MSP Recovery, Inc.

Ladies and gentlemen, and welcome to MSP Recovery's 2022 Third Quarter Earnings Conference Call. You can view the video webcast presentation by accessing the link at the MSP Recovery website under the Investor Events section. Anyone who would like to participate in the Q&A portion after the presentation can register at the link found there as well. As a reminder, this call may be recorded. I would now like to begin today's earnings presentation.

Good morning, everyone, and welcome to MSP Recovery's third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Before we begin, please note that statements made during this presentation, which date the company's or management's intentions, beliefs, expectations, or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act, and actual results could differ in a material manner. Additional information about factors that could cause results to differ from those in the forward-looking statements is contained in the company's SEC filings. This includes, but is not limited to, risk factors contained in MSP Recovery's SEC filings and in the press release issued earlier today. A copy of these materials can be found in the Investors section at msprecovery.com. Non-GAAP financial measures are included in the comments today and in the presentation slides. The reconciliation of these non-GAAP measures to the corresponding GAAP measures is included at the end of the presentation and can also be found in the Investors section of the MSP Recovery website. The participants on today's call will be Founder and CEO of MSP Recovery, Johnny Truese, Chief Information Officer, Chris Miranda, and Chief Financial Officer, Calvin Halmstra. I would like to turn the call over to Johnny Truese.

Good morning, everyone. I'm John H. Ruiz, CEO of MSP Recovery. Welcome to our earnings call. Today, we will share MSP Recovery's third quarter 2022 highlights, earnings and an overview of recoveries. I will provide some quarterly highlights while Chris Miranda, our CIO, will discuss data matching and Calvin Hamstra, our CFO, will walk you through our quarterly financials. Now I'd like to discuss some of our third quarter highlights regarding MSP's recovery efforts and the LifeWallet platform. As announced on October 13, 2022, MSP negotiated a $63 million debt reduction with Brickell Key Investments, by entering into a new warrant agreement. In addition, this transaction is expected to save about $40 million in interest expense year over year until such time as recoveries would have otherwise covered the debt. On our recovery efforts, our paid value of potentially recoverable claims continues to grow. As of September 30th, we have $89.2 billion in paid value of potentially recoverable claims. This balance of potential recoverable claims exceeds our projections by 3.5 times. We continue to make progress in our recovery efforts towards larger settlements. Notably, we recently settled an accident-related case in which we collected $1.75 million at two times the recovery multiple and a group health plan recovery for $1.15 million. The accident-related settlement is consistent with our projected recovery multiple, and the group health plan recovery represents a recovery that was not identified within our PVPRC. As mentioned previously, we continually seek to find new potential recovery paths, and this represents a recovery that was never funneled or identified within our reported PVPRC, which is $89.2 billion. Unfunneled recoveries are not included in our projection of potential recoveries. This represents an important opportunity within our recovery rights, which can provide an upside to recoveries. During our second quarter, MSP announced the implementation of a new strategy that would enable primary payers to make the required payments prior to engaging in litigation. Thus far, we have sent over 22,000 demand letters and have received payment on approximately 130 of those demands at a recovery multiple of 2.1 times. I will highlight responses and the process further in slide 8 when I update on recoveries being sought. This quarter, we had some notable court orders. First, the Second Circuit affirmed a district court order that granted summary judgment in favor of Aetna, a Medicare Advantage organization, solidifying the right for a Medicare Advantage organization to sue primary payers under the MSP Act in the Second Circuit. MSP Recovery filed an amicus brief in support of Aetna in that particular case. Further, the 11th Circuit ruled in favor of Tower Hill Prime Insurance Company and found that MSP's claim in that case was barred by the statute of limitations. In that case, the 11th Circuit held that the applicable statute of limitations to a claim under the MSP private cause of action was four years from the date the primary payer violated the act. Lastly, MSP had a significant win before the 11th Circuit in MSP v. Metropolitan Insurance Company, in which the court held that MSP's allegations within the complaint were sufficient to survive motions to dismiss, which are often filed by defendants in our cases. This decision solidifies our legal strategy and has paved the way for us to file a significant amount of cases in the remainder of 2022 and going forward. As it pertains to LifeWallet, we entered into a one-time licensing agreement fee of $7.5 million and then a $1 million fee per year in servicing for 2023. We also announced the formation of LifeWallet Legal Referral Services. we expect to roll out the legal referral services between the end of 2022 and the first quarter of 2023. I want to take a moment to highlight some factors significant to our continued growth. Even though we started 2022, Having exceeded our projected value of potentially recoverable claims by more than three times, at a figure of $86.6 billion, as opposed to the expected $21 billion, during 2022 we continue to grow with new Asinor clients, as well as new recovery rights assigned by existing Asinor clients. During 2022, 89% of our growth in potentially recoverable rights came from existing Asinore clients. As we have stated previously, we are engaged in data matching with over 10 auto insurance carriers. Through this process, we have identified over $5 billion in possible accident-related treatments paid by our Asinore clients. During the quarter, via litigation settlements, we received $1.9 million in recoveries at a 2.1 times recovery multiple. Chris Miranda, our CIO, will provide a presentation with an overview of data matching. We believe data matching is an important tool in developing recoveries to identify specific recovery rates. In 2022, we deployed a new strategy utilizing demand letters that will enable primary payers to make required payments outside of the purview of litigation. To date, we have sent out over 22,000 demand letters. We have already received over 130 payments at a recovery multiple of 2.1 times with the first party liability claims at 1.8 times and the third party liability claims at 4.4 times. Of the 22,000 demand letters, we have only received 3,342 responses. The remaining are still pending. Most of the replies simply requested additional information from MSP in order to process these claims. During the nine months ended September 30, 2022, through consolidated, unconsolidated, and affiliate entities of MSP, MSP reported $7.9 million of claim recovery income. Of that $7.9 million in claim recovery income, 51% or $4 million of those recoveries were from previously identified recovery opportunities as represented within our paid value of potentially recoverable claims. The remaining 49% of our recoveries came from recoveries that had not been previously identified in the paid value of potentially recoverable claims. We believe this is significant as it highlights the upside in our recoveries. As noted in this table, the initial recoveries are above our projected recovery multiple. And including these unfunneled recoveries, our overall recovery multiple would be 3.7 times the PVPRC. Although we have not yet publicized an overall recovery multiple in our KPIs at this time, our initial recovery efforts are above our projected figures. The 2022 guidance was developed as part of our business combination. As of September 30, 2022, we surpassed our 2022 guidance as it relates to the paid value of potentially recoverable claims by three and a half times the previous projection. Our revenue guidance is dependent on the completion of data matching and achieving settlements in our cases. We feel comfortable that there is progress being made toward meaningful settlements in our recovery efforts. For our 2022 guidance, with respect to total gross recoveries, we expected total gross recoveries to be approximately $992 million. While we anticipate that the amount of those total gross recoveries will be achieved due to various factors, including but not limited to cases that have been appealed, we expect that a portion of those recoveries may spill over onto 2023. However, unlike many other businesses, because recovery rights are liquidated damages, which is an amount that is known as it relates to the amount that is being claimed, these potential recoveries pursuant to law accrue interest. Because of the multiple being achieved, the interest rate would likely be 2.11 times the legal rate of interest as the interest is calculated from the collected amount versus the PVPRC amount. The guidance provided was and is an estimate based on management's current knowledge and various assumptions. The nature of the company's business and the timing and amount of total gross recoveries that will be achieved are inherently unpredictable. And the company cannot provide assurances regarding the timing of or the amount of total gross recoveries that will ultimately be achieved. Now I'd like to turn things over to Chris Miranda, our CIO, to explain the process of data matching.