Ambac Financial Group, Inc.

Greetings and welcome to the ENDAC Financial Group Inc. Second Quarter 2023 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 turn the call over to Charles Sabaki, Head of Investment Relations. Please go ahead.

Thank you. Good morning, and welcome to AMBAC's second quarter 2023 call to discuss financial results. Speaking today will be Claude LeBlanc, President and CEO, and David Trick, Chief Financial Officer. They will discuss the financial results of our business and the current market environments, and after prepared remarks, We'll take your questions. For those of you following along on the webcast, during prepared remarks, we will be highlighting some slides from the investor presentation, which can be located on our website. Our call today includes forward-looking statements. The company cautions investors that any forward-looking statements involve risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described as the forward-looking statements in our earnings press release and our most recent 10Q and 10K, all with the SEC. We do not undertake any obligation to update forward-looking statements. Also, in our prepared remarks or responses to questions, we may mention some non-GAAP financial measures. Reconciliation to those non-GAAP measures are included in our recent earnings press release

operating supplement and other materials available in the investor section on our website amvac.com i would now like to turn the call over to mr claude leblanc thank you chuck and welcome to everyone joining today's call during the second quarter we continue to make material progress in advancing the strategic review of our legacy financial guarantee business in addition to significantly progressing the development and growth of our core specialty pnc business With respect to our legacy business, working with our Wisconsin regulator, we believe we have made significant progress towards the finalization of a new capital and operating framework for AEC. The ultimate timing and determinations for the framework remain in the hands of our regulator, the OCI. However, based on the significant progress made to date, we have already commenced the evaluation of certain strategic options. During the quarter, we initiated discussions with a number of key stakeholders in order to begin preliminary evaluations. We also progressed other key strategic initiatives focused on the de-risking of our platform and further improving our economic and regulatory capital. I will provide more details on these initiatives in a moment. As previously mentioned, our strategic options are not mutually exclusive. and we are evaluating all options on both a time and risk-adjusted basis. With the significant progress made to date, we believe we will be in a position to consider initiating certain strategic options focused on value creation and crystallization as early as the fourth quarter. As we previously noted, certain strategic initiatives will be subject to regulatory approvals and, in all cases, consideration of prevailing market conditions. With respect to our core specialty P&C business, we continue to record significant top and bottom line growth for both Everspan, our hybrid fronting platform, and Serata, our insurance distribution business. Our differentiated market positioning, combined with favorable market trends, position us well for continued robust growth in the coming quarters. Our consolidated financial results for the second quarter showed a modest gap net loss and positive adjusted net income, reflecting the momentum of our new businesses and the increasing stability of our legacy financial guarantee business. During the quarter, we also completed repurchases for just over 200,000 common shares. David will discuss our financial results in more detail shortly. But first, I would like to provide some additional information on our achievements for the quarter. As noted, we continue to focus on the de-risking of the legacy financial guarantee portfolio via select risk-sculpting transactions, which will benefit us significantly in facilitating strategic options for the business. One very notable de-risking transaction for the quarter involved a substantial reinsurance transaction, which reduced our largest risk concentration in addition to certain adversely classified and very long-dated policies. This transaction will also be maturely beneficial from both an economic and regulatory capital perspective. This reinsurance transaction, along with other key de-risking initiatives, reduced our watch list and adversely classified credits by nearly $1.5 billion, down approximately 20% from the prior quarter. Turning now to our P&C businesses. Our specialty P&C platform continues to scale and deliver strong results, with over $94 million of premium production this quarter, a 45% increase over the prior years. Everspan Group continued its upward trajectory, generating gross premium written of $53 million, which was up 30% over last year. The company continues to expand and diversify its MGA program partners, which currently stand at 16, up from 11 a year ago. Everspan's book continues to become more balanced across risk classes, which should have the long-term benefit of more stable and predictable underwriting results. From an overall industry perspective, market conditions remain supportive of our continued business growth at Everspan, particularly in the E&S markets. Demand for E&S capacity remains robust, with many programs transitioning out of the more rigid admitted markets and moving forward on a non-admitted basis. This dynamic is reflected in some of the recent data coming out of excess and surplus line stamping offices for California, Florida, and Texas, which has shown trailing three-month year-over-year premium change growing from over 13% in May to 19% in July. For Everspan, ENS premium represented 78% of its gross premium written this quarter, up from 67% in the first quarter. Against this backdrop, we were on target for Everspan to generate approximately $250 million of gross premiums this year, subject, of course, to market conditions. We also expect Everspan to reach profitability in the back half of the year and begin to contribute to the overall EBITDA growth of our P&C businesses. Serata, our insurance distribution business, also had a strong quarter, generating $41 million of premium, up 72% over the prior year. We continue to see significant opportunities for Serata, whether in the form of additional de novo platforms, product expansion across our current businesses, or through additional M&A. Yesterday, we announced the acquisition of a controlling stake in the Riverton Insurance Agency, which is a New Jersey-based professional line specialist that will add over $40 million of annual premium to our platform and expand our product capabilities. Toronto remains on target to meet or exceed its 2023 target premium of $200 million, while maintaining attractive margins. I will now turn the call over to David to discuss our financial results for the quarter. David.