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Greetings, and welcome to the Ambac Financial Group, Inc. First Quarter 2024 Earnings Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Charles Sebaski, Head of Investor Relations.

Thank you. Good morning, and welcome to Ambac's first 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 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'll be highlighting some slides in 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. These factors are described under the forward-looking statements in our earnings press release and our most recent 10-Q and 10-K 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 release, operating supplement and other materials available to investors 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'm pleased to report for the first quarter, we generated net income of $20 million and adjusted net income of $38 million. Book value per share stands at $30.19. David will discuss our financial results in more detail shortly. Turning to our P&C businesses, our rapidly growing specialty P&C Insurance platform generated $187 million in premium for the quarter, a 45% increase over last year. We expect the growth of our specialty P&C businesses will continue to be fueled by strong tailwinds, supported by the secular shift towards the E&S markets and expansion in underwriting specialization needed to support complex risks. We believe that being a premier destination for MGAs, means offering a specialized and differentiated set of solutions, tailored to the specific needs of this rapidly growing segment, which reached nearly $90 billion in premiums for 2023. Our differentiated market offering provides our MGAs with the following key value drivers. First, access to capital, whether it's in the form of risk capital from a rated balance sheet at Everspan or growth capital as a portfolio company under Cirrata. Second, leading risk and oversight controls. Third, access to reinsurance and other risk transfer solutions and fourth, business agility supported by our broad technology focused shared services. We believe that these differentiated solutions uniquely positions us to attract the best MGAs and program partners and in turn, deliver superior long-term results for our shareholders. Turning to Everspan's results for the quarter, Everspan had a strong start to the year, generating gross written premiums of $96 million, which was up 86% over last year. Everspan's book is becoming more diversified and balanced across risk classes. For instance, at year-end 2022, commercial auto represented 93% of our net premium written. However, by the first quarter of 2024, commercial auto was down to 8% of net premiums written and four other lines of business, each accounted for over 10% of net premiums. We believe that continued diversification in our specialty lines will have the long-term benefit of more stable and predictable underwriting results. This quarter Everspan also generated its first underwriting profit with a 98% combined ratio, the six consecutive quarterly underwriting improvements. And on the business, we're writing, we continued to see pricing exceed loss cost trends. Turning to Cirrata, our insurance distribution business placed over $90 million of premiums, up 17% over the prior year and generated $5 million of EBITDA for the quarter. This was supported by the ongoing benefit of organic growth initiatives and the financial performance of last year's acquisitions. Over the last year, we launched several notable expansion efforts within Cirrata. These included the exchange reprogram and a new transportation for hire program at all trends. We're also gearing up to launch two new professional lines programs these initiatives, amongst others are expected to be a catalyst for organic growth during 2024. We're also evaluating a number of strategic opportunities at Cirrata. Regarding the legacy financial guaranty business, the assessment of strategic options for this business, which we announced late last year is progressing as planned. Since launching our process, we have progressed discussions with a number of interested parties about the business. Consistent with our original expectations, we hope to be in a position to provide you with an update by year before our next earnings call. I will now turn the call over to David to discuss our financial results for the quarter. David?

Thank you, Claude, and good morning, everyone. We are pleased to report that for the first quarter of 2024, Ambac generated net income of $20 million or $0.43 per diluted share compared to a net loss of $33 million or $0.73 per diluted share in the first quarter of 2023. Adjusted net income was $38 million or $0.82 per diluted share for the quarter compared to an adjusted net loss of $14 million with $0.3 per diluted share in the first quarter of 2023. The change in net income and adjusted net income was mainly driven by results from our legacy financial guaranty business as well as the continued growth of our specialty P&C business Everspan and our insurance distribution business Cirrata. Our expense net premiums written in the quarter of $26 million were up 186% over the prior-year period. Our expands retention rate was approximately 27% of gross premiums written of $96 million compared to 18% from gross premiums written of $52 million last year. Both the growth in net premiums and higher retention levels. There mostly from workers' compensation, nonstandard auto programs written in the back half of 2023 as assumed reinsurance. Earned premiums and program fees were $26 million and $2.6 million, up 266% and 73%, respectively, from the first quarter of 2023. The loss ratio of 75.7% in the first quarter of 2024 was up from 66.6% last year. The loss ratio included 4.4% of prior accident year development higher year over year loss picks in commercial oil and some business mix shift. Losses, including approximately half of the adverse development in the quarter were partially offset by a sliding scale commission benefit, which was recorded against acquisition costs and linked to loss performance for the first quarter of 2024 sliding scale, commissions produced a benefit of 6.1% compared to a 0.6% benefit last year. Expense ratio was 22.7% in the first quarter of 2024, down from 55.3% in the prior year quarter, benefiting from the overall growth at Everspan. In addition, the expense ratio benefited this quarter from the increase in sliding scale commissions of 550 basis points noted earlier, as well as the reversal of 2023 compensation over accruals for a benefit of 3.4%. The resulting combined ratio for the first quarter was 98.4%, an improvement of 23 percentage points from the respective prior periods. For the quarter, Everspan generated just under $2 million of pre-tax income compared to a loss of less than $1 million for the first quarter of 2023. This is Everspan's third consecutive quarterly profit since its February 2021 launch. Cirrata generated revenue of $18 million in the first quarter, up 22% compared to the first quarter of 2023, benefiting from both a recent acquisition and organic growth. Cirrata produce $5 billion of EBITDA for the quarter, up 10% from the $4.5 million produced in the first quarter of 2023. The EBITDA margin of 27.9% this quarter compared to 31.3% last year. The margin contraction was largely driven by the acquisition of Riverton last August from business mix shift during the quarter and expenses related to organic growth initiatives and integration costs. Noteworthy is that some of this business mix shift relates to the timing of a large A&H renewal, which shifted to the second quarter of 2024 from what would normally be the first quarter. Cirrata's full year margins are expected to remain in line with our previously outlined 20% plus for 2024. For the first quarter, the Legacy Financial Guarantee segment generated net income of $20 million versus a net loss of $36 million in the prior year period. The year-over-year improvement was primarily driven by a favorable change in losses incurred and improved investment results. Consolidated investment income for the first quarter was $42 million compared to $34 million in the first quarter of 2023. The improvement stems from higher average yield on fixed income securities, which increased nearly 70 basis points over the same time period. Our alternative portfolio contributed just over $15 million first quarter solid investment results just over $13 million in the first quarter of 2023. Consolidated loss and loss adjustment expenses were a $1 million benefit in the first quarter of 2024 compared to an $18 million expense in the first quarter of 2023. Other spend losses grew by $15 million compared to the prior year to $19 million. Legacy Financial Guarantee produced a loss benefit of $21 million, favorably impacted by higher discount rates versus lower discount rates in the prior year and favorable credit development. First quarter 2024 net income contributed to shareholders' equity of $1.37 billion or $30.19 per share at March 31st, 2024, compared to $30.13 per share at December 31st, 2023. Net income in the quarter was partially offset by a $7 million increase to unrealized loss on available-for-sale investments, driven by higher interest rates and foreign exchange translation losses related to AUK of $8 million due to the weakening of the British pound relative to the dollar. Adjusted book value of $1.31 billion or $29.03 per share at March 31st, 2024 was up 1% from $28.74 per share at December 31st, 2023. At March 31st, 2024 AFG on a standalone basis, excluding investments and subsidiaries at cash, investments, and net receivables of approximately $209 million or $4.63 per share. I will now turn the call back to Claude with some brief closing remarks.

Thank you, David. Ambac had a good start to the year, and I am very encouraged about the number and quality of growth opportunities we are seeing across our Specialty P&C platform. As I mentioned last quarter, 2024 is positioned to be a year of transformational change for Ambac as we progress discussions regarding strategic options for our legacy business and strive towards our three-year goal of scaling production in our P&C business to over $1.5 billion, representing over $100 million in EBITDA. In support of this goal, we continue to make investments to enhance our Specialty P&C capabilities, support our MGA Partners, and bolster our long-term growth prospects, which I believe positions us well to meet and potentially exceed our targets and look forward to updating you on our progress in the coming quarters. Operator, please open the call for questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] The first question comes from the line of Geoffrey Dunn with Dowling & Partners. Please go ahead.

Thanks, good morning guys. I had two questions. First, could you elaborate a little bit on the adverse development at Everspan this quarter? And also, in conjunction with that, how the sliding scale commissions work both in practice and as you enter new lines?

Hey, Jeff, it's David. Thanks for the question. So, the adverse development in the quarter, most of it related to nonstandard auto program. And I would say that, a good chunk of that relates to a delay in some data that we received on the program. That program started in the latter half of 2023. So some of that data that we received late in the quarter last year, we reflected in first quarter of this year. So we're still very optimistic about the program. It's mostly California exposure, which got significant pricing increases in that market. So, we have very positive outlook for the program. I have no real concerns about the program or the development. And importantly, the structure of the program is one of the things that we like about it. And as you noted, it does include sliding scale. And so the way that works is that depending on where losses are booked, we're entitled to a change in our acquisition costs against the MGA that underwriting risk. So in this quarter of that, that adverse development was more than offset by a benefit on the sliding scale, which offsets our acquisition costs. And generally, we have a number of programs that have sliding scale commissions and they all work a little bit differently. But generally, they're structured in a way to give us some protection on the loss ratio, particularly for programs that are newer programs and a little less history of underwriting history for our program where we look to structure the risk in a way that is more palatable for the Everspan balance sheet, equivalent to sort of voice corridors, for example, so this way, we get to control the underwriting performance, the impact on our combined ratios and volatility.

How long do those sliding scale commission structures tend to last on these programs, is it like at the 1st year out of the gate or is it a longer period?

It's during the life of the program. Every year, we renew the program. Each program gets renewed every year and depending on circumstances, we could decide to eliminate a sliding scale. But so far for each of the program that we have, that includes sliding scales and that have been renewed and will continue the sliding scale. So you could envision a situation where you have a new program and over the years as the history of the program develops and we can get more comfortable with the ultimate performance of the program that we move away from five sales structure. But we find it to be a very helpful tool, both from a risk management standpoint and a balance sheet management standpoint.

Okay. And then with respect to derisking on the legacy FG side, it looks like you were able to resolve your Italian ABS exposure this quarter. Can you give any additional detail on how you're able to resolve that? It looks like sequentially your adversely credit adverse credit exposure less dropped off and it looks like the hotel in subs are dropped.

Yes. So sovereign dropped. We upgraded one of our. So our exposure to Italy following both upgrades from both S&P and Moody's. The transaction's actually been performing quite fine in line with our expectations. We probably erred a little bit on the conservative side with that closure. But nonetheless, green energy both upgraded the exposure and we felt comfortable to upgraded as well.

Got it. Okay. Thank you.

Thanks, Geoff,

Thank you. Our next question is from Giuliano Bologna with Compass Point. Please go ahead.

Good morning. I had two question around the strategic alternatives process. It seems like you have in the press release to express some optimism around the time line that you hope to be able to provide an update before the second quarter -- before you report second-quarter earnings. I'm curious if there are any milestones in the process or any kind of events going away in the process that gives you increased confidence around the time line is uncertain as a way to have gone through due diligence around consumer data at this point? Or is there anything you can do to kind of, add on from a timeline perspective and Martin, a milestone perspective?

Thanks, Giuliano. It's Claude. We can't say too much about the process, obviously, but I will have, you know, kind of reconfirm that the time lines that we set out initially for the process, we're very much in line with those time lines and that we'd indicated, you know, second quarter likely being a time period to allow us to get through a process of this magnitude and complexity. And we feel that we're right on top of that time line. And today, I would also indicate that we had some strong interest for us, the portfolio and the company based on our options that we outline for strategic options and data. Yes, we're pleased with the way the process has progressed to-date.

That sounds good. And then you're thinking about and the business, kind of, in the interim, are there any opportunities for additional risk management or reinsurance opportunities around portfolio de-risk or capital structure actions that could create some accretion in the interim? Or would it make sense to wait until after the processes completed?

I think for now, we're business as usual, Giuliano. So I think we are often looking at and progressing de-risking transactions, and we will continue to do that. And I we think we have we're maintaining optionality but progressing our businesses business as usual, to continue to improve the quality of our book value and derisk and exposures that we view potentially problematic today or in the future.

That's helpful. Thank you. I appreciate the time and I will jump back in the queue.

Thanks, Giuliano.