Assured Guaranty Ltd.

Good morning and welcome to the Assured Guarantee Limited third quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Robert Tucker, Senior Managing Director, Investor Relations and Corporate Communications. Please go ahead.

Thank you, Operator, and thank you all for joining Assured Guarantee for our third quarter 2021 financial results conference call. Today's presentation is made pursuant to the safe harbor provisions of the private securities litigation of 1995. The presentation may contain forward-looking statements about our new business and credit outlooks, market conditions, credit spreads, financial ratings, loss reserves, financial results, or other items that may affect our future results. These statements are subject to change due to new information or future events. Therefore, you should not place undue reliance on them as we do not undertake any obligation to publicly update or revise them, except as required by law. If you're listening to a replay of this call, or if you're reading the transcript of the call, please note that our statements made today may have been updated since this call. Please refer to the investor information section of our website for our most recent presentations and SEC filings, most financial filings, and for the risk factors. This presentation also includes references to non-GAAP financial measures. We present the GAAP financial measures most directly comparable to the non-GAAP financial measures referenced in this presentation, along with a reconciliation between GAAP and non-GAAP financial measures in our current financial supplement and equity investor presentation, which are on our website at assuredguarantee.com. Turning to the presentation, our speakers today are Dominic Federico, President and Chief Executive Officer of Assured Guarantee Limited, and Rob Balenson, our Chief Financial Officer. After the remarks, we will open the call to your questions. As the webcast is not enabled, please dial into the call if you'd like to ask a question. I will now turn the call over to Dominic.

Thank you, Robert, and welcome to everyone joining today's call. In a successful third quarter of 2021, Assured Guarantee's new business production generated $96 million of PVP. This is our second highest result for a third quarter in the last decade. At the nine-month mark, our year-to-date PVP totaled $263 million, which puts us on pace with last year's outstanding production. The business was well distributed across our U.S. public finance, international infrastructure, and global structure finance markets for both the third quarter and nine months. In terms of shareholder value, as of September 30, 2021, on a per-share basis, shareholders' equity adjusted operating shareholders' equity, and adjusted book value all reach record highs of $88.42, $82.89, and $122.50, respectively. Year-to-date, Assured Guarantee has earned $197 million of adjusted operating income, about the same as in last year's first three quarters, notwithstanding a $138 million after-tax loss on debt extinguishment. This accelerated recognition of an expense resulted from the voluntary early redemption of certain senior notes. These redemptions and the issuance of lower coupon debt will reduce next year's debt service by $5.2 million. Rob will provide more detail on the debt issuance later. During the third quarter, total municipal bond issuance was strong with $121 billion of new part issues. the second highest third quarter volume in a dozen years. For the first three quarters, NUPAR issue of $343 billion exceeded that of the comparable period in 2020, which was a record year. Insurance penetration continued its upward trend, reaching 8.5% for both the third quarter and nine months, the highest level for a third quarter in any nine-month period in more than a decade. This was achieved even though the interest rate environment remained challenging, Although benchmark yields moved a bit higher during the quarter, they remained low by historical standards and credit spreads compressed to the tightest levels in a decade. In this environment, Assured Guaranteed continued to lead the municipal bond insurance industry with a third quarter market share approaching two-thirds of the insured parts sold in the primary market, as we guaranteed 270 transactions for a total of $6.7 billion in insured part. At the nine-month mark, we had guaranteed more than 60% of insured new issue PAR sold this year. The $17.9 billion we insured in the primary market was 19% higher than in the first nine months of 2020 and 88% more than in the first nine months of the most recent pre-pandemic year, 2019. It was, in fact, our highest primary market insured PAR for the first nine months in a decade. We have continued to benefit from institutional investors' preference for Assured Guarantees Insurance on larger transactions. During the third quarter, we insured 17 transactions with $100 million or more in insured PAR, which brings our total year-to-date transaction count in this category to 38, just one deal short of the number we insured in all of 2020. Also in the third quarter, we continue to add value on AA credits, insuring $836 million of PAR on 27 deals that each have at least one rating in the AA category from either S&P or Moody's. The 83 municipal issues reinsured in this category through September of this year aggregated to more than $3 billion of insured PAR compared with $2 billion in the first nine months of last year. U.S. public finance usually generates a large percentage of our PVP each quarter, and its $55 million of third-quarter PVP is no exception. but we have a uniquely diversified approach to producing new business. Our international infrastructure business has been a reliable contributor to our production in every quarter for more than five years. It produced $17 million of PVP in the third quarter of 2021. One significant transaction was a 113 million pound student accommodation issued by the University of Essex. We have a substantial pipeline of high and medium probability transactions for the rest of this year and the first half of next. and the transaction inquiries we are receiving are increasingly diverse. Over the longer term, we believe infrastructure will continue to be a significant international market for us. In the UK alone, the government has put out a paper anticipating as much as 650 billion pounds of public and private infrastructure spending over the next 10 years. In global structured finance, third quarter PVP was very strong, $24 million. bringing the year-to-date total to $35 million. We closed on a large insurance securitization in the third quarter, and our CLO activity has been accelerating. We guaranteed two Euro-denominated CLOs in the quarter. Our guarantees help CLOs attract new investors, which might otherwise be discouraged by the higher capital requirements on uninsured CLOs. And we are seeing more opportunities to help investors reduce the capital consumed by both existing structured finance exposures and new investments. Overall, the quality of our insured portfolio has continued to improve, as the below-investment-grade portion of our insured portfolio declined by $300 million during the quarter, and is within sight of falling below 3% of net par exposure. Puerto Rico issues account for almost half of our below-investment-grade net par outstanding, and there have been important positive developments in the efforts to complete that restructuring center for MESA. Negotiated agreements for these restructurings apply to 95% of our PAR exposures to Puerto Rico entities, with the balance of our exposures remaining current on debt service payment. A logjam was broken on October 28th when the Oversight Board agreed that the recently passed Commonwealth legislation intended to authorize issuance of new exchange securities as part of the Commonwealth restructuring met the Board's condition and a revised plan of adjustment could move forward to the confirmation hearing. which is scheduled to start November the 8th, three days from now. Meanwhile, the Commonwealth revenues have exceeded expectations and billions more have been received or are expected from federal coronavirus relief and disaster relief allocations. And the island may benefit further from pending federal physical infrastructure bill and Build Back Better reconciliation bill. On our last call, I mentioned S&P's affirmation in July of our AA stable outlook, financial trends rating, and insights to our insurance subsidiaries. This has been followed in October by KBRA's affirmation of a AA plus rating of AGM, Assured Guarantee UK, and Paris-based Assured Guarantee Europe. Importantly, it also upgraded AGC to AA plus based on AGC's strengthened capital position relative to KBRA's conservative stress loss modeling along with separate analysis of AGC's Puerto Rico, RMBS, and certain other exposures. KBRA also noted AGC's decreased insurance leverage, the substantial de-risking of its insured portfolio, and the positive movement toward resolution of Puerto Rico's Title III process. All the ratings have stable outlooks. By the way, the Puerto Rico settlement agreements were also deemed credit positive by Moody's in its credit opinion about AGM published in July. On the asset management side of our business, we've been participating in a very active CLO market. We increased free-earning CLO assets during the third quarter largely by launching one new CLO, which brought the number of CLOs we issued during the first nine months to four. These new CLOs were responsible for $1.7 billion of the $3.8 billion increase in free-earning CLO assets since the year began. The remaining $2.1 billion of the increase resulted primarily from selling CLO equity previously held in Assured IM funds and converting AUM from non-fee earning to fee earnings during the year. We have shed virtually all of the CLO equity held by Assured IM legacy funds, and 96% of our CLO AUM is fee earning now. We expect the CLO market to remain strong through year end. We reset or refinanced three CLOs in the United States this quarter, adding up to a total of four CLOs in the U.S. and three CLOs in Europe that were reset or refinanced for the year through third quarter. Four of these transactions are managed on a sub-advisory basis. After the third quarter end in October, we close a new CLO in the United States. In addition, we currently have two open CLO warehouses, one in the U.S. and one in Europe. We are planning to open one additional CLO warehouse in the U.S. before the end of the year. Both CLOs and ongoing Assured IM funds overall have performed well. I look forward to a successful finish for Assured Guarantee this year. Our track record proves that our company is built to withstand severe disruption in the financial markets, and our recent results strongly suggest that a growing number of investors appreciate the resilience of our business model, understand our value proposition, and recognize our financial strength. Those investors will be a source of our success for years to come as we continue to protect our policyholders and create value for our clients and shareholders. Now I'll turn the call over to Rob.