Welcome to the MBIA Inc. First Quarter 2019 Financial Results Conference Call. I would now like to turn the call over to Greg Diamond, Managing Director of Investor and Media Relations at MBIA. Please go ahead, sir.

Thank you, Angie. Welcome to MBIA's conference call for our first quarter 2019 financial results. After the market closed yesterday, we issued and posted several items on our website, including our financial results press release, 10-Q, quarterly operating supplements and statutory financial statements for both MBIA Insurance Corporation and National Public Finance Guarantee Corporation. We also posted updates to the listings of our insurance portfolios. Regarding today's call, please note that anything said on the call is qualified by the information provided in our company's 10-Ks, and 10-Q and other SEC filings as our company's definitive disclosures are incorporated in those documents. We urge investors to read our 10-K and 10-Q as they contain our most current disclosures about the company and its financial and operating results. Those documents also contain information that may not be addressed on today's call. The definitions and reconciliations of the non-GAAP terms included in our remarks today are also included in our 10-K and 10-Q as well as our financial results press release and other quarterly operating supplements. A recorded replay of today's call will be available approximately two hours after the end of the call, and the information for accessing it is included in yesterday's financial results press release. Now I'll read our Safe Harbor disclosure statement. Our remarks on today's conference call may contain forward-looking statements. Important factors such as general market conditions and the competitive environment could cause our actual results to differ materially from the projected results referenced in our forward-looking statements. Risk factors are detailed in our 10-K and 10-Q, which are available on our website at MBIA.com. The company cautions not to place undue reliance on any such forward-looking statements. Company also undertakes no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such statement is no longer accurate. For our call today, Bill Fallon and Anthony McKiernan will provide some introductory comments and then a question-and-answer session will follow. Now here is Bill Fallon.

Thanks Greg. Good morning, everyone. Thanks for being with us today. Last Friday PREPA and a group representing approximately 48% of the PREPA debt announced that they had signed a definitive restructuring support agreement. The RSA provides for current bonds to be exchanged for tranche A bond at a rate of 67.5% and a tranche B bond at a rate of 10% plus a modest fee. In addition, a sure guarantee, the only [indiscernible] that has agreed to the deal has the opportunity to earn premium by insuring some of the new bonds. The parties to the RSA are trying to recruit additional creditors to join the RSA in an effort to get 67% of the creditors by par and file a plan of adjustment with the court. We are disappointed that this RSA suggested a revenue deal with a secured lien will have a loss in excess of 20%. We believe that the deal does not - that does more to improve the operational and financial performance of PREPA would be better for all parties including PREPA customers. We will continue to work for a better deal recognizing the challenges created by the competing objectives of the parties involved. Our motion to appoint a receiver for PREPA has been delayed due to the RSA. Turning to COFINA, we announced on our last call that COFINA was restructured in February. As of March 31, 2019 our insured COFINA accreted par and debt service exposures were $829 million and $2.9 billion respectively which are down more than 30% from the $1.2 billion of accreted par to $4.2 billion of debt service that were outstanding at year-end 2018. The mechanics of the restructuring also provides for ongoing reductions of our insured COFINA exposure. When the assets in Nationals Custodial Trust are monetized,…

Thanks Bill and good morning. I will begin with a review our first quarter 2019 GAAP and non-GAAP results, summarize the entity level liquidity positions, and walk through our statutory results for National and MBIA Insurance Corp. The company reported consolidated GAAP net loss of $17 million or negative $0.20 per share for the quarter ended March 31, 2019 compared to consolidated GAAP net loss of $98 million or negative $1.12 per share for the quarter ended March 31, 2018. The improved result for the quarter was primarily due to two factors; first, lower loss and loss adjustment expense at National related to Puerto Rico exposures as a result of lower risk-free rates that are used to discount estimated losses and expected future recoveries on past and projected claim payments, and second, realized gains on the COFINA bonds owned by National as part of the COFINA bond exchange. The positive effects of those items were offset by lower premium earnings, a $28 million investment impairment of previously recorded salvage on a legacy Muni credit unrelated to Puerto Rico were losses previously in other comprehensive income moved to retained earnings to the P&L, and net losses related to the consolidation this quarter of National's wrapped [ph] COFINA Trust as an on balance sheet VIE resulting from the COFINA debt restructuring. Due to the consolidation National's COFINA Trust as VIEs under GAAP we removed our insurance accounting for our COFINA insured exposure as of the closing date of the COFINA restructuring and began recording the financial assets and liabilities of the trust on our balance sheet at their fair values, which changes in fair values recorded to earnings. The bottom line impact of consolidating the COFINA Trust and the COFINA bond exchange was a negative $21 million to equity for the quarter.…

Certainly. [Operator Instructions] Your first question comes from the line of Bose George with KBW.

Guys morning. Actually my first question if the PREPA RSA goes through without MBI what happens next just in terms of logistics and also if the PREPA RSA goes through, based on their current proposal would you guys have to take any additional reserves?

In terms of the process there are several steps that are anticipated ultimately as I think people are aware, for a final plan of adjustment they would need collectively 11% of the creditors. So, as I mentioned in my comments they start that process, I think the estimates are, there's about 48% of the creditors now, and they’ll see whether or not they can grow that number. So that’s kind of one of the key numbers and that’s just sort of a strict interpretation of the provisions of PROMESA to get there. Now in terms of what happens between the 48% and getting to 67% if in fact they get there, it’s very hard to predict the steps involved. Obviously, we’ve always been open to negotiating with all the parties involved and we remain that way and we’ll see what happens from this point, so it’s just very hard to predict. In terms of the loss reserving, as you know we continue to take all currently available information into account when we sit down to do our reserves each quarter. We will continue to do that and we don’t comment specifically on any one credit and the reserves associated with that. So we’ll just have to wait and see how things evolve.

And just to clarify, if they can get to the 67% without you guys do you then pursue sort of your actions separately?

Again, it will depend, we represent approximately 17% of the PREPA credit and there are provisions that, again, if you get to 67%, you can try, that is the court, and try to cramp down the other creditors and so again, very hard to predict at this point, but we will obviously continue to look to improve upon the current deal.

Okay, thanks. That’s helpful. And then actually just in terms of the loss reserve this quarter, the - how much of that was driven by the discount rate versus sort of the actual change in the fundamentals?

The majority of it was due to the discount rate.

It was, okay. great, thanks.

You next question comes from the line of Geoffery Dunn with Dowling & Partners.

Thanks. Good morning. I want to follow up on Bose’s questions just there and specifically if you can try to give a little bit more color or commentary around the actual economic development in the quarter and specifically did the formalization of the PREPA RSA and the potential risk to your ability to prosecute for a receiver appointment affect your probability assessment on your reserves in any meaningful way for all of the Puerto Rico exposure not just one specific credit?

Geoff as we said, we don’t comment on specific loss reserves. The PREPA deal itself has been around for a while, so we take all available data, as you know when we consider our loss reserving. So certainly that data point is a factor, but we really don’t go any further than that.

Okay, then, I guess from a higher level, I was hoping you can help me understand your reserving then, you’ve paid $755 million on Puerto Rico and you have a statutory salvage of 614 so just making a simple assumption that’s all Puerto Rico, that’s about an 82% recovery, but you only have a $12 million stat reserve against $2.6 billion of remaining, why isn’t that latter number and ratio more in keeping with your salvage recovery estimate versus what looks like kind of a negligible reserve against future exposure?

So I think there’s two pieces Geoff, one is, just you know, the salvage assumption you are making on GAAP, obviously you can assume it’s all Puerto Rico, but you know, it’s not just Puerto Rico it’s salvage on losses of all muni credits. On the stat side, if you look at the gross numbers, you have the $600 million salvage which is on claims that were paid, whether it was Puerto Rico or other credits, you also have a $600+ million reserve on future claim payments. So, that’s future claims minus recoveries in the future your gross reserves of over $600 million on a stat basis. So that net of 12, just on a stat basis just the way the accounting works, you’re netting those two numbers, but you have to actually break them out, so unfortunately the numbers are similar, so it may be confusing but the salvage reserve, again, is on payments we’ve already made. And then the gross loss reserve of over $600 million on a stat basis represents losses on future payments, net of recoveries in the future.

Okay so, 614 salvage against up already paid and you’re saying that the reserve against future risk is $600 million plus?

$626 million, yes.

Okay, alright, thanks. I might need to follow up as I think about this. Thanks.

Okay, thank you.

[Operator Instructions] Your next question comes from the line of Andrew Gadlin of Odeon Capital Group.

Thanks guys, my question was just asked.

Okay.

At this time there are no further questions. I would now like to turn the call back to Greg Diamond for any additional or closing remarks.

Thank you Angie, and thank s to all those, all of you, listening to the call today. Please contact us directly if you have additional questions. We also recommend that you visit our website at MBIA.com for additional information on the company. Thank you for your interest in MBIA. Good day and goodbye.

Thank you for participating in today’s conference call. You may now disconnect your lines at this time and have a wonderful day.