Ambac Financial Group, Inc.

Greetings and welcome to MBAC Financial Group, Inc. Second Quarter 2022 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, Charles Cebowski. Head of Investor Relations, Claude LeBlanc, Chief Executive Officer, and David Trick, Chief Financial Officer. I will now turn the call over to Charles.

Thank you. Good morning, and thank you all for joining today's conference call to discuss Ambeq Financial Group's second quarter 2022 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 circumstance. Any forward-looking statements are not guarantees of future performance or events. Actual performance and events may differ, possibly materially, from such forward-looking statements. Factors that could cause this include factors described in our most recently filed SEC annual report under management discussion and analysis of financial condition and results of operation and other risk factors. AMBEC 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 reconciliation 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 the presentations have been posted to our events and presentation section of our IR website, which support our comments today. Now I would like to turn our call over to Mr. Claude LeBlanc.

Thank you, Chuck, and welcome to everyone joining today's call. For the quarter ending June 30, 2022, AMBAC reported net income of $5 million or $0.11 per diluted share and adjusted earnings of $13 million or $0.28 per diluted share. Book value at quarter end was $785. During the quarter, we repurchased 1.6 million shares of our common stock under our share repurchase program at an average price of $8.86 per share. David will discuss our financial results in more detail shortly. There are several performance and strategic highlights I would like to touch on this morning. This quarter, we continue to advance our goals reducing volatility and exposure in our legacy financial guarantee business. Our specialty P&C business had gross insurance production of $65 million, representing a 168% increase from the second quarter of last year. We believe gross insurance production, which is the combined gross premiums written for Everspan and the premiums placed by our insurance distribution segment to be one key metric for how the business is growing and performing. Turning to Everspan. During the quarter, Everspan Group led our insurance production with another strong quarter of growth, with gross premium written up over 70% from the first quarter of this year. This quarter's results represent an annualized gross premiums written run rate of over $160 compared to our first quarter run rate of $100 million. Everspan currently has 11 MGA program partners, up from 10 last quarter, and has signed three new programs this quarter. The operating environment for specialty insurance continues to be robust and supportive of the strong pipeline of new MGA partners Everspan continues to see. In addition, commercial P&C pricing, while moderating from $14 is still increasing, up 10% in Q2 of this year, and remains above lost cost trends. In the E&S market, conditions remain favorable, with hard markets expected to continue through year end, with strong, although decelerating, premium growth. We expect these factors, along with the strength of our existing programs, to provide Everspan with robust growth opportunities. The Everspan team is also focused on underwriting discipline which is key to the company's profitability and supports the growth and expansion of our strong reinsurance panel. Turning now to our insurance distribution business. During the quarter, Serata, our insurance distribution segment, anchored by Exchange, our first MGU partner, continued its expansion and growth. Exchange placed over 24 million in premiums, an increase of 7% over the prior year. Exchange also saw strong growth in both its affinity business, which grew by 4%, and its ESL business, which grew by 6%, bolstered in part by the EVU renewal rights acquisition announced last quarter. During the quarter, Exchange also announced its continued market expansion with the addition of Markel as a new partner and the related launch of a new ESL program. This quarter, in the health and human services sector. Penny has extensive experience and is considered a market leader in this sector, which is an area of the economy we see poised for growth. Penny has prior experience and success building out a book of business in this space from the ground up, and we are confident in her ability to do it again. With the recent launch of our full business services infrastructure operation, led by our technology We see insurance distribution to be an area of significant future growth potential for AMBAC. Our business services operation was developed to support MGA teams in the rapid build-out and expansion of their distribution platforms and is expected to generate significant cost and operational synergies for our partners, whether de novo or acquired. Interest in the MGA market remains strong. including the recent acquisition of NSM Insurance by Carlyle for $1.8 billion. Conning reports that the total market size for this sector is estimated to be $70 billion, with the industry seeing growth of 15.5% last year, outpacing the overall P&C market premium growth. Turning to our legacy financial guarantee business, during the quarter we achieved material success in our active de-risk reduced by $1.6 billion, or 16% from the prior year end. One key component of our de-risking was the material reduction of our Puerto Rico exposure. During the second quarter, we paid off our last remaining PRIPA and CCDA exposures, reducing net PAR by a total of $317 million, which leaves HTA as our only unresolved exposure. The HTA plan of adjustment is currently scheduled for a confirmation hearing beginning on August 17th, and we expect the plan to become effective later in the third quarter or early in the fourth quarter. I am pleased with the outcome of our meaningful de-risking activities related to our Puerto Rico exposure this year, and I look forward to the final resolution of this last but significant piece related to HTA, which totals $398 million of net par exposure. Our continued de-risking initiatives are focused on reducing the overall volatility of our legacy financial guarantee business, which accomplishes several things for AMBAC. Near term, we believe it will stabilize AFG's consolidated financial performance relative to the last several years. Longer term, we believe our de-risking and stabilization activities will increase the attractiveness of our legacy financial guarantee business as we consider potential strategic alternatives to support our growing specialty P&C platform. Turning to an update on litigation. In our main case against Countrywide Bank of America, we are actively preparing for our trial beginning on September 7th, which was affirmed by Justice Reed at our May 18th hearing and conference. We are pleased that this case is finally headed to trial and remain confident in the strength of our claims. We are also looking forward to our summary judgment hearing later this month in our fraud-only case against Countrywide, which we refer to as our Harbourview case. While we recognize no credit for the Harbourview case in our financial statements prevailing on summary judgment, we'll provide us a path to a trial in front of a jury potentially as early as the first half of 2023, although timing and scheduling remain out of our control. We are also actively working to advance our first Franklin case, our third material litigation against Bank of America. As I mentioned last quarter, the size and scope of all of our active cases against RMBS sponsors are very material to AMBAC's balance sheet relative to our recorded litigation credit of about $1.5 billion. In Countrywide, we're seeking damages of well over $2 billion. and in First Franklin, Harborview, and our Nemura case, we are seeking aggregate damages of more than $1 billion. I will now turn the call over to David to discuss our financial results for the quarter. David.