Greetings, and welcome to Ambac Financial Group, Inc., First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Charles Sebaski, Head of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to Ambac's first quarter 2023 call to discuss financial results. Speaking today will be Claude LeBlanc, President and CEO; and David Trick, Chief Financial Officer. Dave will discuss the financial results of our business and the current market environment, and after prepared remarks, we'll take your questions. For those of you following along the webcast, during the prepared remarks we will be highlighting some slides from the Investor Presentation, which can be located on our website. Our call today includes forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under the forward-looking statements in our earnings press release and our most recent 10-Q and 10-K filed with the SEC. We do not undertake any obligation to update forward-looking statements. Also, in our prepared remarks or responses to questions, we may also mention some non-GAAP financial measures. Reconciliations to those non-GAAP measures are included in our most recent earnings press release, operating supplement and other materials available in the Investor Relations section of our website, ambac.com. I would now like to turn the call over to Mr. Claude LeBlanc.

Thank you, Chuck, and welcome to everyone joining today's call. Ambac kicked off 2023 with strong momentum and an enhanced financial position, which allowed us to materially progress our strategic initiatives during the quarter. Our growing Specialty P&C franchise continues to deliver strong results with over $129 million of premium production this quarter, an 87% increase over the prior year's quarter. We continue to work with AAC's regulator on a revised capital and operating framework, and we remain optimistic that we will be able to complete that process near the middle of this year. Working with our advisors, we are also actively exploring all the options available to us to maximize value from our legacy financial guaranty businesses, on both a time and risk-adjusted basis. I'm also pleased that we continue to attract top talent to our Specialty P&C business franchise, including our recent hire of Naveen Anand as President of Cirrata Group. Naveen's extensive experience in Specialty P&C Insurance will serve us well as we continue to grow our Insurance Distribution platform. Additionally, at our upcoming Annual Stockholders Meeting, we are excited to be nominating Kristi Matus and Michael Price for election to our Board of Directors. Kristi and Michael will add significant insurance expertise to our existing Board. The roster of high-caliber talent we continue to attract is a strong testament to our achievements to-date and gives me great confidence in our ability to realize our long-term goals. As for our financial results, for the quarter ending March 31, 2023, Ambac reported a net loss of $33 million or $0.73 per diluted share, and an adjusted net loss of $14 million or $0.30 per diluted share. Ambac ended the first quarter of 2023 with a book value of $1.25 billion and an adjusted book value of $1.26 billion,…

Thank you, Claude, and good morning, everyone. For the first quarter of 2022, Ambac recorded a net loss of $33 million or $0.73 per diluted share compared to net income of $2 million or $0.04 per diluted share in the first quarter of 2022. Adjusted net income, our new non-GAAP earnings metric, beginning this quarter, is replacing our prior metric adjusted earnings going forward. For the first quarter of 2023, we had an adjusted net loss of $14 million or $0.30 per diluted share compared to adjusted net income of $11 million or $0.23 per diluted share in the first quarter of 2022. We believe adjusted net income is more reflective of our core operating performance and more comparable to how our P&C industry peers report. You can find a table with a reconciliation to net income in our earnings release, operating supplement and investor presentation. The $35 million decrease in net income for the first quarter of 2023 compared to the first quarter of 2022 was driven by several items. Firstly, a $61 million decrease in derivatives gains. Secondly, a $23 million decrease in variable interest entity income. And thirdly, a $14 million decrease in realized investment gains. The $25 million decrease in adjusted net income for the first quarter of 2023, compared to the first quarter of 2022 was driven by similar factors as a decrease in net income, excluding the impact of the change in realized investment gains. These drivers to the change in earnings, compared to the first quarter of 2022, all relate to the legacy financial guarantee business and more than offset a $29 million increase to net investment income, a $28 million decrease in interest expense over the same period, and continued strong growth in our new business segments. Everspan generated $52 million of…

Thanks, David. In conclusion, this quarter's strong growth in our Specialty P&C businesses reflect the continued execution of our strategy, supported by positive rate trends across most E&S lines of business. We also continue to see increasingly attractive capital deployment opportunities in our core P&C Insurance businesses, as a result of the changing market conditions and the pullback by private equity investors. We believe these trends will continue to support strong growth for our businesses in 2023 and beyond. At the same time, we are aggressively progressing the review and evaluation of strategic options for our legacy businesses, which we believe will be a key source of value creation for our shareholders. I look forward to updating you on our progress. Operator, please open the call for questions.

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