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Loews Management Discusses Q2 2012 Results - Earnings Call Transcript

The combined ratio for the P&C operations, excluding catastrophe losses in prior year development, improved by nearly 3 points versus last year's second quarter. Also, the reported combined ratio improved by 4.3 points to 101.7 during the second quarter.

CNA continues to close the underwriting performance gap with its best-in-class competitors. There's more work to be done, and we look forward to CNA continuing its steady progress towards becoming a top-tier industry performer.

In July, CNA closed its acquisition of Hardy Underwriting, a specialized Lloyd's underwriter with a solid market reputation and a long history of disciplined underwriting. This acquisition will provide CNA with a key platform for international growth. Hardy's results would be included in CNA's and Loews' third quarter results.

Turning to Diamond Offshore and the offshore drilling market. Diamond had a solid quarter despite its net income being down by about $60 million versus last year's second quarter. The biggest driver of the decline was that Diamond had 5 rigs in the shipyard this quarter for the 5-year special surveys compared to none during the same period last year. It's worth mentioning that despite the drop in oil prices, the offshore drilling market continues to show real strength. We believe that Diamond is well positioned to take advantage of these market conditions, given its rig availability over the coming 2 to 3 years.

Recent contracts signed by Diamond and other drillers for mid-water, deepwater and ultra-deepwater rigs indicate that demand is strong.

Diamond continues to focus on modernizing its fleet. As a reminder, Diamond has 4 ultra-deepwater drillships under construction in Korea. Earlier in '09, Diamond purchased 2 ultra-deep waters semisubmersibles in bankruptcy options. And most recently, Diamond is reconstructing an older semisubmersible into a high spec drilling unit to be named the Ocean Onyx. The rig was recently awarded a 1-year contract at a rate of $490,000 per day to work in the U.S. Gulf of Mexico upon delivery from the shipyard in the third quarter of 2013.

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