Good day and welcome to the Assured Guaranty Limited Third Quarter 2015 Earnings Conference Call and Webcast. 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 Mr. Robert Tucker, Managing Director, Investor Relations and Corporate Communications. Please go ahead.

Thank you, operator. And thank you all for joining Assured Guaranty for our 2015 third quarter 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 and 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 are 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 recent presentations, SEC filings, most current financial filings and for the risk factors. And turning to the presentation, our speakers today are Dominic Frederico, President and Chief Executive Officer of Assured Guaranty Limited; 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 would like to ask a question. I’ll now turn the call over to Dominic.

Thank you, Robert, and welcome to everyone joining today’s call. The third quarter of 2015 was another successful quarter for Assured Guaranty. We produced $164 million of operating income and continued to build the company's financial strength, market position and value to our shareholders. Our year-to-date operating income of $582 million is 42% higher than the first nine months of last year. At September 30, operating shareholders equity per share stood a record $41.87 per share and our record adjusted book value per share was just shy of $60. As Rob will detail in a few minutes we continued to optimize our capital usage during the quarter. Additionally we continued to generate excess capital as our insured transactions amortize and we further derisk the portfolio with representations and warranties settlements, loss mitigation bond purchases and targeted terminations. That said, the fundamental demand for our core product, municipal bond insurance is increasing even in this environment of low yields and tight credit spreads. This is clear when you look our industry's 21% growth in new insured pars sold in the first nine months of the year compared with a 40% growth in total new insurance. Insured penetration of the municipal bond market has generally fluctuated this year in line with the interest rates. It grew to 7.5% in the second quarter and fell back to 6.1% in the third quarter as municipal bond yields dropped 30 basis points after an 85 basis points rise from the low point in January. Year-to-date penetration through September 30, was 6.5% up from 6% in the first nine months of 2014 and that was a real achievement through the 30-year benchmark municipal yields average 45 basis points below the average for the nine months of 2014. As we look at the new issues sold with…

Thank you, Dominic and good morning to everyone on the call. Today I would like to start with a discussion of operating income. For the third quarter of 2015 the operating income was $164 million or $1.12 per share. That compares with the $177 million or $1.05 per share in the third quarter of 2014. Though this quarter's operating income reflects the continued success in our loss mitigation efforts, the contribution to earnings for the rating portfolio, and credit [ph] acceleration is due to negotiated terminations of non-RBS transactions. We also look at higher U.S. Public Finance loss figures reflecting recent developments in Puerto Rico, which Dominic just described. Net earned premiums and credit derivative revenues were $252 million in the third quarter of 2015 compared with $166 million in the third quarter of 2014. This increase relates primarily to higher accelerations which were $105 million in the third quarter of 2015 including $18 million on the Radian Asset portfolio. This compares with $36 million of acceleration in the third quarter of 2014. Net earned premiums and credit derivative revenues were further bolstered by the contribution from the Radian Asset portfolio we acquired in April 2015. Net investment income in the third quarter of 2015 was higher than the third quarter of 2014 by $12 million. The increase was a direct result a number of the company's strategic initiatives including income on loss mitigation securities, alternative investments and the contribution from the Radian Asset acquisition. Total economic loss development was relatively flat for the third quarter of 2015. The economic benefit in the U.S. RMBS and other structure finance sectors was a total of $94 million. For the Public Finance sector we had $91 million in economic loss development, mostly related to Puerto Rico exposures. The U.S. RMBS economic benefit…

Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] The first question comes from Bose George of KBW. Please go ahead.

Hi, guys good morning.

Good morning.

Let me just start with, you guys mentioned the investment income increase, is that a good run rate going forward and also same for the operating expense number which came in better than we thought?

The investment income number was elevated Bose due to redemption that we had on an alternative investment that we put in the catch space, catch ILS [ph] space in addition to which it was further benefited by an increased yield on the PREPA bond that we received as part of our purchase on July 1. So that bond has a significant yield, so I would say that the investment income number was a bit elevated due to that. And with respect to expenses, last quarter was elevated because we had the Radian acquisition expenses. This quarter I would say is more indicative of what expenses should be and I would expect that to be consistent going forward.

Okay, great. Thanks and then just one on Puerto Rico, do you have any upcoming debt payments before the January 1 apart from the GDB payment? And then do you think January 1 becomes kind of the new fallback date by which something needs to get resolved, could this even go further than that?

Well on the debt service payments Bose, we don’t have that much to do and I think you are correct in looking at January 1 as being the real fallback date for PREPA. Obviously there are some other payments, the government’s response for most importantly the GDB of which we have very, very little, so it is not significant on our books. So for us it’s really January 1, but if you look at the scheduling we provide in the financial supplement, our debt service relative to most of Puerto Rico exposures over the next five years is not insignificant, but pretty benign relative to overall exposure.

And then just in terms of something being resolved by January 1, do you think the chances are reasonably good or do you think that could get pushed out as well?

Well, I think there has been a lot of fresh coverage of this and a lot of statements made publicly by a lot of constituents right. So there is a firm belief and we are also in that camp that there is a deal out there to be done, obviously the devil is always in the details and there is a lot of legislative activity that needs to be accomplished to make all the components of the deal work, but we are at this point in time still working hard to get a consensual agreement which we believe is achievable.

Okay. Great, thank you.

The next question comes from Sean Dargan of Macquarie. Please go ahead.

Thanks and good morning. You know, given where you are in Puerto Rico and there is no restructuring announced, I think a lot of investors probably think there is a low probability of getting permission for extraordinary dividends out of AGC and AGM. I am wondering if you could maybe help us think about what the ordinary dividend capacity in 2016 will look like, some of the puts and takes, what's that net income, net investment income et cetera?

Hi Sean, it's Rob. I would point you to page eight of the equity presentation because I think that clearly shows what we think our dividend limitations are at operating subsidiaries. So when you look at that page, the dividend limitation out of AGM annually is around $260 million, at AGC its about $89 million and in AG Re [ph] it is $271 million, [indiscernible] up it is $576 million. If you take out the expenses you need at the holding company it is about, something $190 million to get net about somewhere in the mid 3s. Yes, obviously we like to keep a cushion, so we said in the past that, at the end I would argue that it's somewhere in the mid 2s that would be available for share repurchase. So, I think that’s based on these numbers that’s what I think you should look at.

Okay and so mid 2s for full year 2016 would indicate your step down from what you've done this year, is there anything else you can see on the horizon that might add to your share repurchase capacity?

Well, we always look at further expansion over the increase to debt is one of the tools that we would typically use, obviously depending on how the Puerto Rico schedule goes, if we get our PREPA deal done I think that takes a lot of marbles off the table. If there is further clarity around the other risks that are out there, which we have use on of course I think, the 16 [ph] for me preclude the potential of a request for some additional dividend capacity. But I think, as we said many, many, many times it’s still going rest on Puerto Rico, but a PREPA deal announced somewhere in this year would be a good first step. And then as we address the other exposures in 2016, I'm not willing to give up on '16 as a potential year for further activity.

Okay and just I guess following up on Bose's question, there is an awful lot of news flow at Puerto Rico and it's hard to tell what’s important to you and what’s not. So would the restructuring of PREPA be the most immediate concern that shareholders should be concerned about?

Absolutely, obviously with the debt service schedule we’ve got as I said that’s part of – most difficult – time we've got coming up January 1 and yet if you think about in the bigger context PREPA has always been described as the most troubled credit. It was the one that really facilitated a lot of the talk about the ability to pay and restructuring. So getting that off the table I think is a huge positive step and would potentially put some confidence back in the market that things can be worked out on a rational basis without government interference, meaning federal government interference and let the markets respond to the challenges that they have and use the tools that are available to them through the contracts, et cetera, to get things done.

Thank you.

[Operator Instructions] The next question comes from Brian Meredith of UBS. Please go ahead.

Yes, good morning everybody.

Good morning Brian.

Couple of things, Rob just quickly can you give us the specific, what the redemption of the alternative, what the - was the actual dollar figure, just so we can kind of adjust my, kind of go forward investment income numbers?

I believe it was around $4 million.

4 million, great, thanks. And second question, what was the driver behind the increase in the reserve for Puerto Rico this quarter?

Okay. We finally got to the question of the day. So and Rob can give you a hell lot more detail. But remember, I think we've got to go through a scenario analysis of probability way. As we look at everything that is advocating, all the available information, so one side of the ledger if you look at available information that is worth in the third quarter and through to basically today, we have a potential PREPA restructuring deal, that is fact one. Fact two, we have got potential settlement involvement including the possibility although we don’t give it a high probability of some Super bankruptcy bill. Step three, to the extent that the Commonwealth feels that it cannot pass obligations that invokes the potential and we do say potential in small gaps [ph] here of a claw back, claw back for us affects primarily our transportation exposure which of course you can read on our schedules of large exposure that we have within the insured group as in respects Puerto Rico debt. However, we should say if you really look at the technicalities of the claw back it is something very, very, very difficult to achieve and we think there is a lot of both remedies and defense against that, but be that as it may as we look at GAAP reserving all those things have to be scenario and therefore probability weighted and therein lies how we come out to our reserves. Our reserves is really what we have to work relative to what the rules are around accounting it might contour or contradict our own specific views or guestimates of what we think ultimately happens, but this is not the manuscript, right? This is kind of something that had to be done based on a formulaic approach. So those three main factors are the things that would have contributed to the reserve moment in the quarter, two of them which are negative, one being total involvement, two being potential claw back. And although we would put the probabilities of those very well, put our probability on any loss estimate from those factors happening and everybody get reserves. Does that help you?

Yes that’s very helpful and I guess just a quick follow up, so given which as you said would that mean under the current PREPA deal you are adequately reserved?

Yes, we always do that. [Multiple Speakers] we wish him well. We were committed to them ton Sundays, but rather be not very good outcome.

I believe you signed the financials as well.

[Indiscernible].

Great, thanks.

And you’re 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.