Ambac Financial Group, Inc.

Greetings and welcome to the AMBAC Financial Group Inc. Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Lisa Kemp, Head of Investor Relations, Claude LeBlanc, Chief Executive Officer, and David Trick, Chief Financial Officer. I will now turn the call over to Lisa.

Thank you. Good morning, and thank you all for joining today's conference call to discuss AMBAC Financial Group's third quarter 2020 financial results. We'd like to remind you, that today's presentation may contain forward-looking statements which are based on management's current expectations and are subject to uncertainty and changes in circumstances. Any forward-looking statements are not guarantees of future performance of events. Actual performance in events may differ, possibly materially, from such forward-looking statements. Factors that could cause this include the factors described in our most recent SEC-filed quarterly or annual reports. under management's discussion and analysis of financial conditions and results of operations under risk factors. AMBAC is not under any obligation and expressly disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise. Today's presentation contains non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures are included in our earnings press release, which is available on our website at AMBAC.com. Please note that presentations have been posted to the events and presentation section of our IR website, which support our comments today. Management is participating in this call from remote locations. If technical difficulties occur and we have to terminate the call, you will be able to read the transcript of our prepared remarks, which will be posted to the investor relations section of our website. In addition, management will be available to address any questions that remain unanswered. Please feel free to contact me via the contact information in our press release to schedule a call. I would now like to turn the call over to Mr. Claude LeBlanc.

Claude LeBlanc Thank you, Lisa. For those of you joining us on today's call, we hope that you and your families are keeping safe and healthy. Last night, AMBAC reported a net loss of $108 million or $2.33 for diluted share and an adjusted loss of $93 million or $2.01 for diluted share for the quarter. Results for the third quarter were driven by higher loss and loss expenses, primarily related to Puerto Rico and RMBS exposures. This increase reflects evolving credit conditions stemming from the COVID-19 pandemic, as well as costs incurred from our ongoing actions to defend our rights and recover losses through litigation. David will speak to our results in greater detail in a moment. Turning to our insured portfolio. During the quarter, our insured portfolio continued to fare well with no COVID-19 related claims paid. Net par exposure was $34.8 billion at September 30, 2020, down 1.5% from June 30, and 9% year-to-date. Excluding the impact of the weakening U.S. dollar, total net par would have been down 3% for the quarter. Watchlist and Adversity Classified credits were $14 billion at September 30, 2020, down 3% for the second quarter, and 5% year-to-date. Additionally, during the third quarter, no new credits were downgraded to the Adversity Classified category. The relative strength and resilience of our insurer portfolio reflects in large part the material benefits of our active de-risking strategy and the ongoing seasoning of our portfolio. We continue to actively monitor the credits in our insurer portfolio stressed as a result of the pandemic. At this time, we believe that there are sufficient revenue streams or alternative funds available for the majority of these issuers to mitigate longer-term losses. However, significant uncertainties remain, including the magnitude and timing of relief, if any, for state and local governments through additional fiscal stimulus. During the quarter, we were also able to restart a number of key de-risking and credit strengthening efforts. which were helped by the improving economy, the stronger municipal new issuance market, and the stabilization of credit markets. Key de-risking transactions during the quarter included, one, the refinancing of an international saving transaction with a net par of $217 million, two, the commutation refinancing or cancellation of several municipal and structured credit exposures, and three, the enhancement of credit and liquidity protections of key COVID stress exposures, including two of our largest exposed credits. We're optimistic that the regain de-risking momentum achieved during the third quarter will continue, although looking forward, it is expected to be more choppy than what we experienced in the pre-pandemic environment. Turning now to Puerto Rico. Over the past few months, the political landscape in Puerto Rico has changed materially, starting with the resignation of four Oversight Board members in recent months and the appointment of Justin Peterson to the Oversight Board. In addition, the gubernatorial and legislative elections were held last week, leading to the election of a new governor, Pedro Peralusi, which is expected to lead to changes to AFAWF. We are hopeful that a new political leadership and composition of the Oversight Board will focus on transparency, accountability, and good faith negotiations with creditors to avoid an even more prolonged restructuring process. We look forward to constructive engagement with the new Oversight Board and Commonwealth leadership over the coming months. Turning now to our loss recovery efforts. We've been advancing our weapon warranty case against Bank of America Countrywide and ramping up our preparation for the trial, which is scheduled to begin in February of 2021. As expected, during the third quarter, Countrywide filed a motion to dismiss AMBAC's fraud claim. The issue was fully briefed in September, and the judge scheduled oral arguments for November 13th. While there remains risk of further delays due to COVID and other factors, We look forward to proceeding to trial and resolving our longstanding claims against Countrywide and Bank of America as expeditiously as possible. Turning now to new business. As previously announced, our Everspan subsidiary was repositioned under our holding company, AFG, with the goal of pursuing opportunities in a specialty program insurance business. During the third quarter, we continued to progress our initiatives by, amongst other steps, applying to re-domesticate Everspan to Arizona and to expand the company's licenses to broader property and casualty lines. We also continue to explore opportunities to invest in or acquire managing general agents and other fee-based businesses as part of our broader strategic priorities, which we believe could achieve attractive risk-adjusted returns for our shareholders and maturely accelerate the use of our NOLs over time. We are pleased with the progress we have made so far and look forward to updating you as we progress. I will now turn the call over to David Schreck to discuss our financial results in more detail. David.