Good morning, my name is Samantha, and I will be your conference operator today. At this time, I would like to welcome everyone to the Loews Corporation Q3 earnings conference call. [Operator Instructions]. I would now like to turn the call over to Mary Skafidas. Please go ahead.

Thank you, Samantha. Good morning, everyone, and welcome to Loews Corporation third quarter earnings conference call. A copy of our earnings release, earnings supplement and company overview may be found on our website, loews.com. On the call this morning, we have our Chief Executive Officer, Jim Tisch; and our Chief Financial Officer, David Edelson. Following our prepared remarks this morning, we will have a question-and-answer session. Before we begin, however, I will remind you that this conference call might include statements that are forward looking in nature. Actual results achieved by the company may differ materially from those made or implied in any forward-looking statements due to a wide range of risks and uncertainties, including those set forth in our SEC filings. Forward-looking statements reflect circumstances at the time they are made. The company expressly disclaims any obligation to update or revise any forward-looking statements. This disclaimer is only a brief summary of the company's statutory forward-looking statements disclaimer, which is included in the company's filings with the SEC. During the call today, we might also discuss non-GAAP financial measures. Please refer to our security filings and earnings supplement for reconciliation to the most comparable GAAP measures. In a few moments, our Chief Financial Officer, David Edelson, will walk you through the key drivers for the quarter. Before he does, Jim Tisch, our CEO, will kick off the call. Jim, over to you.

Thank you, Mary. Today, I'd like to talk briefly about 2 things, CNA and share repurchases. CNA delivered another good quarter, thanks to strong operational results and more normalized catastrophe losses. While good quarterly results are always welcome, at Loews, we understand that there are a number of factors that can positively or negatively impact earnings. And for that reason, we focus on making decisions and running businesses for the long term, and we continue to see positive outcomes from some of the decisions made over the past decade at CNA. CNA has worked hard to strengthen its underwriting talent, improve its technology infrastructure and expand its distribution network, all while maintaining its fortress balance sheet. CNA has also actively managed the risks from its runoff, long-term care segment. On their earnings call earlier this morning, the company's CEO, Dino Robusto; and CFO, James Anderson, walked shareholders through additional details about their long-term care book of business. CNA's proactive management of this business, together with its reserve unlocking at year-end 2015, has led to several years of stable results. And at Loews, we feel great about how they've handled it. Let me hit some of the highlights that Dino and James talked about. First, the long-term care business is a closed book of business that's in the runoff mode. CNA has not written a new individual long-term care policy since 2003. And since 2015, the number of individual policyholders has decreased by 15%. Also, around 2003, CNA stopped accepting new group long-term care policies. The active lives in these group policies have declined 29% since the end of 2015. Additionally, CNA's long-term care book of business is mature. The company has processed more than 100,000 claims, which have yielded solid data that CNA is using to model reserves for the…

Thank you, Jim, and good morning. For the third quarter, Loews reported net income of $278 million or $0.88 per share, up from $157 million or $0.46 per share in last year's third quarter. Our EPS comparison benefited from share repurchase activity over the past 12 months. Page 13 of our earnings supplement sets forth the key quarterly drivers. A quick summary of the quarter. CNA accounted for the bulk of our year-over-year net income improvement as lower catastrophe losses and continued strong underlying -- underwriting income drove the results. Boardwalk and Loews Hotels also posted favorable year-over-year contributions. Offsetting these increases were lower contributions from Diamond Offshore and the parent company investment portfolio. As in Q1 and Q2, the lower corporate tax rate benefited our year-over-year after-tax results. Now for more detail. CNA's after-tax earnings contribution was $300 million, up $170 million from Q3 2017. P&C underwriting income drove the increase. CNA's third quarter combined ratio improved almost 10 points from 103.7 in 2017 to 94.2 in 2018, translating into a $161 million increase in pretax P&C underwriting income at CNA. Lower catastrophe losses at CNA drove the year-over-year underwriting improvement. In 2017, CNA had pretax catastrophe losses of $269 million or 16.5 points versus only $46 million or 2.6 points in this year's third quarter. Catastrophe losses reduced Loews' third quarter net income by $32 million this year versus $170 million last year. CNA booked favorable prior year development in both Q3 2018 and Q3 2017, although the amount of favorable development was less this year than last, partially offsetting the earnings impact of this substantially lower catastrophe losses. CNA's underlying combined ratio of 94.8, which excludes cats and prior year development, was essentially in line with last year's third quarter. Other factors favorably impacting CNA's year-over-year comparison…

Thank you, David. Samantha, we'd like to open the call for questions. Can you provide participants with instructions, please?

[Operator Instructions]. And your first question comes from the line of Josh Shanker with Deutsche Bank.

I wanted to bring back a question, maybe I've asked you in private or maybe public in the past. Thoughts on another 10% of CNA being publicly traded and how liquidity impacts fair valuation for that company.

When you say another 10%, do you mean...

Or thereabout, not below 80% held by you guys.

You mean at selling shares down to 80%?

Yes.

We're very happy with our investment in CNA. We're buying in the shares of Loews. For every share of Loews, there's more than 0.77 shares of CNA. So for the life of me, I can't imagine why it is we should sell shares of CNA. We think Loews is cheap. We think CNA is cheap.

Okay. Well, do you think it might be able to more fully realize its valuation if there was more liquidity?

The last sentence of my comments said that if the market isn't going to price our shares and CNA's shares accordingly, we'll just take the gift and buy in the shares. Listen, I would love for CNA to be at a price that reflects its true value. But as you know, I don't complain about it. We put our money where our mouth is instead.

And in terms of positioning the investment portfolio, do you have some comments about any changes you might be making as we go into 2019?

So we're pleased with the increase in treasury rates. That should allow CNA to get a higher rate of returning on money that it has to reinvest that is otherwise might have earlier this year or over the past few years. In terms of equities, we're not making a big change to our portfolio now. As David has said, we have reduced our hedge fund portfolio somewhat, reflective the fact -- of the fact that we have $3 billion to $3.5 billion of investment assets rather than $5 billion. And likewise, there's been a slight reduction of hedge funds at CNA. But otherwise, there has been no major moves in the portfolios. One other thing that -- I'm sorry, one other thing that's happened is that as a result of the tax bill, we've -- at CNA, they've begun to reduce their municipal bond portfolio, and that's because with a 35% tax rate, immunities have a lot more value to CNA than when the corporate tax rate is 21%.

That was my follow-up question. I think about 3 quarters, though, you said there were immunities available on the market at equivalent yields to other stuff that you might buy, and so even though they weren't as tax efficient as they used to be, that they were still valuable. Has the market become more rational and those opportunities have gone away?

Yes. And when you think about it, CNA has a 21% tax rate. Individuals in New York State, they have close to a 50% tax rate. So immunities are much more valuable to individuals than they are to corporations.

That concludes the Q&A portion of the call. I will now turn the call back over to Mary.

Great. Thanks, Samantha, and thanks to all of you for your continued interest. A replay will be available on our website, loews.com, in approximately 2 hours. That concludes Loews call for today.

This does conclude today's conference call. You may now disconnect your lines.