AMBC - Earnings call transcript Q1 2024 | Ambac Financial Group, Inc.

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Operator

Greetings, and welcome to the Ambac Financial Group, Inc.

First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Charles Sebaski, Head of Investor Relations.

Charles Sebaski

Thank you. to quarter welcome discuss call and results. financial morning, Ambac's XXXX first to Good

be President questions. the Claude David will remarks, current today Speaking LeBlanc, after And Financial our and prepared They market of environment. Trick, take and Officer. will results discuss your financial we'll business the Chief and CEO;

investor remarks, be highlighting website. some For those on along on will following can the webcast, located from we the presentation, of you during which be the prepared slides our

forward-looking recent our The our statements. statement expressed undertake forward-looking may statements release cautions and due do investors uncertainties includes is statements forward-looking and today call from SEC. update XX-Q press forward-looking guarantee or in statements. results company factors a to of that any the the forward-looking performance. involves and factors. earnings most those variety Our in differ filed materially Actual obligation and to risks implied not of not These a We with XX-K any the under are described future

our materials our remarks would the earnings to mention Reconciliation like to non-GAAP responses are some investors prepared to over and call or questions, I Mr. to measures. may non-GAAP supplement other in operating to we our financial release, measures included website, recent ambac.com. LeBlanc. available on those turn in now Also, Claude

Claude LeBlanc

results $XX detail net million. stands of discuss call. to $XX financial in report pleased per income share joining and for income I'm Thank quarter, shortly. David Chuck, at today's to first we welcome more will value you, generated everyone and adjusted our Book the $XX.XX. of million net

our P&C to businesses. Turning

premium last generated quarter, platform year. for the over XX% Our rapidly a growing specialty insurance $XXX increase million P&C in

shift be support solutions P&C tailored specialization specialized offering for the growth businesses to towards needed in of needs underwriting premiums to by which being this of fueled E&S complex of secular the our XXXX. to risks. We differentiated for the expect strong segment, and markets MGAs billion in tailwinds, the rapidly and premier set expansion destination believe supported $XX by continue will means growing specialty specific a a that nearly reached We

business Our whether the access the positions services. and, that as risk access technology-focused third, Cirrata; reinsurance results our and at rated transfer capital in provides best agility, our second, attract balance and the under shareholders. form deliver drivers: capital, broad capital to offering differentiated Everspan believe to solutions; superior following fourth, us and by MGAs to or We first, risk program it's from value company MGAs of key a other for market uniquely a with leading long-term oversight solutions differentiated controls; shared sheet portfolio our turn, risk partners and supported these in growth

strong written had quarter. last Everspan's the gross generating of results a start was classes. year, book to $XX Everspan more for becoming premiums Turning and risk the balanced XX% million, year. diversified is across over which Everspan's to up

For represented net year-end commercial instance, XX% our XXXX, of premium at auto written.

X and XXXX, and specialty first of will net written accounted lines underwriting have over long-term of quarter business for commercial of believe XX% to auto We down net lines the continued other However, of X% by results. was premiums more our in that of stable benefit diversification the each premiums. predictable

business to continue quarterly a also underwriting the the XX% we're Everspan we writing, trends. see combined cost with profit consecutive its on underwriting improvement. first exceed loss pricing And quarter, This ratio, generated sixth

to Turning Cirrata.

initiatives last year of over performance distribution organic supported $X the of business premium, the EBITDA by of year's the and prior up financial benefit the insurance XX% placed and million for of over was Our quarter. growth generated million $XX This acquisitions. ongoing

program reprogram expected launched programs. catalyst last we and others, professional All organic at included are We're exchange initiatives, Cirrata. Trans. new be within These for launch up X for the lines expansion hire to during efforts the These XXXX. to gearing amongst a also transportation notable several year, a Over new growth

We a Cirrata. opportunities also of at strategic evaluating are number

Financial turn to before you provide position our [ our for the the original I last a ] options next for this will be our assessment Legacy we to progressed over strategic expectations, as discussions we David announced earnings financial we results to Since late business. business, which Guarantee to the with the Consistent business, right quarter. an progressing planned. discuss update parties now interested process, hope have of year, Regarding of a number launching the with with call call. is our in about David?

David Trick

Claude, you, Thank and good everyone. morning,

$X.XX driven business Cirrata. $XX net diluted first from growth continued of the our that the our report or net XXXX, quarter Adjusted per P&C as to quarter as of the of quarter a $X.XX was change $X.XX or results million net to XXXX. or net adjusted per $XX well by Financial per to Everspan $X.XX diluted the in was per compared XXXX. million of share and distribution million loss million income compared in diluted Legacy generated pleased an mainly are for income or share adjusted the loss first diluted and of insurance Ambac of income of We first our net for in business, The specialty business, net share share income quarter $XX $XX Guarantee

were in was the the XXXX respectively, prior premiums million and of quarter Everspan's of premiums gross fees of program the and auto premiums written back higher the written period. premiums million of assumed as of compensation in nonstandard $XX and were to quarter net rate compared retention workers' in of premiums year $XX written gross levels half retention million up million million, first $XX year. $XX were up approximately programs over written mostly XX% from of and XXX% XX% reinsurance. Both Everspan's net growth XXX% the XXXX. Earned $X.X and from XX%, last

commission of of some by linked quarter offset The a including the adverse loss prior picks quarter the in sliding XXXX year were was first shift. loss to in XX.X% oil and commercial performance. accident was year-over-year XX.X% approximately development, higher Losses, partially X.X% against of up business half benefit, ratio ratio costs last scale development recorded and mix year. which acquisition the included of from loss The in loss

of quarter scale XXXX, first X.X% the year. the commissions produced X.X% For last sliding a benefit benefit to of compared

expense in from The quarter first XXXX, Everspan. from of benefiting year ratio at quarter, in the was overall XX.X% prior growth the XX.X% the down

expense of quarter quarter combined The XXXX increase improvement the XX.X%, X.X%. resulting the points from of percentage for over the this ratio benefited reversal compensation was sliding scale well of benefit addition, points basis from in first as respective prior In periods. earlier a XX accruals as XXX the commissions ratio an noted for the of

generated This third $X since loss quarterly compared million Everspan quarter, of is XXXX of For consecutive $X million than quarter under in income profit its the to Everspan's first pretax less XXXX. for just launch. a February the

integration the the generated both of acquisition growth. recent The XX.X% the initiatives of produced quarter produced of last related compared August, benefiting the first margin and from million expenses Cirrata the a from of in of million for acquisition XX.X% mix quarter driven Riverton XXXX. $X.X the margin costs. EBITDA from by compared during to this The XX% and million revenue organic contraction and first $XX quarter, XX% organic last the quarter first up XXXX, in business year. growth up to quarter, shift of Cirrata was largely $X EBITDA quarter to

year XXXX quarter Noteworthy business shifted of are previously with renewal, margins A&H is to that this first of second remain full which our the of some timing to plus the normally for relates the would in outlined to from XX% shift mix be a XXXX. Cirrata's expected large quarter. line what

change $XX versus million the net in period. a net improved income investment results. Legacy was segment losses in and primarily incurred prior The of driven For year-over-year first the million $XX loss Guarantee the a quarter, by improvement year generated Financial of favorable

investment period. first yields stemmed points time the same from XXXX. XX average for quarter Consolidated was quarter nearly million increased income of the securities, The first over million higher fixed to on $XX improvement compared in basis income $XX which the

contributed XXXX. XXXX. to $X loss adjustment Our first quarter quarter benefit of million the loss $XX a alternative compared solid just over results the in million expense $XX of $XX million quarter's million an the Consolidated to just compared XXXX, expenses were in the and of quarter first over portfolio of investment first in

rates grew loss by million million. $XX compared prior losses $XX of benefit prior impacted credit discount development. the and the by of year a favorably in year to rates produced lower Everspan Financial versus million, Guarantee higher discount favorable $XX Legacy

rates by a shareholders' Net December the or $X.XX XXXX of XX, share $X loss translation XX, to in weakening available driven $XX.XX relative higher dollar. quarter per British equity million by and of income increase exchange The to the compared $X pound net partially at to contributed $XX.XX sale to was of quarter offset First losses to unrealized income AUK the March per related share for at foreign the to XXXX million on investments XXXX. due billion interest

from cash, XXXX. closing $XXX a or and December of back receivables XX, per XX, March XXXX, share to the million share remarks. per now of will net for some and subsidiaries approximately $XX.XX standalone value book up $X.XX was on at billion $XX.XX Adjusted XXXX, XX, X% AFG At at March investments $X.XX share. and brief turn I investments Claude excluding or basis, call per

Claude LeBlanc

about to start the and platform. I and Ambac quality opportunities David. are of very had you, the we number our Thank seeing am encouraged good growth year, specialty P&C across a

to strategic In XXXX and our P&C partners be a P&C to well representing to of Ambac exceed as specialty believe enhance X-year prospects, regarding discussions targets. billion, bolster transformational our over mentioned MGA legacy million our strive in change positions options scaling and positioned long-term we in make investments $XXX us meet and over goal, we production to As this towards last growth quarter, business business progress of for our I continue our for support which to of capabilities, is support our $X.X year our I potentially EBITDA. goal

in you on to open look I call forward quarters. please for our the coming questions. Operator, the progress updating

Operator

Dunn [Operator & Instructions] Partners. line The of first the question comes Geoffrey Dowling from with

Geoffrey Dunn

two questions. I had

and First, bit lines? how development adverse a little this with in new that, could enter the practice of quarter? scale the Everspan in you as on also conjunction you work, commissions And both sliding elaborate

David Trick

David. question. it's the for Jeff, Thanks

say program relates that And to of received would good So in the it that on latter quarter this a we chunk auto quarter data the data a that received some that XXXX of that adverse quarter, of the program. delay first to and reflected most half started development in the related I of year, nonstandard the year. in this we we little late program. in some the That in last

exposure. market. about increases pricing significant program. very got just that optimistic So we're still in the We mostly It's California

or program sliding So development. and I is the the for the program, no we have it. the does of we the the concerns a very of real program scale. noted, it about as positive one things outlook And And importantly, include that have like about you structure

depending the way the booked, to in so where a that works risk. MGA is the that's that on we're our underwriting losses entitled And acquisition against cost change are

that way this combined scale structure ratio, have some history the get performance, than development give on So loss control volatility generally, less little to the adverse loss structured a sort this programs the programs palatable which the way more ratio that we us generally, acquisition example, for And quarter, Everspan sheet against a all is differently. a impact they're to a bit of risk newer for that offsets to underwriting have in the on underwriting sliding they where balance in number scale to of the our of history corridor, for equivalent -- protection But a we by was are for and commissions our and a book. look particularly we sliding little and our work in cost. offset on programs that way benefit more programs

Geoffrey Dunn

long Is a structures sliding scale last those these year the of it do first longer to it gate? How Or period? out is programs? like tend commission on the

David Trick

renewed, to on so circumstances, each program. Each have but gets of those far every renew we could includes sliding year. the decide continued a scales. And scales and it's for length the been sliding scale, sliding that eliminate we programs Every the depending renewed program. No, of during have that we've year, we program

can years, over you comfortable of a live-scale standpoint a performance the program. a So new situation program to that find could away the ultimate tool we very of we from helpful it have you move management we history a both and and with a develops, sheet standpoint. structure, program from risk the envision And but balance more the the get where be management

Geoffrey Dunn

the to on quarter. to exposure that? derisking any to this Italian Can respect you're able you FG with your give on you legacy side, able how like then were And Okay. additional detail it ABS looks resolve resolve

David Trick

Italian ABS?

Geoffrey Dunn

and looks dropped. the It your like adverse it exposure -- looks like credit credit dropped adversely list sequentially sub-sovereign Italian

David Trick

Yes.

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

Operator

Bologna Our question Giuliano with next is Point. from Compass

Giuliano Anderes-Bologna

process if before of time able you the around around specially are some diligence, in process a seems quarter. the increased the an anything gone line a It that point? line. time or the provide press -- there or like perspective in as second you'd you time in have the second you around everyone in I kind and room curious we process. the give on confidence from optimism kind milestone data perspective? Essentially to expressed had a any milestones events cut before I'm away is tangible through there alternatives release, the at report quick of looks update to this hope Or -- though that the be pulling any line question quarter you due

Claude LeBlanc

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

Giuliano Anderes-Bologna

derisk that Yes. And additional until is portfolio to opportunities after then there accretion any kind the opportunities create the risk the It the management Or interim? or make some to of or the around would sounds good. in in for interim. process completed? wait capital reinsurance actions business could Are thinking it about sense structure

Claude LeBlanc

usual, we're now, For as business Julian.

And book transactions, to at business often the and So the optionality, we continue to of or looking in think but I progressing and think that we are I and we maintaining we're grow as will progressing today potentially that. do and derisk our problematic derisking future. value exposures our usual continue view to quality

Operator

teleconference. are at time. thank further There you We This questions concludes today's for participating. no this

lines this your your at disconnect time. may you Thank You for participation.

Ambac Financial (AMBC) 7 May 242024 Q1 Earnings call transcript