Good morning, and welcome to the Assured Guaranty Limited First Quarter 2024 Earnings Conference Call. My name is Carla, and I will be your operator for today's call. All participants will be in listen-only mode. [Operator Instructions]. Please note that today's event is being recorded. I would now like to turn the conference call over to your host, 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 first quarter 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. 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, both 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; Rob Bailenson, our Chief Operating Officer; and Ben Rosenblum, our Chief Financial Officer. After their remarks, we will open the call to your questions. As the webcast is not enabled for Q&A, please dial into the call if you'd like to ask question. I will now turn the call over to Dominic.

Thank you, Robert, and welcome to everyone joining today's call. I want to begin with a little history. Last month, we celebrated the 20th anniversary of our IPO. Since that time, through the end of first quarter of 2024, we produced cumulative net adjusted operating income of almost $9 billion increase our adjusted book value by 542%, returned $1 billion in dividends to our shareholders and increased our share price by 385%. Of note, the increase in our share price over that period exceeded those of the S&P 500 Financials, the S&P 500, the Dow Jones Industrial Average and New York Stock Exchange Composite Index. We prove the effectiveness and prudence of our earnings strategy as well as the resilience of our business model through difficult circumstances. These include the 2008 global financial crisis with its many high-profile municipal and corporate bankruptcies, the increased occurrence and scale of natural disasters and the impacts of the COVID-19 pandemic with its far-reaching global effects. During those periods, we maintained our ratings and claim paying resources at high levels and continue to write new business. We also reduced our insured leverage, our single risk exposures, while at the same time returning more than $6 billion to our shareholders through share buybacks and dividends and maintaining significant excess S&P capital. While we sought to preserve sufficient excess capital, we did not lose sight of our shareholders' need for appropriate returns on their investments. We began our share repurchase program in 2013 and since then through May 7 this year, we repurchased a total of 75% of the shares that were outstanding at that time. This year, we are commonly ramping up our expectations for share buybacks to the level that prevailed in earlier years, when we generally bought back about $500 million per year.…

Thank you, Dominic, and good morning to everyone on the call. Our Financial Guaranty new business production was strong in the first quarter of 2024, in which we closed $63 million of PVP. U.S. Public finance led the way with $43 million of PVP approximately double its PVP for the first quarter last year, even though the corresponding gross par written closed was similar. Supported by growth in the overall municipal market, total first quarter primary market volumes sold utilizing bond insurance was up 24% year-over-year. Primary market insurance penetration continued to exceed 7% of par sold as it generally has since 2020 when the COVID-19 pandemic reminded investors of the value of bond insurance in an unpredictable world. It's worth noting that in our target rating category of transactions with single A underlying ratings from S&P and/or Moody's, insurance penetration was 27% of par sold and 53% of the number of transactions sold. Assured Guaranty remained the market leader in U.S. Municipal bond insurance ensuring approximately 53% of all primary market insured par sold during the first quarter of 2024. The $3.8 million of new issued par sold with our insurance during the quarter was 12% higher than in first quarter 2023. We continue to benefit from institutional investor demand for short guarantees insurance on larger transactions. During the quarter we insured 7 transactions with $100 million or more in insured par totaling approximately $1.4 billion including the 2 transactions sold with the largest insured par amounts during the quarter. The $340 million of insured revenue bonds for the North Carolina Turnpike Authority Triangle Expressway System and the $380 million of insured revenue bonds for the Lower Colorado River Authority. We also continue to add value on AA credits during the first quarter, as we insured $605 million par…

Thank you, Rob and Dominic, and good morning. I am pleased to report first quarter 2024 adjusted operating income of $113 million or $1.96 per share compared with $68 million or $1.12 per share in the first quarter of 2023. On a per share basis, this represents a year-over-year increase of 75%. The Insurance segment contributed $149 million of adjusted operating income in the first quarter of 2024 compared with $117 million in the same period last year. This segment is the largest component of adjusted operating income and had a few notable items driving the quarter-over-quarter increase. First, net earned premiums were $38 million higher compared with last year, primarily due to the refunding of one large transaction. Second, mark-to-market gains on Puerto Rico contingent value instruments were $26 million compared with a loss of $2 million in the first quarter of 2023. Our remaining CDIs have a fair value of $272 million as of March 31, 2024. And last, equity and earnings from our alternative investments was a gain of $40 million compared with a gain of $30 million in the first quarter of 2023. Investments in CLO equity tranches were the primary component of the alternative investment gains in both periods. Fair value changes of assets underlying the alternative investments may cause volatility in adjusted operating income from quarter-to-quarter. However, on an inception-to-date basis, they have generated an annualized internal rate of return of 14.4%. These year-over-year increases in the insurance segment were partially offset by a decline in other income which included a nonrecurring benefit related to the release of a litigation accrual in the first quarter of 2023. Our deferred premium and credit derivative revenue which represent the storehouse of future earnings in the insurance segment remains strong at $3.8 billion. In the Asset Management…

[Operator Instructions]. Our first question comes from Tommy McJoynt from KBW.

Good morning, guys. Thanks for taking my questions. The first question is on the net investment income line. So, it looks like it had been averaging, looking at the insurance segment, around $99 million in per quarter in the second half of last year, and it dropped sequentially to $83 million. Can you walk through some of the puts and takes for what drove that decline? And then how we should think about the run rate from that going forward?

I think the answer is if you look back a couple of quarters beforehand, you'll see it was a little lower. What happened at the end of the last year, the last two quarters, we had income from some loss mitigation bonds that came through. I would say that what you're observing this quarter is probably a relatively consistent run rate of what I would expect throughout the year.

Okay. Got it. Thanks for that. And then can you remind me, what is happening in the other segment, in terms of the, I forgot kind of mechanically how it works with the large negative equity and net earnings of investees the last couple of quarters. I think that's offsetting some of the fair value gains on the CIBs. But can you just remind us mechanically what's happening there?

I think what you're looking at is you're looking at the impact of some of the consolidation of the SG and CVI that are coming through and some of the volatility coming through that consolidation. Just a reclass, not on the bottom-line impact.

And then just last question. I think there's still a special dividend request pending in New York for AGM. Is there any status update on that or anything you want to share there? Sure.

As you know, we filed a request back in fall last year, and New York is going through its process to approve the dividend. We don't have any expectation of issues. So, it's just them going through their process at this point in time. Hopefully, we'll hear something in the near future.

Understood. thank you.

[Operator Instructions]. I would now like to turn the conference back over to your host, Robert Tucker for closing remarks.

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

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