Q4 2024 Assured Guaranty Ltd Earnings Call
Ezra: Good morning and welcome to the Assured Guarantee Limited fourth quarter and full year 2024 Earnings Conference Call. My name is Ezra and I will be the operator for today's call.
Ezra: 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. 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. To withdraw your question, please press star, then two. Please note that this event is being recorded.
Speaker Change: 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 Tucker: Thank you, Operator, and thank you all for joining Assured Guarantee for our fourth quarter and year-end 2024 Financial Results Conference Call. Today's presentation is made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Robert Tucker: 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.
Robert Tucker: These statements are subject to change due to new information or future events.
Robert Tucker: 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.
Robert 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, most current financial filings, and for the risk factors.
This presentation also includes references to non-GAAP financial measures.
Robert Tucker: Turning to the presentation, our speakers today are Dominic Frederico, President and Chief Executive Officer of Assured Guarantee Limited.
Robert Tucker: 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.
Robert Tucker: Yeah.
Dominic Frederico: Thank you Robert and welcome to everyone joining today's call.
Dominic Frederico: Assured guaranty produced many significant achievements in 2024 or 40, if you are in business.
Dominic Frederico: 20th year as a publicly traded company.
Dominic Frederico: We earned adjusted operating income per share of $7.
Dominic Frederico: And created significant future earnings from strong financial Guaranty originations.
Dominic Frederico: Once again, we reached record year end high for adjusted book value per share at $170.12.
Dominic Frederico: Adjusted operating shareholders' equity per share at $114.75.
Dominic Frederico: And shareholders' equity per share at $108 80.
Dominic Frederico: We continue to build value for both assured guaranty's shareholders and policyholders.
Dominic Frederico: Pjm's common stock share price rose, 20% for the year to $90.01.
Dominic Frederico: And then our capital management program, we repurchased 11% of the common shares that were outstanding at December 31, 2020.
Dominic Frederico: While meeting our 2024 target of repurchasing $500 million of our shares.
Dominic Frederico: Further managing our excess capital.
Dominic Frederico: And new business production Pvp across our three financial guarantee businesses to up to $400 million for the second year in a row.
Dominic Frederico: U S public finance originated $270 million of Pvp.
Highest annual total in four years.
Dominic Frederico: Both non U S public finance and global structured finance saw strong production and build solid pipelines for 2025 and beyond.
Dominic Frederico: We ensured the winner of the bond buyers over all of 2024 deal of the year.
Dominic Frederico: The health care financing northeast regional and.
Dominic Frederico: An innovative financing category winners.
Dominic Frederico: I will tell you more about our participation in these exceptional transactions when he reviews. Our production resulted in a few moments.
Dominic Frederico: We expanded our geographic reach and pursued further opportunities in Australia, New Zealand and Asia by opening an office in Australia and one in Singapore.
Dominic Frederico: We made further inroads in continental Europe, and continue to view it as an area of opportunity.
Dominic Frederico: As we mentioned on several previous earnings calls, we completed the consolidation of our two primary insurance subsidiaries into one emerging assured guaranty municipal to assured guaranty bank, thereby creating a more efficient capital structure and the larger ensure whether it be more highly diversified insured portfolio larger capital base and <unk>.
Dominic Frederico: Greater claims paying resources.
Dominic Frederico: This is one of several strategic moves that we've made in recent years.
Dominic Frederico: We're positioned us for growth profitability and corporate efficiencies.
Dominic Frederico: The inception to date return on our alternative investments, including funds managed by some point in HP was approximately 13% through year end.
Dominic Frederico: Regarding our one remaining unresolved, Puerto Rico exposure PREPA. The title III Court has ordered the parties to continue mediation.
Dominic Frederico: Extending the time for them to resolve their differences.
Dominic Frederico: Additionally, the first circuit is to confirm the bondholders are secured by an unavoidable security interest the purpose past current and future net revenues and twice denied rehearing petition by the ethylene be asking the court to reconsider such ruling.
Speaker Change: We remain committed to a fair and consensual resolution for all PREPA stakeholders and are determined to enforce our rights as a secured creditor.
Speaker Change: We are well positioned for success in 2025 in the U S municipal bond market and started the year with a very strong new issue volume.
Speaker Change: Some analysts projected 2025 volume will rival or even exceed the annual record volume of 2024.
Speaker Change: Another important achievement and another example of insured defending our legal rights.
Speaker Change: Early February 2025, we successfully concluded litigation with Lehman Brothers International Europe, who will recognize a pretax gain of approximately $103 million in the first quarter of 2025.
Ben: Ben will discuss this further in a few minutes.
Ben: During our 40 year history, we have proven over and over value and reliability of our guarantee and the resilience of our business model, even through some extraordinarily difficult global economic environment and geopolitical events.
Ben: We believe we have untapped business opportunities around the world as well as the financial strength and talented people to successfully pursue these opportunities over the coming years and decades.
Speaker Change: I'll now turn the call over to Rob to provide more details about our production results.
Rob: Thank you Dominic business production across our three main business lines U S public finance non U S public finance and global structured finance continued to perform well in 2024.
Rob: As Dominic mentioned Pvp across our three financial guaranty businesses topped $400 million for.
Rob: For the second year in a row and was appreciably higher than the $375 million in 2022.
Rob: And U S public finance, we had a very strong year, reaching $270 million in Pvp.
Rob: <unk> were primarily driven by continued recognition of the value of our guarantee across the credit spectrum and the use of our insurance on some very large infrastructure transactions.
Rob: Buying with a record year.
Rob: They're all municipal par issued which.
Rob: Which exceeded 500 billion.
Rob: For the first time.
Rob: Bond insurance continued to be in strong demand in 2020 form with the industry's annual penetration rate at eight 3% of par issued.
Rob: This was the fourth consecutive year when industry par penetration reached 8% or higher.
Rob: Assured guaranty achieved a 14 year high for annual new issue insured par sold ensuring more than $24 billion. During 2024, the most since 2010.
Rob: Assured guaranty insured 58% of.
The total insured par issued in 2024 as we continued our leadership position in the industry.
Rob: <unk> nearly 800, new issue transactions for the year.
We finished the year with an excellent fourth quarter, capturing 61% share of par insured and the primary municipal bond market total insured municipal par sold reached 10% penetration of the municipal bond market during the fourth quarter.
Rob: Short guaranty fourth quarter primary market insured par increased by 37% year over year to $7 4 billion.
Rob: During the year assured guaranty rep par amounts of $100 million of more on each of 48 municipal transactions.
Rob: This tied our 2021 all time high in this category and included six deals with more than $500 million.
Rob: Of AG insured par as we have launched several of the market's largest and most high profile transactions.
Rob: We believe this indicates that institutional investors increasingly place greater value on our guarantee.
Rob: Among our largest transactions in 2024 three were honored at the bond buyers deal of the year ceremony. These included the overall 2024 deal of the year. The Brightline, Florida passenger rail project issue, where we insured $1 $1 billion of par. This transaction also won in the innovative.
Rob: Financing category.
Rob: The northeast regional deal of the year was awarded to the JFK International Airport, New terminal, one project, where we insured a total of $1 $6 billion.
Rob: $801 million in June 2024, and $800 million in December 2023.
Rob: In the health care financing winter issued by the Westchester Medical Center Health Network, serving Westchester County, New York, where we insured $259 million of par.
Rob: These transactions were noteworthy for their underlying credit profiles are amounts and use of insurance to expand and diversify the bond buyer base and to enhance the overall liquidity of the transaction.
Rob: Also in 2024, we saw an increase in the use of our insurance among double a credits.
Rob: And as those credits rated in the double a category by S&P and Moody's on an uninsured basis.
Rob: Year over year, we insured 27% more of these policies for 38% more par, reflecting a total of 103 policies and approximately $4 4 billion.
Rob: Of insured par.
Rob: Non U S public finance contributed $67 million of Pvp in 2020 for a very solid result.
Rob: In 2020 for non U S public finance Pvp included secondary market guarantees of several UK regulated utilities and airport transactions as well as the annual renewal of certain liquidity guaranteed.
Rob: Our strong 2024 production results also included $65 million of Pvp generated by our global structured finance business.
Rob: The transactions were primarily insurance Securitizations bank balance sheet relief subscription finance and the guarantee of a diversified real estate portfolio.
Rob: As part of our new business growth strategy in Australia. For example, we ensure that transaction in 2024 for a bank, which provided protection on approximately $600 million core lending portfolio.
Rob: We continue to pursue both public finance and structured finance opportunities in Australia.
Rob: All three of our major financial Guaranty businesses are providing solid contributions to our bottom line and we continue to look for opportunities by expanding our geographic reach and exploring new product opportunities.
Dan: In addition to building our business further in our U S and U K markets. We are pursuing opportunities in Australia, New Zealand Continental Europe, and Asia I will now turn the call over to Dan to discuss our detailed financial results.
Thank you Dominic and Rob and good morning.
Dan: I am pleased to report fourth quarter 2024, adjusted operating income of $66 million or $1 27 per share.
Dan: By comparison in the fourth quarter of 2023.
Dan: We reported adjusted operating income of $338 million or $5 75 per share, which included $208 million and nonrecurring benefit related to tax law changes in Bermuda and New York State.
Dan: The insurance segment contributed $98 million of adjusted operating income in the fourth quarter of 2024, compared with $339 million in the same period of last year.
Dan: The most notable item driving the quarter over quarter variance as the prior year benefit related to Bermuda tax law changes of $189 million. In addition.
Dan: The fourth quarter of 2023 included an after tax fair value gain of $25 million on Puerto Rico contingent value instruments or CVI.
Dan: That we received in 2022 as part of the resolution of most of our Puerto Rico exposures.
Dan: Comparable amounts in the fourth quarter of 2024 were negligible.
Dan: Since 2022, we've been strategically reducing our CVI position and as of December 31, 2024, we held only 21% of the original notional amount, we received our $123 million on a fair value basis.
Dan: Lastly loss expense increased from $7 million in the fourth quarter of 2023 to.
Dan: <unk> hundred $31 million this quarter, mainly due to.
Dan: Lower expected recoveries on certain long dated U S public finance transactions.
Dan: And increased losses on certain insured health care transactions.
Dan: Loss expense is based on both the amount of economic development and our reporting period.
Dan: And the amortization of the deferred premium revenue.
Dan: In the fourth quarter of 2024, net economic loss development was $17 million.
Dan: Primarily attributable to certain healthcare and UK regulated utility exposures.
Dan: Turning to net earned premiums and credit derivative revenues in the fourth quarter of 2024.
Dan: We reported an increase to $107 million from $86 million in the fourth quarter of 2023.
Dan: This was attributable to both an increase in acceleration due to refundings and an increase in scheduled net earned premiums.
Dan: Our deferred premium revenue remained strong at $3 9 billion as a.
Dan: <unk> of the new business production.
Dan: In addition to the insurance segment, our participation in the asset management business is an important strategic initiative in terms of diversifying our stream of earnings.
Dan: <unk> had been working steadily towards maximizing the synergies with the assured iam business, we contributed to them in July of 2023.
Dan: In the corporate Division.
Dan: Adjusted operating loss was $34 million in the fourth quarter of 2024, compared with $16 million in the prior year.
Dan: Which included a $19 million benefit related to New York State tax law changes.
Dan: In terms of our investment results the company's portfolio of increasingly diverse assets continues to perform well with a stable stream of interest income from the fixed maturity portfolio complemented by income from alternative investments.
Dan: On a consolidated basis net investment income from our available for sale fixed maturity and short term investments was $93 million in the fourth quarter of 2024, compared with $95 million in the fourth quarter of 2023.
Dan: The available for sale fixed.
Dan: Maturity and short term investment portfolio, primarily consist of these three types of investments.
Dan: The largest component mainly consist of investment grade long term debt securities and short term investments.
Dan: Income from this portfolio is relatively predictable, but may vary based on short term interest rates.
Dan: Net investment income from these securities was $71 million in the fourth quarter of 2024, which is in line with the $70 million of income in the fourth quarter of 2023.
Dan: We also have another portfolio consisting of loss mitigation securities, which are bonds that we insured and later purchased at a discount to mitigate losses and other securities, including those we acquired in the resolution of previously troubled insured exposures such as that.
Dan: <unk> 2022, Puerto Rico resolution.
Dan: In recent years, we have not been actively purchasing loss mitigation securities.
Dan: And have sold most of our Puerto Rico Securities.
Dan: We expect this portfolio to continue to amortize down.
Dan: Net investment income on these investments was $11 million in.
Dan: In the fourth quarter of 2024, compared with $24 million in the fourth quarter of 2023.
Dan: Lastly, in the fourth quarter of 2020 for approximately $263 million in CLO equity tranches that we previously held in a consolidated down fund were transferred to the available per sale.
Dan: Maturity Securities portfolio.
Dan: Net investment income on CLO Securities was $11 million in the fourth quarter of 2024.
Dan: The company considers these sound quite managed CLO equity tranches to be a component of the alternative investment strategy.
Dan: Our partnership with standpoint continues to promote our alternative investment strategy with the goal of increasing the company's overall investment returns. In addition to the income from CLO equity tranches in the fixed maturity portfolio earnings from our alternative investments.
Dan: Or $24 million in the fourth quarter of 2024, compared with $22 million in the fourth quarter of 2023.
Dan: On an inception to date basis alternative investments have generated an annualized internal rate of return of approximately 13%.
Dan: On a full year basis 2024, adjusted operating income was $389 million.
Dan: Our $7 10 per share compared with $648 million or $10 78 per share in 2023.
Dan: Our prior year results included a $175 million after tax gain associated with the south point and HP transactions.
Dan: And the $208 million in tax benefits I mentioned earlier.
Dan: Alright.
Dan: These large nonrecurring benefits in 2023 or lower loss expense and increased net earned premiums in 2024.
Dan: Our full year tax rate on adjusted operating income was 19, 2%.
Dan: The effective tax rate is a function of taxable income across jurisdictions and varies from period to period.
Dan: The strong results in 2024 reflects the cumulative effect of our long standing strategic initiatives across all aspects of the business.
Dan: First we continued to write new business across all markets in accordance with our strategy to grow our deferred earnings and we continue to work with troubled issuers to resolve underperforming exposures.
Dan: We have also successfully diversified earnings through our asset management segment and improved investment results via alternative investment strategy or the annualized returns have consistently exceeded returns on the fixed maturity portfolio.
Dan: And lastly, we have continued to return value to shareholders through our successful capital management strategies.
Dan: In 2024, we paid $68 million in dividends and the board of Directors recently approved a 10% increase to our quarterly dividend per share from 31.
Dan: To 34.
We also merged our U S subsidiaries and paid $400 million.
Dan: Special dividends from the subsidiaries to the holding companies, which is an important step in order to meet our share repurchase goal for the year.
Dan: This program continues to be one of our most accretive strategies.
Dan: In 2024, we repurchased six 2 million shares for $502 million at an average price of $81 28 per share.
Dan: This represents 11% of the shares that were outstanding as of December 31, 2023.
Dan: Since the beginning of our share repurchase program in 2013 and through December 31, 2024, We've returned $5 4 billion to shareholders under the program and retired over 150 million shares ending the year with 55 million shares outstanding.
Dan: As of today, our remaining authorization is approximately $276 million.
Dan: And our holding company cash and investment balances are approximately $352 million of which $53 million resides in AGL.
Dan: Share repurchases, along with adjusted operating income and new business production.
Dan: Collectively contributed to new records for adjusted operating shareholders' equity per share of over $114 and adjusted book value per share of over $170.
Dan: While adjusted operating income varies from period to period, the consistent quarterly increases in this book value metrics reflect how the successful execution of all our strategic key initiatives build shareholder value over the long term.
Dan: Looking forward to the first quarter of 2025.
Dan: Wanted to highlight the successful conclusion of a long disputed claim brought against US by Lehman Brothers International Europe R. L. B E in 2011.
Dan: Following the exhaustion of <unk> Appeals, we will be recognizing a pre tax gain of $103 million in the first quarter of 2025, which represents the full satisfaction of the judgment in our favor and includes reimbursement of attorneys fees and expenses.
Dan: Along with the accrued interest.
Speaker Change: 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 are using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Yeah.
Speaker Change: Our first question comes from Merit that Lobo with UBS. Your line is now open. Please go ahead.
Speaker Change: Thanks, Good morning, Thanks for taking my question.
Speaker Change: I was hoping you could with you. This morning, the recent developments on <unk> water.
Speaker Change: What near term developments that Youre looking for.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: And also any at any development in southern water as well sure.
Speaker Change: Sure So let's start with Thames water well, we can take it from there. So obviously, let's start with the U K water sector as an essential service obviously in those water utilities are monopolies in their service areas. So that it's a good back to start the UK government has stated that they really don't plan to nationalize the water utilities and frankly they don't.
Speaker Change: Seem to have the room in their budget to do so.
Speaker Change: And they would like to see additional investments. So I think the macroeconomic background for the U K water sector. It looks pretty good when you drill down to 10, specifically.
Speaker Change: Our debt is at the senior operating level. So again, it's an area that we feel pretty good about they've made progress in their recent and define a regulatory determination recently, so again an improvement in their underlying financials and they have stated along with some of the other UK water utilities that they are going to go through the competition or market authority and appeal that and.
The past has never predictive of the future, but historically, there's been success when companies have appeal that so we do feel pretty bullish about that going forward.
Speaker Change: And frankly, you know obviously our reserving.
Speaker Change: Means that we have to look at all possible scenario. So when we look at the scenarios. We do feel really good about this we think that they will come out really well, but obviously, we do have some pessimistic scenarios that result in a loss. We are looking forward to see how the competition market authority.
Speaker Change: Lays out and how this plays out frankly in the public markets and we are there to help support any restructuring that needs to be done, but we do feel we're going to get out of here with no loss.
So to emphasize we are at the operating company level not at the Holdco level number two rates are adequate to pay debt service, but not to provide for capex.
Speaker Change: Additional capital improvement so it's a capital issue not a operating issue three they're going to appeal the rate that was granted to them in the appeal process has been fairly successful.
Speaker Change: Companies in terms of succeeding in the appeal process and they're not that far off between the request.
Speaker Change: And with the current rate or the.
Speaker Change: Challenge could be so when you look at it all in fact, there is included it looks like a pretty good situation for us.
Speaker Change: Got it.
Speaker Change: And the timeline to the CMA process.
Speaker Change: When that takes a while.
Speaker Change: Okay.
Speaker Change: Yes, I would say, it's probably best guess would be excellent.
Speaker Change: 25, maybe beginning of 2026.
Speaker Change: Remember in terms, we did sign the liquidity agreement so that we've been able to take away. The short term issue that I'm running out of cash or having a deficit in the cash position, even with the capital expense expenditures.
Speaker Change: He puts a lot of relief into the system as well.
Speaker Change: Thank you.
Speaker Change: Could you just got the California wildfires had any impact on your exposure.
Speaker Change: So we've gone through the portfolio more times than I can count and we don't see really any exposure to the California wildfires.
Speaker Change: I mean, if stores, we have are kind of in good position. The Windsor Mr debt service only plans I'm missing a debt service payments. So at the end of the day.
Speaker Change: It's tracking them without question, but it doesn't seem to have any effect on the municipal performance.
Speaker Change: Okay.
Speaker Change: And finally, just looking at the level of non U S. Structured finance par written this quarter $2 1 billion came in well ahead of our expectation could you give us more color on the geographies that drove it and expected returns.
Speaker Change: Great.
Speaker Change: Okay.
Speaker Change: The geography is still dominated pretty much by the U K, however, because of our GE revenue expansion and we're seeing opportunities now and he was actually recorded.
Speaker Change: Yeah.
Speaker Change: Transactions.
Speaker Change: Turning to Europe, as well as Australia, we're looking all around in Asia and the parties for other opportunities. Yes, we are seeing a lot of opportunity in Australia, a lot of the non U S. Global structured finance is going to be in Australia.
Speaker Change: As we see going forward, we did a very large transaction.
Speaker Change: For our core loan portfolio.
Speaker Change: In Australia Bank.
Speaker Change: On an excess position that's in the non U S structured finance sector.
Speaker Change: Sector, and we feel really good.
Speaker Change: Excited about it and just to give you a little color on that that the structured finance business that were shifting to.
Speaker Change: More shorter shorter dated will earn more quickly so when you're looking at Pvp totals. We have this business is more repeatable and so youll have business rolling into the next years as opposed to these large life insurance capital relief transactions, which have to be constantly renegotiated. So.
Speaker Change: Youll see a repeat more repeatable performance in structured finance it much like our public finance and as a steady stream of flow business, we're trying to create flow business in the other areas of the company as well.
Speaker Change: Finance represents a flow business for us and restructured area and as Rob says you can't record Pvp on the same basis, you would on the municipal side based on an expected life of the program you can only recorded on the years you've got actual contracted.
Speaker Change: Agreement, but these things tend to automatic not automatically but renew annually. So your understanding pvp, but you're building up a stronger earnings portfolio and a quick earnings profile.
Speaker Change: Got it thanks for that that's it for me.
Speaker Change: Youre welcome.
Speaker Change: Okay.
Speaker Change: Thank you very much. Our next question comes from Jordan Hymowitz with Philadelphia Eagles Capital Management Joint and your line is now open. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Thanks, Scott the only thing that makes me happier.
Speaker Change: Following you guys for 19 years at this point is the Eagles won the Super Bowl twice in my lifetime.
Speaker Change: I have a couple of questions first of all for the average premium.
Speaker Change: Premium written was one through six and that's up from 123 and I believe it was below one two.
Speaker Change: A year or so ago, so hypothetically if everything would be put on at this rate what would your return on equity I mean, it would be like 11%, 12% is that reasonable.
Speaker Change: On the business written yes, yes, yes.
Speaker Change: Ro.
Speaker Change: Turn on the business is really based on mix.
Speaker Change: Yeah.
Yes, it's Dominic <unk> return on the arm based on the data business.
Speaker Change: I just wanted to give you some number right. So.
Speaker Change: So looking at ROE public finances, generally in the 8% to 10% range.
Speaker Change: <unk> finance is going to be somewhere between 12, and 18% and international infrastructure is somewhere between 15 and 20% so that mix of business changes.
Speaker Change: That's where the ROE is going to be coming from from that mix.
Speaker Change: And remember this.
Speaker Change: 5%.
Speaker Change: Sure.
Speaker Change: So what used to be it was 9% business four years ago, because it was almost all domestic is now with the current mix, probably a low double digit mix on average fare.
Speaker Change: Yes as.
Speaker Change: As you shift, yes, as you shift into more structured finance.
Speaker Change: International infrastructure Thats correct.
Speaker Change: But remember public finance is always going to be a significant portion of your business Smith.
Speaker Change: So looking at a different way.
Speaker Change: Say 11, 12 versus eight to nine five years ago and what another.
Speaker Change: Another way of saying is once you right size the capital you could be earning $10 plus per share.
Speaker Change: Yes, probably probably in that range, but again.
I think you got to separate two things you've got to separate out.
Speaker Change: The amount of business being written in the amount of business being earned right. So it does take a while for the business to come in in the row, where.
Speaker Change: What I'd say is I think it would be right sized our capital, we probably be low double digit return company right. So that would that would make sense and then you got to look at how much business. You are writing that achieve that low double digit return to know exactly what your dollars per share earnings is going to come out of that that's really important.
Speaker Change: You remember, where we're writing business in today's current market, which means we would characterize current interest rates in today's current credit spread those things do change so theres favorable markets in some cases in less favorable markets in other cases.
Speaker Change: Therefore, you got to remember, it's only one year's contribution.
Speaker Change: Premium is made up of 20 years of contribution of different rates different returns et cetera is the mix of business, but are you looking at at current market yields of today's business, which doesn't mean necessarily at the same margin you're going to see through the rest of the <unk>.
Speaker Change: It's also important to note that in public finance, we're still capturing.
Speaker Change: On average <unk> 70, 60, 70% of that.
Speaker Change: <unk> savings.
Speaker Change: So you're still providing significant value in and the other lines of business structured finance and international infrastructure are less sensitive to changes in credit spreads.
Speaker Change: I understand all that but I remember in 2019, and 20, arguing with people that you could make $7 a share and people said that'll take forever and now you are there and I am just looking into next.
Speaker Change: Leg up with since we plan to be here for a long time. My second question is interest rates have fallen a lot in the past month and there is a fixed dollar difference between David Buchen operating book, which I believe is all a OCI.
Speaker Change: So a fair amount of that <unk> <unk>.
Speaker Change: Reverse plus you'll get the $2 from Lehman this quarter, so kind of the gap between adjusted book or operating book I'm, Sorry, and stated book being much closer to this quarter if the quarter ended today.
Speaker Change: First of all interest rates are going to bounce around quite a bit. So a lot of this as unrealized gains and losses that come through on securities that we have so it's not really tangible I mean, you could you could move it up or down it doesn't really matter, obviously youre right about the Lehman Lehman brothers, you get $100 million in and that's why we're just under 50 million shares outstanding.
Speaker Change: Right now so that is $2 a share so you would pick up that pre.
Speaker Change: Pre tax rate, you'll pick up you pick up $2 per share for doing that.
Speaker Change: Got it okay. Thank you very much and I'm looking forward to see if you might be interested in buying some of the Delaware River Green for next season.
Speaker Change: We're always looking at supporting the Eagles.
Speaker Change: Thanks, Thanks Jordan.
Speaker Change: Just as a reminder 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 are using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: Our next question comes from Tommy Moll join with K B W. Toni Your line is now open. Please go ahead.
Speaker Change: Thanks tough to follow up some good eagle's banter.
Speaker Change: But a couple of them.
Speaker Change: Questions have been on various on various.
Speaker Change: Specific credit so we had the U K water, California wildfire I'll ask about another one with the department of government efficiency.
Speaker Change: Really going after perhaps disrupting the DC market can you talk about your exposure there, whether it's any public works projects or.
Speaker Change: And municipalities around there that might be impacted.
Speaker Change: I can't think of any significant exposure with revenues D C market.
Speaker Change: There'll be subject to any potential issue relative to the government.
Speaker Change: Programs currently going on.
Speaker Change: I mean, when you look at the portfolio pretty clearly.
Speaker Change: We have a toll road maybe but.
Speaker Change: Usage, so I'm not concerned about that.
Speaker Change: And we'd probably go to the airport as well.
Speaker Change: That's helpful.
Speaker Change: Eric Dominic's broadly, saying, we don't have a ton of exposure. We're concerned about we obviously, there's some tangential exposure that's may be there, but we're not sitting here really spending a lot of time at this point worrying about that right now.
Speaker Change: Okay got it.
Speaker Change: You also called out the health care side can you remind me what's going on with like health care facilities in terms of like why some are seeing that financial troubles I guess I think about some of the voluntary care procedures coming back but that would help the health care facilities can you remind me what's going on there.
Speaker Change: Well I remember as an operating risk not really a financial risk.
Speaker Change: If you take the operating risks for number of years as we knew through Covid. There was a lot of pressure on health care facilities in terms of the loss of revenue that seem to recover substantially once all the COVID-19 restrictions were lifted and they started to get back help even the government through a ton of money out of it as well, but it also made it a little bit better than facing high layer.
Speaker Change: For clothes, which is really put some pressure on that but once again. These are operating risk type of thing to get managed pretty expertly, we bring in consultants, we get involved in detail with any troubled credit in our experience has been exceptional in the healthcare area.
Speaker Change: But like anything else that we downgraded credit will take you through the reserve model, we upload your possible scenario analysis.
Speaker Change: LG probabilities and you wind up booking some losses, but you never really realize.
Speaker Change: Got it.
Speaker Change: And then last question just on the.
Speaker Change: Somewhat around the PREPA side of things.
Speaker Change: I guess my question was really focused on the political side in the U S. Athena lighthouse Puerto Rico.
Speaker Change: A change in leadership.
Speaker Change: In your view has this changed political landscape.
Speaker Change: <unk> been helpful to what might ultimately be necessary to get the backing to push that towards a resolution or should we not read too much into the change in the political landscape.
Speaker Change: Well it could but at the end of the day, they've got a lot on their plate that they're trying to address but im not expecting quarter youre going to be one of their high priority.
Speaker Change: It could put some pressure on the air for RMB, which would be very helpful for us, but as we said we're more than happy to play the litigation game live is a great example.
Speaker Change: That was a claim that they I think of it is back in the day, we put in $26 million of turning to $103 million are going to play the long game. We're happy to play the long game, we've had our rights in terms of the revenue stream affirmed by the court the challenge of twice the loss twice.
Speaker Change: One day, they're going to have to come to the table David Bill.
Speaker Change: However, long it takes because the government help absolutely are we're trying to get some help sure. We are that's the nature of how we look at the business we.
Speaker Change: We feel good about the new administration, we think the government when we tried to get involved with PREPA a credit that can actually go into the market at some point in time. So therefore that should help our clubs as well as I said the courts are back to sub 100% for the appeal court.
Speaker Change: Quarter of course.
Speaker Change: <unk> is up a 100% so we're very comfortable with our legal rights and we're going to continue to pursue them as we did in Libya.
Speaker Change: Let the chips fall where they may.
Speaker Change: Duncan.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: This concludes today's conference call.
Speaker Change: You all for attending you may now disconnect your lines have a great day.
Speaker Change: Yeah.
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Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.