Loews 4Q15 Earnings Call Notes

Jim Tisch

Chaos continues to reign over energy markets

“unfortunately, that elephant has not gone away and chaos continues to reign over the energy markets.”

Oil prices have not been driven by weakness of demand

“Oil price declines have largely been driven by the exceptional strength of supply, not by the weakness of demand. In fact, demand for oil is still growing and remains quite healthy. If there is any bright spots on which to focus is that the lack of drilling activity today will only help speed up the recovery in the oil market tomorrow. As I say in the oil business, the best cure for low prices is low prices.”

Offshore drilling will come back

“By some estimates, offshore oil production supplies up to 30% of the world’s oil, a significant percentage that cannot be replaced by conventional onshore drilling or shale production. ”

We aren’t seeing assets come on to the market maybe if this continued for another several quarters

“We look at what’s available to buy. A lot of the assets that become – companies that become available to buy, especially in the strike zone that we are looking at are owned by private equity firms. And those companies, those firms have the ability to time when they want to sell their assets. So, one would think that right now prices of our companies that private equity firms might want to sell are coming down, because the financing markets have become so much more expensive. But in fact, what we are seeing is not too much that on the market. In fact because now it’s not a particularly attractive time to be selling those businesses. If the financial markets that we have today continue for another several quarters, then it’s entirely possible that we could see assets that come on the market that could be attractively priced.’

The more equities go down, the more attractive they get

“listen, from my own personal point of view, the more equities go down, the more attractive they get. So at Loews, as the stock market has been going down, we have been modestly increasing our exposure to equities.’

Wont change forecast for 2% growth

” I am doing better than a stopped clock. A stopped clock is right twice a day. My 2% forecast for the economy has been right for 5 years, so why I change it now?

When you step back from Wall street things don’t look so bad

“There is a lot to be worried about in the world. But I also think that those of us that are on Wall Street can sometimes be overwhelmed by the problems that we see on the horizon. And I think from time-to-time, it’s important to step back, take off your Wall Street glasses and put on industrial America glasses. And I think things don’t look as bad when you look that – with that lens.”

Oil prices are too damn low

“We are sort of like the guy who ran for mayor, he said the rent is too damn low or too damn high, we say oil prices are too damn low. And so I believe that in a number of years, I am not making a prediction for the next number of months, but in the next number of years, we think that oil prices will be significantly higher than the levels we are at today.”