Good morning and welcome to CNA’s discussion of its 2021 Fourth Quarter Financial Results. CNA’s fourth quarter earnings release, presentation and financial supplements 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 Larry Haefner, CNA’s Interim Chief Financial Officer. Following their prepared remarks, we will open the line for questions. Today’s call may include forward-looking statements and reference to non-GAAP financial measures. Any forward-looking statements involve risk and uncertainties that may cause actual results to differ materially from the statements made during the call. Information concerning those risks 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, February 07, 2022. CNA expressly disclaims any obligation to update or revise any forward-looking statements made during the 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 accessed on CNA’s website. If you are reading a transcript of 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 turn the call over to CNA’s Chairman and CEO, Dino Robusto.

Thank you Tracy and good morning. In the fourth quarter, we continue to effectively leverage the favorable market conditions and achieved strong quarterly results which topped off a great year with record core income. Before I provide details, let me offer a few highlights on both periods. Our gross written premiums excluding our captive business grew by 16% in the fourth quarter and 10% for the full year.\ Importantly, the overall P&C rate increase remained at 8% in the fourth quarter consistent with the third quarter, leading to a full year rate increase of 9% which was well above long run loss cost trends. The all in combined ratio was 92.9% for the quarter and 96.2% for the year, each representing the best ratios in five years. Our underlying combined ratio was 91.2% for the quarter, and a record low of 91.4% for the full year. All of this led to record core income of just over $1.1 billion for the year, up 50% in core EPS of $4.06 per share. Drilling down on the details starting with the fourth quarter, our P&C operations produced core income of $353 million, or $1.29 per share. Our Life & Group segment produced core income of $6 million, and our Corporate & Other segment produced a core loss of $94 million, mainly impacted by a non-economic charge related to asbestos and environmental. As usual, Larry will provide more details on Life & Group and the corporate segments. In the fourth quarter, the all in combined ratio was 92.9%, a half a point lower than the fourth quarter of 2020, and the lowest all in quarterly combined ratio since 2016. Pretax catastrophe losses in the quarter were $40 million or two points of the combined ratio, compared to $14 million in the prior year…

Good morning, everyone. I will provide some additional information on the results as Dino indicated. Starting with core income for the fourth quarter, our P&C operations produced a core income of $353 million as Dino indicated, a key contributor to the strong result was our pretax underlying underwriting income of $167 million, a 22% increase from the fourth quarter of 2020. In addition, our catastrophe losses are relatively modest at $40 million pretax, but despite the fact that estimated Cat losses for the industry were significantly above the 10-year median for fourth quarter events. For full year 2021, record core income of $1.106 billion produced an ROE of 9.1%, up substantially from 2020s 6.1%. Our Q4 expense ratio was a key component of our higher, underlying, underwriting profits. For the fourth quarter of 2021, expense ratio was 30.8%, which was 1.2 points lower than the fourth quarter of 2020. In Specialty, the expense ratio increased slightly in the quarter by half a point compared to a year ago, due to recognition of higher profit sharing in the quarter for one of our profitable programs. In commercial, the expense ratio improved by 2.3 points this quarter, largely from growth in net earned premium. International also showed significant year-over-year improvement of 2.6 points derived by net earned premium growth and lower acquisition cost. On an annual basis, the expense ratio was 31.1% in 2021, 1.5 points lower than full year 2020. We believe 31% is a reasonable run rate going forward as we continue to make investments in talent, technology and analytics. The expense ratio improved for each segment with specialty improving 0.8 points from 31.3% to 30.5%, commercial improving almost two core points from 33% in 2020 to 31.1% in 2021 and international improving 2.4 points from 35.5% for 2020 to…

Before opening the call to the Q&A session, I'd like to offer a few comments about how we perceive the marketplace dynamics might involve, might evolve in 2022. Most importantly, we see pricing remaining favorable with overall rate increases, persisting above long run lost cost trends for most of 2022 in light of the oft quoted headwinds, like social inflation and economic inflation and elevated cat activity, all of the headwinds are still present, there has been no significant changes since last quarter. The uncertainty these factors create a loss cost trends have only been exacerbated by the Omicron variant, which has slowed the full return of court activity and docket logs to a pre-pandemic level, just why we have continued to prudently recognize margin improvement in our current accident year loss ratio. And although written rate increases in the last 8 to 10 quarters have allowed us to make up most of the last ground from 2015 when the rate versus loss cost trend started to become a headwind, it can easily become insufficient if loss costs trends increase further. And this is why we are focused on pushing for more rate and where needed additional improvements in terms and conditions. As I mentioned earlier, our pricing remained stable for the third quarter at eight points while retention increased two points. So even though rates have moderated from their high watermark in the fourth quarter of 2020, we believe the pace down will be slower than the pace rates increased. Finally, as seen by our increasing overall growth as well, as well as our growth in new business as the year progressed, we are bullish about our continued prospects, and meaningful levels of quality business to our portfolio in 2022. And with that, we will take your questions.

Thank you, sir. [Operator Instructions] We will now take our first question from Josh Shanker from Bank of America. Please go ahead.

Yes, thank you. So listening on prior calls and this one to you spoke about the need to perhaps increase the loss cost trend assumptions based on what you're seeing in the marketplace. But of course, we all talked about the risk from dockets opening up and accruing [Ph] more losses. At the time that the courts were closed in the dockets were thin, what data was coming in that said that you know, what we need to increase our loss trend. Was it more or less a hunch? Or did you actually see underlying a court data saying that court decisions are getting more generous to the plaintiffs’ [Indiscernible]?

Josh, the way I would answer it is based on some of the information we talked to you about originally, with lines like medical malpractice, and some of the auto liability, as we have a portion of the portfolio in construction, which wasn't as impacted by the COVID benefits, and also just umbrella and what we were seeing at the time, even before the pandemic, and then it continued in those lines through the pandemic, in particular professional liability. You saw things like a little bit higher attorney representation on cases, which also might have led to some additional frequency of cases potentially interested in being litigated. You saw higher settlement demands, even when the facts of the case didn't warrant it. And so, those are the kinds of things that that, despite, the dockets being lower, it's got implications, on settlement values. And we saw that and we continued to move our long run loss cluster. In the last quarter, you also recall, we increased our property, long run loss cost trends, about two points that had less to do, obviously, with dockets, and had to do with our view that, economic inflation, supply chain issues would probably continue. So, there's a dynamic in particular in lines like medical malpractice that started before the pandemic and continued through it in terms of settlements that we saw.

And if I try and think about that, in terms of the stock at issue and paid to incurred ratio. I mean, nobody really knows. But do you have any advice for us in thinking about how to think about pay to incurred ratio in 22 and 23, given that the courts will presumably reopen?

Yes, I'll give it -- to Josh, let Larry jump in his things, considerable amount of time on these fees to incurred ratios.

Yes, Josh, we spend a lot of time thinking about that as well. I can assure you of that. And it really is difficult to parse between them right now, which is why we have been prudent about it. But as we look at it, as I mentioned in my remarks, where we have seen lower non cat paid ratios and paid loss dollars actually, is in product lines, where we have taken pretty significant underwriting action, like medical malpractice in some of our excess liability lines, particularly with auto exposures. So it's really hard for us to try and separate what the difference is between those. But we do know that the paid to incurred loss ratio was down significantly from pre-pandemic days. And, we're just being cautious about recognizing any of that potential improvement if it exists until we know more about what's happening as those dockets open back up.

Alright, well, we will certainly find out more. Thank you for the color.

We will now take our next question from Gary Ransom from Dowling & Partners. Please go ahead.

Yes. Good morning, I wanted to focus on the areas where the rates are moving up. More noticeably that would be financial lines in the specialty segment and small commercial in the commercial segment. Is there something particular going on that's making those move up and accelerate compared to some of the other segments or lines?

Yes, there's a little bit on each. I mean, clearly on the financial lines, which includes our cyber, cyber has been accelerating, the rate increase. And if you look at it in the fourth quarter, we actually got triple digit rate increase. And, and the other lines, had some more stable sort of behaviour. On the small business, Gary, we, it's on our BOP policy, we had filed for a few points of rate increases, we also got three points of exposure change and our retentions also up. So, it's all sticking. So it's really just filings in the BOP policy on small business.

Thank you. And if I look at the growth, I think you did mention in commercial about the exposure increases, but just across the whole, whole business is -- can you somehow parse out the amount of exposure increase we're seeing versus rate or other factors?

Well, in commercial, we got about two points of exposure growth. And that was, I think I may have mentioned in the prepared remarks, really just, you're seeing more in the way of sales, you're also seeing payroll increases. You have underwriting actions that work against that. A little bit, it's hard to know exactly. But, our sense is we probably had a point reduction in exposure and commercial due to our underwriting actions. And, and so maybe you're looking at three points in the absence of that, which I think is, sort of reflective of the economic activity that's about, the sort of best detail I can offer there on the exposure again.

That's great. Thank you. And, and one other thing on more on the loss trends. I’m just thinking about your loss picks for the full year, were there any adjustments or true ups that you kind of changed your view at all, and as you look back at 2021, in any of the segments or areas?

No, there was nothing really significant at all in the quarter. And when we looked at the long run loss cost strains, which obviously, despite the name of long run, we look at -- all the time, and the reality is still relatively in line with what the changes we had made in the third quarter. So there was nothing in the way of any meaningful true ups.

Okay, great. And one last little one, can you remind us what your COVID reserves actually are at this point?

Yes, Gary, they're $195 million. That was the original. That was the original estimate. We held that.

Right. Okay, and was some of that recognized in 2021? Or was all that in 2020?

That was the initial estimate we put up, and we still comfortable with that. Yes, we never moved it from there. Right.

Great. Thank you very much.

Thanks, Gary.

Thank you.

[Operator Instructions] We will now take our next question from Meyer Shields from KBW. Please go ahead.

Great. Thank you. Good morning. I want to follow up on Gary’s question with the exposure unit growth. In your view, is that exposure unit growth likely to have any impact on the loss ratio?

Meyer, we are struggling to hear you, but are you asking what the impact on the loss ratio is from the exposure growth?

Sort of. I’m asking whether you expected to have an impact on exposure unit growth? I'm sorry, I'm the -- I mean, it's like asking whether exposure unit growth should have an impact on the loss ratio going forward?

It's minimal right now. I mean, certainly when you think about workers comp, and you think about payroll, what's going up? Is it is it salaries going up? And how is the salaries that you're insuring compared to average weekly wage, versus just growth in number of employees, right. Because if it's, if it's just payroll going up the average amount being paid, and you're above the average weekly wage, it would have some benefit. But we haven't really incorporated any benefit into to our loss ratios from that.

Okay, now that's helpful. On Dino, you talked about inflation, and obviously, it's everywhere. I was hoping you could zero in maybe on whether the various forms of inflation that we're seeing now are likely to translate into above average loss trend on the Affinity business?

And so on inflation is on the social inflation side, you're referring to Meyer?

So I'm trying to incorporate like or just to see whether any, like, because there's so many different aspects of inflation now, and most of them seem to be getting worse, whether any of those matter to Affinity?

Yes, on Affinity. We've talked a little bit about it before Meyer in the context of social inflation, because it's all professional liability. Our Affinity programs and as I think, I've indicated before, these programs largely comprise of, of single practitioners like nurses and they typically their coverage is largely supplementary to the facilities. And rarely is there any singular accountability to the practitioner and the facilities at higher limits where typically, you see the plaintiffs go after from a social inflation. So it's clearly had a lot less impact on the Affinity portfolio, even within the med mal side of it, than it did on the regular health care portfolio. And it's mainly there that we focus on given its professional liability.

Okay, perfect. I'm all set. Thank you very much.

There appears to be no further questions. I now like to turn the conference back to Mr. Robusto for any additional or closing remarks.

Okay thank you everyone. And we look forward to chatting with you next quarter.

This concludes today's call. Thank you for your participation. You may now disconnect.