L - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Loews Corporation Q1 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. the to turn Skafidas. now will call Mary over I Please go ahead.

Mary Skafidas

our and Christie, conference And of our supplement, website, good found welcome may you, company call. release, overview, and to copy loews.com. earnings everyone. on quarter morning Thank be earnings first Loews A earnings Corporation's

Executive Officer, On David the Chief call and Tisch; we morning, Jim this Edelson. our our have Officer, Chief Financial

question-and-answer remarks shareholders. session, morning, have which include prepared we this our a Following from will questions will

you remind Actual that conference we our in the including begin, any will Before due a are those nature. filings. I include SEC forward-looking might in company from to uncertainties, that those in wide results this set statements or materially however, call by implied range forth made statements and may of forward-looking differ achieved risks

of reflect disclaimer statements any disclaims forward-looking to Forward-looking are they at only included the statements time in is company company's a company's statements. circumstances made. filings revise SEC. the expressly The summary with disclaimer, which update the any This statutory is or forward-looking obligation the brief

call. we few today, David will earnings to Tisch, might for drivers supplement before walk does, comparable CEO, through But reconciliation he discuss In measures. Please non-GAAP call Jim CFO, you. over our refer filings to for the During kick those measures. the key GAAP and minutes, Jim, financial the our our a security also you off Edelson, the quarter. to will

Jim Tisch

progress CNA full-year results. the the Robusto X financial over X steadily clear. metrics with is by CEO the the points due XXXX XXXX, XXXX Mary, The on momentum loss the have subsidiary. to several results, expense largest of off comparing the by a years, points, CNA, ratio Building you, been to good end combined and with improved start underlying first Thank results good primarily became had in Since XXXX, morning. and care at ratio solid quarter is quarterly Loews its risk Dino In carefully is and CNA's improving. strong last committed key to our distributors business in CNA's on CNA rate to policyholders mitigate further business, this reduce lessen company its with CNA obtaining Notwithstanding strengthen also its regulators point. managing X expenses book exposure. progress, of by exploring claims grow relationships rate from not satisfied. diligently. of and The its to continuing of continues would still the new decreasing when CNA that by long-term underwriting meaningfully state strategies book is managing to improving performance, increases effects justified. its ratio remains simultaneously and increases decreasing

over future. moves continually as discount. from and so the what stability about confident shares company benefit new this CNA X.X spending call own a repurchases our view, is X.X% purchased Loews shares In forward, shares at we far million in outstanding about grow cost strength In this and recently financial triple shares in even the will reason has just representing about well stock or its and stronger that is deliver $XXX of shares. XXXX. continue operating business the performance results improving many its bought million of it for that repurchased last Friday, of operational can As profitably common we our But will nothing and share XX a than Through are X.X% outstanding Loews to responsibly, of billion. million so these more I’d CNA's we've major as XXXX, $X why of a us.

in peers; attractive is a stock yet PE at S&P insurance to intrinsic a peer and for second, at at it's our shares CNA continue industry my discount the makes discount our buying repurchasing a to a in. with trading notable and creation great what companies the its value; value extent we is discount to lever its discount at trading XXX. are us an gift, giving trading First, we trade triple are us. P&C believe shares Loews view, to the yielding comfortable the a third, we to I this be that extraordinary prospects In high an CNA's consider stock is feel market to them discount, like

from this backlog the contracts for to the work. potential for call would These at Dave, add company company. than market over attractive morning, announced Petroleum, some of Diamond I a want news major two its four turn Earlier mention I to E&P with Australian Before contracts more rates follow-on Woodside good new of Offshore. drillships years with

is rig expected late XXXX. start first drilling in to The

rate the you? backlog not day in Diamond's I in that to charter to David, suggests significant with disclosed, large this represents the growth While Woodside charter due record. part Diamond's stellar is in operating over uptick rates, a believe

David Edelson

and Jim, you, morning. good Thank

to $XXX to increase one, the Loews company of or equity compared than doubled by both at due current two For share to results number income our strong $X.XX mainly to driven net million in our Pipeline first two, year's parent quarter's the investment increase was factors. million Boardwalk and share This quarter, first performance; XX% whose from stoked XXX%. quarter. CNA robust per the by main year-over-year income ownership net market healthy the first and last $XXX reported per or the $X.XX in contribution more Number

XX% per income was shares last earnings prior as XX% up the While average outstanding our net first from year, increased declined X.X% share over year's quarter.

one, CNA the of net higher CNA improved contributed gains; corporate and net XX% driven segment. three QX XX% XXXX. factors. in performance quarter, ins income income; two, higher three, by the CNA's our investment increase was net $XXX This of through main of income over Number walk me in million. of a with starting for let and number which accounted investment Now number outs level

lower was premium quarter year-over-year higher successfully higher strategy on to cat all-in in down, combined year-over-year in profitable combined was an CNA highlight increase losses, ratio attributable in however, favorable versus that underlying slightly ratio. QX posted XX.X% continues to development, of as XXXX. its level CNA income a a these the three execute prior-year XX.X% of describing of the Before and underwriting ratio P&C drivers, I'd The combined growth.

ratio, combined cat which underlying came prior the losses in Importantly, excludes XX.X%. year at development in

strong is in year's below first the quarter, ratio underlying better While than quarter underlying this below coming point ratio CNA's underlying XXXX full-year higher was full-year than in last it combined for of loss XX%, loss CNA's about XXXX. XX.X%. ratio one the extremely is

to quarter's underlying earlier XXXX. Anderson this underwriting James call earnings CFO makes to full-year highlighted results CNA the On today, sense why it compare

million over The things Let increase. year's three last and after-tax investment income was last gains investments. me impacted non-redeemable after-tax holdings and quarter. in three, the quarter after-tax to reported in Number $XX $XX year-over-year reported in gains drove up better CNA versus preferred its the million of X.X% losses. a earnings loss on net the the equity year two, And to million, investment stock mark-to-market and markets. year. investment return almost X.X% XXXX million $XXX by CNA's than XXXX quarter $XX the CNA million CNA QX This last last records number of $X in to segment benefit a quarter million X.X% million compared as year-over-year QX reinsurance year NII CNA's net retroactive improvement a that as recorded to in a $XX loss this XXXX. compared Number portfolio in corporate portfolio the sell-off returns $XXX results. fourth charge entirely in fourth first attributable CNA's partnership in returned company year equity QX last to of declined versus The on negative was net negatively limited one,

to these loss reserves. company transfer Indemnity reminder, CNA quarter. involving however, CNA's National and in a conduct environmental first reserve in quarter with As conducted last the retroactive asbestos results Subsequently, the reinsurance going the the pollution LPT decided fourth reviews an forward. to year's portfolio review XXXX relate

there such QX in review charge no As was XXXX. or

of LPT. In the the amortization with benefited associated deferred fact, gain the results from

after-tax corporate Loews. variances to investment investment together, for the favorable and Taken year-over-year gains, amounted CNA's $XXX in segment million income,

Offshore. Diamond $XX Turning a quarter to positive last contributed contribution net in first million the loss $XX year's million quarter. to Diamond in compared first

earning a the income tier from rigs by more per expanded of X.X% in working XX% a a ensure XX% to margins liquidity were million and focused Diamond points contribution down than about due in to had net its contract X% are position, XX%. doubled considered margins revenues to average XXX% declined EBITDA a investing year after-tax its Boardwalk our $XX XXXX. XX% good reversal rig increase in year-over-year of for quarter to the the to third top of revenues in decline rose revenue over was the XX liquids. of last of down daily global healthy natural offsets XXXX. an was and storage propelled maintaining Diamond restructurings, quarter. the natural the Net quarter. Operationally, were ownership on up Boardwalk's impact decline customers. As conditions position storage tax predominantly year-over-year would by the market. impact increase QX increase contract lending two drilling points. The gas outgrowth transportation loss uncertain XX% the and a the included of Pre-tax $XX an if in experienced while Contract a as income expirations, drilling and parking favorable gas at been revenue was Revenue not and by drilling Diamond's from renewals. and Boardwalk million remains projects in loss fleet have revenue reminder, XX%. The challenging in and net growth contribution to offshore days

as first an to earnings on Moving held-for-sale charges as in earnings QX under excludes quarterly from booked was same in longer on properties million $XX non-recurring negligible improvements hotels impairment in in million hotels million selectively EBITDA and year's Those property adjusted a activity in divests Such and made our in on company by QX last million items our properties which repositioning obscured Those no year. the and that which contributed were both quarter. from company year's of expenses development. summary fit strategy. income charges The and unusual year-over-year defined $XX the up quarter, charge the underlying hotels last ongoing up pre-opening reported were after-tax quarter. first as largely last operational its strategic to new $XX net $X.X of gains Loews Hotels develops XXXX amount

higher equity of Parent of year-to-year investments. $X.X the company, totaled was in equivalents over cash income securities partnership XX, the the the equities XX% Parent up a portfolio company investment and increase. and and At marketable with markedly March remainder on mainly billion to with cash returns limited Turning driving in investments and portfolio

of summer to portfolio activity units reminder, on $X.X months the purchase past over decline Parent the The by resulted previously together LP billion a XXXX. share Boardwalk company As with owned Loews. totaled the XX, the last repurchase XX from close March primarily not

received the from of the Boardwalk, regular maintaining on past CNA dividend and our million non-cash and of we favor assets our and a million subsidiaries dividends quarterly holdings special kept includes reducing year, cash million over dividend. our equivalents. high-level the We Importantly, $XXX $XXX have focus during liquidity the of $XX by in which from quarter, first from $X.XX $X in

mentioned, for X.X As quarter quarter-end, $XX of repurchased total additional first the XXX,XXX we million. million we After $XXX repurchased for shares during an Jim of shares our a stock million. common

back hand Let now me the Jim. to call

Jim Tisch

David. you, Thank

talk up the call portfolio. to quickly about want open questions, investment we I Before Loews to

investment the market the in stock million. market of net in first volatility over time quarter In investment some loss recall leading and fourth portfolio, have the end fourth to words, has the was quarter Mary, portfolio back the the of million investment fourth other first stock for volatility of year quarter our in XX% XXXX. our loss driver XXXX, income XX% the in to about may loss you. forward that period ended declined quarter the portfolio. that we of recouped million Fast having of the and pre-tax with that a quarter to The then increased had in Loews a quarter. XXXX the of $XX and You in the $XX the $XX over

Mary Skafidas

Thank you, Jim.

questions, open they would shareholders send encourage have do hope shareholders. that submitted from we like up call the We to us we four Before for questions so. that us questions us and to continue answer, to to they we

traded the why to as since think discount you has a today's first question significant is always Our repurchases? industry share the is about Jim. to Jim discount market, P&C at

JimTisch

that. you increasing property their on commercial to I would write Travelers down industry They the would property move that capital that on that that sector the and earn a up fact in of dividends question, the his of statutory time industry, levels up or XX, stop balance not would think pay as it's industry, the to cyclical ago XXX. and industry for which get like more things with the unnecessary shares. much dividends the shares? an insurance buy, capital, again. CEO, decade casualty never today the and reason companies is the if would cyclical memory believe XX% at repurchase market, rates that trades because index business, So, dramatically blessed capital, Jay look the more had the accumulate is and but insurance the see I a a over lot would the and can money, who feel things used at industry they today increased. to Fishman you balance accumulating it P&C But going about And capital, companies and sheet insurance discount The dried cas, less that of believe then so to there is they rather would would had dramatically believe no much they you they business. bad price you write they than significantly, sheets of started industry, would to the compete and the property companies and started CEO is less of and was S&P our where our being and see of sector capital insurance earnings casualty so that was stock in previously. business of longer then is today other XX repurchase back how is insurance I CNA write the [ph] a years XX than is writing my Travelers industry that up as And lesson price I pay his use to to guess business of went to to dramatically competition. in capital

not think in of the an market enormous dynamics anymore. view such warranted just is I in today the discount

Mary Skafidas

you, Okay, Jim. thank

Our next CCC acquisition. question most acquisition wants about recent or is to from a recent shareholder who know Loews'

So you us two an CCC. give acquired it’s they you years about Can since please update? ask, been

Jim Tisch

Sure.

to X% are buying short-term the right into especially was just got market. we pop that for of by got CCC, CCC, it meaning just So there we sector industry studying interest when economies X%, scale had significant Its the few sector then market packaging other good when as right are had opportunities been cash a industry. be mom of X%, the environment and returns really where be for the and we are on reminder, -- we’ve a in the the there this opportunity into in businesses is buy years, cash of roll-ups. fragmented the thing, just had X%. rates to smaller There in are or to And an company

the got why place. first that in So we CCC was into

the approximately had on we've We've expected. forward. cash that fast let's Now cash returns

compelling businesses our say us. the which to We're times have at seller nine them in platform six at economies but we're to of own the hands able has multiple very for because a able to buy EBITDA think multiple. for growth of I been We our scale; a

management manage any two their knows years, team that we've We important are I at profitable really, do them to a really lived acquire other in good bad have And not is think to growth who a how business times business, well. growth for in really we now is what I interested to reasonably strong have knows defensive businesses, going cost. how most that and with think

we how out for the really we and on Loews and see thesis growth, organic its So out opportunities working playing pleased opportunities for is acquisition, CCC very shareholders. more we're this from perspective, with see is my and for

Mary Skafidas

Excellent, you. thank

feel next this about question about cycle? protracted especially is Our Diamond. Loews does How in Diamond down

Jim Tisch

XX yet excellent the is more and got share, better is ago a prospects market seen thing Diamond $XX So now drilling is Diamond earnings at We’ve does. -- stock into a about today reported offshore down much that than years that feel over highly is the than it my like guess significantly. we Diamond My about cyclical. stock. is is excellent the it option stock view trading a Diamond I've

trip invested we happened Let back. lane. before short memory you had what a I price into public, a public; me really the then, total it for our forget When while. on million. we Diamond, a nothing about of down public went got all take stock we $XXX bought And went of cash at. It went

a pay stock those per And $XX business $XXX excess XXXX the of used to I As know good, Diamond all drilling really $XXX such, to dividends. as come the good share, share. to paid in when shareholders. you got think a was Diamond dividends share in times

now today. above could fast to likewise Diamond XXXX get trades Diamond So gotten can't just couldn't from and forward $XX to that believe just Today, let's I Diamond I $XX. if has believe to $XXX, that

the seeds it's change about rigs are cold rigs fleet, been at take worth, XXX XX% a stacked back also XX% rigs as industry. in XXXX, will come Since out left I work, operating to you XXX about they're have what the see the or never When in rate. of operating the market, most and For of there floater floating which scrapped.

in offshore drilling the I this in early business. So, shipping this saw in I've XXs, seen the industry and the

good prospects. scrapping operating stays WTI prices more that and enough on that at for to fleet. believe levels, As will drilling opportunity have than long level customers oil the $XX on be it's profits I $XX market is at, additionally, from there as the the with our there to And Brent, continue on these at

in be there So that I demand increases think for rigs. will

$XXX,XXX, bam, to fleet to down, my would see can got a happen, the demand highly, me for have come for it's that that day for not all to next four like of of that and down, will a surprising that going rate is position the it happen. to increases at $XXX,XXX of doubt go day. Diamond's $XX,XXX, it's supply -- size of to is industry then highly And and thing, will continue lot the up. happen. mind in Demand over There's in will years this day think one highly, inelastic, five come I I about all be no the us runway

pretty actually thing, good So as has feel oversized value. can an earnings, One I Corp.'s where us it million from an market Yet $XXX you has overall additional for is. Diamond about Loews Diamond effect see earnings. on the

it's as of measure for the one as share. some So looked reasons, parts opposed per of Loews I at to earnings value a the

Mary Skafidas

Okay, thank you, Jim.

Our Jim about question has CNA valuations What with its CNA, from think of shareholders that you you other obviously do cheap last peers. trading to think to do is subsidiaries? Loews

JimTisch

flat all I've the I have down talking -- opportunities and it. a opportunities in spent in some Boardwalk I think where business our to just a we portion and both But lots going we the forward. the Likewise, potential, are upside return love over be down about EBITDA of good Diamond children had Loews. see that some -- for that front of very, of CCC because up at Offshore I EBITDA of at talked about in of for very we've all my possibility to and attractive morning has what value CNA subsidiaries hotel there EBITDA build also And and our are upside. in also think I very opportunities Pipelines in of I offshore past drilling. for the significant the prospects. lot seen work. this year, other of rates I us. have family past represents see it see I we've where But sorry time consider of hotels chances CNA and

And overall I I for so when Loews. see put opportunity all it of together, lots

any are buying said buy a similar extent billion in like Rodney Loews in we respect, as on year our shares and Last shares. not getting thing, shares, year before, we're that bought we're to and happy Dangerfield we're pace them to is other happy dollars The our of this in. I the

Mary Skafidas

Thank you.

turn Okay. Christie to like we'd -- it

Jim Tisch

not is This Christie.

Mary Skafidas

turn Clearly. participants. additional up and Christie, to the the we'd from for like call over questions call open call conference to you

Operator

[Operator Sure. Josh first is Instructions]. Bank. from your of Deutsche Shanker And question

Josh Shanker

Good morning.

to investment multiline be disappointed. mean I be I a too Loews reductive won't hope So don't conglomerate. but call I you

Jim Tisch

it -- I call -- call a it conglomerate. are I we unabashedly

we're So with upset no not that.

Josh Shanker

Okay.

that shareholders S&P not but a your the So XXX. to established you early competitor, your the he And can a function think recently was who one long that one peers expect of your much run you is very of doesn't company outperform he that over -- would said of think that thinking of have about time company. it don't businesses? and diminish you about mix you ability, Loews I'm unusual But businesses over a better when have market his Loews, you do an believe to is that function so than of or that speak warn is does long-term, are size

Jim Tisch

know I I as really I don't as Loews S&P know well XXX So know the well. Loews.

the S&P opportunity can't have I or to you that us for the for the price. Loews our intermediate given that and given underperform given front So individual businesses, we outperform is whether value a build flow, know shareholders is I five great is opportunity share that cash our of What there over to Loews long-term. I What to think I set XXX. us at going know in our our is opine and

control As any my I can't industries. within way that's the XXX, for that's because we'll their know or whether in are bogey don't outperform companies what I S&P not not not other -- doing

Josh Shanker

in company look that extension that put sixth quite another do to of new company. for benchmark believe discount so a generally valuation can the buy lot is that and to an or your in that try to the free work and to is you stock use of own and to Do business great you high money back become that you By Loews Okay. you you ultimately buy necessary exceed? can cash -- use expert you're a also

Jim Tisch

Yes.

that trillion factor other didn't is can equity and probably equity those private up $X firms easily there unused that at you of And XXX%. one firms lever by is mention. So

$X than So that spot sitting a trillion means what of result, see businesses what dry to there's for. department, high our And for looking we And prices would We buy is call need has we're another be very in powder shares. our what in of the as continues see words that repurchase that louder are investment sweet can don't you own that the probably from business. those speak firms. been actions to of and I focus

Josh Shanker

expect guess might Eureka And think misquote times you've little said say, then a point I I value you, at is stuff". Jim, the the scrap to gotten doesn't you make again I "This but you're that find anymore? going you tankers just market a efficiency you buys one had available of how much to that's those idea to where money possibly Do oil could or this where sense it. few have don't moment, exactly

JimTisch

XXXX to test that I about was $X where million scratched Yes, Tisch you of looked the mean the uttered million Jim you fact drilling you're later, developed an lifetime offshore the get all into thought -- just in the But rear, I Supertanker on both exact deck in and came years head the in the getting a drilling this test handy same I for quoting words to in the once opportunity. in my to stood literally, myself. said I where I business offshore that Jim the of that so I to I looked standing $X a and in on was sides. looked rig, Tisch $X I front, the And million? fact a deck eight

time people any and So it are no, us. another doesn't other my opportunities. sure always for lookout crystal up. the that we're for ball at test million the seen since waiting such that worked to that haven't us for we time, XXXX, them in $X to show day the when snatch present occurred on But I'm

Josh Shanker

one All question may right. dovetail. And final that

properties mentioned Can Hotels hotels enunciate right in more you that You concise out way strategy is fits Loews and the getting strategy acquiring no now? a of do. what of the that longer

Jim Tisch

Sure.

And experience very a above we're operating earned occupancy. hotels room We market have us have learned significant partners our of where from Universal. market lot rates above Orlando at six rates and at hotels our and in returns for those

is year. significant earn in we're building market building above St. building City, of are business. more Group And our we perspective, cities fit, in what equity And every our not that opportunities translated experience fit into our and Texas oftentimes strategy strategy from trying where in amounts we what with or my we partnership plate may municipalities properties we've we're may to hotels in investments. really into we're building on demand hotel can Louis, returns than building we're a that our own Rather we're hotels so we of And believe driver for now, business nearby full. that in Kansas buying this are fully do, do pretty having we're our And in Orlando. see, generating new

returns and really and to be I within good now entirely we about good So feel think to us it's up about going feel I and that company reach. the our are generate really the the in the hotel opportunity execute people set strategy. to

Josh Shanker

that Theme Great. a Park after I well. make as call sure my novels you I into develop I

JimTisch

Okay.

Mary Skafidas

Thank for you, Josh. That today. call concludes our

As always Thanks available we want hours. our to thank on approximately will be your for in continued website, again. loews.com A replay you two interest.

Operator

call. conference today’s conclude does This you. Thank

now may disconnect. You

Loews (L) 29 Apr 192019 Q1 Earnings call transcript