Good morning and welcome to the CNA's discussion of its 2020 First Quarter Financial Results. CNA's first quarter earnings release, presentation and financial supplement were released this morning and are available via its website www.cna.com. Speaking today will be Dino Robusto, CNA's Chairman and Chief Executive Officer; and Al Miralles CNA's Chief Financial Officer. Following their prepared remarks, opened up -- we will open the lines for questions. Today's call may include forward-looking statements and references to non-GAAP financial measures. Any forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made during the call. Information concerning those risk is contained in the earnings release and in CNA's most recent SEC filings. In addition, the forward-looking statements speak only as of today, Monday, May 4, 2020. CNA expressly disclaims any obligation to update or revise any forward-looking statements made during this call. Regarding non-GAAP measures, reconciliations to the most comparable GAAP measures and other information have been provided in the financial supplement. This call is being recorded and webcast. During the next week the call may be assessed on CNA's website. If you are reading a transcript on this call, please note that the transcript may not be reviewed for accuracy, thus it may contain transcription errors that could materially alter the intent or meaning of the statements. With that, I will now turn the call over to CNA's Chairman and CEO, Dino Robusto.

Thank you, Jennifer. Good morning. It is very good to be with you today and I hope you and your families are coping well in this difficult time. As our nation in the world address the challenges brought by COVID-19, I am honored to be a part of an industry that continues to meet its commitments and provide some certainty in these uncertain times. During this crisis, our industry will be resilient and remain a strong factor in the recovery of the U.S. and world economies. On behalf of all of our employees, CNA acknowledges and thanks to our first responders and healthcare workers for the selfless and courageous efforts they advance every day, and we are grateful for all essential workers who continue to go to work each day providing key services and goods we all depend upon. I am grateful to CNA employees who have embraced this new work environment and continue to manage our business and operations effectively. And I would also to acknowledge our government leaders across the nation, who are working tirelessly to keep our citizens today sent to respond to this pandemic. We will now turn to the quarter results, and following that I will add my early thoughts on how the industry issues surrounding COVID-19 relate to our portfolio. Our first quarter results continue to reflect strong underwriting performance, accelerated price increases, and the robust growth in our U.S. operations, offsetting the strong underlying underwriting performance where loss is in our investment portfolio due to the economic impacts of COVID-19. Core income for the quarter was $108 million or $0.40 per share. The P&C combined ratio for the quarter was 97.5%, cap losses were $75 million pretax, which included $13 million due to COVID-19. The underlying combined ratio was 93.9% to reflect the…

Thank you, Dino and good morning everyone. I am happy to be here today and assume the CFO role of CNA. Clearly, these are interesting times to step into the position on the experiences CNA including my first role overseeing investments in treasury have prepared me also this challenging period. Our Property & Casually operations produced core income of $122 million in the first quarter. Pretax underlying underwriting profit was $107 million. This was the fourth successive quarter with pretax underlying underwriting profit mix of $90 million. The P&C combined ratio was 97.5% this quarter, which includes 4.3 points of catastrophe loss and favorable prior period development of 0.7 points. Our catastrophe losses included the impact of COVID-19 which amounted to $13 million pretax or 0.7 points of loss ratio within our cap losses. The underlying combined ratio was 93.9% with sixth consecutive quarter of underlying combined ratio below 95%. The underlying loss ratio was 60.4% and the expense ratio was 33.1%. In terms of our operating segments, the combined ratio for Specialty was 91.3% this quarter. This is a one point improvement compared to first quarter of 2019. The combined ratio includes favorable prior period development of 1.5 points and 1.1 point from catastrophe losses. The favorable prior period development is largely driven by favorable outcomes ensuring predominantly for accident years 2017 and prior. Underline combined ratio for Specialty was 91.7% this quarter, 1.8 points of improvement compared to first quarter of 2019. The underlying loss ratio was 59.5% and the expense ratio was 32%. Expense ratios improved by 0.8 points compared to the first quarter of 2019 largely due to growth net earned premium. The gross written premium growth ex-captive was 2% in Specialty for the quarter and was negative 1% on net written basis. Rate continue to…

Thanks, Al. Before we move to the question-and-answer portion of the call, let me provide some perspective on the pandemic and our portfolio. The claim notices we have received to date are mainly business interruption notices related to our property forms. So, let me start here. Our property policies require direct physical damage to the property from a covered peril for coverage to attach and on property policies whether issued in the U.S. or international all have exclusions barring coverage for viruses. There are a very few policies where coverage may exist on small participation in our Lloyd's operation, but the total limit exposed is de minimis. So, with respect to business interruption on property policy exclusionary language does not provide coverage for COVID-19 and as such we never collect a premium for it. Now, let me turn to an area that I have commented on during several of these calls, aging services. And I wanted to first remind you of the composition of our book. Our aging services is predominantly a medical malpractice professional liability book with some property coverage and a small amount of auto. Importantly, we write essentially no workers' comp coverage. It is less than 1% of our work comp premium volume and it is written over a very large deductibles. This is also true for our broader healthcare business beyond aging services, which is also a professional liability portfolio, with minimal workers' comp exposure to front line healthcare providers. Additionally, we don't like coverage for first responders. Moreover, on aging services, as I have said on prior calls, we have been working for some time to obtain the right terms and conditions for the exposures, and we have walked away from accounts when we could not achieve them. Our current professional liability exposure is 26%…

Yes. [Operator Instructions] And we'll go first to Jeff Smith with William Blair.

Hi. Good morning. I may have missed it, but did you say if you have any event cancellation policies at all?

No. That's not a coverage we have. There may be some small little freebies on some International, but we've looked at all of those and those limits are totally de minimis.

Okay. And then in the Specialty book, about how much of that is D&O, and do you see much risk there for Covid-19?

As we've indicated in the past, Jeff, we -- it's not a large portfolio D&O for us, but it is an area that we have been focused on and we have been growing. And look, I mean, it is clear that there's been a tremendous stock price drops and whenever you see that you it's -- you're going to see some elevated class action activity. But truthfully, I think this is going to end up being much more of a defense cost scenario. The stock drops were very, very broad based from the pandemic and I think it's difficult to establish Director & Officer accountability for the drop.

Right. Okay. And then just the warranty business, are you seeing a pretty big drop-off in demand there? Is that mainly vehicle warranties?

Yes. Yeah, it's mainly vehicle warranties. We have -- as you know, we have the large -- also electronic cell phone programs, but those are all captive, reinsured to captive. So, you're seeing, obviously, some drop-off in the warranty along with the drop off that you see on sales and new cars, et cetera.

Okay. Thank you.

Thank you.

[Operator Instructions] We will go next to Meyer Shields with KBW.

Great. Thanks. Good morning and thank you very much for the disclosure on your book of business. Did you bring it on the line -- okay. The lines of business for which the $15 million charge applies.

I'm sorry, say it again.

The -- so the $15 million virus related charge in the first quarter, did you break down which lines of business that was for?

Yeah. So, the line of business that we put actual charge for what's trade credit, even though it is on a runoff, you still have, as I said, $7 million. And so what you see there as we did our reserve reviews of all lines, is -- the dropping of commodity prices, especially on the oil side, the drop on the oil prices that that's going to put a strain on trade credit until we put our money for trade credit losses. And then the rest is just the legal expert costs that the claim’s department -- we are typically doing a catastrophe, but clearly in something a big size. And so the estimation for those costs, as we play through to pandemic, are also in that amount. It's not any number of like ultimate defense costs for the future. We hope to have a much better picture, Meyer, as we get through the second quarter to be able to put together some other projections there for defense costs.

Okay. Fantastic. That's helpful. I was hoping you could sort of wrap up all of your thoughts on workers' compensation. In general, I'm wondering, first of all, what do you expect reinsurance come into play? And second of all, what CNA stance is on states that are expanding presumptions considerably.

Yeah. Okay. So, appreciate the question and obviously complicated at so many different levels. Let's start with reinsurance, if I may. And then, I'll give you my sense on some of the regulatory. We do have work comp reinsurance protection for large events. And it provides, Meyer, perception for on a fall of the fortune status, by the way. And it provides $275 million protection excess of $25 million retention. And we get to determine what constitutes an event and we can then select the consecutive 160 hours time period for combining the losses. So, some very strong, reinsurance protection. Now, look, so let's get to the presumption doctrines. And as you know in some states the officials have supported the coverage for -- coverage presumption for both first responders and the healthcare workers. And as I said, frontline healthcare workers make up a very small part of our work comp portfolio. And I went through that in detail, because we do write medical malpractice. And I want to be clear that it's not a work comp portfolio. We also -- we have no work comp for first respondent. Now there are a few other states, fortunately, relatively few where a broader presumption for essential workers, it's being proposed. And look, this would add, in my opinion, significant unpredicted costs to the system overall, because those exposures were not underwritten, they were not priced and ultimately are going to be shouldered by already struggling businesses. So, what we are doing is together with many of the other member companies of the APCIA IS -- we're working with policyholder groups and that’s very important because the policyholder groups themselves are pushing back for the obvious reason of the subsequent consequence and availability. And they're pushing back on broad extra contractual retroactive. And so -- look, we're going to need to see how that plays out, which is why I suggested we wait for the second quarter. We, obviously, have seen a drop in claim counts from workers' compensation because of the lockdown. So, then you got to see that sort of as net-net basis you've got to factor in a little bit of the exposure that's going to come in place. And in the meantime, we're going to fight tooth and nail on avoiding a very broad assumption because in the end whether it’s cutting off your nose to spite your face. And so, we'll see how this shakes out. We really do have to wait to see how it shakes out.

Okay. Thank you. That was very thorough.

Yeah. Meyer, thanks for the question.

And at this time, there are no further questions.

Okay. Thank you everyone. Appreciate your time and please be safe and be healthy.

This does conclude today's conference. We thank you for your participation.