Ambac Financial Group, Inc.

Ladies and gentlemen, good morning and welcome to the AMBAC Financial Group third quarter 2023 earnings conference 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 and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Charles Sabesky, Head of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to AMBAC's third 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 environment. And after prepared remarks, we'll take your questions. For those of you following along on the webcast, during the prepared remarks, we will be highlighting some slides from our investor presentation, which can be located on our website. Our call today includes forward-looking statements. The company cautions investors that any forward-looking statement involves 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 under the forward-looking statements in our earnings press release and our most recent 10Q and 10K filed 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 in our investor section on our website, AMBAC.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. I am pleased to report that AMBAC had a very strong third quarter. We completed the evaluation of the strategic options for the legacy financial guarantee business and at the same time recorded very strong financial results across all of our businesses. The results generated by our core PNC franchise puts us squarely on track to achieve our stated 2023 strategic goals, including Everspan achieving initial profitability in the second half of this year. Our consolidated financial results for the third quarter included net income of $66 million and adjusted net income of $94 million. We also completed repurchases for just over 120,000 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, starting with an update on our legacy financial guarantee business. Working with our Wisconsin regulator, the new regulatory capital model for AAC is now substantially complete. As a result of our progress with the OCI, We were also able to complete the internal review and analyses of strategic options I previously discussed for our legacy business. And we have now formally engaged Mullis & Company, along with certain other external advisors, to commence discussions with interested parties and assess potential transactions to maximize value from our legacy business. In parallel, we continue to actively pursue certain prioritized options to further enhance the value of the company. The goal of this process remains the same, to maximize value realization from our legacy business on both a time and risk-adjusted basis. We expect to update shareholders with additional information, including an expected timeframe, as we progress. With respect to our core specialty P&C business, We continue to record significant top and bottom line growth as Everspan and Serata scale their respective business platforms. This quarter, on a combined basis, these platforms generated over $140 million of premium production, a 140% increase over the prior year's quarter. Year-to-date premium production has exceeded $360 million, representing an approximate 90% increase over the same period last year. In addition, both businesses generated positive net income for the quarter. For 2024, we have provided our preliminary guidance for our PMC businesses, Everspan and Serrata, where on a combined basis, we are now forecasting over $700 million of premium production with attractive margins. As a reminder, this excludes any future acquisitions or startups not previously announced. Turning to Everspan. The business continued its upward trajectory, generating gross premium return of $77 million, which was up 160% over the third quarter of the prior year. The company continues to expand and diversify its MGA program partners, which currently stand at 20, up from 13 programs a year ago. One of our third quarter additions is a workers' compensation program. Workers' compensation is a line of business Everspan views as attractive and from a profitability and diversification perspective. We took advantage of an opportunity to partner with an industry-leading workers' compensation program partner in the quarter to write assumed reinsurance business. Everspan intends to write some limited assumed reinsurance programs where we believe the terms, conditions, and pricing to be attractive. We see this as a natural fit for Everspan given our program expertise, desire to retain risk, and diversify. Everspan's book has continued to become more balanced across risk classes given the new program additions, which should have the long-term benefit of more stable and predictable underwriting results. From an overall industry perspective, we believe 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. We expect this trend to continue in 2024. Everspan is on target to generate approximately $250 million of gross premiums for 2023, and we are now forecasting close to $400 million of gross premiums for 2024. subject, of course, to market conditions. At scale, we are still targeting mid-teen ROEs for Everspan, with a mid-single-digit ROE forecasted for 2024. This quarter, we saw the continuation of elevated loss-cost trends, particularly in certain commercial auto classes, which have experienced a frequency uptick in recent quarters. We still see pricing trend exceeding loss-cost trend as the market continues to push rates. However, there may be some timing differences before the full effect of pricing comes through earned premium and hence loss ratios. Turning to Serata, we had a strong quarter generating $62 million of premium, up 119% over the prior year, which produced nearly $4 million of EBITDA, all of which reflects the ongoing benefit from prior quarter acquisitions and growth initiatives. We continue to see significant opportunities for Serata, whether via product expansion across our current businesses or through additional M&A transactions. Serata is on track to exceed its 2023 target premium of $200 million and $45 billion of gross revenue, while maintaining attractive margins. Looking ahead to 2024, without the addition of any acquisitions, we are targeting over $300 billion of premium and $60 million of gross revenue. while maintaining our 20% plus EBITDA margins. I will now turn the call over to David to discuss our financial results for the quarter. David.