Burford Capital Limited (BUR) Q4 2025 Earnings Report, Transcript and Summary

Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Burford Capital Fiscal Year 2025 and Fourth Quarter 2025 Financial Results Conference Call and Audio Webcast. [Operator Instructions] I would now like to turn the call over to Josh Wood, Head of Investor Relations. You may begin.

Thank you, Bailey. Good morning, everyone, and thank you for joining us to discuss Burford's fourth quarter and full year 2025 results. On the call, we have our Chief Executive Officer, Chris Bogart; our Chief Investment Officer, Jon Molot; and our Chief Financial Officer, Jordan Licht. Earlier this morning, we posted a detailed earnings presentation, which we'll refer to during the call, as well as our annual shareholder letter, and we also filed our Form 10-K for 2025. If you haven't already, you can find all of these materials on our Investor Relations website. Before we get started, just a reminder that today's call may contain forward-looking statements that involve certain risks, uncertainties, and other factors that could cause actual results to differ materially from those discussed during the call. For information regarding these risk factors, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC. We will also be referring to certain non-GAAP financial measures during the call. Please refer to today's earnings materials and our filings with the SEC for additional information, including reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. With that, I'll turn the call over to Chris.

Thanks, Josh, and thanks, everybody, for joining us today. I'm going to take you through some key messages, and I'm going to start on Slide 9 of the presentation deck. And what I'd really emphasize about what happened in 2025 is that we had a standout year when it came to new business, which is the thing that we really have the largest amount of control over in this business. So we saw -- as you can see here, we saw very significant numbers, taking us well on our way to meeting our longer-term goals of doubling the base portfolio by 2030. If we were to keep on, on this clip, we would significantly exceed that goal. So that was just a terrific performance across the board: new definitive commitments, deployments, we added a net of $700 million of additional modeled realizations to the overall portfolio, taking that number to north of $5 billion now. So we're very pleased with how the year went from that perspective. As all of you will be aware, our realization activity, while still robust, was not as strong as it was last year. And that, of course, was a disappointment to us. That's, of course, also something that we have less control over, and it's something that as longtime observers of this business know, it's something that can ebb and flow with the level of activity going on in the courts. And we've been describing to you over the past several years, a world where we have a significant volume of older cases in the portfolio, which are simply not moving through the court system, the court process, at quite the pace that we would wish. We think that's probably still a hangover from the portfolio. In our shareholder letter this year, which I'd encourage you all to go and have a look at, we refer to -- we try to refer to it as 4 lanes of highway traffic trying to merge into 2. But the good news there is that the portfolio still had a significant level of activity, a good level of cash generation, and a good level of realizations. And most importantly, we're not seeing degradation in portfolio quality. The loss rates are stable. Our returns are stable. So the issue from our perspective is much more an issue of throughput and timing than it is anything else. And we'll take you through some more detail about that. However, that obviously impacted our income, which was down somewhat, and we'll take you through -- and Jordan will take you through in more detail just exactly how all of the numbers looked. So I'm going to turn to Slide 10. And this really highlights what happened on the new business front. It really was just a terrific year. You saw there a 39% increase in new definitive commitments. And that was coming off a year that was already relatively robust. That enabled us to significantly increase our portfolio base. That's the metric that we're using to look at our goal of doubling the business by 2030. And you see there, we've not only had a multiyear significant level of growth, but just this past year, we were able to put up a 20% growth rate in that number. So that's really very exciting for us, and it positions the business very, very well for the years ahead. Slide 11 takes you through realizations. And what you see in realization activity here is on the right side of this slide, you see that the world is continuing to go pretty well. We hit a new high of rolling 3-year average realizations. And so we're pleased with the level of portfolio activity that we're seeing. And you can also see there that we saw a number of portfolio events, basically right on top of the number of portfolio events that we saw in the prior year. But what really did happen there that caused the numbers not to be as robust as they were in the prior year is we simply didn't have as many big chunky wins. And you see that if you look at the graphic on the very left side of the slide, you see there that even though we had a roughly similar number of large-ish outcomes, we didn't have those big, big outcomes that drove the 2024 performance. And so when that doesn't happen, when we're missing one of those big, big -- or 1 or 2 of those big, big outcomes, you just inevitably see a decline in the overall realizations that the portfolio is driving. So if you look across here, we saw lots of activity, 69 assets add realization activity in fiscal '25 compared to 71 in fiscal '24. So that's an insignificant difference. But the dollars per realization event were just lower. That doesn't reflect portfolio quality. It just reflects the fact that we didn't have one of those big cases that we've been waiting for to show up and conclude and generate cash. It doesn't affect our enthusiasm for the portfolio, as Jon is going to go through in some detail. And again, our loss rates have been stable, our returns have been stable, but it just reflects the fact that we didn't have the kind of throughput that we had. The good news is all that stuff is still out there waiting. So it's not as though these things are gone. It's simply that when you look at our larger cases, we didn't -- we simply didn't have as much activity in them as one might have wished on a single year basis. And if you turn to Slide 12, you really see this illustrated in a more graphical format. Interestingly, we even saw -- if you look at gains year-by-year, we even saw an overall higher level of gains in fiscal '25 against fiscal '24. That's those 2 green bars on the left, $508 million to $579 million. But at the same time as we saw those higher gains, we also saw a somewhat higher level of losses. Now what does that mean? That doesn't mean case losses. Case losses, when you look at realized losses, those numbers are still pretty low, and you see those numbers there over on the right-hand side. Those numbers are low, our loss rates are acceptably low, and consistent with historical practice. So what's going on there? What's going on there is we have some unrealized losses. And I'm going to take you through a few examples of what creates an unrealized loss in our book because the reality is that while bad case events can also cause unrealized losses, so too can a number of things that don't speak to the underlying merits of the cases, things like changes in duration, changes in cost, and other extrinsic factors. And so it's important when you look at these numbers and you go into the accounting numbers as opposed to the cash numbers, it's important to bear in mind that there's quite a lot going on in the accounting, which is why we've always said we like to look at the cash performance of the business instead of the accounting performance. But since we have these accounting numbers, we're going to unpack them a little bit for you so that you can really see some of the dynamics in play. And before I delve into this, I'd also just encourage everybody to go and read our Shareholder Letter. I'm not going to go through every theme orally that we hit in that letter, but we talk there in some detail about topics like AI and our technology initiatives. We talk about our continuing market expansion, including our launches in Madrid and in Seoul, South Korea. And we talk at the end about Burford's overall role in the justice system and how we've become a very significant part of that overall process. But turning now to some actual examples so that you can see what's actually going on there. Slide 13 talks about a collection of cases that we call the proteins cases. And these are U.S. antitrust cases involving allegations of price-fixing in the proteins foods cases. So the reality of these cases is that they're going pretty well. You can see 4 different proteins there, all seeing positive outcomes and forward momentum. And in fact, we just had a significant win in one of these cases in the Seventh Circuit Court of Appeals, where one of the major proteins players had been trying very hard to cling to a settlement that was, in their mind, done before we became actively involved in the cases. And the Seventh Circuit rejected that effort, basically signaling that the cases were worth more than the settlement had been done for at the time. But the reality of these cases is that this is complex litigation, and it's taking somewhat longer than one would have wished. And the way that our accounting works, and Jordan is happy to answer questions about this later or offline. The way that our accounting works is that if duration extends past our original expectations, that's going to cause a reduction in our fair value. And so we, in fact, took a $22 million charge to earnings from nothing more than the fact that these cases are taking longer and costing more, even though they are proceeding well, and we're quite optimistic about their ultimate outcomes. So there's that sort of interim action in the numbers there that the complexity of our accounting now is causing that. And it's important that when you look at these numbers, you separate the things that are these interim time-based, non-merits-based dynamics from what's actually going on in the underlying merits portfolio. Turning the page to Slide 14, which is still a little bit in the proteins world. This is another example of where our earnings can be depressed from things that don't actually go to the underlying merits of the cases. One of the counterparties that we financed here, a very large wholesale distributor, has gone into Chapter 11, into the operating bankruptcy regime of the U.S. And that means that we and other creditors of this business are jockeying for a position. Now it's obviously not great when your counterparties go into bankruptcy. But here, the underlying claims that are our collateral are proceeding well and actually are continuing to be settled and to pay cash. So even though we, for accounting purposes, have taken a significant charge to earnings because of the pendency of this Chapter 11 proceeding, the reality is that the underlying collateral is continuing to perform, and we have reason for optimism that we're going to not suffer the kind of loss that you would normally associate with being -- particularly a potentially unsecured creditor in bankruptcy. So again, this is divorced from the underlying merits of the case, and it's an issue where -- it's a place where we actually expect cash to flow to the business over time. And a third example on Slide 15 is a mining arbitration where we see the benefits of having cross-collateralized portfolios. And here, we have 2 cases in play. One of those cases has had an initial unfavorable outcome. But the other case has yet to be decided, and the first one is on appeal. And either one of those cases, if successful, is sufficient to make up our whole entitlement out of these cases. However, the accounting reality is -- and the market reality, we're not trying to walk away from the market reality, is that when you have 2 chances to win as opposed to 1 chance to win, the asset is probably somewhat more valuable. And so having had a negative impact on 1 of the 2 chances to win, that causes appropriately a decline in the accounting carrying value of that asset. But it doesn't mean that we don't necessarily have every opportunity to both win the second case and get our full entitlement out of that 2-case cross-collateralized portfolio. So the purpose in going through all of these is really just to show you that there's a fair bit going on under the covers. It's not as simple as us just saying, okay, well, here's the case, we either win it or we lose it, and money comes in. That's how we look at the business on a cash basis. And on that basis, the business is doing very nicely. I would have liked some more cash in 2025 than we generated. But overall, when you think about the strength of the new business that we were able to create, the progress that we're making towards achieving our long-term goals, and the fact that both our returns and our loss rates have remained steady, that all tells me that this cash basis is a waiting game. And what's important to me is not to have the accounting get too much in the way of understanding that basic cash principle about the business. So we're happy to take your questions on that. But before I turn you over to Jordan, I don't think any Burford presentation these days would be complete without talking briefly about YPF. So turning to Slide 16. This is a slide that you've all seen before. I'm not going to go through it in any great detail. I think just about every Burford shareholder is pretty familiar by now with YPF and what's going on with it. And that slide is really there just to remind you of the basics. We did, however, add a new slide, Slide 17. And on that slide, we tried to pull together the threads of everything that is going on right now because there is quite a lot happening. So the main -- the big issue is that we're awaiting a decision from the Second Circuit Court of Appeals on what we call the main appeal, so Argentina's appeal of the underlying $16-plus billion judgment that has been growing now with prejudgment interest and post-judgment interest added to it. That appeal was argued on the 29th of October, and we're waiting for a decision. That decision, if past practice is any guide, you would expect that decision during the course of this year, although there's no requirement for that to occur. And like everything else about litigation, nothing about that is certain, and some litigation risk always remains in these cases. But in addition to playing a waiting game for that decision, there's actually a fair bit going on elsewhere. The District Court, the trial court that gave us the judgment in the first place, has been actively enforcing the judgment, has had many hearings over the past months, has been actively engaged in the process, has now scheduled a further evidentiary hearing on a whole variety of topics, including contempts and sanctions and Argentina's gold reserves for late April. So that's upcoming. There are some other collateral appeals floating around in the system. One of them is around the order that Argentina turn over its YPF shares as partial satisfaction of the judgment. There are some discovery issues around the senior Argentine administration officials' use of off-channel communications like WhatsApp and Gmail, and there are some procedural appeals. Those are not entirely calendared yet. The way the process works is that the Second Circuit tries to respect lawyers' schedules, and so it sends out a preliminary idea of when it might like to try to hear the appeals, and it's done that, suggesting the week of April 13th. It's had feedback from the lawyers about their availability, and now we're all waiting to see if they will pick a date during that week, or if they will push it off to some other sitting of the court. And then we have enforcement proceedings going on in 8 different foreign jurisdictions in which there's probably -- in which there's likely, in fact, to be a reasonable amount of activity in 2026. So with that, let me bring my introduction to a close and hand you off to Jordan, just with the overarching theme, though, that while I know people will have been looking for some more cash and some more realizations, and, of course, we would have liked that, too, the simple reality is that there's not much we can do about the pace of the conveyor belt, but we're very happy with the state of the business and the amount of new business we were able to generate, which sets us up very nicely for the future. And we're happy with what's left in the portfolio, as you'll hear from Jon.

Thanks, Chris. Good morning, everyone. I'm going to take us through our 2 segments. That's the total segment. That's what we also call Burford-only. It's what the shareholders own. I'm going to jump straight into the Principal Finance and focus on the portfolio to start. If you look at the snapshot of where we are on Page 22, and you can see the portfolio is now $3.9 billion. YPF represents slightly below $1.7 billion. And then we've got deployed cost of slightly over $1.7 billion, and then unrealized fair value above that of around just under $500 million, which is around 27%, 28% of the total deployed cost. It sets us up, obviously, very well when you think about what the potential future of gains can be relative to how much cost in portfolio is out there. If you think about that number relative to our historic 82%, 83% ROIC, or we'll talk more about our modeled realizations in a couple of slides. The portfolio is also very diverse. You've seen these 2 charts before, and it remains -- the diversity still remains very similar in terms of geography with just over 50% in North America and continuing to expand, as Chris highlighted briefly, and we talk more about in the shareholder letter, as we explore other opportunities internationally. Asset type is also extremely diverse with a number of different, what I'll call, 20% type slices. In terms of moving forward, though, on how this segment, this is our Principal Finance segment, how did the revenue capital provision income play forward. First and foremost, I think Chris spent a lot of time with that on Slide 12, historically looking at breaking down the capital provision income between its gains and losses and then also the net realized gains and losses for the period. I want to remind folks that when you look at the movement out of fair value, you also have what's the transfer from unrealized to realized, which makes sense. When you have an asset that's been positively marked and has some fair value associated with it, when that asset concludes positively, you're going to see a reduction in fair value, and that flips itself into net realized gains, which makes sense. That happens every period. I think the other place to focus is on how the balance sheet actually moved itself forward. Hopefully, by now, folks are familiar with the charts on the bottom of Page 23, but I'll walk through it quickly, which is we have our asset value as of the end of the year, continued deployments as we invest in the portfolio, where it's healthy this year at $457 million. You have a duration impact. This is just the passage of time. As we move forward with respect to getting closer to the ultimate resolution or expected resolution of these assets, you have a change in discount rate. Works the same as bond math. Rates go up, the asset value comes down, and vice versa. In this period, for the year for our portfolio, the discount rate had an approximate 80-ish basis points of improvement, and that's then represented in that change in discount rate, which brought value of $75 million. And then you have the milestones and other impacts. And that is going to coincide neatly with the case studies that Chris just described, both positive and negative, as well as some of the other changes in models when we change a duration or there's an expected value change that plays itself in, and you can see the impact on fair value there. And then, of course, obviously, the realizations when the assets themselves turn into a settlement -- excuse me, turn into a receivable or cash, I'm finally finishing up with a little bit of foreign exchange impact. So overall, that's the march forward from just under $3.6 billion to $3.9 billion. Before I hand to Jon, a little bit more on the new business. If you look at -- I mentioned the deployments on Page 24, and you can see the relationship of '25 to fiscal year '24 on the bottom of the page, but also the new business. We wrote a lot of new business in the year, 39% growth of our definitive commitments. This is where we not just have entered into a relationship with a counterparty, whether it's a law firm or a corporate client, but have identified the cases and have committed to spend over the duration of those cases our capital. You can see the growth in 2025. I want to highlight also, though, that the absolute growth didn't come from necessarily reaching for more risk. The absolute values of the -- we've started to show you the bands in which we look at analyzing our cases from the onset. And you can see that the absolute amount of higher-level risk was pretty much the same as 2024, and most of the growth came then obviously from other areas in the portfolio, the lower risk kind of middle tier and lower tier buckets. So we're happy -- extremely happy with the type of new business that we put on as we continue to grow the portfolio. And with that, I'm going to turn to Jon.

Thanks very much, Jordan, and thanks to you all for joining. So as Jordan and Chris have both said, it was a very strong year when it came to new business and increasing the potential of the portfolio. And I'm going to turn to that, but I do want to first turn to Slide 25 and have a word about the past. When you look at Slide 25, as Chris and Jordan both said, the realizations were not in '25 what they were in '24, a record year. But as Chris also pointed out, it wasn't a lack of activity in the portfolio that we had 69 assets contributing to realizations in '25 compared to 71 in '24, pretty comparable, just not as many big, chunky realizations. There was one matter that was a large deployment that was fairly short term. And in fact, when you look at the ROIC numbers, part of the reason that the ROIC number for '25 was lower is that matter happened quickly enough that we had a 40% IRR, but only a 25% ROIC. I'd do that deal any day when it comes along, but it's going to affect the numbers. Nonetheless, you see that our track record across the 2 years produced an ROIC of 81%, which is almost spot on with the historical track record over a longer period. And that's not really surprising. If you turn to Slide 26, you've seen this slide before. Basically, the nature of our business is there's 3 possible outcomes for any time we put money out. We can have an adjudication gain. We go to trial and win. We can have an adjudication loss, so we can have a settlement. The vast majority of our matters settle. They settle at an attractive IRRs and ROICs, but below our historical performance. The reason for that is the wins far outweigh the losses, and that makes for a very attractive model. As long as we're rigorous in our underwriting and rigorous in our case management, and we continue to invest in this asset class the way we have, I'm pretty bullish on putting new matters into the portfolio given that track record. And if you turn to Slide 27, you've seen this, too, instead of dividing it into 3 buckets, we actually break it down over every investment we've made, show graphically. Those red bars, those are triples, better than a triple, meaning you've got an ROIC in excess of 200%. That stuff far exceeds the black bars where we have losses, many of which are only partial losses, and then you have the singles and doubles in between. And that's really what -- that asymmetric profile, that asymmetric distribution of returns is what makes it attractive and why I continue to want to just put money out in good deals as we've been doing. If you turn to Slide 28, you've seen this, too. This is broken down by vintage, and you see the IRRs and ROICs may bounce around, but they blend to something quite attractive. And basically, the last 2 slides are a comparison of the black bars to the red bars by vintage, right? The black bars is the money that went out, the red bars is the money that's come in. It's a bigger number. That's great. That's what's produced the IRRs and the ROICs. But day to day, what I'm focused on is the gray bars, right? That's the investments we've put out and continue to put out in a big way in '25, and I'll turn to that in a moment, that we have put out that are there to deliver value in the future. And if the gray bars, if we just perform the way we've been performing, it's an attractive -- and we actually think there's great potential there. And if you turn to Slide 29, this kind of tells the story about what a successful year it was in terms of new commitments. The modeled realizations for the entire portfolio as of December 31, 2024, the prior year, was $4.5 billion. As of December 31, 2025, it's $5.2 billion, a big increase. Why was that increase? Where does it come from? Well, we have $1.4 billion worth of modeled realizations from those new 2025 definitive commitments. That's what's been, I think, the success story of this year. You reduce it by $0.5 billion for the actual realizations. Of course, when the cash comes in, you have to -- the modeled realizations for the future go down. And not surprisingly, the net change in the portfolio, given what Chris described in terms of as an accounting matter, as a GAAP matter, that there are things that reduced fair value on an unrealized basis, it's not surprising that the models would also show some reduction. But overall, we more than made up for that with the modeled realizations from the new definitive commitments. And I'm really pleased with what we've done this year in setting ourselves up for the future, and I'm really happy with the portfolio. And with that, I'll turn it back over to Jordan.

Thank you, Jon. I'm going to switch to Page 30 and talk a little bit about how do you tie that $5.2 billion then and think about that with respect to the Principal Finance balance sheet. So this is obviously on the ex-YPF basis. And the first piece to understand is, well, what if all the cases won, went all the way to the very end and adjudicated win. That estimate, that's what we sometimes call the win node, and it's where all of our initial work starts from. When you start to think about a settlement, when you think about the different probabilities of what could happen in the case, it derives from, well, what could happen if you actually won, even though the overall majority of our cases, 70%, 80% of them ultimately settle, well, that win node would be $12.8 billion. What we then do is we establish a model in which there's a litigation risk premium and, of course, duration, the discounting back. And when you bring that down, that window then settles at $2.2 billion, and that can be broken into the fair value that I -- that's the fair value that we have on the balance sheet, and that's broken into the net unrealized gains as well as the deployed cost. That's the $2.2 billion and the $1.7 billion. Where will that book of business ultimately land? The modeled realizations, as Jon just described, is $5.2 billion. And then ultimately, we believe in a modeled ROIC of 110%. That, of course, is based on a future estimate of deployed cost. The cases still have some money to spend to get to their ultimate conclusion. And so that's estimated on this slide to be at $2.5 billion. So that gives you a little bit of framework to think about how our modeled realizations tie to the balance sheet. Since many, if not all, of these cases exist in some form on our balance sheet and then in partnership with our asset management business, as they produce for the balance sheet Principal Finance, there's an expectation that they would produce asset management cash receipts. And so the correlation there would be approximately $350 million of future asset management cash receipts based off of the models. That's a perfect segue to take us into the Asset Management segment, which is the next page. I'm jumping straight to Page 33, in which, first, let's start on the right-hand side, cash. Cash has stayed fairly steady. We had $32 million in '23, dipped a bit in '24, back to $32 million in '25 in terms of the cash receipts from asset management. Income of $36 million overall for the year. That's going to track somewhat consistently with some of the movements in fair value. Again, since the assets very much mimic what's also in our Principal Finance segment, movements in those assets are also going to play out in the recognition of potential future income from our profit-sharing agreement with respect to the BOF-C fund. The other piece, though, to highlight in 2025 is the Advantage Fund and starting to receive income off of the Advantage Fund, as that portfolio continues to perform. Overall, you'll see the fund sizes in the bottom right-hand corner. If you look at the funds, they're predominantly in runoff, and you can see that in the black bar. BOF-C continues the sovereign wealth fund partnership, continues to be a partner to us. While the investment period ended, they're continuing to invest in assets as they move forward, amendments to those assets. We enjoy a good relationship and are exploring opportunities to continue that. Page 34 gives you some more detail on some of the other funds, but I'm going to jump into the next segment and focus on liquidity and cash first. Our liquidity and cash started off the year around $500 million. We discussed the robust year of having $530 million, obviously down from 2024, but the fourth quarter saw us back up over the $100 million level with respect to the fourth quarter in terms of bringing in cash. In the bridge, you also see the debt that was raised in the summer, and I'm going to talk about debt twice here. First, this was to pay off the existing bonds that were coming -- that came due in the summer of 2025. And that's why you see a net number that results. We did a $500 million issuance at 7.5%, but that number obviously is much smaller in terms of proceeds to the balance sheet to be deployed because we used the proceeds of that to pay off a bond. And then you can see that the cash that come in clearly covers our operating expenses. Finished the year at $621 million of cash. Before I do more on the capital structure, though, we'll hit expenses real briefly on Page 37. Overall, operating expenses slightly up from 2024, and there's a couple of reasons I'll go into for that. First, total comp and benefits, almost flat, a little bit higher than last year. You see some growth in salaries and benefits as you see some inflation, but as well as our expansion and building of the team. The movement between annual incentive comp and long-term incentive comp, that's what we effectively call carry or our carry program. There's some movement in between those 2 items in relation to 2024. It's important, I always remind folks that while we accrue carry, we only pay it out when we actually receive the cash. On the share-based and deferral compensation, a reminder, I did talk about this a couple of quarters ago. There is an element of this, which is the mechanical vesting or acceleration of the expense for some tenure-based awards, but the vesting of that, the actual delivery of those shares will still occur on the original schedule. In G&A, we were up from last year, mainly due to professional fees. Some of that -- proud to announce the completion of our transition to KPMG fully from E&Y, also the resolution of our material weakness with publishing of this 10-K, and there's some other policy-related items in the professional fees associated with the second and third quarter. But to take a step back, looking at all these numbers -- oh, I should mention one more thing. On case-related expenses, really hard to compare to 2024. We have a revenue item in 2024, where we won an insurance settlement on our behalf, and so you're going to see a negative number there in 2024. But the trend of that has come down, so $1.1 million in the fourth quarter, and it's come down significantly from the $15 million that we had seen in case-related expenditures in 2023. But when I look at all these numbers, I look at the right-hand side and try and understand, okay, how do these operating expenses look across the portfolio. The 2.3% looks very favorable in terms of our expected expense ratio across the portfolio and fits favorably into the unit economics that we discussed at length during Investor Day and how this expense base allows us to continue to achieve the ROE long-term target of around 20%. One more slide, and then I promise we'll get to Q&A, is just to hit the debt outstanding. I mentioned what happened this past summer. Well, we did the same thing, rinse and repeat, in the first quarter of this year. And so we've pro forma'd the schedule for that. We took out the remaining bonds in the U.K. We thank our investors who participated in those over the years, but the 144A market has become much more practical and available to us in terms of raising capital and efficiently for our balance sheet. We went out and raised and then went and paid off the last of those bonds. That also changed the slide. You no longer see 2 different types of covenant levels because we no longer have the incurrence covenants associated with those U.K. bonds, and now we just have the maintenance covenants that you can see we have plenty of room within those levels. The final comment that I would make is when I look at the pro forma life of our debt relative to the assets. The weighted average life associated with assets that concludes is under 3 years, and the active capital on our balance sheet is just over 3 years. But the weighted average life of our debt is 5.7 years. And so that shows that we have a laddered maturity schedule that matches neatly with the duration of these assets. And with that, I'll give it to Chris for some closing remarks.

Thanks very much, Jordan. And I'm on Slide 39. And just to really come and sum up here. We have what we believe is a pretty fantastic core operating business, and Jon took you in some detail through why we believe that. We have showed a consistent ability to grow that business over time, growing to what is now a very substantial player in the legal industry. We deliver cash regularly. We don't always deliver as much cash as we would like as 2025 is a testament to. But that doesn't mean the cash isn't coming. It just means the cash is somewhat delayed. I've used for years with many of you the analogy of the litigation process being a conveyor belt, and that's exactly what it is. It moves forward. It moves forward inexorably, but it twists and turns and moves at unpredictable speeds. We can't control that. But in some ways, we're the beneficiary of it because that is what gives us our completely uncorrelated returns. So we have growth, we have cash, and we continue to believe that this business can produce a long-term ROE in the 20% range, as we've said before. On top of that, we've got the YPF assets, which we think continue to have very substantial value and option value for the business. And we are continuing to grow this business, not only in the core business, but as we continue to drive throughout the legal ecosystem. So we thank you all for your support. And with that, we're happy to take your questions.

[Operator Instructions] Your first question will come from the line of Mark DeVries with Deutsche Bank.

I appreciate this is not going to be an easy question. But just looking across all the different matters in your portfolio, where they are in the development, can you give us any sense for how the outlook for realizations looks for '26 relative to 2025?

So the short answer to that is no for 2 reasons. One is because as a matter of policy, we don't guide that way, just because we simply feel like we're unable to do so. And number two is I used my 2 lanes -- my 4 lanes merging into 2. And the problem with that is that we don't really know the pace of that merging. Like if you go back to Slide 28 that Jon talked about, that shows you a lot of stuff that is, to use a technical expression, jammed up in the 2015 and onward. And there's stuff there that just shouldn't have taken that long. Some stuff in litigation always takes a long time. And I always get people asking me when they look all the way back on this chart, they say, oh, look, you've still got active deployments from 2010. Are you kidding yourself? Are those ever going to come in? And the answer is yes to that. We write them off if they're not going to come in. But we actually got some money out of that 2010 band this year, and we're expecting to get more in this coming year. So no is the answer to that question. But the simple reality is those cases are going to move over time, and we just don't know exactly what that timing looks like. It would be lovely if we could take this on a quarter-by-quarter basis and give you a pretty reliable projection, but we just can't do that. And candidly, if we were able to do that, I think that more people would do this business and the returns would be lower. So the fact that it is unpredictable, while I realize is painful to many of our current shareholders, it, in fact, is also, to some extent, a moat in this business.

Okay. Any other color you can give us on what's driving this dynamic of the 4 lanes merging into 2? Are we still dealing with like backlogs related to court closures from the pandemic or other factors worth calling out?

No, I think you really are. Like when you think about what happened there, you had court closures at a time when there was no lessening of new disputes. And so you had the same volume of new disputes. If you look at the filing levels, it's not like they collapsed during the pandemic. So you had a world where all of a sudden, courts don't have any physical ability to expand their operations. We already have vastly fewer judges in courtrooms than we do for the number of cases filed. And the reason for that is that the system expects, just as our portfolio shows, most cases to resolve by settlement. But to get a case settled needs a catalyst, right? If you're a defendant, you're not going to settle a case if you can simply sit on your hands and not spend the money to settle the case. So you need to feel some pressure. And the pressure usually is the case is moving through the process along the conveyor belt that I described, and it's putting you at trial risk. So if the court congestion is kicking the trial risk out, then you're realistically also kicking that settlement pressure out. And look, I think it's getting better, but it's a lot for the system to absorb, given that every single year, something like 12 million new civil cases are filed in the United States.

And then I've got an accounting question for Jordan. Jordan, do you have room to get more conservative on the duration assumptions on your fair values such that you reduce the risk that you have these negative fair value marks when you don't have a negative development, it's just a change in assumption related to the duration of the case?

Absolutely. And I think that we're constantly looking at our models with respect to how to initially establish duration and then how it impacts over time. So yes, to the extent that we see it up at the onset, that we should set a duration that's longer, we can, and we have that ability.

Your next question comes from the line of Timothy D'Agostino with B. Riley Securities.

Regarding new definitive commitments, I was wondering if you could provide some color on the composition of those, understanding that '25 lacked some of those big case resolutions. So as we look at new commitments for this year, I guess, any color on the composition of maybe how many dollar amount or case-wise are these larger scale cases, that would be great.

Sure. So for those of you who are newer to Burford, let me just remind you that in addition to all of the gory detail that we provide in the slides and the 10-K and so on, we also publish on our website a detailed table that goes literally case by case and shows you for each new -- well, for each existing and for each new case that we put on, it shows you a bunch of demographic information. So it shows you the type of case, so whether it's, for example, a business court or an intellectual property case, or an antitrust case. It shows you the industry that's involved. It shows you the geography where the case is pending. And it shows you the size of the commitment that we've made, the amount of deployment against that case. And once we start to get returns, it shows you, again, on a granular line-by-line basis, what the returns are. And so you can pull that up, and you'll see that there are several dozen new cases in 2025 or new investments in 2025, and you can scan through them. And you'll see that there's quite a lot of diversification there. We typically span a significant number of industries, a number of case types, a number of geographies, and 2025 was no exception to that. And they also range in size from quite large commitments to significant matters to relatively small things that are single cases that nevertheless, we think have the potential to generate attractive future returns. So that's a useful source if you want to get granular about what's going on in the portfolio.

And your next question comes from the line of Mike Piccolo with Wedbush.

I had 2 questions related to the negative fair value marks on the cases highlighted in the presentation. The first one with the Sysco proteins case, what are the potential gains for that?

The potential gains for the case? So we don't release individual case modeling expectation data for pretty obvious reasons that, that would feed very nicely into the litigation strategy of the other side. And so that's something that is not only something that we don't release, but something that we would regard as being protected by legal privilege. That being said, I think if you look at those cases, and there's quite a lot of public information about them, I think it's clear that the size of the claims in those cases is substantial.

And the next one with the bankruptcy case. Is the collateral separate from other claims?

Well, so we are entitled -- when we provide litigation finance to people, we're entitled to proceeds only from the claims that the companies have. So we're not a general creditor like a bank is where we're looking for repayment from any assets. Our claims are just for proceeds from the underlying claim outcomes. So the way that's going to play out is that as those claims pay, there's lots of things going on in that case. That was a multibillion-dollar distributor. So it's not as though the only cash flow sources are these litigation claims. So within the Chapter 11, there's cash flowing to the senior secured creditors and so on from the business operations and the business continues to function. But we have our handout for proceeds from the litigation claims, which continue to be strong and which continue to be resolving positively. So there is positive cash flow coming from those claims as well.

And just one last question. I don't think you guys give guidance, but in terms of your long-term ROE target, the 20%, when you say long-term, how do you bridge that gap from where ROE is sitting currently?

Well, we do it on a...

Like it's a matter of...

Yes, we do it on a rolling basis. We've certainly had individual years where our ROE was well in excess of that long-term target, and we've had years where it's well below it. Right now, as you can see from one of the early slides in the deck, our multiyear ROE is in the teens, but it's not up to our 20% target. And that's something that we believe, and Jordan walked through the unit economics associated with ROE at our Investor Day. And that's something that we still believe is achievable over a longer period of time.

Okay. Bailey, I think we'll jump in here with a quick question that's coming in through the webcast. We have a question. You mentioned before reluctance to buy back shares due to unpredictability of capital needs. If so, there seems to be no real justification to pay a dividend, especially with current share price. Why not turn off dividends and opportunistically buy shares instead?

Yes. So this is certainly a theme that we have heard from a number of investors, and it's something that we considered very carefully over the last few months, including with the Board and with our outside advisers. And the dynamic for us -- because I certainly understand the logic behind the concept. The logic for us works as follows. The dividend, we've had a constant level dividend for some years that pays at $0.125 a year. So in round numbers, think about that as being $25 million. So it's a pretty small amount. If we were to stop paying that dividend altogether, then we would turn a number of particularly U.K. income-focused fund investors into forced sellers whose funds would no longer permit them by their mandate to continue to hold Burford stock if we didn't pay a dividend at all. And so we basically weighed the value of a $25 million buyback, which we think is pretty low against the negative impact of turning a portion of our shareholder base, including some very long-term and loyal shareholders, turning those shareholders into forced sellers. And when we considered that balance, we ultimately came down on the side that the $25 million buyback wasn't enough to move the needle compared to the negative impact of the -- of losing those investors in the U.K. And so that's where we are. It's not -- it's a relatively fine call, I would say. And if the dividend had been dramatically larger, I'm not sure that I would have -- or the Board would have come out in the same place. But that -- just to give you transparency into our thinking, that was the underlying thinking behind it. And we also debated, well, do you do something in the middle. Do you reduce the dividend and take some of that and put it towards a buyback. And then we got into the point of saying, well, gee, at some point, we're dealing with such small numbers that it really doesn't make any difference for anybody. So that was the underlying logic.

Okay. One more from the webcast here. How is your underwriting changing to reflect potentially longer court times on new pieces of litigation?

Jon, do you want to...

Yes. I'm happy to take that. So we're constantly updating our modeling and underwriting based on our historical experience. And one way I think we've talked in the past that we've dealt with duration is to structure deals so the terms reward us for delay so that our returns go up as matters go longer. There's no doubt that we have paid increasing attention to that dynamic to make sure that we're compensated for the longer run times. So that's a little bit why also when Chris says that not having the realizations this year, of course, we would rather, but we feel good about the portfolio. The same case that resolved at this moment, if it resolves in another year, it may well be it resolves with a higher return for us, given the way we've structured things. And that's on top of the dynamic that often the question of whether it resolves now or later is going to be a product of the recovery level, both that whether it's going to be a settlement or an adjudication win, but also that settlements later on can end up being higher settlements. So we definitely take into account duration as part of our underwriting, and I like to think that we try to get better at it as time goes on and learn from experience.

All right. We'll do one more question from the webcast around debt structure. Why not obtain a revolver, delayed draw facility or securitization facility instead of discrete notes to better match capital unpredictability and allow for share buybacks?

Sure. Yes. I was about to say Chris talked a lot about our thought process around share buybacks. How it relates to the capital structure, we're constantly looking for other ideas and exploring ways in which we can build the balance sheet. I do -- the asset itself is not as similar to some consumer or even commercial assets in terms of its predictability to fit neatly into a securitization facility or to obtain that in size relative to the balance sheet that we currently maintain. I understand the logic of that, and we're constantly in conversations. We haven't found the perfect match. And ultimately, the unsecured and covenant levels that we have, the cost of the capital, and the amount that we can put on has favored -- has become very favorable relative to some of the things that we've seen, especially the scale that we would need with respect to that.

Well, we have made it to the top of the hour. And with thanks, as usual, to all of you for your interest in Burford, quite frankly, for your patience as we wait for some cash and as we wait for some YPF news. We're looking forward to an exciting 2026, and we'll continue to keep you updated about where things are going. So thank you all very much.

Thank you. This concludes today's conference call. You may now disconnect.