Ambac Financial Group, Inc.

Greetings and welcome to the AMBAC Financial Group Incorporated third quarter 2021 earners 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 2021 financial results. We'd like to remind you that today's presentation may contain forward-looking statements about our business, including but not limited to new business, credit outlooks, market conditions, credit spreads, financial ratings, loss reserves, loss mitigation, loss recoveries, investment returns, or other items that may affect our future results. These statements 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 and 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 condition and results of operations, and under risk factors. ANVAC is not under any obligation and expressly disclaims any obligation to update any forward-looking statements, 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 gap 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. I would now like to turn the call over to Mr. Claude LeBlanc.

Claude LeBlanc Thank you, Lisa, and welcome to everyone joining us on today's call. I am very pleased with our third quarter results, which were primarily driven by positive credit development in our structured finance and public finance insured portfolios. Net income for the quarter was $17 million or $0.35 per diluted share, and adjusted income was $25 million or $0.53 per diluted share. David will discuss our financial results in more detail in a moment. As we approach the end of 2021, we have demonstrated significant progress in the active de-risking of our legacy financial guarantee portfolios, the further rationalization of our capital structure via the refinancing of our senior notes, and the continued growth and expansion of our new specialty property and casualty program insurance business. Taking a closer look at our new specialty PNC business, starting with Everspan, our specialty PNC insurance platform, which anchors pillar one of our strategy. Since its launch in February, Everspent has continued to make material progress on all key growth and value metrics. Everspent Indemnity, our surplus lines carrier, is currently authorized for access and surplus lines in all 50 states and is whitelisted in 45 states that either maintain or have a de facto registry. Everspent Insurance Company, our admitted carrier, now has full P&C authority in 45 jurisdictions, including California. We are working to secure authority in the few remaining states in the near term. Since its launch, Everspan Group has built a robust program pipeline across various classes of business through multiple distribution sources and has signed up and is currently writing for three program partners, the most recent being CoverWell, an insurtech focus on the commercial auto space. Everspan is poised to launch a number of additional programs in the fourth quarter. Everspan Group has also expanded its carrier base this quarter with the purchase of an admitted shell, Providence, Washington Insurance Company, or PWIC, the second oldest insurance company in the United States. PWIC will provide Everspan with additional capabilities to launch new admitted programs develop innovative products, and provide enhanced flexibility to foster strategic relationships with prospective program partners. Everspan Group has also filed Form A's to acquire additional admitted carriers, which will further expand its admitted carrier offerings. We hope to close on these acquisitions in the fourth quarter. The acquisition of additional carriers furthers our goal to build a leading specialty P&C program insurance business where we can provide multiple options for our distribution partners, minimizing the risk of channel conflicts. Turning to the second pillar of our new business strategy, MGA and MGU businesses. The acquisition of exchange benefits, our A&H MGU, at the end of 2020 was the first of what we expect will be several distribution businesses for our Pillar 2 strategy. Exchange continues to perform well in the current environment and our outlook remains favorable. Since our acquisition, Exchange has broadened its carrier base, expanded its product offerings, and has made $6 million in distributions to AFG. The Exchange team continues to actively explore opportunities to grow the business by further expanding their carrier network and distribution channels. We continue to seek opportunities to grow Pillar 2 through further acquisitions and de novo startups, and we are seeing a growing pipeline of quality opportunities. As a public company with permanent capital, we are a differentiated strategic partner for prospective MGAs and MGUs. As part of our value add, AMBAC also offers our partners a full suite of business services, including advanced P&C technology solutions, which we believe will enhance the competitive position of our Pillar 2 businesses. We have also progressed our Pillar 3 segment, where we have identified and executed on three opportunities. To date, these investments have included data analytics and insurance-related technology companies, the most recent being our investment in CoverWell. We expect these strategic investments will generate attractive returns on capital, and allow for broad synergies across our Pillar 1 and Pillar 2 businesses. In summary, we continue to see attractive growth opportunities across all three pillars of our specialty P&C insurance business, offering attractive risk-adjusted returns and strong fundamentals. We are well-positioned to take advantage of such opportunities as we advance our efforts to grow and further scale our platform. Moving now to our legacy financial guarantee business. Net par exposure was $29 billion at September 30th, down 6% from June 30th, and down 16% year to date. AMBAC's watch list and adversely classified credits reduced to $11 billion at September 30th, down 5% from last quarter, and down 20% from year end. Proactive de-risking efforts accounted for decreases net par exposure and $340 million in watch lists and adversely classified credits during the third quarter. Year-to-date de-risking efforts accounted for $2.7 billion of the decrease of net par exposure and $1.7 billion in watch lists and adversely classified credits. Moving now to Puerto Rico. This past July, AMBAC reached a settlement on our insured PRIP or RUM tax exposure and became a party to agreements for RGO, TBA, HTA, and CCDA exposures. During October and earlier last week, Puerto Rico bondholders submitted their settlement elections on all but our HTA bonds. Yesterday marked the start of the confirmation hearing to approve the Commonwealth's eighth amended plan of adjustment into bankruptcy court. The proposed plan has the broad support of creditors and the Commonwealth of Puerto Rico. While there are objectors to the plan, we expect the plan to be approved by the court with an effective date sometime during the first quarter of 2022. Confirmation of the plan of adjustment will eliminate considerable uncertainty as to the ultimate loss experience for our Puerto Rico exposures, with the exception of our HTA exposure, which will be addressed by a separate Title III process. We expect the HTA Title III process to move to conclusion as quickly as possible following the recently announced settlement between the Oversight Board and the DRA parties, pursuant to which, among other things, the DRA parties will support the Commonwealth Plan and the forthcoming HTA Plan of Adjustment. Our loss reserves in Puerto Rico include settlement options offered to AMBAC guaranteed bondholders, including the potential for commutation payments from AMBAC and contingent value instruments issued by the Commonwealth, which remain subject to residual market and credit risks. With the bankruptcy conclusion of Puerto Rico in sight, our exposure to adversely classified credits at AEC will be significantly reduced. Puerto Rico risks currently total $1.1 billion of net par and represent 16% of total adversely classified credits as at September 30th. We view this as a major step forward towards accomplishing our strategic de-risking objectives in our legacy financial guarantee business. Turning now to our rep and warranty litigation. A conference has been scheduled for late November in our Bank of America countrywide litigation. We plan to ask the judge to set a trial date as soon as reasonably possible. I will now turn the call over to David to discuss our financial results for the quarter. David.