Q4 2023 Assured Guaranty Ltd Earnings Call

Operator: Good morning, and welcome to the Assured Guaranty Ltd fourth quarter and full year 2023 earnings conference call. My name is Harry, and I'll be your operator for today's call. All participants will be in listen-only mode.

Good morning, and welcome to the assured Guaranty limited fourth quarter and full year 2023 earnings Conference call. My name is Harry and I'll be your operator for today's call.

All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad.

Operator: Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad.

After today's presentation there'll be an opportunity to ask questions. So I'll ask you. A question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Operator: To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to our host, Robert Tucker, Senior Managing Director, Investor Relations and Corporate Communications. Please go ahead.

Please note. This event this event is being recorded.

I would now like to turn the conference over to our host Robert Tucker Senior managing director Investor Relations and corporate Communications. Please go ahead.

Robert S. Tucker: Thank you, Operator, and thank you all for joining Assured Guarantee for our fourth quarter and year-end 2023 financial results conference call. Today's presentation is made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The presentation may contain forward-looking statements about our new business and credit outlooks, market conditions, credit spreads, financial ratings, loss reserves, financial results, or other items that may affect our future results. These statements are subject to change due to new information or future events. Therefore, you should not place undue reliance on them as we do not undertake any obligation to publicly update or revise them, except as required by law.

Thank you operator, and thank you all for joining assured guaranty for our fourth quarter and year end 2023 financial results Conference call. Today's presentation is made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 995.

Presentation may contain forward looking statements about our new business and credit outlooks market conditions credit spreads financial ratings loss reserves financial results or other items that may affect our future results. These statements are subject to change it or new information or future events. Therefore, you should not place undue reliance on.

On them as we do not undertake any obligation to publicly update or revise them, except as required by law. If you were listening to a replay of this call or if you're reading the transcript of the call. Please note that our statements made today may have been updated since this call.

Robert S. Tucker: If you're listening to a replay of this call, or if you're reading the transcript of the call, please note that our statements made today may have been updated since this call. Please refer to the investor information section of our website for our most recent presentations and SEC filings, our most current financial filings, and the risk factors. This presentation also includes references to non-GAAP financial measures. We present the GAAP financial measures most directly comparable to the non-GAAP financial measures referenced in this presentation, along with reconciliation between such GAAP and non-GAAP financial measures in our current financial supplement and equity investor presentation, which are on our website at assuredguarantee.com. Turning to the presentation, our speakers today are Dominic Frederico, President and Chief Executive Officer of Assured Guaranty Ltd., Rob Bailenson, our Chief Operating Officer, and Ben Rosenblum, our Chief Financial Officer. After their remarks, we will open the call to your questions. As the webcast is not enabled for Q&A, please dial into the call if you'd like to ask a question. I will now turn the call over to Dominic.

Please refer to the Investor information section of our website for our most recent presentations and SEC filings, most current financial filings and for the risk factors.

This presentation also includes references to non-GAAP financial measures, we present, the GAAP financial measures most directly comparable to the non-GAAP financial measures referenced in this presentation, along with a reconciliation between such GAAP and non-GAAP financial measures and our current financial supplement and equity investor.

<unk>, which are on our website at assured guaranty dot com.

Turning to the presentation. Our speakers today are Dominic Frederico, President and Chief Executive Officer of assured Guaranty Limited, Rob Bailenson, our Chief operating officer, and Ben Rosenberg, Our Chief Financial Officer. After their remarks, we will open the call to your question is the <unk>.

<unk> is not enabled for Q&A. Please dial into the call if you'd like to ask a question I will now turn the call over to Dominic.

Dominic John Frederico: Thank you, Robert, and welcome to everyone joining today's call. Assured Guaranty performed exceptionally well in 2023. We demonstrated again the power of our diversified production strategy as our U.S. public finance, international infrastructure, and global structured finance businesses combined to produce $404 million of total PVP in 2023. This was almost 8% more than in 2022 and the sixth consecutive year in which new business production generated more than $350 million of PVP. In U.S. public finance, we led the municipal bond insurance industry to the highest market penetration since 2008, guaranteeing 61% of new-issue insured parts sold. Our global structure finance business more than doubled the PVP it wrote in the previous year and produced its highest direct PVP amount in over a decade. And in non-U.S. public finance, which we also refer to as international infrastructure, our PVP increased 22% year over year. Additionally, we brought key measures of shareholder value per share to new year-end highs. Shareholders' equity per share increased 18% to $101.63. Adjusted operating shareholders' equity per share increased 13% to $106.54. Adjusted book value per share rose 10% to $155.92.

Thank you Robert and welcome to everyone joining today's call.

Assured guaranty performed exceptionally well in 2023.

He demonstrated again the power of our diversified production strategy as our U S public finance international infrastructure and global structured finance businesses combined to produce $404 million of total Pvp in 2023. This was almost 8% more than in 2022, and the sixth consecutive year in which new business production.

<unk> generated more than $350 million of Pvp.

In U S public finance related municipal bond insurance industry has the highest market penetration since 2008, guaranteeing 61% of new issue insured par sold.

Our global structured finance business more than doubled the Pvp. They wrote in the previous year and produced its highest direct pvp amount in over a decade.

Non U S public finance, we also which we also referred to as the international infrastructure, our Pvp increased 22% year over year.

Additionally, we brought key measures of shareholder value per share to new highs.

Holders' equity per share increased 18% to $101 63.

Adjusted operating shareholders' equity per share increased 13% to $106.54 adjusted book value per share rose, 10% to $155 92.

Dominic John Frederico: We transformed our asset management business with the completion of our milestone transaction with SoundPoint, contributing substantially all of our asset management business in return for an approximate 30% interest in the combined entity. That transaction, along with a separate transaction involving other Assured IM-related assets, resulted in a pre-tax gain for the year of $222 million, net of expenses. Most importantly, the SoundPoint transaction significantly advances our asset management strategy, as we now own approximately 30% of an entity with significant scale and distribution capability. Soundpoint also provides a broader range of alternative investments in which we may receive asset management earnings and in which we may invest. We believe that strategic transactions should be a strong driver to further increase and diversify our earnings, allowing us to participate in a fee-based earning stream that is independent of our risk-based insurance premiums and to improve our investment returns by increasing the allocation of alternative investments in our investment portfolio. We repurchased a total of 3.2 million common shares for approximately $200 million during the year.

We transformed our asset management business with the completion of our milestone transaction with sound point contributing substantially all of our asset management business in return for an approximate 30% interest in the combined entity.

That transaction, along with a separate transaction involving other assured I am related assets resulted in a pre tax gain for the year of $222 million net of expenses.

Most importantly, the Safeway transaction significantly advances our asset management strategy.

We now own approximately 30% of an entity with significant scale and distribution capabilities.

It also provides a broader range of alternative investments.

You may receive asset management earnings, which we may invest.

We believe the strategic transaction to be a strong driver to further increase and diversify our earnings allowing us to participate in the fee based earnings stream that is independent of our risk based insurance premiums and to improve our investment returns by increasing the allocation of alternative investments and our investment portfolio.

We repurchased a total of $3 2 million common shares for approximately $200 million during the year then.

Dominic John Frederico: Then we'll say more about our results in the Capital Management Program, including the meaningful tax benefit we recorded, which resulted from a change in the Bermuda Tax Code. We also paid dividends of $68 million in 2023. Last week, we announced for the 13th consecutive year an increase in our quarterly dividends. And I'm pleased to say that our Marin Regulator has approved a $200 million special dividend from AGC to our holding company, which increases our flexibility to further manage our capital.

And then we will say more about our results and capital management program, excluding the meaningful tax benefit we recorded which resulted from a change in the Bermuda tax code.

We also paid dividends of $68 million in 2023, and last week, we announced for the 13th consecutive year and an increase in our quarterly dividend.

And I am pleased to say that our Marion regulator has approved a $200 million special dividend from AGC to our holding company, which increases our flexibility to further manage our capital.

Dominic John Frederico: For 2024, we are targeting a return to our $500 million share repurchase. Also, during 2023, we saw growth and further strengthening of our high-quality, well-diversified insurance portfolio. That par outstanding increased by $16 billion for almost 7%. We now classify only 2.2% of our $249 billion insured portfolios below investment grade, compared with the last peak of 4.6% of our portfolio in 2017. Regarding PREPA, the proposed PREPA plan of adjustment is headed toward a contested plan confirmation hearing next month.

For 2024, we are targeting a return to our $500 million of share repurchases.

Also during 2023, we saw growth and further strengthening of our high quality well diversified insurance portfolio.

Poor outstanding increased by $16 billion or almost 7%, we now classify only two 2% of our $249 billion.

Insured portfolios below investment grade compared with the last peak of four 6% of our portfolio in 2017.

Regarding PREPA proposed PREPA plan of adjustment is headed toward a contested planned confirmation hearing next month, we remain committed to resolving PREPA consensually if possible, but we will protect our bond claims and enforce our creditor legal rights with litigation in a title III plan confirmation and appeals processes necessary began though that this is our last.

Dominic John Frederico: We remain committed to resolving PREPA consensually, if possible, but will protect our bond claims and enforce our creditor legal rights through litigation in the Title III plan confirmation and appeals process as necessary. We again note that this is our last remaining non-paying Puerto Rico exposure. Rating agencies continue to look positively on Assured Guaranty's activities.

The remaining non paying Puerto Rico exposure.

Rating agencies continue to look positively on assured guaranty's activities.

Dominic John Frederico: Both S&P Global Ratings and Kroll Bond Rating Agencies cited our handling of the Puerto Rico settlement as well as our strategic direction in their affirmations during 2023 of our AA ratings at S&P and AA plus ratings at KBRA, both with stable outlays. Before we dig deeper into these accomplishments, I want to say something about important promotions that strengthened our senior management team and corporate focus for years to come. As you may know, in November, we announced that Rob Bailenson would be, as of January 1st, promoted to COO, and Ben Rosenblum would succeed him as CFO. You'll hear from both of them later on this call.

S&P global ratings and Kroll Bond rating agency cited our handling of the Puerto Rico settlements as well as our strategic direction and their affirmations during 2023 of our double a ratings at S&P and double a plus ratings of KBR, both with stable outlooks.

Before we dig deeper into these accomplishments I want to say something about important promotions that strengthened our senior management team and corporate focus for years to come.

As you May know in November, we announced that Rob balance would be.

January one is promoted to COO and then rosenbloom with succeeded him as CFO, you'll hear from both of them later on this call.

We are now pleased to announce a Nick crowd has been appointed global head of origination for our financial Guaranty business.

Dominic John Frederico: And we are now pleased to announce that Nick Proud has been appointed Global Head of Origination for our Financial Guarantee business, creating this new position to enhance our strategic approach, generating new business and executing transactions, including in new asset classes and jurisdictions. Dominic Nathan has assumed the next responsibilities as CEO of Assured Guaranty UK Ltd and serves as head of international... Dominic has been at Assured for over 20 years and has most recently been Senior Managing Director of International Infrastructure Finance and the Chief Underwriting Officer of AGUK. I'm grateful for the tremendous pool of leadership talent at our company. These professionals know our business inside and out, and I believe they will lead us into greater growth and new business opportunities.

This new position to enhance our strategic approach generating new business and executing transactions, including a new asset classes jurisdictions.

So I think Nathan is assume <unk> responsibilities as CEO of assured Guaranty Ltd, and serves as head of international.

Nick has been an assured for over 20 years and has most recently been senior managing director of International infrastructure Finance, and our Chief underwriting Officer <unk> U K.

I am grateful for the tremendous bench of leadership down at the at our company. These professionals know our business inside and out and I believe they will lead us into greater growth and new business opportunities.

In our view 2023 was a remarkable year for assured guaranty.

We are well rewarded with a $222 million pre tax net gain for making our initial investment what became assured I am and then transforming into a more valuable firm.

Dominic John Frederico: In our view, 2023 was a remarkable year for Assured Guaranty. We were well rewarded with a $222 million pre-tax net gain for making our initial investment in what became Assured IM and then transforming it into a more valuable firm. We're now advancing our asset management strategy to our ownership interest in SoundPoint, where the benefit of the firm's scale and diverse capabilities position it for further growth and future success. Our diversified production strategy has been shown to give us flexibility and freedom for any one market as conditions change.

We are now advancing our asset management strategy through our ownership interest in standpoint.

The benefit of the firm's scale and diverse capabilities position us for further growth and future success.

Our diversified production strategy was shown to give us flexibility and freedom from any one market as conditions change.

We believe the increased market penetration of municipal bond insurance indicates more widespread understanding of our value proposition, which will support increasing demand for our product in a world economic stage, showing no signs of becoming more stable.

2021 infrastructure investment and jobs Act continues to incentivize disabilities to complement federal funding with their own funds, including proceeds of bonds, we could potentially insurer.

Dominic John Frederico: We believe the increased market penetration of municipal bond insurance indicates more widespread understanding of our value proposition, which will support increasing demand for our product on a world economic stage showing no signs of becoming more stable. The 2021 Infrastructure Investment and Jobs Act continues to incentivize municipalities to complement federal funding with their own funds, including proceeds of bonds we could potentially insure, and it encourages public-private partnership financings where we can add great value to our infrastructure finance expertise, analytical and due diligence capabilities, and financial strength. Lastly, we laid the foundation for further capital management through our special dividend strategy and other strategic initiatives we have planned for 2024. Looking forward, we are well-positioned for growth because we will continue to do what we've always done, protect insured investors and shareholders through disciplined underwriting and risk management, reduce savings and broaden opportunities for issuers, expand our markets, and actively and prudently manage our capital. And now, I'd like to turn the call over to Rob to discuss our financial guarantee business. Thank you, Dominic.

And and encourage as public private partnership financings, we can add great value to our infrastructure finance expertise analytical and due diligence capabilities and financial strength.

Lastly, we laid the foundation for further capital management through our special dividend strategy and other strategic initiatives, we have planned for 2024.

Looking forward, we are well positioned for growth because we will continue to do what we've always done.

Thank you Jordan investors and shareholders through disciplined underwriting and risk management do savings and brought in opportunities for issuers expand our markets and actively and prudently manage our capital.

I'd now like to turn the call over to Rob to discuss our financial Guaranty business.

Thank you Dominic I'm excited to have taken on this new role and I look forward to further growing our financial guaranty business and continuing to execute on other strategic initiatives at the company 2023 was a great production year for assured guaranty.

$404 million of Pvp was an outstanding result, especially because most of the year, we faced a relative lack of supply due to reduced new issuance and our principal market U S. Public finance the benefit of our three pronged origination strategy paid off as intended as we produced significant growth in both our non.

Robert Adam Bailenson: I'm excited to have taken on this new role, and I look forward to further growing our financial guarantee business and continuing to execute on other strategic initiatives at the company. 2023 was a great production year for Assured Guaranty. The $404 million of PVP was an outstanding result, especially because, for most of the year, we faced a relative lack of supply due to reduced new issuance in our principal market, U.S. public finance.

Public finance and structured finance businesses.

The $212 million of U S public finance Pvp was as usual the largest contributor to our total Pvp global structured finance.

Historic year, producing $109 million of Pvp and in non U S public finance year over year, we increased pvp by 22% to $83 million.

And U S public finance, both assured guaranty, specifically and the bond insurance industry in general saw increased demand in 2023.

Robert Adam Bailenson: The benefit of our three-pronged origination strategy paid off as intended as we produced significant growth in both our non-U.S. public finance and structured finance businesses. While the $212 million of U.S. public finance PVP was, as usual, the largest contributor to our total PVP, global structured finance had an historic year, producing $109 million of PVP. And in non-U.S. public finance, year over year, we increased PVP by 22% to $83 million. In U.S. public finance, both Assured Guaranty specifically and the bond insurance industry in general saw increased demand in 2023. The insured power penetration of the primary municipal bond market rose from 8% in 2022 to 8.8% in 2023, the highest annual level since 2008.

Insured par penetration of the primary municipal bond market rose from 8% in 2022 to eight 8% in 2023, the highest annual level. Since 2008 assured guaranty was the main driver of the growth in the bond insurance industry accounting for.

$2 $5 billion of the $3 billion year over year increase in new issued short Parsons.

While demand remains strong across our target ratings spectrum of rising growth has been notably observed in the single a rated space.

<unk> was used on more than 30% of 2023 municipal par sold up from around 20% in years prior to 2020.

Robert Adam Bailenson: Assured Guarantee was the main driver of the growth in the bond insurance industry, accounting for over $2.5 billion of the $3 billion year-over-year increase in new insured parcels. While demand remains strong across our target rating spectrum, the rising growth has been notably observed in the single-A rated space, where insurance was used on more than 30% of 2023 municipal PARs sold, up from around 20% in years prior to 2020. And when looking at the single A space based on the number of transactions sold in 2023, 62% of the deals used insurance.

And when looking at a single space based on the number of transactions sold in 2023, 62% of the deals used insurance.

We believe the growth in recent years reflects both investors increased depreciation of the benefits that bond insurance provides especially during volatile economic or uncertain market conditions and issuers greater recognition of its cost effectiveness and capacity to increase investors demand and market access.

In 2023, we ensured 61% of the insured new issue market, representing $19 5 billion of new issue par sold the highest in the industry by 7 billion in.

And 15% higher than the previous year's par.

Robert Adam Bailenson: We believe the growth in recent years reflects both investors' increased appreciation of the benefits that bond insurance provides, especially during volatile economic or uncertain market conditions, and issuers' greater recognition of its cost-effectiveness and capacity to increase investors' demand and market access. In 2023, we insured 61% of the insured new issue market, representing $19.5 billion of new issue par sold, the highest in the industry by $7 billion and 15% higher than the previous year's PAR. We have exceeded $19 billion of primary par insured in three of the last four years.

We have exceeded $19 billion of primary par insured and three of the last four years.

We ended the year with a terrific fourth quarter, ensuring $5 4 billion of new issue par, 32% higher than in the same period last year, and we saw demand across a wide range of transactions sectors.

Rating levels and deal sizes.

645, new issues in 2023 with sizes as small as $1 million and.

And as large as of a $1 billion.

Two statistics further indicate the high value, we believe the market assigns to our insurance.

The first is the number of transactions that we insured.

With at least one underlying ratings in the double a category from S&P or Moody's.

Robert Adam Bailenson: We ended the year with a terrific fourth quarter, ensuring $5.4 billion of new ISHU PAR, 32% higher than in the same period last year. We saw demand across a wide range of transaction sectors, rating levels, and deal size. We wrapped 645 new issues in 2023 with sizes as small as 1 million and as large as over one billion. Two statistics further indicate the high value we believe the market assigns to our insurance. The first is the number of transactions that we insured with at least one underlying rating in the AA category from S&P or Moody's.

In 2023, we ensured 81 such transactions.

With a total par of $3 2 billion 71 of which four insured in the primary market.

In fact, the credits <unk>.

Ratings are as high as our own still benefit from insurance reflects the positive market perception of our value proposition, which includes not just our guarantee of timely payment of principal and interest, but also our credit selection underwriting surveillance and for an insured bond with the underlying credit later becomes finish.

Robert Adam Bailenson: In 2023, we insured 81 such transactions, with a total premium of $3.2 billion, 71 of which were insured in the primary market. The fact that credits whose ratings are as high as our own still benefit from insurance reflects the positive market perception of our value proposition, which includes not just our guarantee of timely payment of principal and interest but also our credit selection, underwriting, and surveillance, and for an insured bond whose underlying credit later becomes financially stressed, to hold its market value better than if it were not invested. The second statistic is the number of transactions on which we insured a par amount of 100 million or more. We insured 37 such large transactions in 2023, with aggregate insured par of $10.3 billion.

We stressed the potential for it to hold its market value better than if it were not insured.

The second statistic is the number of transactions on which we insured par amount of $100 million or more.

We insured 37, such large transactions in 2023.

With aggregate insured par of $10 3 billion.

We believe this accomplishment signals strong institutional demand for our product.

Our four largest 2023 U S municipal transactions or $1 1 billion of insurance on dormitory authority of the state of New York bonds.

<unk> hundred million on John F. Kennedy International Airport bonds $756 million on Houston, Texas airports system bonds and $734 million on power authority of the state of New York Green bonds Adil.

Additionally, we participated in three other such large transactions in Texas, Florida and Pennsylvania.

Robert Adam Bailenson: We believe this accomplishment signals strong institutional demand for our product. Her four largest 2023 U.S. municipal transactions were $1.1 billion of insurance on dormitory authority of the State of New York Bonds, $800 million on John F. Kennedy International Airport Bonds, $756 million on Houston-Texas Airport System Bonds, and $734 million on power authority of the State of New York Green Bonds. Additionally, we participated in three other such large transactions in Texas, Florida, and Pennsylvania that were winners of the Bond Buyer Deals of the Year Award in their respective categories.

The winners of the bond by our deals of the year Award.

In their respective categories.

While our U S public finance production was constrained by the amount of available supply production grew significantly.

Other markets non U S public finance has become a consistent performer.

More than $60 million of Pvp and each of the last seven years and 2023, we were at 83 million pvp across various infrastructure sectors, including airports, where we ensured our first primary market transaction for Heathrow Airport. Additionally.

Robert Adam Bailenson: While our U.S. public finance production was constrained by the amount of available supply, production grew significantly in our other markets; non-U.S. public finance has become a consistent performer, producing more than 60 million PVP in each of the last seven years. In 2023, we wrote 83 million PVP across various infrastructure sectors, including airports, where we secured our first primary market transaction for Heathrow Airport. Additionally, we now have a presence in Spain, which joins our Paris office to help originally new business in continental Europe more effectively.

Additionally, we now have a presence in Spain, which joins our Paris office to help originate new business in Continental Europe more effectively.

In addition to enlarging our European footprint, we are taking steps to expand further in the Australian market to.

To lead this effort, we have opened an office in Sydney and hired a dedicated professional with long experience in Australia, and New Zealand financial markets.

In global structured finance, we produced $109 million of new business Pvp more than double the 2020 to result.

In terms of direct structured finance activity, we wrote the most direct Pvp since 2009.

Robert Adam Bailenson: In addition to enlarging our European footprint, we are taking steps to expand further in the Australian market. To lead this effort, we have opened an office in Sydney and hired a dedicated professional with extensive experience in the Australian and New Zealand financial markets. In global structured finance, we produced $109 million of new business PVP, more than double the 2022 results. In terms of direct structured finance activity, we were at the highest level of direct PVP since 2009 and close to twice the amount we wrote last year. Providing institutions like banks and insurance companies with tools to syndicate risk

And close to twice the amount we wrote last year providing.

Providing institutions like banks and insurance companies tools to syndicate risk.

The optimized capital utilization continues to be an important focus of ours.

During the year, we took advantage of opportunities banks insurance companies pension funds and asset backed investor clients across sectors, including pooled corporate and fund finance.

We continue to make inroads into subscription finance, where.

Where we work with banks to help them provide credit to private equity style funds collateralized by investors funding commitments.

As 2024 begins we are off to a strong start in new business production. We are seeing increased issuance of muni bonds to start 2020 for creating more opportunities to provide insurance.

Robert Adam Bailenson: Optimized Capital Utilization continues to be an important focus of ours. During the year, we took advantage of opportunities. Thanks, insurance companies, pension funds, and asset-backed investor clients across sectors, including pooled corporate and fund financing. We continue to make inroads into subscription finance, where we work with banks to help them provide credit to private equity style funds collateralized by investors' funding commitments. As 2024 begins, we are off to a strong start in new business production. We are seeing increased issuance of muni bonds to start 2024, creating more opportunities to provide insurance. As increased federal spending provides an impetus for large-scale infrastructure projects, we bring not only our guarantee of timely principal and interest payments but also our financial strength and capacity to ensure large-project finances, as well as our years of experience underwriting infrastructure credits, including public-private partnerships.

As increased federal spending provides impetus for large scale infrastructure projects, we bring not only our guarantee of timely principal and interest payments, but also our financial strength and capacity to ensure a large project financings as well as our years of experience underwriting infrastructure credits, including public.

<unk> partnerships.

And we entered the year with both our non U S public finance and global structured finance businesses well established with recent records of success.

I'll now turn the call over to Ben to discuss our financial results.

Thank you Robyn Dominic and good morning, I'm excited to be joining the call and I'm looking forward to working with all of you.

I am pleased to report that fourth quarter 2023, adjusted operating income was $338 million or $5 75 per share compared with $14 million or 22 per share in the fourth quarter of 2022.

Ben Rosenblum: And we entered the year with both our non-U.S. public finance and global structure finance businesses well-established with recent records of success. I will now turn the call over to Ben to discuss our financial results. Thank you, Rob and Dominic, and good morning.

Before I go into detail on the quarterly results.

I wanted to highlight a change affecting our two Bermuda insurance subsidiaries and.

In December 2023, new legislation was passed implementing a Bermuda corporate income tax which had a significant effect on adjusted operating income.

Ben Rosenblum: I'm excited to be joining the call and I'm looking forward to working with all of you. I am pleased to report that fourth quarter 2023 adjusted operating income was $338 million or $5.75 per share, compared with $14 million or $0.22 per share in the fourth quarter of 2022. Before I go into detail on the Court of the Result.

Bermuda corporate income taxes, which will be at a rate of 15% will be assessed beginning in 2025.

The new law allows an economic transition adjustment, our EPA equal to the difference between the fair market value and the carrying value of assets and liabilities of each of the Bermuda insurance subsidiaries.

Ben Rosenblum: I wanted to highlight a change affecting our two Bermuda insurance subsidiaries. In December 2023, new legislation was passed implementing a Bermuda corporate income tax, which had a significant effect on adjusted operating income. The Bermuda corporate income tax, which will have a rate of 15%, will be assessed beginning in 2025.

The EPA resulted in the establishment of a deferred tax asset of $189 million that was reported as a benefit in the fourth quarter 2023, adjusted operating income.

It is expected to be utilized to reduce tax payments over 10 to 15 years beginning in 2025.

In addition to the Bermuda income tax benefit there are a few other noteworthy components of adjusted operating income in the fourth quarter of 2023.

Ben Rosenblum: The new law allows an Economic Transition Adjustment, or ETA, equal to the difference between the fair market value and the carrying value of assets and liabilities of each of the Bermuda insurance subsidiaries. The ETA resulted in the establishment of a deferred tax asset of $189 million that was reported as a benefit in the fourth quarter 2023 Adjusted Operating Income, and it's expected to be utilized to reduce tax payments over 10 to 15 years beginning in 2025. In addition to the Bermuda Income Tax Benefit, there are a few other noteworthy components of Adjusted Operating Income in the fourth quarter of 2023. In the insurance segment, every component of the investment portfolio contributed to fourth quarter 2023 adjusted operating income. Fair Value Gains from Contingent Value Instruments, or CVIs, which were received in 2022 in connection with various resolutions reached with Puerto Rico, were $32 million in the fourth quarter of 2023, while the comparable 2022 fourth-quarter amount was a loss of $4 million. Also of note is that all of the new recovery bonds we received as part of those resolutions have now been sold or redeemed, reducing our exposure to Puerto Rico. SEC.

In the insurance segment every component of the investment portfolio contributed to fourth quarter 2023, adjusted operating income.

Fair value gains and contingent value instruments, or CVI, which we received in 2022 in connection with various resolutions reached with Puerto Rico were $32 million in the fourth quarter of 2023, while the comparable 2022 fourth quarter amount was a loss of 4 million.

Also of note is that all of the new recovery bonds. We received as part of those resolutions have now been sold or redeemed, reducing our exposure to Puerto Rico.

Second in the fourth quarter of 2023 equity in earnings of our alternative investments was a gain of $22 million, while the comparable 2022 amount was a loss of $5 million.

And finally fixed maturity securities and short term investments generated net investment income of $97 million in the fourth quarter of 2023, compared with $80 million in the fourth quarter of last year.

Ben Rosenblum: In the fourth quarter of 2023, equity and earnings of our alternative investments was a gain of $22 million, while the comparable 2022 amount was a loss of $5 million. And finally, fixed maturity securities and short-term investments generated net investment income of $97 million in the fourth quarter of 2023, compared with $80 million in the fourth quarter of last year. Their increase was primarily attributable to higher short-term interest rates and higher average short-term balances, as well as higher income from loss mitigation security.

The increase was primarily attributable to higher short term interest rates and higher average short term balances as well as higher income from loss mitigation securities.

Net earned premiums and credit derivative revenues were $86 million in the fourth quarter of 2023 down from $111 million in the fourth quarter of 2000 $22 million to $29 million in premium accelerations attributable to resolve Puerto Rico Highway and transportation.

<unk> exposures in 2022, however, scheduled net earned premiums were slightly higher in 2023.

Ben Rosenblum: Net earned premiums and credit derivative revenues were $86 million in the fourth quarter of 2023, down from $111 million in the fourth quarter of 2022 due to $29 million in premium accelerations attributable to resolve Puerto Rico highway and transportation exposures in 2022. However, scheduled net earned premiums were slightly higher in 2023, and loss expense of $7 million and economic loss development of $17 million in the fourth quarter of 2023 were mainly attributable to changes in discount rates. The difference between these loss metrics is the impact of deferred premium revenue associated with transactions with expected losses. In the Asset Management Sector, for example, reported after-tax adjusted operating income of $6 million.

Loss expense of $7 million and economic loss development of $17 million in the fourth quarter of 2023 were mainly attributable to the changes in discount rates the.

The difference between these loss metrics is the impact of deferred premium revenue associated with transactions with expected losses.

And the asset management segment, we reported after tax adjusted operating income of $6 million.

This is the first time, we are reporting our share of earnings and standpoint, which is on a one quarter lag and the first time asset management has generated income since establishing this segment in 2019.

And finally changes in New York tax regulations resulted in the benefit of $19 million, which is reflected in the corporate division adjusted operating income.

Ben Rosenblum: This is the first time we are reporting our share of earnings in SoundPoint, which is on a one-quarter lag and the first time asset management has generated income since establishing this segment in 2019. And finally, changes in New York tax regulations resulted in a benefit of $19 million, which is reflected in the Corporate Division Adjusted Operating Income. The changes relate to the methodology for allocating income across jurisdictions, and the benefit reflects the retroactive application of this new methodology to the previous year's assured IM asset management fee. On a full year basis, Adjusted Operating Income was $648 million, or $10.78 per share.

Changes relate to the methodology for allocating income across jurisdictions and the benefit reflects the retroactive application of this new methodology to the previous year's assured I am asset management fees on.

On a full year basis, adjusted operating income was $648 million or.

Or $10 78 per share the most noteworthy contributor to adjusted operating income in 2023 was the completion of the sound point and HP transactions the transformed assured I am in.

So a minority interest in sound point, a larger asset manager with significant distribution capabilities, a more diverse array of investment opportunities and our history of strong growth in assets under management.

Ben Rosenblum: The most noteworthy contributor to adjusted operating income in 2023 was the completion of the SoundPoint and AHP transactions that transformed Assured IM into a minority interest in SoundPoint, a larger asset manager with significant distribution capabilities, a more diverse array of investment opportunities, and a history of strong growth in assets under management. The SoundPoint and AHP transactions collectively generated corporate division gains of $222 million or $175 million on an after-tax basis and represent significant accomplishments in our earnings diversification strategy. On a per share basis, even excluding the effect of the Bermuda Tax Benefit, 2023 adjusted operating income was the highest it has ever been.

At some point and HP transactions <unk>.

<unk> generated corporate division gains of $222 million or $175 million on an after tax basis and represent significant accomplishments and our earnings diversification strategy.

On a per share basis.

Even excluding the effect of the Bermuda tax benefit 2023, adjusted operating income was the highest it has ever been.

This reflects the cumulative effect of our long standing strategic initiatives across all aspects of the business first in our insurance business. We have written new business across all our sectors over the past several years, which has led to a stabilized level of scheduled net earned premiums.

Ben Rosenblum: This reflects the cumulative effect of our longstanding strategic initiatives across all aspects of the business. First, in our insurance business, we have written new business across all our sectors over the past several years, which has led to a stabilized level of scheduled net earned premium. On the loss mitigation front, we continue to work with trouble issuers to resolve those exposures.

On the loss mitigation front, we continue to work with troubled issuers to resolve those exposures and as of December 31, 2023, only two 2% of our net par outstanding consist of below investment grade credits.

We have also successfully diversified earnings.

Ben Rosenblum: And as of December 31st, 2023, only 2.2% of our net par outstanding consists of below investment grade credit. We have also successfully diversified earnings. Through our asset management segment, we have turned a corner and are now reporting income from our investment and sound point and alternative investments where the annualized returns have consistently exceeded returns on the fixed maturity portfolio. And lastly, we have continued to return value to shareholders as we manage our capital, including by repurchasing our shares and paying increased dividends year over year. In the insurance segment, once again, investment results help drive our adjusted operating income for 2023. We have fair value gains on Puerto Rico's CVIs of $74 million in 2023, primarily due to an increase in the sales and use tax collections underlying these CVIs.

Through our asset management segment, we have turned the corner and are now reporting income from our investment in some point and alternative investments where the annualized returns have consistently exceeded returns on the fixed maturity portfolio.

And lastly, we have continued to return value to shareholders as we manage our capital, including by repurchasing our shares and paying increased dividends year over year.

In the insurance segment once again and desperate results helped drive our adjusted operating income for 2023.

We had fair value gains on Puerto Rico, <unk> of $74 million in 2023, primarily due to an increase in the sales and use tax collections underlying <unk> since.

Since the end of 2023, we sold <unk> with a December 31, 2023 carrying value of $44 million or 15% of the notional amount that CVI that will remaining.

Ben Rosenblum: Since the end of 2023, we sold CVIs with a December 31st, 2023 carrying value of $44 million, or 15% of the notional amount of CVIs that were remaining. Equity and earnings from our alternative investments were $82 million in 2023, mainly attributable to the CLO strategy. Alternative investments have generated an inception to date annualized internal rate of return of 12.8%, and as of December 31st, 2023, we had alternative investments with a net asset value of $729 million in the insurance segment that are accounted for under the equity method. As we have noted in the past, these investments result in more volatility in periodic income compared to our fixed maturity investment portfolio. The $8 billion available for sale, fixed maturity, and short-term investment portfolio generated net investment income of $370 million in 2023, compared with $278 million in 2022.

Equity in earnings from our alternative investments were $82 million in 2023, mainly attributable to the CLO strategy.

Alternative investments have generated an inception to date annualized internal rate of return of 12, 8% and as of December 31 2023.

Turning to investments with a net asset value of $729 million in the insurance segment that are accounted for under the equity method as we have noted in the past these investments.

Result, and more volatility in periodic income compared to our fixed maturity investment portfolio.

The $8 billion available for sale fixed maturity and short term investment portfolio generated net investment income of $370 million in 2023, compared with $278 million in 2022.

Ben Rosenblum: The increase was primarily due to higher short-term interest rates and higher short-term balances, as well as higher income from loss mitigation security. Partially offsetting these gains will be lower insurance segment net-earned premiums from refundings, which declined by $151 million due to the acceleration of $133 million in earned premium on Puerto Rico exposures that resolved in 2022. More importantly, however, scheduled net-earned premiums were consistent year over year.

The increase was primarily due to higher short term interest rates and higher short term balances as well as higher income from loss mitigation securities.

Partially offsetting these gains were lower insurance segment net earned premiums from refundings, which declined by $151 million due.

Due to the acceleration of $133 million and earned premium on Puerto Rico exposures that resolved in 2022 more importantly, however, scheduled net earned premiums were consistent year over year.

Ben Rosenblum: Insurance segment lawsuits in 2023 were $161 million, up from $12 million in 2022, primarily due to higher Puerto Rico Electric Power Authority losses and a lower benefit on RMBS transactions. Asset Management Adjusted Operating Income for 2023 was a gain of $3 million and included a half-year of Assured IM and one-quarter income from SoundCloud. The Share Repurchase Program has been a key strategic objective since 2013 and continues to be accretive to all our key financial metrics. In the fourth quarter of 2023, we increased the pace of repurchases, buying back 1.7 million shares for $109 million at an average price per share of $65.83, consistent with our previously stated plan to increase share repurchases in the second half of the year. This brought our total 2023 repurchases to $199 million, or 3.2 million shares, which represents 5.4% of the shares outstanding at the beginning of the year.

Insurance segment loss expense in 2023 was $161 million.

Up from $12 million in 2022, primarily due to higher Puerto Rico Electric power authority losses, and a lower benefit on RMB <unk> transactions.

Asset management adjusted operating income for 2023 was a gain of $3 million and included a half year of assure I am and one quarter income from sound point.

The share repurchase program has been a key strategic objective since 2013 and continues to be accretive to all our key financial metrics.

In the fourth quarter of 2023, we increased the pace of repurchases buying back one 7 million shares for $109 million at an average price per share of $65 83.

Consistent with our previously stated plan to increase share repurchases in the second half of the year.

This brought our total 2023 repurchases to $199 million or $3 2 million shares which represents five 4% of the shares outstanding at the beginning of the year.

Ben Rosenblum: Since the beginning of our repurchase program in 2013 and through December 31st, 2023, we have returned $4.9 billion to shareholders under this program and retired over 144 million shares. Since the end of 2023, we've repurchased another $76 million in shares, bringing the remaining authorization to repurchase shares to about $228 million. For 2024, we are targeting $500 million of share repurchase.

Since the beginning of our repurchase program in 2013 and through December 31, 2023, we have returned $4 9 billion to shareholders under this program and retired over 144 million shares.

Since the end of 2023, we have repurchased another $76 million in shares.

The remaining authorization to repurchase shares to about $228 million for 2024, we are targeting $500 million of.

Share repurchases.

Ben Rosenblum: The timing of Sherry purchases depends on the timing of dividend availability from insurance subsidiaries, as well as the assessment of other accretive strategic growth initiatives that may require holding company liquidity. We also declared dividends of $68 million in 2023, and last week, the company declared a quarterly dividend of $0.31 per common share, an increase of 11% from the 2023 quarterly dividend rate of $0.28 per common share. In terms of our current holding company liquidity position, we have cash and investments of approximately $263 million, of which $30 million resides in AGL.

The timing of share repurchases depends on the timing of dividend availability from insurance subsidiaries as well as the assessment of other accretive strategic growth initiatives that may require holding company liquidity.

We also declared dividends of $68 million in 2023 and last week. The company declared a quarterly dividend of 31 per common share an increase of 11% from the 2023 quarterly dividend rate of 28.

Per common share.

Yeah.

In terms of our current holding company liquidity position, we have cash and investments of approximately $263 million of which $30 million resides in AGL. These funds include the recent $200 million share redemption from AGC.

Operator: These funds include the recent $200 million share redemption from AGC. As a result of the $350 million five-year debt offering in August of last year, whose proceeds were used to refinance $330 million in debt originally due in mid-2024, the holding company funds are available for other liquidity needs or for use in the pursuit of our strategic initiatives to either expand our business or repurchase shares to manage our capital. Continued share repurchases, along with our positive adjusted operating income and new business production, have increased adjusted operating shareholders' equity per share and adjusted book value per share to new records of over $106 and almost $156, respectively. While operating results vary from period to period, the consistent quarterly increase in these book value metrics reflect how the successful execution of our key strategic initiatives builds shareholder value over the long term.

As a result of the $350 million five year debt offering in August of last year, whose proceeds we used to refinance $330 million in debt. Originally due in mid 2020 for the holding company funds are available for other liquidity needs or for Houston.

The pursuit of our strategic initiatives to expand our business, we'll repurchase shares to manage our capital.

Continued share repurchases along with our positive adjusted operating income and new business production have increased adjusted operating shareholders' equity per share and adjusted book value per share to new records of over $106 and almost $156 respectively.

While operating results vary from period to period, the consistent quarterly increases in this book value metrics reflect how the successful execution of our key strategic initiatives that will shareholder value over the long term.

Operator: I'll now turn the call over to our operator to give you the instructions for the Q&A period. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. If you're using a speakerphone, please pick up your handset before pressing the key.

I'll now turn the call over to our operator to give you the instructions for the Q&A period.

We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

If youre using a speakerphone please pick up your handset before pressing the keys.

Operator: At this time, we will pause momentarily to assemble our roster. Our first question today is from the line of Tommy McJoynt of KBW. Tommy, your line is now open. Please go ahead. Hey, good morning guys.

At this time, we will pause momentarily to assemble our roster.

Okay.

Okay.

Yeah.

Our first question today is from the line of Tony <unk> of <unk>.

Your line is now away from please go ahead.

Hey, good morning, guys. Thanks for taking my questions.

Thomas McJoynt: Thanks for taking my questions. Could you walk through some of the science behind why the $200 million was the appropriate amount to request from Maryland? It's evidently a function of capital ratios and exposure size, claims, paying resources, and plenty of other inputs, I'm sure.

Could you walk through some of the or.

Our science behind it.

Why the $200 million was the appropriate amount to request for Maryland.

It's evidently.

Functional capital ratios exposure size claims paying resources and plenty of other inputs I'm sure but.

Can you just help us give us some guardrails as for some of those key ratios that you would point to just shared about why the $200 million was the right figure there.

Dominic John Frederico: But could you just help us, you know, give us some guardrails as for some of those key ratios that you would point to to show why the $200 million was the right figure there? Well, Tommy, it's consistent with our capital planning strategy in terms of buyback. We try to manage it at all the levels of restrictions that we have, which includes Assured Guaranty. Okay. And can you remind me the differences between, when I look at the capital ratios of AGM and AGC, they're vastly different numbers. Could you just remind me kind of what the underlying reason for the differences is?

Well tell me, it's consistent with our capital planning strategy in terms of buyback we tried to manage it to all the levels of restrictions that we have which includes.

Multitude of rules and regulations, we estimate relative to both regulatory and rating agency.

What we said we'd been conservative with how we looked at it we always want the states to be very positive with assured guaranty convinced of our financial strength.

<unk> managed amount based on what we were targeting those share repurchases in 2024.

Okay.

And can you remind me the differences between when I spoke at the capital ratios of AGM and AGC.

There are vastly different numbers.

Could you just remind me kind of what the underlying reason for the differences and just to be clear I didn't Miss an update on.

Dominic John Frederico: And just to be clear, I didn't miss an update on the New York request for a special dividend, did I? He did, did not, I'm sorry. So the difference is really the makeup of the portfolio and the capital that they have. And we run both of them through our own capital model, through the S&P model, through the various state regulatory models, and come up with our excess capital. And as I said, we plan our dividend policy off of that excess capital and our share repurchase target for the year. In terms of New York, obviously, as we said in the last quarter's earnings call, we replied to both states for special dividends. We've gotten the Maryland approval, and we're working our way through the New York approval process, which we're confident will be successful.

The New York request for a special dividend.

You did.

Do not I'm sorry.

So the difference is really the makeup of the portfolio and the capital that they have.

And we run both of them through our own capital model through the S&P model through the real estate.

<unk> models and come up with our excess capital and as I said, we plan our dividend policy for that excess capital and our share repurchase target for the year.

In New York, Obviously, as we said in the last quarter's earnings call. We were applied to both states for special dividends, we've gotten the Maryland approval.

Working our way through the New York approval process, which we're confident will be successful.

Dominic John Frederico: Okay, got it. And then historically, you know, I think that the request and approval of special dividends has been, you know, a fairly regular part of the strategy, at least it was pre-pandemic, even though it's called specials, but it seems like it was more of a regular function. Do you envision that again becoming a somewhat regular part of the strategy in light of your outlook for the kind of your business outlook opportunity and anything else for the guarantor business where you might need capital, just as you weigh your strategic alternatives? Yes, we do, Tommy. And to give you some numbers, so for AGM, we've gotten dividend approvals in 2016 and 2017. That's 2016, 2017.

Okay got it.

Then historically.

And then a question on approval of the special dividend.

Currently regular part of the.

The strategy at least it was pre pandemic.

Called specials, but it seems like it was more of a regular function.

Do you envision that again becomes somewhat regular part of the strategy in light of your outlook for.

Kind of your business outlook opportunity than anything else for the guarantor business, where you might need capital just as you weigh your strategic alternative.

Yes, we do Tommy and to give you some numbers so free the AGM, we've gotten dividend.

<unk> in 16, and 17 2016 2017 for AGC, we've gotten approvals in 18 19 and 23.

Dominic John Frederico: For AGC, we've gotten approvals in 2018, 2019, and 2023. So we're now looking at, with all the problems behind us, pandemics, Puerto Rico, great recessions, etc., we now expect it to be a normal part of our dividend process. Great, thanks for recapping those years. And then this last one really quick; I'll sneak it in as a housekeeping one.

So we're now looking at it with all the problems behind Us Pandemics, Puerto Rico, Great recessions et cetera, we now expect it to be a normal part of our dividend process.

Great. Thanks for the recap in those years and then just last one really quick I'll sneak in a housekeeping one.

Ben Rosenblum: Given your kind of mix of business by tax jurisdiction, what's an appropriate effective gap tax rate that we can use for modeling earnings and going forward? I'm not sure how much the Bermuda tax law change would impact that, but do you kind of have a rough effective gap tax rate we can use? Yeah, I think as you noted, the Bermuda tax law change is obviously going to affect our Bermuda based income. I think when you look forward, it's going to obviously, at least on an expense basis, not necessarily on a cash basis, increase that over the next couple of years. And I'd probably guess somewhere, you know, probably 16, 17, 18% that really depends on the mix of business that comes through. This is Ben Rosenblum, our CFO, for those of you that don't recognize the voice. I tried not to screw up my first question.

Given your kind of mix of business by tax jurisdiction.

Whats an appropriate effective GAAP tax rate that we can use for modeling earnings.

Going forward I'm not sure how much the Bermuda tax law change would impact that but do you kind of have a rough effective GAAP tax rate weakness.

Yes.

As you can as you noted the Bermuda tax law change is obviously going to affect our Bermuda based income I think when you look forward, it's going to obviously at least on an expense basis not necessarily a cash basis increase that over the next couple of years and I would probably guess somewhere.

<unk> 16, 17, 18% that really depending on the mix of business that comes through.

It's been rosenbloom, our CFO for those of you that don't recognize the words trying not to screw up my first question.

Ben Rosenblum: All right. Thanks, Geoff. Our next question today is from the line of Giuliano Bologna of Compass Point. Please go ahead.

Yeah.

Alright, thanks, guys.

Our next question today is from the line of Giuliano Bologna of Compass point. Please go ahead. Your line is open.

Giuliano Bologna: Your line is open. Thank you and congratulations on the continued execution. I remember when you started buying back stock and your share count was closer to 200 million, not in the low 50 million dollar range, so it's been a long ride along the way. A handful of my questions were kind of asked before, but one thing I'd be curious about is that you're still in a position where you're most likely generating more capital than you're consuming over the next few years. When you think about that, and the commentary on specials becoming more regular as a regular capital planning strategy, do you think the security has the ability to keep up the $500 million buyback break beyond 24, or, in a sense, how long could that last? Or is it just 24 for now?

Thank you and congrats on the continued execution of our garage when you started buying back stock and the share count was closer to $200 million.

About $50 million range.

Along right along the way.

Yes.

A handful of my questions were kind of asked before but one thing I'd be curious about.

Youre still in a position where most likely generating more capital than you are consuming.

Over the next few years.

When you think about that.

The commentary around special is becoming more regular regular capital planning.

Strategy.

Keith.

With regard to how is it going to keep up with $500 million buyback rate beyond 'twenty four or so.

I'm, sorry, how long could that class.

So just.

Just 24 for now.

Dominic John Frederico: Well, Giuliano, in spite of our great growth opportunities across the board in all aspects of our business and the asset management business as well, plus other opportunities to strategically expand both jurisdictions and product lines, capital management and capital management strategy is still number one in the company. And as you saw this year, we've immediately returned to the 500 million target. So each year is going to be an individual decision.

Giuliano in spite of our great growth opportunities across the board in all aspects of our business and the asset management business as well plus other opportunities to strategically expand both jurisdiction and product line.

Capital Management and capital management strategy is still number one in the company and as you've looked at this year. We returned back to the 500 million target. So each year is going to be an individual decision, but once again capital management strategy is number one we know we need to get the equity down to generate a higher ROE, which everybody in the market wants us to do and we're very cognizant of that fact.

Dominic John Frederico: But once again, capital management strategy is number one. We know we need to get the equity down to generate a higher ROE, which everybody in the market wants us to do. And we're very cognizant of that fact.

Dominic John Frederico: That's very helpful. And then pivoting over to the asset management side, the equity and earnings from investees were about $5 million in the fourth quarter. And that, you know, let's say, I think it was a partial period anyway and probably had some volatility, just as actively as the entries are emerging. Is there a rough way to think about, you know, what the earnings capacity could be for your equity from investees?

Thats very helpful.

And then pivoting over to the us earning side.

The equity in earnings from.

<unk> is about $5 million in the fourth quarter.

I think it was a partial period emulators.

We probably have some volatility.

Actively our guarantees of Mercury.

Is there a rough way to think about.

The earnings capacity could be.

To your T.

Equity from Investees, and then one kind of housekeeping corner on that whether or not thats pretax or post tax.

Dominic John Frederico: And then one kind of housekeeping point around that is whether or not that's pre-tax or post-tax. We haven't given out a number, Tommy, but you can, or Giuliano, but you can understand that the first quarter has a lot of integration costs in it, a lot of, you know, management shifting and desk shifting. We had about 100 employees in Assured IM. They took about 37 of those employees.

We haven't given out a number target, but you can or Julian I know, but you can understand that the first quarter has a lot of integration costs.

A lot of you know.

Management is shifting and shifting.

Shifting we had about 100 employees and assured I am they took about 37 of those employees with the benefit of expense savings that will come through yet.

Dominic John Frederico: So the benefit of that expense savings hasn't come through yet. I think you're gonna see that number change dramatically as we go through the year. Plus, we have strategies targeting the growth of the asset manager as well. So I think we're very bullish on what we think the asset manager is gonna deliver relative to the bottom line. And I'm not hesitant to give you a number because it's really shifting fairly quickly. So I don't wanna give you a number that's either gonna be way too low, and therefore, you get a different pressure that Yes! Imagine is going to deliver.

To see that number change dramatically as we go through the year plus we have strategies targeting the growth of the asset manager as well. So I think we're very bullish on what we think the estimate is going to deliver relative to the bottom line and im hesitant.

Hesitant to give you a number because it's really shifted fairly quickly. So I want to give you a number because you are going to be way too low and therefore, you get a different impression of what the estimate is it's going to deliver.

Dominic John Frederico: So I think as we go quarter to quarter, we'll give you an update on where we stand synergistically, integration-wise, and expansion-wise. To answer your housekeeping question, that's a pre-tax number. Thank you. And I do want to ask you, you know, a slight piece around that that, you know, may fall in the housekeeping category. You know, from a distribution perspective, obviously, you know, the entity would generate earnings and then distribute them at a certain point in time. Are the distributions, you know, quarterly, annual, or is there any kind of, you know, irregularity?

I think as we go quarter to quarter, we'll give you an update on where we stand Synergistically integration was an expansion was.

To answer your housekeeping question Thats, a pretax number.

Alright, thank you.

Perhaps.

Slide please.

Around that.

Yes.

So on the housekeeping category.

A distribution perspective, you're obviously.

Generally earnings distributor.

Point in time or the distribution using our quarterly annual or is there anything up here.

Except it pays for the distributions are growing you're familiar.

Dominic John Frederico: Thank you. Accepted pace for the distributions of from the, Sounds good. That's perfect. That's all I had. No problem. Well, that was all the questions I had.

Sounds good that's perfect.

That's all I had.

No problem.

That was the other question I had.

Giuliano Bologna: I really appreciate it and congratulate you on the continued execution. Thank you. Thank you. Our next question today is from the line of Geoffrey Dunn of Dowling and Partners. Geoffrey, your line is now open. Please go ahead. Thank you. Good morning.

Congrats on the continued execution.

Thank you. Thank you thank you Julian.

Our next question today is from the line of Geoffrey Dunn of Dowling and partners.

Jeffrey Your line is now open. Please go ahead.

Thank you good morning.

Yeah.

Geoffrey Murray Dunn: I was just wondering if you could give a quick 101 of the accounting of the asset management business going forward as far as it hits the P&L. You still have an asset management segment this quarter as well as your equity earnings and investees, so a very high level. How should we expect to see the income coming through in the future? Yeah, I think you're going to I think you're going to continue to see it coming through in much the same way as we're reporting it now. Most of it is going to be just coming through our equity ownership and sound point as well. And that's probably how you're going to see it going forward. So what is the other income and expense line?

Good morning, I was just wondering if you could give a quick one on one.

Of the accounting of the asset management business.

Going forward as far as it hits the P&L you still have Master management segment this quarter as well as.

Your equity earnings and invest at a very high level, how should we expect to see the income coming through on the future.

Yes, I think youre going to I think you are going to continue to see it coming through much in the same way as we're reporting it now.

Most of it is going to be just coming through in our equity ownership in sound point as well.

That's probably how you're going to see going forward.

So it would be.

One is the other income and expense line.

Geoffrey Murray Dunn: Sorry about that, and I'm going to call it a day. So on the other income and expense line, we have a number of other investments that are still legacy investments that we had before with Assured Investment Management and other investments and funds, and that's what you're seeing coming through. Remember, we started the Alternative Investments Strategy long before we both set up for it. I think you're going to see that eventually dwindling down over time, but as we crystallize some of those investments, there may be a little volatility around that, but that will obviously dwindle down over time as we run those off.

Sorry, Greg.

What we said.

Thanks, Gary.

The other income and expense line, we have a number of other investments that still are legacy investments that we had before with assured investment management and other investments in bonds and Thats, what youre seeing coming through.

Yes, we have started to see surgical valve strategy.

It's been a point.

I think youre going to say that.

<unk> dwindling down over time, but as we can as we crystallize some of those investments you may and maybe a little volatility around that but that will obviously dwindle down over time as we run those off.

Ben Rosenblum: Okay, you're going to see, you know. Yep, exactly. And you're also going to see, Geoff, remember, you're going to see equity earnings in the funds that we've invested as well, but that's going to be much more volatile, given that you're investing in sound point funds. But the earnings from the GP are going to come through, as Ben suggested.

Okay.

Okay.

Yes, exactly and Youre also going to see Jeff remember, you're going to see equity earnings and the funds that we've invested in as well, but thats going to be much more volatile given that you have.

In some funds.

The earnings from the GPA going to come through.

Dominic John Frederico: Okay. All right. Thank you. Thank you. Thank you. Thank you. This concludes the question and answer session. I would now like to turn the conference back over to our host, Robert Tucker, for closing remarks. Thank you, operator. I'd like to thank everyone for joining us on today's call. If you have additional questions, please feel free to give us a call. Thank you very much. This concludes today's conference call. Thank you all for attending. You may now disconnect your lines and have a great day.

It's been suggested.

Okay alright, thank you.

Thanks, Jeff.

Yeah.

This concludes the question and answer session I would now like to turn the conference back over to our host Robert Tucker for closing remarks.

Thank you operator, I'd like to thank everyone for joining us on today's call. If you have additional questions. Please feel free to give us a call. Thank you very much.

Yeah.

This concludes today's conference call. Thank you all for attending you may now disconnect your lines and have a great day.

[music].

Okay.

Okay.

Okay.

Sure.

Sure.

Yes.