Loews Corp (L) Q4 2020 Earnings Call Transcript

Loews Corp  (NYSE: L) Q4 2020 earnings call dated Feb. 08, 2021

Corporate Participants:

Mary Skafidas — Vice President of Investor Relations and Corporate Communication

James S. Tisch — President and Chief Executive Officer

David B. Edelson — Senior Vice President and Chief Financial Officer

Presentation:

Operator

Good morning. My name is Sia and I will be the conference operator today. At this time, I would like to welcome everyone to the Loews Corporation Q4 2020 Earnings Conference Call. [Operator instructions]

Thank you. At this time, I would like to turn the conference over to Mary Skafidas, Vice President of Investor Relations and Corporate Communication for Loews. Please go ahead, ma’am.

Mary Skafidas — Vice President of Investor Relations and Corporate Communication

Thank you, Sia. Good morning, everyone and welcome to Loews Corporation’s fourth quarter earnings conference call. The copy of our earnings release, earnings supplement and Company overview maybe 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 with questions from our shareholders. 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.

With that I’d like to turn the call over to Jim. Jim, over to you.

James S. Tisch — President and Chief Executive Officer

Thank you, Mary and good morning. 2020 was a year of extraordinary challenges. The coronavirus changed our lives with astonishing speed and what began as a promising year quickly and dramatically morphed into a global health and economic crisis. In addition to the harsh toll on human lives and livelihoods, the pandemic has brought about changes in society and business that are likely to be felt for years to come.

Before I speak about Loews, I want to acknowledge and to thank everyone on the front lines of the fight against this pandemic, especially the medical professionals, the first responders, and people in every industry who are risking their own safety to provide essential products and safety. While we can never sufficiently express our gratitude for their bravery and their compassion, Loews and our subsidiaries have provided philanthropic support to various organizations supplying relief and aiding recovery efforts in their community. We also want to recognize our Loews corporate and subsidiary employees who rose to this ongoing challenge with determination, focus, and professionalism.

Across the organization, our people have done their part to make sure that businesses had insurance and claims were paid that natural gas was available to heat homes, schools, and medical facilities, that packaging was available for water and medicine bottles where that a meal was delivered to a family in a hotel room. Each of our subsidiaries went to impressive lengths to ensure the health and safety of their employees and customers. These efforts enabled us to meet the needs of our customers and communities at a critical time while continuing to move Loews forward. Let’s look at the operational impact of COVID on each of our subsidiaries over the course of 2020 starting with CNA.

Operationally CNA’s performance continues to be quite strong, while the events of 2020 were unprecedented including impacts not only from COVID, but also from civil unrest and hurricanes. The overall trend in the property casualty insurance industry has been upwards towards a hardening market. Not only did CNA have good growth in new business, the Company also benefited from higher P&C rates, leading to higher overall premium growth. Throughout the year, CNA has continued to focus on underwriting discipline, partnerships and talent. This focus has resulted in continued improvements in CNA’s underlying performance which excludes catastrophe losses and prior-year development.

In 2020, CNA had an underlying combined ratio of 93.1% compared to 94.8% in 2019 and 95.4% in 2018. That represents a more than 2 point improvement over two years reflecting progress in both the expense and loss ratios. Earlier today, CNA declared a special dividend of $0.75 in addition to raising its quarterly common dividend to $0.38 per share.

The increase in the common dividend is reflective of the CNA Board’s confidence in the ongoing operational improvements at CNA. CNA paid total dividends of around 90% of its 2020 earnings. CNA’s ability to return capital to shareholders even after the extensive cat losses the Company absorbed this year underscores its financial strength and fortress balance sheet.

At Boardwalk in 2020, the Company met the challenge of operating its pipelines without service interruptions to its customers, not only during COVID-19, but also through the hurricanes that hit the Gulf Coast. Boardwalk has completed the re-contracting of its pipelines originally put into service between 2008 and 2010. While future growth projects could become more difficult to green light in the current environment, Boardwalk continues to benefit from its long-term fixed fee contracts. During 2020, the Company added approximately $1.3 billion of new contracts and the contractual backlog ended the year at over $9 billion or seven times Boardwalk’s annual 2020 revenues.

Boardwalk reported EBITDA of $819 million for the year, essentially flat from 2019. As for our packaging Company, Altium, demand for its products continues to be strong overall and even stronger for product segments such as household, household chemicals and beverages. On the flip side, as a result of the pandemic, demand is somewhat weaker in segments such as automotive, commercial foodservice and school dairy. Additionally, the Company’s recycling business, Envision has been experiencing its best performance since it was acquired by Altium in 2014 driven by stronger demand for recycled products also known as post-consumer resin.

Altium’s focus on new business is bearing fruit and should benefit results in future periods. The Company continues to be successful in gaining new accounts by demonstrating reliability, continued innovation and customer focus during this difficult COVID period. Of all our subsidiaries Loews Hotels has been the hardest hit by the pandemic. In February, the Company had occupancy rates of around 80% for its owned and joint venture hotels. By April, only three of these hotels were operational and occupancy rates had plummeted to about 9%. The Company responded quickly to the COVID-induced downturn in a number of ways. To better align to reduced level of demand, Loews Hotels aggressively cut expenses. They rightsize capital spending, worked with lenders to defer interest and principal paydowns and reevaluated opening dates for new developments.

Importantly, in the face of this crisis, Loews Hotels continue to look out for its team member’s safety and well-being, putting programs in place to assist those negatively affected as well as implementing extensive COVID protocols in hotels as they resumed operations. During December of 2020, occupancy rates for owned and JV hotels that were operational had risen to almost 38% with 22 out of 27 Loews Hotels once again welcoming guests. At this point in time, leisure travel is recovering at a somewhat faster pace than business travel, but it is still difficult to predict when Loews Hotels will resume normal operations. We expect that circumstances will vary by hotel property with the occupancy at hotels increasing gradually as the travel industry recovers from the pandemic. That being said, we believe properties such as those in Orlando, Miami Beach and Arlington, Texas are well positioned to participate in the early stages of the travel resurgence.

It bears mentioning that throughout the pandemic Loews and its subsidiaries continued to have ample access to the capital markets. Loews, CNA and Boardwalk each issued $500 million in bonds between May and August of 2020, taking advantage of the low rates available in the credit markets. Altium Packaging completed a debt recapitalization in January of 2021, which resulted in a $199 million payment to Loews basically returning a third of our equity and we still own a 100% of the business. This is our first dividend from Altium since acquiring the Company in 2017. The success of these offerings is a testament of the strength of Loews’ corporate and subsidiary balance sheets and investor’s confidence in our credit worthiness.

Before I hand the call over to David, I want to talk about capital allocation. Throughout this year, I have emphatically stated my strong belief that the market has been significantly undervaluing Loews’ shares. I also stated that while Loews plans to maintain a substantial liquidity position as our rainy day fund. We would still take advantage of the markets discount and continue to buyback our shares. With our stock trading considerably below our view of its intrinsic value, share repurchases have recently been our most attractive capital allocation option. That being said, our decision to buyback stock has not come at the expense of any of our subsidiaries.

We provided about $150 million to Loews Hotels in 2020 to help it right out the effects of COVID on the hospitality industry. We will continue to support Loews Hotels in 2021 as it prepares for travel and tourism to come back with the expectation of a return to more normalized operations in 2022. During the fourth quarter, we purchased almost 6 million shares of Loews stock for about $244 million while preserving ample liquidity and ending the quarter with about $3.5 billion in cash. Over the course of the year, Loews repurchased nearly 22 million of our own shares for an average cost of below $42 per share, which is lower than Loews’ current market price and considerably lower than what we believe to be the intrinsic value of the company. In my view that’s a great use of capital in order to create value for all shareholders over the long-term.

And now David over to you.

David B. Edelson — Senior Vice President and Chief Financial Officer

Thank you very much, Jim and good morning, everyone. Today we reported fourth quarter net income of $397 million or $1.45 per share compared to $217 million or $0.73 per share in last year’s fourth quarter. For the full year, we reported a net loss of $931 million or $3.32 per share while in 2019 our net income was $932 million or $3.07 per share.

I will briefly summarize our strong fourth quarter results and then turn to the full year. CNA drove the year-over-year increase in our fourth quarter income with an assist from Boardwalk. The absence of results from Diamond Offshore which last year posted a fourth quarter loss also helped. Let me share some highlights on CNA’s fourth quarter. For more details, check out the transcript from today’s CNA Investor Call. CNA’s net income contribution to Loews rose 42% to $346 million making up the bulk of our consolidated fourth quarter net income of $398 million. The core P&C business performed extremely well. Net written premium grew 12% year-over-year. Thanks to robust new business together with rate increases averaging over 12%. The combined ratio improved 2.1 points to 93.5 driven by lower expense and underlying loss ratios as well as reduced cat losses.

After tax P&C net investment income was down slightly, as higher returns on LP and common stock investments were not able to fully offset the impact of lower yields on the fixed income portfolio. Net investment gains, however, were greater than during the prior-year quarter. The Life & Group segment posted strong results. Thanks principally to favorable morbidity trends in the long-term care block. Boardwalk pipelines net income contribution rose from $48 million in last year’s fourth quarter to $83 million which included $26 million after-tax of settlement proceeds related to a customer bankruptcy.

Fourth quarter net revenues excluding these proceeds were up 4% driven by growth projects recently placed into service. Loews Hotels posted a net loss of $68 million in Q4 2020 versus a net loss last year of $59 million. This year’s net loss was caused by the continuing revenue challenges stemming from the pandemic with operating revenue, down 81% year-over-year.

In last year’s fourth quarter, Loews Hotels incurred a $69 million after-tax charge from the impairment of two hotel properties as well as some pre-opening expenses on properties under development. Before turning to the full year, one last observation on the quarterly comparison. The fourth quarter of 2019 included a $38 million net loss from Diamond Offshore. Diamond is no longer one of our consolidated subsidiaries and thus did not affect our Q4 2020 earnings. Now for our full year results. We reported a net loss of $931 million or $3.32 per share.

Let me start by recapping the drivers of the loss, which primarily relate to Diamond and Loews Hotels. Diamond filed for a Chapter 11 bankruptcy protection on April 26, 2020. Through that date, Diamond had contributed net losses of $476 million to Loews mainly attributable to rig impairment charges.

Further because of the bankruptcy filing, in the second quarter, we deconsolidated Diamond, wrote down the carrying value of our investment in the Company and booked a $957 million after-tax investment loss. In total, Diamond accounted for $1.43 billion of net losses to Loews in 2020. Loews Hotels has been severely impacted by the COVID-19 pandemic with operating revenue, down 71% for the full year. Similarly, income in joint ventures swung from positive $69 million in 2019 to a $73 million loss in 2020. This dramatic change in Loews Hotels operating environment caused the Company to incur a net loss of $212 million for the year.

Loews’ net income declined even after entirely excluding the impact of Diamond in the Loews Hotels from our results in both years. This decline was entirely attributable to higher catastrophe losses at CNA and lower results from investment-related activities at CNA and the parent Company. CNA booked pretax catastrophe losses of $550 million in 2020, up from $179 million in 2019.

Weather related events comprised 50% of the year’s cat losses with COVID-19 and civil unrest making up the remainder. The negative year-over-year impact to Loews of CNA’s unusually elevated catastrophe losses was $262 million after-tax. After-tax net investment income in CNA’s P&C business fell year-over-year because of lower returns on fixed income securities and limited partnership in common stock investments. This accounted for $148 million decline in Loews’ net income. Similarly, the Loews parent company’s net investment income declined $141 million after-tax, driven mainly by lower returns on LP and equity investments. Finally, CNA swung from net investment gains in 2019 to net investment losses in 2020.

This swing reduced our net income by $60 million. In total, these items, cat losses net investment income at CNA and Loews and CNA’s net investment losses accounted for a year-over-year decline in Loews’ net income of $611 million. Thankfully, there were numerous positives during 2020 worth highlighting. CNA’s core P&C business excluding catastrophes performed extremely well. Net written premium increased 6% on the back of new business growth, solid retention and rate increases averaging 11%. The underlying combined ratio for the full year, which excludes cat losses and prior year development was $93.1 million down from $94.8 million in 2019, with improvement in both the loss and expense ratios.

All of this led to a 38% increase in pretax underlying underwriting income. CNA’s long-term care business continues to benefit from active, operational, and risk management of the block. Even including the impact of this year’s active life and claim reserve reviews, the Life & Group business generated positive results driven by better than expected morbidity in long-term care. CNA’s balance sheet remains rock solid. Its decision to pay a $0.75 special dividend which was announced this morning is further evidence of CNA’s dedication to financial soundness. Moreover, it continues to reduce its risk profile, most recently with the agreement signed last week to cede a legacy portfolio of excess workers’ compensation policies to a subsidiary of Enstar.

Boardwalk had a good year operationally. Net operating revenues excluding the settlement proceeds from a customer bankruptcy in each year were down less than 1% reflecting the last vestiges of expirations and renewals at lower rates of long-term contracts put in place 10 plus years ago. The Company’s growth projects together with a strong market for storage and park and loan services made up for most of the falloff, and Boardwalk continues to effectively manage its expenses. Altium Packaging, which is included in our corporate segment had a strong year operationally with revenues up almost 10% driven by organic growth, new business, exceptional results in its recycled plastics business, the full year impact of acquisitions made in 2019 and higher year-over-year resin prices.

2020 was a record year for new business awards for Altium, further highlighting its reputation for quality, reliability, innovation and customer service. As I’ve mentioned in the past, Altium’s results have had little effect to-date on our net income, while Altium generate healthy EBITDA and free cash flow, its GAAP income has been weighed down by depreciation and amortization from recent acquisitions and accelerated trade name amortization.

Last week, Altium completed a recapitalization, issuing a $1.05 billion seven-year secured term loan. The proceeds of which went to refinance its existing debt and pay Loews’ a dividend of $199 million. As Jim mentioned, this is the first distribution Loews has received from Altium since we acquired the company in 2017. Importantly, this transaction in no way hamstrings Altium’s ability to continue pursuing tuck-in acquisitions. As a reminder, our initial equity investment in Altium was slightly more than $600 million.

Turning to the parent company. The parent company portfolio of cash and investments stood at $3.5 billion at year-end, with about 77% in cash and equivalents. During the fourth quarter, we received $192 million in dividends from our subsidiaries, $90 million from CNA, and $102 million from Boardwalk, which represented Boardwalk’s only dividend to Loews in 2020.

For the full year, we received total dividends of $947 million from CNA and Boardwalk. Today, CNA declared a $0.75 per share special dividend and a regular quarterly dividend of $0.38 per share up a penny from $0.37. Combining the two, Loews will receive $275 million in dividends from CNA this quarter as well as the $199 million received from Altium last week. We repurchased 5.8 million shares in the fourth quarter for $244 million and 22 million shares during the full year for $917 million. Since year-end, we have repurchased an additional 2.2 million shares for a total of $100 million.

I will now hand the call back to Mary.

Questions and Answers:

Mary Skafidas — Vice President of Investor Relations and Corporate Communication

Great. Thank you, David. Moving on to the Q&A portion of the call. We have a number of questions from shareholders. Every quarter we encourage shareholders to send us questions in advance that they would like us to enter on our earnings call. Our first question is for Jim. And it’s a topic that it is always of interest to Loews’ shareholders. Jim, can you walk us through how you think of intrinsic value?

James S. Tisch — President and Chief Executive Officer

Sure. So one of the good things about getting the questions in advance is, I can prepare a thoughtful and detailed answers as I have especially on this one. So we assess Loews’ some of the parts value based on our view of the intrinsic value of each of our subsidiaries. Intrinsic value is our view of what our subsidiaries are worth based on our medium to long range outlook.

And the valuation can and often does differ from the current market value of those enterprises. Our outlook for each subsidiaries is informed by our view of the industry in which it operates and the competitive strengths and weaknesses of our subsidiaries. So let’s take a look at these subsidiary by subsidiary. Starting with CNA. The primary indicators that we look at our core earnings, the combined ratio. We look at earnings per share, dividend capacity, pricing and loss trends. Based on these metrics, we believe CNA’s undervalued compared to its peers and even more so compared to the overall markets.

We are bullish on the commercially property and casualty insurance industry and we also believe that CNA will be able to continue to take advantage of the current hard market. For Boardwalk, the factors that we consider for assessing intrinsic value are EBITDA, free cash flow, natural gas volumes, regulatory environment, industrial demand for both gas and gas liquids, the revenue backlog, organic growth potential, along with several other measures and characteristics.

We’re positive on the natural gas industry and believe the gas will be an important transition fuel for a greener economy. When we think about Loews Hotels, we consider adjusted EBITDA, cash flow, comparable asset valuation, and occupancy and room rates. Loews Hotels has a unique business model since it’s both an owner and an operator of its hotel properties. This differentiator has enabled Loews Hotels to successfully compete for attractive projects over demand, near demand generators such as Orlando, Arlington, Texas. Although the hotel industry has been hard hit by COVID, we believe that Loews Hotels is uniquely positioned to succeed in a post-COVID world.

And finally for Altium. We primarily look at organic volume growth, EBITDA, and cash flow as well as the Company’s ability to make accretive acquisitions in diversified end-markets. Since we purchased Altium, the Company has made seven accretive acquisitions a compelling multiples that have diversified our businesses into higher growth end-markets such as pharma. These factors are just the beginning of how we come to our assessment of each of our subsidiaries intrinsic value. Additionally we assess the businesses, management teams, the Company’s competitive position within its industry and the long-term outlook for each of those industry.

Mary Skafidas — Vice President of Investor Relations and Corporate Communication

Great. Thank you, Jim. Next question is on CNA’s dividend. Jim, CNA’s special dividend has been $2 for the last few years compared to the $0.75 special dividend declared today. Can you comment on the change?

James S. Tisch — President and Chief Executive Officer

Sure. So I think the Board made the right call here. CNA’s board declared a $0.75 special dividend increased its common dividend by $0.01 to $0.38 per share. The increase in the common dividend is reflected of the CNA Board’s confidence in the Company’s ongoing operational improvements. The reduction in the special dividends reflects events of 2020 that reduced CNA’s earnings. 2020 was a terrible year for the insurance industry. With the impact of COVID, hurricanes with civil unrest, the industry experienced unprecedented cat losses. In spite of all that, though, CNA came through the year very well. One of our highest priorities is for CNA to retain its rock solid capital position.

Heading into 2021, we think that CNA is setting up for a very good year. Operationally and financially, CNA ended 2020 very strong with the continuing hard market. Rate increases are robust, retentions are good, and there’s solid new business generation. All this points to 2021 being a much more successful year for CNA than 2020.

Mary Skafidas — Vice President of Investor Relations and Corporate Communication

The next question is on capital allocation. Jim, you touched on this in your prepared remarks, but can you comment about how you’re thinking about capital allocation at Loews going forward?

James S. Tisch — President and Chief Executive Officer

Sure. So when we think about how to best allocate capital, we traditionally think of it in four ways. And I think many people on the call have heard this before. We can invest in our existing subsidiaries. We can make an acquisition. We can repurchase our shares or as I like to say if there is nothing to do, we can do nothing. With our stock trading considerably below our view of its intrinsic value, share repurchases have been almost compelling capital allocation option.

As I said in my remarks, our decision to buyback stock has not come at the expense of investing in any of our subsidiaries. For example, we’ve provided capital to Loews Hotels to help it right out the effects of COVID on its business. Our three other subsidiaries CNA, Boardwalk, and Altium Package have not recently required parent company capital and in fact they’ve returned capital to the parent company.

In terms of adding a new subsidiary, I think valuations are still too damn high. When buying a new business, there’s no amount of due diligence that we can do, that will result in the same knowledge that we have of our own businesses and considering where valuations are today when you compare allocating capital towards a new business with buying in shares when our stock is trading so far below our view of its intrinsic value, well, it’s really a no-brainer. When we think about allocating capital, we really think of it from the perspective of a shareholder. After all, management’s interests are totally aligned with those of our shareholders since senior management has significant shareholdings and the Tisch family overall owns about one-third of the Company.

Mary Skafidas — Vice President of Investor Relations and Corporate Communication

Okay, thank you. The next question is for David and is on Loews Hotel. David, can you give us an update on the impact of COVID-19 on the subsidiary?

David B. Edelson — Senior Vice President and Chief Financial Officer

Sure, Mary. Happy to. The economic aftershocks of the pandemic have caused revenue of Loews Hotels to decline precipitously. Both Jim and I mentioned that in our prepared remarks. If one looks just at the last three quarters of 2020, operating revenue was down 86% from 2019. The three main drivers of Loews Hotels business, leisure travel, business travel and group meetings were all stopped in their tracks by COVID. Leisure travel is slowly returning mainly in drive-in markets for our resort properties. Loews Hotels responded to the sudden downturn by temporarily suspending operations at all four of its properties and taking tough actions to reduce property level and management Company expenses. Early on, the hotel company established programs to assist its affected team members, including a multimillion-dollar relief fund, and continuing to provide medical insurance benefits for furloughed team members for extended timeframes.

Additionally in solidarity with Loews Hotels team members, the three members of our Office of the President Jim, Jon and Andrew Tisch reduced their 2020 salaries by 50% and their 2020 bonuses by the same amount. As properties began resuming operations in May, the Company put in place significantly enhanced safety and well-being standards and protocols for team members and guests. Now let me comment on the hotel company’s cash flow. On our first quarter earnings call, I noted that as long as operations, we’re almost completely suspended. The hotel company would likely have negative cash flow of about $25 million monthly. I also noted that management intended to reopen properties only when doing so improved earnings and cash flow. As anticipated, cash flow has improved as properties have resumed operations, expenses have been aggressively managed and capital spending has been rightsized.

Today 22 out of 27 properties are operating albeit at depressed occupancy rates. The Company continues to generate negative cash flow, although significantly better than the $25 million per month sited in early May. During 2020, the Loews parent company contributed $151 million of cash to Loews Hotels to fund working capital and other capital needs. We will contribute cash again in ’21 for working capital to fund operations. Although, we expect such amounts to be less than in 2020. Because of the Company’s improved cash flow, we also expect the contributions to be skewed towards the first half of the year. One last note. If financially attractive hotel development opportunities surfaced in 2021, we would certainly consider helping Loews Hotels fund them. Back to you, Mary.

Mary Skafidas — Vice President of Investor Relations and Corporate Communication

Thank you, David. Jim, going back to CNA for a moment. Loews manages CNA’s portfolio. Can you talk a little bit about your philosophical approach to managing this portfolio?

James S. Tisch — President and Chief Executive Officer

Sure. At year end 2020, the CNA portfolio had a market value of about $50 billion. It had an average credit rating of A and had net unrealized gain of about $5.7 billion. Additionally 89% of the portfolio is made up of fixed maturity securities and 94% of CNA’s fixed maturity securities are investment grade. Loews maintains high coordination with CNA to align the management of the portfolio to CNA’s broader strategy. Managing the investment portfolio internally rather than outsourcing its management gives us a better ability to act on dislocations in markets when they occur.

Additionally, we can carefully focus on objectives and constraints including managing portfolio book yield as well as capital considerations. Almost every year we have met objectives as agreed upon with CNA with a focus on stability of income as well as outperforming indices across broad asset classes. Our goal is to create stable and growing investment income throughout a balanced risk return approach. We don’t focus on hitting home runs. Our approach is more like moneyball. We hit a lot of singles and don’t strike out very often. We try to be opportunistic in the face of market volatility and fluctuations, seeking assets that fit within our risk profile.

In the beginning of 2020, we took advantage of market dislocations to reallocate assets into corporate high grade securities when they were trading at a relatively widespread. In the spring of 2020, the muni market had a dislocation that lasted about a week or so, but we were able to actually put a lot of money into work and it paid off for CNA by being so quick on the trigger there. We have built parameters around volatility and risk with a focus on consistent returns. For example, we maintain single issue position limits by rating, which generally speaking keep us from being hurt by surprises in the credit world. These credit limits result in a diversified portfolio that has served CNA very well.

I also want to comment briefly on the short squeeze of game stock and other stocks that resulted in losses for several hedge funds. In late 2018, we began to rebalance CNA’s alternatives portfolio meaningfully reducing hedge fund investments. Over the last three years, CNA has reduced its investments in hedge funds by half and as of year-end 2020, the portfolio only had about $800 million invested in hedge funds. We expect these funds to report normal January returns.

Mary Skafidas — Vice President of Investor Relations and Corporate Communication

Great. Thank you, Jim. David question on Boardwalk. What is the step [Phonetic] of the shareholder litigation related to the purchase of the units previously owned by Loews?

David B. Edelson — Senior Vice President and Chief Financial Officer

Mary, the litigation is ongoing. Trial date in the Delaware Court of Chancery has been scheduled for late this month. Beyond that, we really can’t comment.

Mary Skafidas — Vice President of Investor Relations and Corporate Communication

Okay. Thank you, David. Next one is also for you came in early this morning. Can you bring us up-to-date on Altium Packaging including the recent recapitalization?

David B. Edelson — Senior Vice President and Chief Financial Officer

Sure. Altium had an excellent year with record operating revenues of more than $1 billion, up almost 10% from 2019. The revenue increase came from several areas, mainly the full year impact of 2019 acquisitions, including Altium Healthcare. Stellar performance from the recycled plastics business, organic volume growth and new business and higher year-over-year resin prices passed through to customers on a lagged basis.

The Company also posted record EBITDA and cash flow. When we acquired what was then Consolidated Container in 2017, a key plank of our thesis related to tuck-in acquisitions. We saw fragmented industry, numerous targets, and the opportunity for purchasing and expense synergies. In November, Altium completed its seventh acquisition under our ownership. A privately held company specializing in the blow molding of industrial containers. This acquisition had only a small impact on 2020 revenue, but will benefit all of 2021. Acquisitions completed in 2019 accounted for about 70% of Altium’s 2020 revenue growth.

Altium Healthcare, the company’s pharmaceutical packaging business acquired in June of 2019 led the charge. Altium continues to look for accretive tuck-in acquisitions to add further scale and diversification. Altium had record new business awards in 2020 as the company’s reputation for reliability, innovation, and customer service continued to differentiate Altium in the market. This new business will mainly benefit revenue in 2021 and beyond. Envision the Company’s recycled plastics arm had its best performance in 2020 since Altium acquired the business in 2014. Demand for recycled plastic has been robust as Altium’s end markets focus more and more on sustainability.

In January, Altium recapitalized its debt structure, replacing its roughly $850 million of debt with a new $1.05 billion seven-year term loan. The deal price strongly at LIBOR plus 275 with a 50 basis point LIBOR floor. The recapitalization raises Altium’s interest expense only very slightly and should not impair its ability to grow organically or execute tuck-in deals. Altium’s key bank credit ratios are essentially in line with or slightly better than they were when Loews acquired the company. Loews received $199 million dividend last week out of the excess proceeds representing the return of about one-third of our initial equity investment. We posted on our website this morning, the lender presentation used in conjunction with Altium’s term loan financing. The presentation includes both business and financial information about the Company and we hope you find it helpful. Thanks, Mary.

Mary Skafidas — Vice President of Investor Relations and Corporate Communication

Great. Thank you, David. Our last question is for Jim. More of a big picture question. Jim, how do you think the Biden administration will affect Loews and its businesses going forward?

David B. Edelson — Senior Vice President and Chief Financial Officer

So we’re looking at how the new administration will handle a number of issues over the long term. First off, the administration’s climate agenda has created some new risks for the natural gas sector by implementing a pause on new natural gas leases on federal lands and also on offshore waters. In my view, natural gas is an important transition fuel to cleaner energy in the US and it is also a growing export opportunity to help the rest of the world meet their similar climate change goals. The recent executive orders, in my mind, are troubling sign of new federal restrictions that may make it more difficult to access this plentiful American resource. Additionally, the Federal Energy Regulatory Commission that regulates Boardwalk is changing. While it’s too early to know exactly what impact these changes will be, will have, we believe that there will continue to be increased pressure on the industry’s ability to build pipelines.

However, the administration is focused on the environment could be beneficial for Envision, Altium’s Packaging, Recycled Resin business as well as for Dura-Lite, the plastic packaging Altium has designed that uses significantly less resin without compromising the strength of the container. Certainly, the Biden administration’s focus on stemming the tide of the virus should be beneficial to Loews Hotels and help increase demand for the travel and tourism industry. While our largest subsidiary CNA is mostly regulated through the stage, the new administration and Congress pose some policy challenges and opportunities.

For example changes to the corporate tax code would affect Loews and our subsidiaries, but such changes aren’t expected until later in the year when there is more evidence of economic recovery. And from what we understand corporate taxes probably will not go back to their pre-2017 levels. We’re going to continue to watch these issues as they develop. It’s only been a few weeks now and we’ve just got to wait and see what happens.

Mary Skafidas — Vice President of Investor Relations and Corporate Communication

Great. Thank you, Jim, and thank you, David. That concludes the Loews call for today. As always, we thank you for your continued interest. Please feel free to reach out to me with any additional questions at mskafidas@loews.com. A replay will be available on our website loews.com in approximately two hours. You may disconnect.

Operator

[Operator Closing Remarks]