[ The transcript was presubmitted by CNA Financial Corporation. No live call was conducted for the second quarter earnings call. ] Before providing remarks on our results for the second quarter, I would like to comment on the pending CEO transition that we announced on June 5, 2024 that takes effect January 1, 2025. For the past eight years, it has been my honor and privilege to lead CNA on a journey to record levels of profitability and production results. Doug Worman has been instrumental to the success achieved over the many years we have worked together, and he has been an outstanding partner in this journey as Global Head of Underwriting. I have absolute confidence that he is the right successor to drive CNA ever-forward to continued levels of top performance. I am also very pleased to assume the new role as Executive Chairman of the Board and strategic advisor, supporting Doug as CEO. Together with the Board, we are excited about the future of CNA and you should expect the same level of underwriting prowess and strategies that have been the hallmark of our success over the last eight years to continue unabated. In the second quarter we produced very strong results with excellent profitability including the fifth consecutive quarter with pretax underlying underwriting gain of $200 million or greater, higher investment income, solid top-line growth, and a one-point increase in Commercial rate. Importantly, for Commercial excluding workers’ compensation, written rate change is 8% and covers our loss cost trend, and, specifically for commercial casualty lines like auto and excess casualty, written rate change continues to be low double-digit and covers loss cost trend for the respective classes. Before drilling down further on the numbers, I wanted to begin by highlighting that over the last several years we…

CNA’s core income of $326 million is up 6% compared to the prior year quarter, leading to a core return on equity of 10.6%, and reflects another quarter of great underwriting and investment results. Our P&C expense ratio for the second quarter was 30.7% compared to 30.9% in the prior year quarter reflecting higher net earned premium. As we have noted previously, while we tend to have a certain amount of variability quarter to quarter in this ratio, we do expect the expense ratio to be at about this level for the full year. The P&C net prior period development impact on the combined ratio was 0.3 points favorable in the current quarter. In the Specialty segment, favorable development in surety and in casualty coverages associated with healthcare products was partially offset by unfavorable development in other professional liability and management liability. In the Commercial segment, favorable development in workers’ compensation was largely offset by unfavorable development in commercial auto and general liability. The unfavorable development in commercial auto of $21 million was concentrated in the most recent accident years as Dino alluded to and the unfavorable development of $19 million in general liability was across multiple accident years going back to 2014 and prior. In the International segment, favorable development in specialty coverages was partially offset by unfavorable development in commercial coverages. During the first quarter earnings call, we explained certain factors impacting our auto warranty business, namely, higher labor rates and car part costs are driving an increase in severity, and lengthier durations of car ownership resulting from higher car prices and interest rates are driving higher frequency of warranty claims. This same dynamic is continuing to impact claim costs in our non-insurance auto warranty business where pretax earnings before investment income of $16 million this quarter is…

CNA had a very strong second quarter, following up on an excellent first quarter, and has generated record core income for the first half of the year. Record levels of core income are reflective of disciplined underwriting, profitable growth and high levels of net investment income. We achieved 7% growth in gross written premiums excluding captives, 6% growth in net written premiums and our retention remains very strong at 85%. Our loss cost trends remain unchanged in the aggregate, but commercial auto continues to see elevated claim activity. We believe the double-digit rate increases in commercial auto and excess casualty, and meaningful high single-digits in medical malpractice will persist, thereby covering loss cost trends for these three classes of business most unfavorably impacted by social inflation. We remain optimistic about our ability to successfully navigate the current favorable market dynamics and to further the Company’s profitable growth. We look forward to providing comments to you next quarter.

We invite shareholders and analysts to submit questions for management in advance of each quarter’s earnings release. Below we address some questions we have received as well as some timely and topical focus areas for CNA and our industry.

What do you expect the loss impact to be from the CrowdStrike event?

It is still very early; however, we do not expect this to be a major claims event for us.

Where is pricing going? What do you expect?

Based on what we can see right now, in the financial lines there is a little bit of variability month to month, but we expect to see a little bit of moderation in the rate decreases in this area. In workers’ compensation, we anticipate it remaining in the mid-single-digit negative range. On property, rate has come down from where it was late last year; absent any significant catastrophe experience that this line tends to respond quickly to, we do not expect rate to re-accelerate and expect it to be in the low to mid-single-digit range in total. On the casualty lines pressured by social inflation, as we indicated in our prepared remarks, commercial auto and excess casualty are in the low double-digits and rates need to continue to increase. In International, we expect rate in the aggregate to stay roughly flat as margins are still favorable.

Do you think loss cost trends could increase?

As we said in our prepared remarks, loss cost trends are unchanged in aggregate, but are up over a point in commercial auto even with reduced backlogs in our court system today. We are taking into consideration everything that we see right now for each class of business. Is there a possibility loss cost trends could continue to go higher? It is certainly possible. So we will continue to watch it and react accordingly.

Can you please remind us of your investment portfolio exposure to the commercial real estate sector, in particular office properties?

Our direct exposure to commercial real estate is through fixed income securities, in the form of commercial mortgage-backed securities and debt issued by real estate investment trusts, as well as through our direct mortgage loan portfolio. Together these three portfolios comprise about 8% of our total investment portfolio. Our commercial real estate holdings are high quality and well diversified as to underlying property type and geography, with a modest exposure to central business district office properties. Taken together, our CMBS and REIT portfolios are over 95% investment grade with about 60% rated A or higher. Finally, we are limited in exposure to commercial real estate in our limited partnership portfolio as this is not one of our core alternative strategies. Please refer to our 2023 Annual Report on Form 10-K for additional detail on our commercial real estate holdings.