Ambac Financial Group, Inc.

Ladies and gentlemen, good morning and welcome to the AMBAC Financial Group Fourth Quarter 2024 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 signal the operator by pressing 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 Sabaski, Head of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to AMBAC's fourth quarter 2024 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 for 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 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 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. Those factors are described under 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 prepared remarks or responses to questions, we may mention some non-GAAP financial measures. Reconciliation of those non-GAAP measures are included in our recent earnings press release, operating supplement, or other materials in the investor section of 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. Last year, AMBAC made great strides in anchoring our market positioning as a leading growth-focused MGA and delegated authority platform. On a consolidated basis, our P&C business generated nearly $900 million of premiums, up 74% from 2023. and produce $236 million of revenue, which is up 89% from the prior year. These results were made possible due to the tremendous progress on several fronts. Some of those achievements include, one, the acquisition of BEAT. This was a transformative deal that brought immediate scale and breadth to our distribution platform. BEAT has proven capabilities and a solid track record as an MGA incubator. The experience of the BEAT leadership team, combined with Serrata's US specialty business expertise, is expected to deliver very strong organic growth into the future. Two, successfully selling our legacy financial guarantee business to Oak Tree for $420 million. This was a monumental effort for our organization and provides us the opportunity to accelerate the scaling of our specialty P&C business. This sale was a culmination of years of hard work and successful execution of key priorities across our organization. I am extremely proud of the outcome we achieved, and I look forward to closing the sale as soon as we satisfy the last remaining closing condition, receipt of regulatory approval from the Wisconsin OCI, which we anticipate this quarter or early next quarter. Three, investing in and preparing the business for the future. We have strengthened our business by investing in technology and talent to ensure the continued success of our platform. In addition, we have substantially completed the separation of our legacy and PNC businesses, financial and technology platforms, as well as personnel in preparation for the close of our legacy sale. Our focus is squarely on the future growth of our specialty PNC business and delivering value for our shareholders. Our efforts are supported within a market environment where, broadly speaking, we continue to see the overall E&S market performing well. The move towards risk specialization and E&S business continues across our industry, and that specialization supports the growth of the MGA market. We continue to experience rate increases in the U.S. casualty lines we focus on, where we are generally seeing high single to double-digit rate increases. In the property market, we have seen some softening in the fourth quarter and through January 1 renewals, but terms and conditions have helped. It remains too early to know the overall impact of the California wildfires on market conditions. Professional and financial lines continue to see softness, especially in large account and public market DNO. Smaller account and management liability are holding up much better. Overall, specialty and E&S commercial insurance market conditions remain broadly supportive of our business goals. Turning to our distribution business, Jurata generated nearly $100 million in revenue for 2024 of 93% and earned approximately $20 million of adjusted EBITDA and $13 million of adjusted EBITDA to AMBAC common shareholders. The adjusted EBITDA margin for 2024 on a consolidated basis was 20%. However, I would point out that there are about 500 basis points of margin headwinds from the costs associated with the six de novo startups previously mentioned. Those costs, as we scale, will be less and less material to the overall performance. In addition, longer term, we expect to make meaningful advancements to the adjusted EBITDA margin from organic growth economies of scale, further technology-led efficiencies, and business synergies. For the year, organic growth was 5.4%, with our specialty commercial auto business performing particularly well and more than offsetting some headwinds in our ESL and short-term medical business. It is worth highlighting that we view organic growth to be a core KPI of the business. However, the timing for the inclusion of BEAT in the organic revenue base later this year may result in some volatility in our quarterly organic growth results. One key element for supporting the growth in MGA businesses is the availability of managed capacity. That is why we believe having access to a broad range of managed capacity is a strategic differentiator for us. Managed capacity enables us to leverage the overall depth and breadth of insurance, reinsurance, and ILS markets, as well as a duration of third-party capacity to the platform. While this is not something we will be reporting on every quarter, we thought it would be helpful to provide color on our capacity sources. The Serata platform has more than $1.5 billion of committed third-party capacity from a diversified panel of insurers, reinsurers, private capital, and pension funds. Over 60% of that support has been behind us for four or more years, which I think validates the quality of the underwriting of our MGAs. Turning now to the Everspan results for the quarter. Everspan had a strong year with the team focused on underwriting profitability and growth. Everspan's gross premium written grew to over 380 million, up 40% from the prior year. Its full year combined ratio of 101.6 was nearly a 500 basis points improvement over 2023. as the platform progresses towards critical scale. Everspan ended 2024 with its second quarterly underwriting profit with a 96.5 combined ratio, which was down 380 basis points over the fourth quarter of 2023. The underwriting performance was a result of Everspan's concerted efforts to adjust to market conditions and rebalance capital allocation in support of our future business growth. EverSpend maintains a strong pipeline of internal and external program opportunities, which we believe will further our goals to diversify the portfolio, support growth, reduce our combined ratios, and deliver strong future ROEs. I will now turn the call over to David to discuss our financial results for the quarter. David?