Assured Guaranty Ltd.

Good morning and welcome to the Assured Guaranty Ltd. third quarter 2023 earnings conference call. My name is Elliot and I'll be your operator for today's call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keyboard. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keyboard. To withdraw your question, please press star then two. Please note that this event is being recorded, and I would now like to turn the conference over to our host, 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 2023 Financial Results Conference Call. Today's presentation is made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act 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 are listening to a replay of this call, or if you're reading the transcript of the call, please note that the 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 current 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 such GAAP and non-GAAP financial measures in our current financial supplement and equity investor presentation, which are on our website at assuredguaranteed.com. Turning to the presentation, our speakers today are Dominic Frederico, President and Chief Executive Officer of Assured Guarantee Limited, and Rob Balanson, our Chief Financial Officer. After their remarks, we will open the call to your questions. As the webcast is not enabled for Q&A, 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. We continued to build value for Assured Guarantee shareholders and policyholders during the third quarter and first nine months of 2023. Adjusted book value per share of $148.03 and adjusted operating shareholders' equity per share of $99.18, both reached record highs at the end of the third quarter. New business production has been strong this year with significant contributions from U.S. public finance, international infrastructure finance, and global structured finance. For the fourth consecutive year, our PVP for the first three quarters reached or exceeded $240 million, coming in at $249 million for 2023. In July, we completed our transaction with SoundPoint Capital Management and Assured Healthcare Partners, which resulted in a $241 million pre-tax gain net of expenses. We now continue our asset management diversification strategy to our 30% ownership interest in SoundPoint. The earnings from that stake will be reflected for the first time in our fourth quarter reporting, furthering our strategy of generating fee-based earnings to complement our risk-based financial guarantee earnings. We also expect enhanced returns on our investment portfolio based on a broader range of alternative investment options with SoundPoint. More generally, these changes will also result in streamlining some of our financial disclosures. Rob will expand on this in a few minutes. In capital management, during the third quarter, we completed our current debt restructuring efforts by refinancing $330 million of our senior obligations due next year. We also picked up the pace of our share repurchases, buying $64 million worth of shares in the quarter, and last week our Board of Directors increased our repurchase authorization by $300 million. Before I go into greater detail about the quarter and year-to-date results, I want to tell you about two important management promotions. I'm pleased to announce that CFO Rob Balanson will become Assured Guaranty's Chief Operating Officer as of January 1, 2024. Rob will assume responsibility over our financial guarantee underwriting and origination strategies worldwide, as well as other initiatives to grow our financial guarantee business and increase returns. We will also be working with Mayo on setting the company's strategic direction and in assisting in executing other corporate priorities. Additionally, we are fortunate to have an outstanding person to fill Rob's role as CFO, Ben Rosenblum. Ben is currently our chief actuary. Ben has managed under Rob many critical financial functions, including accounting and financial reporting, As CFO, he will add treasury, tech, and investment management to his portfolio of responsibilities. Ben's quantitative and management skills have helped us accomplish many business objectives since he joined us in 2004. Most recently, he was instrumental in completing the SoundPoint transaction. Rob and Ben have earned these promotions by making numerous significant contributions over their many years at Assured Guarantee. With their extensive understanding of our strategies, markets, business practices, and unique characteristics of the Financial Guarantee business, I am confident they will provide great leadership in the years to come. Turning to U.S. public finance, where total year-to-date municipal bond par insurance was down 9% year-over-year, we nonetheless achieved a nearly 10% increase in the par amount of bonds sold with our insurance, guaranteeing $14.1 billion for a 62% insured market share. This includes $7.2 billion of par from 27 large transactions that each involved at least 100 million of insured par. up from $4.8 billion of PAR from 21 such transactions in the first three quarters of 2022. Importantly, the industry has maintained relatively steady high insured penetration rates this year, with a rate of 8.5% of new issue PAR sold for the first nine months of 2023, compared with 7.8% for the first nine months of 2022. The nine-month 2023 penetration rate is the highest in the decade. And in the third quarter of 2023, with overall part volume issued up only 3% year-over-year, we insured almost 50% more primary market parts sold than we did in the third quarter last year. Our insured parts sold in the primary and guaranteed in the secondary markets totaled $4.4 billion, up from $3.4 billion in the third quarter of 2022. We are also pleased with the increased activity we are seeing on bonds with underlying AA ratings from S&P or Moody's. In that category, we insured approximately $2.8 billion of FAR during the first nine months of 2023, up from $2.3 billion of FAR for the first nine months of last year. We wrote 64 policies on such AA transactions during the nine-month period, 55 of which were for new issues. We believe investors see our guarantee on high-quality credits as a mitigant to downgrade and market value risks. In looking forward to the fourth quarter activity, we're off to a strong start. In the month of October, three U.S. public finance transactions between $350 million and $750 million sold or closed with our insurance, two airport transactions, and a green bond transaction in the power sector. Outside of U.S. public finance, our international public finance business produced $38 million of PVP year-to-date. We also have a promising pipeline of additional infrastructure business, closing five transactions in the airport, water utility, higher education, and student accommodation sectors, with bar totaling almost $600 million. In global structured finance, we produce $82 million of PVP year-to-date, assuring that 2023 will be our best year for direct structured finance production since 2009. We have a number of future mandates expected to close this year. The growth of our structured finance business further validates the three-pronged approach we take to writing financial guarantee business. By diversifying across U.S. public finance, global structured finance, and international infrastructure markets, we can reduce production volatility over time. as weird conditions in one market can be offset by a more favorable environment in another. Our last remaining non-paying Puerto Rico exposure is the Power Authority PREPA, for which we continue our loss mitigation efforts. After mediation reach and impasse, proposed PREPA plan of adjustment appears headed towards a contested plan confirmation hearing. We remain committed to resolving PREPA consensually, if possible, but will protect our bond claims and enforce our credit or legal rights through litigation in the Title III plan confirmation and appeals process as necessary. Meanwhile, our outstanding private insured exposure continues to reduce. Overall, the strength of our insured portfolio has improved significantly in the last several years, largely because of our loss mitigation efforts. We now classify only 2.1% of our $242 billion insured portfolio as below investment grade, compared with 4.6% of the portfolio in 2017. As I mentioned on our last call, during the third quarter, S&P reaffirmed its AA financial strength rating with stable outlooks of our insurance companies. citing both our very strong financial risk profile and very strong business risk profile in its annual review of us. Its report describes many strengths supporting our AA rating, including S&P's view that we have excellent capital and earnings with a meaningful capital adequacy buffer. Additionally, in October, KBRA reaffirmed its AA plus insured financial strength rating with stable outlook of our financial guarantee operating subsidiaries in its annual surveillance reports on AGM and AGC. It also commented that investor demand for our product may be further enhanced by economic conditions such as tightening credit cycle, an economic environment of higher interest rates, volatile or widening credit spreads, and economic uncertainty. Our product is designed to provide value in a matter of the market environment, including when credit or market conditions are particularly uncertain. We believe the market disruptions during the pandemic, and more recently, volatility in the markets and global economies, geopolitical unpredictability, and climate-related natural disasters have resulted in a broader recognition of the protection and value our guarantee provides. against unforeseen circumstances, and a greater appreciation for the capital and liquidity supporting our insurance policies. We believe that concerns in the market can increase the demand for financial guarantee insurance because it can help support price stability and provide greater certainty of execution for new issues in the volatile pricing environments. Our outlook is positive as we continue to focus on our core principles of prudent capital management that is optimized for the benefit of our policyholders and shareholders, disciplined risk management, and clear and well executed strategies for new business production. I will now turn the call over to Ron.