Good day and welcome to the Assured Guaranty Limited Fourth Quarter 2016 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Robert Tucker, Senior Managing Director Investor Relations and Corporate Communications. Please go ahead.

Thank you, operator, and thank you all for joining Assured Guaranty for our 2016 fourth quarter and year-end 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. If you are 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. 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 in our current financial supplement and Equity Investor Presentation which are on our website at AssuredGuaranty.com. Turning to the presentation, our speakers today are Dominic Frederico, President and Chief Executive Officer of Assured Guaranty Ltd., and Rob Bailenson, 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.

Thank you, Robert, and welcome to everyone joining today's call. 2016 was a very successful year as Assured Guaranty continued to build on the solid foundation of our financial strength, strategic flexibility, disciplined risk management, and robust business model to remain the proven leader of financial guaranty insurance. The list of our 2016 accomplishments include $895 million in operating income, $185 million more than the previous record set in 2015, 40% year-over-year growth in annual operating income per share to $6.68, year-end operating shareholders’ equity per share of $49.89 a new high and 16% higher than the year earlier, a record year in adjusted book value per share of $66.46. The return to shareholders of $375 million of excess capital through $69 million in dividends and the repurchases of 10.7 million common shares, an 8% increase in our quarterly dividend to $0.13 per common share and in February 2017 a further increase of 9.6% to 14.25 cents per share per quarter. $214 million of present value of business production or PVP the highest annual amount in five years, continued leadership in the U.S. municipal bond insurance market providing insurance for more par issued than the rest of the industry combined and more transactions than any other insurer. Important progress in our strategy of acquiring legacy bond portfolios with the acquisition of CIFG NA in July and the September announcement that we would require MBIA UK which we accomplished in January of 2017. Removal of all debt from the balance sheet of MAC by completing its full repayment of the $400 million in surplus notes that AGM and AGC had provided for MAC's initial capitalization. In contrast, the next month's active bond insurer has been unable to pay even the interest on its surplus notes while continuing to produce statutory losses…

Thank you, Dominic and good morning to everyone on the call. Before I review this quarter’s results I would like to draw your attention to a change we made to our calculation of non-GAAP measures. In 2016 the SEC issued updated compliance and disclosure interpretations for non-GAAP measures and how they may be presented to investors. After discussing these new interpretations with the SEC we agreed to include the effect of FG VIE consolidation in our non-GAAP measures. This change affects our reported operating income, operating ROE, non-GAAP operating shareholders equity and non-GAAP adjusted book value. Our release and financial supplement provides the effects of FG VIE consolidation that now included in each of these measures. All prior periods presented in the earnings release, investor presentations and those that I discussed today has been revised to reflect our new non-GAAP measures in a consistent comparative manner. As I noted this change was made in accordance with the SECs updated interpretations and not as result of any change in the terms of our economics of our contracts. FG VIEs relate principally to RMBS transactions and are typically concerned when certain triggers of met they give the company additional control rights. Despite the trigger event, the company’s obligation was and remains solely an obligation to pay only the shortfall on scheduled principle and interest when do. The new interpretations also resulted in a change to the presentation of the detailed line item reconciliations of net income to operating income. The earnings release and supplement now show only two products, one for operating income adjustments and the other for the effect of FG VIE consolidation. The first operating income adjustment column shows amounts reported in each line item and we subtract from GAAP amounts to arrive at operating income. The second column, we…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Geoffrey Dunn of Dowling & Partners. Please go ahead.

Thank you, good morning guys.

Good morning Geoff.

Dominic, can you talk a little bit about the new business environment? You went through a lot of details for the year, but I'm curious of what you saw from a pricing and demand standpoint in the fourth quarter. We have seen rates spike a little bit over the last, I think back in 2013 and 2015, but this is the first sustained move we have seen in a long time, how are clients reacting, how do spreads look and demand look over the last three, four, five months?

Well, as you can see from the results we reported Geoff, fourth quarter was a very strong production quarter, especially in the U.S. Public Finance markets. We are always hesitant to call a victory prematurely and until we see sustainable rate increases that are actually held across the board I'm still cautiously optimistic in terms of where we can get to relative to production. Our anticipation is we will see increased demand in the U.S. markets because two things are going on right, we still got continued argument on Puerto Rico which is kind of a threat against credit worthiness. You still have a lot of noise relative to Chicago, Illinois, New Jersey, Dallas, many areas around the country and we think that credit concern, credit perception will drive people to the insurance market. And as you said, there has been kind of although it has been moving all over the place, increase in rates where the 30-year MMD was over 3% at the end of the year and we think for this to be sustainable, we would love to see it north of 3.5 and then I think you are going to see more scheduled and reliable demand. But remember we are not just in the U.S. municipal finance market. As you see in the year we had basically new business written across all of our operations and we are very optimistic in terms of what we see in our European pipeline. As we said last year Europe grew business across every quarter in the year, we have got a very active and strong pipeline looking at 2017, so our expectation is we should be able to book better results in Europe as we have seen the corrected problems of the past kind of the reputation that we've had to rebuild, our guarantee is very competitive and across that P3 market. We think we do have the appropriate product to serve that ever increasing marketplace. And in structured finance we are creative. We continue to look at places to make our guarantee worthwhile and we are being helped by regulation both in Basel III and Solvency II and how they look at certain assets being held by financial institutions much like the life financing, life reinsurance financing that was strictly a Solvency II play. Now this is a great way to put capital to work within a very benign credit risk and still get paid reasonably for the opportunity. So we are not ready to call victory on U.S. Public Finance. We do see increasing opportunities on our two other core businesses and therefore optimistic about 2017.

Okay. And then Rob, can you - two things, can you quantify the par and PVP from muni-secondary activity in the quarter? And can you also remind how excess spread works in the RMBS deals and how do we have to think about your future provisions to the extent rates keep going up?

Well the first question par for secondary markets in the quarter was $807 million and we wrote PVP of $34 million for secondary markets and you have some primary as well.

We can back out of that, but the excess spreads?

So excess spread, the reason we had development in this quarter on excess spread is because on some of our first lien transactions, the assets of the transaction are fixed rate loans and the debt of those securities are LIBOR floating rate loans and LIBOR increased this quarter, but those fixed rate loans actually did not move. So that is going to affect your excess spread and we saw as we call spreads squeeze this quarter. If you look at what we have in total for excess spread in all of our transactions, it is approximately $225 million. So you could not get any larger than that. But that is if you lost all of that. Now that is also related to transactions where not all loans have been [moded] [ph] to fixed rate loans. So some of them have actually - the assets are actually also variable rate assets and variable rate loans. So I would tell you that I don’t expect to be significant in quarters to come, because I don’t think over time you could not have anything more than $220 million and so that is the entire amount, but I don’t expect it to be as significant as it was this quarter.

And does this quarter anticipate future rate increases to kind of front end load what the direction of rates look like?

We look that in our – in our scenarios we do look at that, so it is in our probability weighted scenarios.

Great, thank you.

The next question comes from Michael Temple, a Private Investor. Please go ahead.

Yes good morning. With regard to the figure that you cited that you had losses in Puerto Rico in 2016 of approximately $250 million, can you speak to the overall strategy going forward? Obviously as you stated you are going to assert your legal rights in court, but at the same time you're obviously working with the new administration to come to consensual solutions to move Puerto Rico forward. So how should we think of the reclamation if you will of some of those $250 million in terms of being rebooked in the form of claw back payments being made and/or repayments being made because of new negotiations on the remaining debt that you still insure which is net right now approximately $4.7 billion?

Okay, Mike I’ll take a crack at it. So you have to in our world accept it for what it is, separate the accounting from the economics. So under the rules of accounting for Financial Guaranty we are subject to a strict interpretation of how we must evaluate and book reserves. In the old days you would be able to put up a point estimate of what you thought was your most realistic view of what ultimately is going to happen. Today, however, you really have to determine all possible scenarios including from good to bad to ugly. And then probability weight those scenarios and that is the provision you have to put in your books and records as the reserves or the accounting hit that you would take in establishing a potential liability role to the outcome as to a default in any of your securities. That doesn’t necessarily coincide then with our negotiating position, our view of the credit the activity that we seek along with both the control board and the government. Obviously we feel very strongly about our contractual rights. We feel very strongly that PROMESA does recognize constitutional priorities and contractual liens which –we think is very positive and as you saw on the PREPA deal that was negotiated and although the Governor wants to take another look at it the bond insurance market was basically not having a recognizable loss but we were providing future value and a surety over the new bonds being issued that would allow them the ability to get sold to market and may be even have an investment grade rating. So, it’s a fluid situation. We fully expect to pursue all of our rights. As I said on other calls we are large enough creditor that although we can't…

Okay, can I ask one quick follow up?

Sure, you pay for it though.

I more than appreciate the dynamism. It’s a fluid situation. Is it fair to say that Kroll and S&P and the others who are evaluating your credit worthiness have more than taken into consideration the developments or should we be prepared that perhaps in 2017 we might see them reassess negatively some of the stress scenarios for your exposure, again given the fact that things are still very highly fluid and we've seen some rather indicative outlook again or it is all part of negotiations rather negative outlook for what that service at the island might look like in 2019 et cetera, et cetera, so might we have to consider that further negative view points are adopted by the rating agencies regarding PR [ph] exposure at this time?

Well, Michael it is hard pressed for me to have to speak on behalf of the rating agencies because you wouldn’t be very kind or considerate, but be that as it may really that may be focuses on one of the rating agencies. But if you go back and look at their analysis they did and they each published and I would really call your attention to those, if you look those what they said was we looked at insurance financial strength, excess capital. We also looked at insurance internal rating and therefore their own analysis of potential liability. And under extremely stressed scenarios we find those circumstances which would A) change their view of the issuer rating or but honestly represent a major economic issue for Assured Guaranty. And they did contrast us against some of the other bond insurers. So they’ve already taken Puerto Rico and they believe and it has to work, but I think in some cases they are in the like 50% of all of our Puerto Rico obligations. And therefore I can’t believe it can get worse and if you think about it their stress, that they’ve applied in their models they have made the conclusion of our adequacy of both capital reserves and financial strength was well in excess of the government's last call for the former governor who was no friend of the bond market. So, I believe that and like I said I will call your attention back to their specific publications, but I don’t see that as an issue at all for Assured Guaranty in 2017 or beyond.

Alright, thank you very much for your time and explanation.

You’re welcome.

[Operator Instructions] The next question comes from Chas Tyson of KBW. Please go ahead.

Thanks, buenos diás gentlemen.

Good morning.

First question I wanted to ask is on just follow up on some of the Puerto Rico questions, so the governor last couple of days has been saying that he thinks the $800 million to $1.3 billion of debt service, probably if I look at the Oversight Board which put out of 2019 scenario which was fairly Draconian or how do you guys think about squaring those two data points with where your reserve is at spread a decent bit lower than the implied haircuts in the two statements made by those two entities?

Well I think there is a very strong argument that is going to have to play out relative to the amount of austerity that the government is willing to recognize or will be forced to recognize between what the Control Board is saying and the government. The real argument I think is going to come down to what is essential services because if you're really excited you are going to pay attention to contractual into constitutional priorities. The constitution is pretty clear that given the response it has to be for essential services, the governor made a first attempt of essential services which I know funding is going is going to be questioned significantly and therein lies what is the amount then for debt service. We had always anticipated in any sort of a work out that there will be some level of restructuring with some deferral of principal but the current payment of interest. If I can take any positive from what is going on the fact that the governor decided to pay interest up in February, general obligation also being to support part of the payments that we are doing in 2017 at least as an indication that point of direction. And as I said, once you argue down the percentage of essential services and make some collection improvements and some other things, will there be enough debt service available to pay the interest charge. I'm optimistic that potentially there will be and if not there will be this once again hard argument between the Governor and the Control Board. So one fact you have to take some comfort from is, remember one of the critical objectives of both the Control Board and the Government is to get access to the market and I don’t think it takes…

Okay and then following up on some of your comments, obviously there has been some media attention on the governors wanted to take a look at deal and some of the media articles have said that he wants to take specifically a look at asking the model lines to take a haircut which they want to required to under the current deal. I mean can you talk about is that kind of an off the table type scenario for you are you kind of willing to work with the new government and look at that deal again?

No, we work with anybody and understand we’ve never disclosed reserve positions and so we’ve let kind of be a mystery as whether we still carry reserves and not position regarding that we’re able to absorb some level of a discount. However, you've got to understand is that PREPA the government is relaying on substantially to provide Assured it is to get the new bonds issued and there could be position that we think that says if you make me pay at a loss I don’t provide Assured going forward. So what's more important to you, getting a small haircut from the buy shares and gained the ability to issue the new bonds. So these are the nearest of [indiscernible] table behind closed doors where voices typically get raised just to get pounded and decisions were ultimately made. But I think we’re in a very negotiating position Vis-à-vis the reliance on us to move forward and getting preferred debt to some level of market access because some level of reasonable rate relative to what the consumers and commercial accounts will pay. They still have to make a lot of operational changes relative to the correct metrics, the rate, stability, the securitization surcharge. A lot of things still have to be done, but I think we played critical role in that and then somewhat wants a pass the hat around the table. We will look at that in accordance with other things. But once again, if you are asking us to be an integral part of the solution to unfold, I am hard pressed for you to come back and then say but I want you to throw over the par as well. I don’t think we should doubled up in this regard.

Okay and then just separate topic, but on M&A obviously you guys have been pretty successful over the last 12 months on your consolidation strategy with CIFG and MBIA UK coming up, and it's obviously a couple other potential targets out there with I think all are pursuing strategic opportunities that the deal that you guys disclosed, the potential deal I should say which FIG can you give us an update on how you are thinking about consolidation of the space in 2017 and how many more you would like to see financial grantors you can still get?

And I think we keep saying that there is 4.5 to go and 3.5 to go I keep losing track and it's our goal to consolidate the more we think it is the best thing on behalf of the industry on behalf of bondholders and really provide stability where currently there is still this uncertainty. So I think it is a positive movement for the market in general. Number two, we think it is a positive movement for these companies. They are not trading. They’re basically sitting on a melting ice cube of value. But they've got huge NOLs, they need to be put to work if they are going to be put to work and it's not going to be based on the do it portfolio of financial guarantee. So, they need to figure out something to do when they grow up and its 2017. So you’re good, nine year after crises and eight years after the majority of the crises it's the time to get up and do something. I think we have a compelling approach and rationale that it says all parities, bondholders and the incoming companies and we’re very optimistic that will continue on that path. As you know we've got the FIG reinsurance close we're there. We hope that it gets further support and becomes more of the acceptable opportunity in the current year. Obviously we look to provide those type of solutions or acquisitions. I mean the right thing about us we can do it either way we want to do it, but we still believe it’s a valued and it is a value to the bondholders, it’s the valued to the income and company and in terms of its ability to now go forward outside of the regulatory regime, it is trapping the capital, melting their earnings, using up a lot of expenses that have no real value in terms of doing a future book of business and therefore we have asked them to move forward and start to utilize NOLs. So in the old days we would take kind of the crusade to them and I’m hoping in 2017 they start coming to us. They said okay, you are right, we need to move on, we need to get something on our books or operations and utilize the NOLs.

Okay and then related question on use of the capital obviously, I mean you guys noted the share prices increased materially over the last couple of months. How you think about using capital given your other alternatives of obviously I'm sure your purchases one lapping, but your new ventures M&A and how you’re rank ordering your options at this point?

We are including it, but share repurchases are still number one, it's still number two, it's still number three, it's still number four. The acquisitions are typically capital accretive the way we engineer themselves there actually helped the problem. We’re exacerbating the problems if anything how you want to look at it, so that's been good and the track record in those have been very public and seen the value that the add. The new ventures, I mean we’re building this slowly and we are very critical in our assessment of opportunities in that space. We kissed a lot of frogs, found very few princes. And therefore I don’t see us deploying anywhere near capital where there is influence whatsoever relative to the amount of capital management we still need to get done in this company number one. And number two, it depends on the execution whether these things will take the capital charge that you could assume. In other words we take a position in a GP of an investment fund, but some of the underlying investments are investments greater would qualify for capital then all you are taking is the capital as it which paid for the GP and the investment side doesn’t take a hit at all. And number two, we've got a lot of, what I’d call capital charge investments that are rolling off our books anyway and freeing up capital beyond just what the portfolio and amortization is providing. So, we are in very, very good shape and continue to increase our excess capital even in spite of all the hard work we have done to manage the capital down, so we will continued to manage the capital down and as I said its still priority 1, 2 and 3 and 4. And although the prices got closed it used to be that’s the good news, bad news, it's still very accretive for us to buy back stock.

Yes, and then last question is just you guys touched on it earlier, but obviously rates are up in the last few months and poised to go further team is like, so is there a good way to for us to think about how much penetration rate just on an industry basis of non-insurance can go up as rates raise and I guess what’s the appropriate benchmark to be looking as we think about that penetration rate going up.

The anticipation is as rates so does penetrations. The problem we have is because we are still in single digits and we are very much influenced by who is the issuer of the movement or the issuer in the quarter in terms of size, liquidity, current ratings, it's harder to be able to assess that expertly. However, we will say that every time the MMD goes over three, we seem to have a spike in opportunity or demand. However, it doesn’t stay with rate and then continues to bob up and down. And therefore, until we get sustainable rate increases that stick in the market and really do affect short term and long term yields its harder to declare that when they see instances of increased demand every time the rates bobs, sure we can. Obviously we would like to see it permanent. We'd like to see a definite move upward of interest rates and especially in the 10-year treasury to make it, give us that opportunity. The interesting thing we do have kind of why we see the jumps when we go up at three is because market has been able to borrow on such historic lows any movement even a 50 basis point movement, we think will cause certain municipal budgets to have some concern and therefore say, wait a minute I need to get back to more the historical low and therefore you think He has been in a case where you would normally see insurance, there might be an insurance request just to try to lever that rate down. And remember, the amount of the uninsured volume that has gone out over these last few years has created the market opportunity for our secondary market execution which as I said in my comments was up of 91% year-over-year. So, we’re not seeing in the primary market, we are seeing it in the secondary market and the combination of the two led us to that, very strong number of product last year. And as I said where trade increases at least scheduled and our account would be driving clear and victory on our rate increase schedule it never worked right? But they say there is going to be three this year. They follow up for those three. I would be optimistic that there will be a substantial increase in opportunity relative to the insurance marketplace.

Okay. Thank you, very much guys.

You're welcome.

And we have a follow up from Geoffrey Dunn of Dowling & Partners. Please go ahead.

Thanks. I got a few here, number one drop in your category of 1 BIG this quarter pretty substantial, can you give any color on that?

Well, let me pull my BIG out there Geoff. So it went from, no it went down $1 million in the quarter, but year-over-year it is down around, I'm sorry, $1 billion dollars and from $2 billion year-over-year and I'm trying to figure out who is the big boy in that regard? I have to buy [indiscernible] but anybody remember? You know typically amortization, yes terminations accounted for well $500 million of lease terminations Geoff. So we would have them targeted terminations. So the major project was terminations in residential mortgages and corporate obligations is the big boy. So we have had a strategy that was going out to look at opportunities to risk mitigation and one of the major transaction types was terminations. In this case if I remember it was a European financial institution where we were training favourites. So they asked to do certain things relative with [indiscernible] and waivers and we said fine, you've got to tear up these deals. And remember although we have them as below investment grade, that doesn’t necessarily mean we were going to recognize a reserve generally and actual incurred loss. But the way our ratings says, the more or just a few far below certain level of debt service coverage, that is one of the primary issues that would make you in non-investment grade. We categorized it that way. So these were probably issues where we weren’t kind of loss, but we expected an economic loss. Classified as below investment grade and working with the financial institution in Europe this is one of the transactions that in the negotiation I am giving them amendments and waivers we've tore up these transactions.

Okay. And then you touched on it, but I was hoping if you could give a little bit more of an update on your alternative investment initiatives?

Well as they say we've kissed a lot of frogs found very few princes or princesses as the case may be. But we did make our first investment and it was more on a passive basis, but with very high return expectations as we went through a lot of analysis and scrutiny. That was for $100 million which will be funded over a two-year period. So the impact is negligible, and remember we make $400 million of investment in core year. The second one we got it close or getting close to making an acquisition. Remember we look at the acquisition on three basis, right? It has got to be financially creative, it has got to build at least utilized our core competencies and then we've got to research fully accretive. And we think we are fairly far down the road. So stay tuned in terms of an announcement. And at this point in time we are saying to protect the organization and build a very strong foundation. We believe we should have a portfolio of these type of risks and kind of the diversification of fund to funds and therefore you are looking at numbers and that's $100 million to $250 million range in terms of investments as of this point in time that could change sort of lock us into it, but we are, I can say we made one, but it is more passive than active. We are looking at potentially putting out an awful our first real active operating type of situation and they are all in the same areas of kind of credit, credit, credit and it's credit we know very, very well.

Okay and when you say passive does that just mean $100 million of money out of AGC or AGM invested into a fund?

Yes, yes.

Okay and then when you say active is that an investment at the operating co level or an investment outside of the operating?

Yes.

It is more operating co level. It might also involve invested funds as well in LPVs [ph] but we want to get piece of the OpCo and the piece of the GP.

Okay. So the GP investment is being made outside of AGM and AGC?

We haven’t decided yet.

It could go either way.

Okay, all right. Thank you.

And we have a question from Michael Cohen of Opportunistic Research. Please go ahead.

Hi guys, thanks for taking my question. I just wanted to touch base and get your perspective?

I haven’t a taken it yet, so be careful.

Got you, it is rather what is your perspective on the Ballantyne [indiscernible] case which judge [indiscernible] issued her ruling on the motion for partial summary judgment which on paper reads like she denied, but as was communicated, she did sort of give it in favor of the plaintiffs and how do you guys are thinking about that case which is headed to trial on March 13?

There you know lot of vaccines you got my general counsel dancing in the corner, so he obviously runs our litigation in the company. We are very pleased with the Judge's decision. We have already felt a reasonably strong case. We don’t litigation lightly. We will bring cases for just bringing a case from sake of [indiscernible] and therefore we're pleased with the judges current ruling and we look forward to a trial beginning in March.

Great and then maybe at a highest level if you could offer all of sort of some sort of roadmap as to sort of how you think things are going to evolve in Puerto Rico over the next six, 12, 18 months in terms of the milestones that we are looking for obviously getting PREPA finally done would be a great first step, but how are you thinking about the rest of it?

It is an interesting question and this is more of my view. And trust me, I say an awful lot to the various parties in Puerto Rico as you will imagine. But for me the smartest thing they can do is solve all the public corporations because all the public corporations are solvable and that is PREPA, PROMESA and transportation. If you leave transportation alone, meaning given back its revenue, it is fine. PREPA and PROMESA, PREPA was restructuring and it makes it fine process is fine and you then clear the debts of about $19 billion of debt which is never a bad thing and it will be a great victory and it will really set those on their way develop work credibility to the marketplace maybe even get you access as we've talked about in PREPA we would get you access. So we think that is a smarter play, it is easy to do. And therefore maybe that is something they consider because you know you are ultimately have the fight of sites between GO and COFINA and I'm not going to tell you where my view is because that will get too much activity. But you are going to have that battle at some point in time, someone is going to blink and that is where really the main lifting that has to be done and therefore that makes sense. But there is going to be some compromise done in the market, it makes sense you get it all together and you knock it out once. Remember, you do have the one issue that they have to be cognizant of in terms of the delay of getting any of these deals executed and she got the legal stay expiring on May the 1st. And unless you want…

No that certainly helps, I understand the timeline. And have you had any conversations with the new administration about what or have any insight as to sort of how they are thinking about Puerto Rico and obligations they are having?

In conversations yes, right we can only talk as much as we can talk. They have not given us a peak of their cards. We I think have put our cards on the table. We are very transparent as we've said and it is their move. And PREPA is a great example of it's their move. And you can now , so you want a relook at the agreement, well okay relook at the agreement, but get it done and you have till May 1st. And that is not the only reason you've got to give before May 1st. You are going to have to have some agreement in principle how you want to go forward while the avalanche is going to happen and although you are going to cry that, oh look this is where you have to avoid what you are bringing it on yourself. We've stayed here for two years with PREPA. We have done all the forbearances. We have done the funding, we have helped in every way we've possibly can to get a resolution to everyone's satisfaction now is the time, you know to get off the pot and do something.

Understood and did the rate increases get codified at Puerto Rico, I mean at PREPA?

I think we are about 50:50 on that mike. So one did, the other one was changed a couple of times if I remember correctly, there was actually another rejection of it most recently but yet they are allowed to still continue after some short period of time. So it's still a political football and as you can imagine and I'm not trying to make light of this thing or making it sound easier than it is. There is the huge political environment here that has to be managed as well. I mean there are 3.5 million Americans there that have to be consistent in any scenario and how is the best way to steer this very complicated situation while still being able to recognize the rights and the conditions of these 3.5 million Americans just still recognized the financial reality which they brought on themselves that has to be addressed, there is no easy solution. Do we think there is a way forward? Absolutely and as I said a little bit earlier the public corporation will be the first way forward, they've got other issues relative to tax policy, tax collections, government, operations, efficiencies of the individual apartment that you saw the, great argument going on at the University of Puerto Rico where they suggested that they, we’re going to made – management resulting. So you can understand this is not politically easy and you could almost fall off the strip in Greece where the first level of use met with absolute revolution, but there is an economic reality that has to be faced and someone is going to get up and account for and take the appropriate responsibility and we worried we – work with them, we are big boys take. We sit at the table every day. We have a very realistically view in terms of what is the way forward and what our responsibility is and we're getting help in any way we possibly can. They do need some federal assistance with this, you know, there is medical reimbursement disparity makes no sense to us, if you are going to call the 3.5 million Americas and how you treat them differently. I don’t see the cause of the ability. And that's a huge number relative to their budget and maybe that's how they are arguing this thing. And so she is trying to get some further action on that part. It is a complication beast and I think Assured as I said earlier in the call, we are well positioned to be an A, we are very well positioned vis-à-vis our legal rights and work either side of the quake [ph] as terms dictate.

Right, thank you, for taking my questions.

You’re welcome.

And the last question will be a follow up from Michael Temple, a Private Investor. Please go ahead.

Yes as clearly as we look at the company over the last two, three years it's been a Puerto Rico story for all the obvious reasons and but at the same time, as you pointed out here in the financials, your core business as a finally showing some extraordinary year-over-year growth reflecting marketplace dynamics. My question for you is as follows, can you recap for us because again you are buying up the legacy businesses of your principal competitors from a decade ago, could you just give us a rough ballpark of your competitive place in the industry say 10 years ago, what was your market share, who were your principal competitors? And then today where it seems like you're the last cowboy standing at the saloon and what the relative market share you think you have and who is your number two or number three as you go about bidding for all these new business initiatives again away from the whole Puerto Rican situation that obviously continues to calm people's mindset about your company?

Well a little quickly just read because I'm not so sure that has helped us much. But 10 years ago we were the smallest company in the industry. We were probably still split range at that time. therefore we were only able to do small transactions [indiscernible] we were very dependent in that market because that market wasn’t as rating sensitive. And our competition then was the other monoclines. Today our major competition is the uninsured market. There is really the market itself in terms of the desire for yield and return in a very low interest rate environment. So we went from having to compete against several other competitors back in the day now we're competing here in some market that's made up of financial institutions, other investors, insurance companies, et cetera that hold this paper and are competing for the yield and therefore not utilizing the insurance product because they want to return as opposed to pay for the insurance. As interest rates spike up however, we see an opportunity for the demand for insurance will increase. As the credit concerns increase we see demand for insurance increase. In the old days the insurance industry wrote 50% of the market. Today we probably don't write half of the market that we used to write. So now the insurable market is half of what it used to be. But I still believe in the long term value of bond insurance that we will rise after that, in other words 50% of the 50% which gets you 25%. So our penetration rates today on an product basis are between 5 and 7 and I think in the right insuring environment we can continue to increase in demand for the product relative to the appreciation of what the product delivers in terms of value we substantially increase over the next few years. And although we have two [indiscernible] out there in the market we think we're in the best position to capitalize on that increasing market share. And we will be kind of you will say the last guy standing at the bottom.

And who are those two competitors that you are up against on daily business out there?

A company called [indiscernible] and company called National. National was the former MBIA company, [indiscernible] is a mutual company that was sponsored by a company called White Mountain. White Mountain just produced its annual results which showed an increasing loss on its exposure to [indiscernible] $600 million of surplus loans which is down and repaid and the principal, nor has been paid any interest. Then the current accumulated interest that is not recognized on a statutory basis, but our competitor is over is over $100 million. So you can make your own conclusions relative to the value of their guarantee.

Thank you very much.

You are welcome.

This concludes our question-and-answer session. I would like to turn the conference back over to Robert Tucker for any 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.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.