Good morning, my name is Lisa, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Ambac Financial Group, Incorporated Second Quarter 2017 Earnings Teleconference. Our hosts for today's call are Lisa Kampf, Head of Investor Relations; Claude LeBlanc, Chief Executive Officer; and David Trick, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 11:30 Eastern Standard Time. To dial-in number is 1-800-585-8367 domestic or 416-621-4642 internationally using ID number 55278932. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. [Operator Instructions] It is now my pleasure to turn the floor over to Ms. Lisa Kampf. Please go ahead.

Thank you. Good morning and thank you all for joining today's conference call to discuss Ambac Financial Group's second quarter financial results. We'd like to remind you that today's presentation may contain forward-looking statements, which are based on management's current expectations and are subject to uncertainty and changes in circumstances. Any forward-looking statements are not guarantees of future performance or events. Actual performance and events may differ, possibly materially from such forward-looking statements. Factors that could cause this include the factors described in our most recent SEC-filed quarterly or Annual Reports under Management's Discussion and Analysis of Financial Condition and Results of Operations and under Risk Factors. Ambac is not under any obligation and expressly disclaims any obligation to update any forward-looking statement whether as a result of new information, future events, or otherwise. Today's presentation contains non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures are included in our earnings press release, which is available on our website at ambac.com. Please note we have posted slides on our website to accompany this call. I will now turn the call over to Claude LeBlanc.

Thank you, Lisa, and welcome to everyone joining today's call. I'm pleased to report we've had another very active and successful quarter resulting in an achievement of several key strategic milestones over the past few months. Our results for the quarter, along with our recent announcement that we reached agreement on a holistic restructuring transaction to conclude the rehabilitation of AAC's Segregated Account, with the full support of our regulator, reflects our ongoing commitment to advance our stated strategic objectives where the ultimate goal is to deliver value to our shareholders. The process represented by these achievements is a result of our proactive approach towards managing the risks in our insured portfolio and improving the overall quality of our balance sheet. Yesterday, after market closed, we reported net income for the second quarter of $7.1 million, or $0.16 per diluted share and adjusted earnings of $70.4 million or $1.54 per diluted share. In addition, book value increased from $1.08 to $37 per share and adjusted book value increased to $1.26 to $28.35 per share. David Trick will go into more detail regarding our financial results for the quarter momentarily. Active management of our assets and liabilities contributed materially to the results with accretive to both our earnings and our regulatory capital position and materially reduced our risk profile during the quarter. I would like to take a moment to highlight a few of these transactions. First, AEC successfully commuted an assured interest rate swap at a material discount, which led to the termination of the associated 185 million adversely classified insured structure finance transaction. This transaction combined with other actions contributed to a 4% reduction in adversely classified credits during the second quarter to $15.2 billion from $15.8 billion at March 31. Second, Ambac UK successfully negotiated a de-risking transaction…

Thank you, Claude and good morning. Before I address the specific results for the quarter, I note that following our announcement last month of our holistic restructuring transaction to conclude the rehabilitation of the segregated accounts, we posted on our website as part of our broader investor presentation a summary pro forma March 31, 2017 balance sheet, reflecting regulatory capital accretive transactions expected to be executed, and the impact of the amendment, exchanges, and issuance of the Tier 2 note. It is important to note that the items identified in the one column of the pro forma titled regulatory capital and accretive transactions, other than approximately $2.6 million of accelerated premiums, which will be recognized in the third quarter, were executed and reflected in our second quarter results. The impact of the amendment, exchanges, and Tier 2 notes provided in those pro forma’s will be recognized primarily upon closing of the transaction. Other than the estimated impact of accelerated income on our investments in Ambac's insured RMBS, which is likely to be realized through closing of the transaction. Now, I will walk through our second quarter 2017 results. During the second quarter of 2017, Ambac produced net income of $7.1 million or $0.16 per diluted share, compared to a net loss of $125.4 million or $2.77 per diluted share for the first quarter of 2017. Adjusted earnings in the second quarter was $70.4 million or $1.54 per diluted share, compared to an adjusted loss of $91.2 million or $2.01 per diluted share in the first quarter. These positive results reflect the impact of transactions successfully executed during the quarter related to our proactive asset and liability management program Claude discussed earlier, as well as lower public finance incurred losses and lower foreign taxes. During this quarter, we did however experience…

Thanks David. I want to emphasize that the board, executive management, and all employees at Ambac remain committed to and are working diligently towards generating future value for shareholders. We believe our recent achievements serve a strong evidence of this commitment and focus, which we plan to progress. Looking forward towards the second half of 2017, we’re continuing these strategies by focusing on finalizing the transactions to conclude the rehabilitation of the segregated account, reducing and managing the adverse and classified credits in our insured portfolio, actively prosecuting our RMBS rep and warranty litigations, and progressing our strategic planning process. We look forward to updating you on our progress later in the year. Operator, we will now open the call for questions.

[Operator Instructions] And our first question comes from the line of Andrew Gadlin from Odeon Capital Group. Your line is open.

Hi good morning. Claude you talked a little bit about the strategy with Countrywide pursuing a trial date in mid next year while simultaneously appealing in the first Department's rulings, could you talk about how you prosecute those at the same time and what would happen if in fact you got some of the decisions from the first Department over current while you're in a trial setting in the Supreme Court?

Thanks and good morning Andrew. Great question. So, we obviously, as one of our key strategies we will focus on the resolution of this key litigation. We were very pleased with the decisions to grant us leave on these appeals. I think the process and timing involving the appeals will work independently, but in parallel with the trial process and we will be working on establishing the trial scheduled with the judge. We hope in the coming few months that we expect will happen in parallel to the extent decisions are reached in the appeals during that process. We expect that those will also be factored into the judges’ decision process as we move to the trial. So again we expect it to be in parallel that’s where we are hoping and planning for and we will be looking forward to progressing the trial schedule as soon as we can.

Thanks very much.

[Operator Instructions] Our next question comes from the line of Andrew Hain from Stifel. Your line is open.

Hi, good morning.

Good morning.

Quick question on the exchange, if you get the necessary court approval in December, how soon after that could you sort of effectuate or complete the exchange or what kind of timeline are we looking at?

Thanks, good question. We are still working through the timeline. At this point there are some - some of the aspects of the transaction that can be sequenced, others that will be parallel. We still believe that assuming we get a hearing, final hearing set for late December that it is likely that we should be able to have the exchange completed either prior to or maybe subsequent to the court decision, which would allow us to close in the early 2018 or possibly even by year end, if we’re able to effectuate the exchange immediately prior to the completion of the hearing.

Okay great.

Scheduling is still being evaluated, but again we are contemplating and exploring both a sequencing of the exchange to the plan hearing or something that could happen in parallel, so by the time we get to the end of the hearing we would have both completed.

Okay, great. And I might have missed it in the paperwork, is there a minimum participation threshold for the exchange you guys have outlined?

There is. It is set at 85%, and that’s a condition waivable only by Ambac.

Okay great. And then just lastly, if I may, just get some clarity on your bond buybacks, the 33 million you repurchased during the quarter those were the 5.1 senior surplus notes?

Yes it was. Now it is at the holding company.

Okay and then in your 8-K you guys filed on 20 July, I think you had also had a chart in the back that you had repurchased about $45 million junior surplus notes, did I read that right?

We had entered into an agreement to acquire those notes that’s correct. That was something that occurred in the third quarter.

Right, that was mid-July and then - so there were two transactions right? There was a repurchase of the notes and then there was an option to repurchase the additional $45 million, am I reading that right?

I think that is correct.

Did you guys disclose your option price there, your strike there on the $45 million?

No, we did not.

Can you do that or will you do that?

To be specific, those are the accrual notes that were issued as part of a financing transaction related to the junior surplus notes back in 2014.

I understand that, I just didn't know if you guys would be willing to disclose your option price?

Not at this time.

Okay great. Thank you very much for the…

Andrew let me go back here; I just want to clarify one point on the exchange offer participation threshold of 85%. That this for the surplus notes only, general account surplus notes and that includes AFG’s participation.

Okay, great. Thanks for the questions guys, appreciate it.

Thanks for the questions.

Thank you.

[Operator Instructions] And we have no further questions in queue. Ladies and gentlemen this concludes your conference call for today. We thank you for participating. You may now disconnect.