NYSE:AMBC Ambac Financial Group Q4 2023 Earnings Report $7.30 +0.18 (+2.45%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$7.30 0.00 (0.00%) As of 04/17/2025 05:21 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Ambac Financial Group EPS ResultsActual EPS$0.32Consensus EPS $0.03Beat/MissBeat by +$0.29One Year Ago EPS$4.18Ambac Financial Group Revenue ResultsActual Revenue$76.00 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AAmbac Financial Group Announcement DetailsQuarterQ4 2023Date2/28/2024TimeAfter Market ClosesConference Call DateWednesday, February 28, 2024Conference Call Time8:30AM ETUpcoming EarningsAmbac Financial Group's Q1 2025 earnings is scheduled for Monday, May 5, 2025, with a conference call scheduled on Tuesday, May 6, 2025 at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Ambac Financial Group Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 28, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Greetings, and welcome to the Ambac Financial Group, Inc. 4th 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. As a reminder, this conference is being recorded. Operator00:00:22It is now my pleasure to turn the call over to Charles Sebaske, Head of Investor Relations. Speaker 100:00:28Thank you. Good morning, and welcome to Ambac's Q4 2023 call to discuss financial results. Speaking today will be Claude LeBlanc, President and CEO and David Trick, Chief Financial Officer. They 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 on the webcast, during the prepared remarks, we'll be highlighting some slides from the investor presentation, which can be located on our website. Speaker 100:00:59Our 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 ks filed with the SEC. We do not undertake any obligation to update forward looking statements. Speaker 100:01:32Also, in our prepared remarks or responses to questions, we may mention some non GAAP financial measures. Reconciliation to those non GAAP measures are included in our recent earnings press release, operating supplement and other materials available in the Investor Relations section of our website, ampec.com. I would now like to turn the call over to Mr. Claude LeBlanc. Speaker 200:01:58Thank you, Chuck, and welcome to everyone joining today's call. On a consolidated basis for the full year 2023, we generated net income of $4,000,000 and adjusted net income of 93,000,000 dollars List value per share stands at $30.13 up 8% from the start of the year. David will discuss our Q4 financial results shortly. Turning to our strategic priorities for 2023. Our focus during the year was twofold. Speaker 200:02:271, scaling our specialty P and C insurance platform and 2, progressing additional value enhancing initiatives for our legacy Financial Guaranty business. With regards to our Specialty P and C Insurance platform, I am pleased to report that we exceeded our strategic objectives for 2023, including generating over $500,000,000 of premium for the year, a 79% increase over 2022. Our results were driven by our Specialty P and C Insurance franchises, Everspan and Serata. Each platform produced positive net income for the quarter year in line with our projections. And while it's early days, both are on target to deliver strong results in 2024. Speaker 200:03:10As we look ahead to the future, we are well positioned to leverage the strong growth generated in 2023 and we believe that our specialty insurance platform is poised to deliver significant incremental value for Ambac shareholders. Our vision is to create the premier destination for MGA and program operators, and I believe we have built a strong foundation to deliver on that goal. The MGA program market remains attractive to us for a number of reasons. Firstly, the MGA market has nearly doubled in size over the last 5 years, meaningfully outgrowing the P and C market at large. Forecasts predict the specialty market to nearly double in size again to $160,000,000,000 by 2,030. Speaker 200:03:55Secondly, MGAs are more aligned with the E and S market, which has been generating superior underwriting results compared to the standard P and C market. The E and S market's loss ratio has diverged from the standard market in each year since 2020. And in 2022, E and S posted a 91% combined ratio, which was 12% lower than the standard market. Lastly, and most importantly, these strong results point towards what we view as a secular shift towards specialization within the insurance industry as the risk landscape becomes more complex. Our P and C franchise is well equipped to effectively underwrite and support specialized risks. Speaker 200:04:36Ambac's differentiated offering addresses distribution and risk assumption needs in the following ways. We provide capital, whether it is risk capital in the form of a weighted balance sheet at Everspin or growth capital as a portfolio company under Serrata. We provide our MGAs and program partners with leading risk and oversight controls. We facilitate reinsurance for our MGAs and program partners. We support our partners with a broad technology focused shared service offering, and we provide our partners with business agility solutions to rapidly react to changing business or market conditions. Speaker 200:05:15As we laid out last quarter, we now forecast our P and C business, Everspan and Serata, to generate on a combined basis over $700,000,000 of premium production in 2024, setting aside any future acquisitions. That implies growth of over 40% from 2023, while maintaining very attractive margins. Turning now to Everspan's results for 2023. Everspan had a very strong year generating gross premium written of $273,000,000 which is up 87% over 2022. The business continues to diversify its program partners, which currently stand at 23, up from 14 programs a year ago and includes among other classes, commercial auto, excess liabilities, workers' comp and general liability programs. Speaker 200:06:05Overall, Everspin's book is more balanced across risk classes, which should have the long term benefit of more stable and predictable underwriting results. Following its launch in 2021, Everspan has now achieved the necessary scale to start generating underwriting profits, reporting a 100% combined ratio for the 4th quarter, the 5th consecutive quarterly improvement. We are now on a pathway to generating mid teen ROEs at scale over the cycle. Dorada had similarly strong performance in 2023, generating $231,000,000 of premium, up 70% over the prior period, while producing over $11,000,000 of EBITDA, supported by the ongoing benefit of organic growth initiatives and the financial performance of last year's acquisitions. After onboarding 3 partners over the last 15 months, we now operate 4 programs at Serrata across various classes of business, including specialty commercial auto, professional liability, inland marine, employer stop loss and affinity programs. Speaker 200:07:12We continue to see significant opportunities for growth at XERATA whether by a product expansion across our current businesses or through additional M and A transactions. Having exceeded our 2023 targets of $200,000,000 of place premium, dollars 45,000,000 of gross revenue with in excess of 20 percent EBITDA margins. We now have our sights set on our 2024 business plan forecasting over $300,000,000 of premium and $60,000,000 of gross revenue, while maintaining our plus 20 percent EBITDA margins. These figures exclude potential M and A opportunities, which could materially and favorably impact our results. Regarding the legacy Financial Guarantee business, late last week, the OCI finalized AAC's new stipulation and order, which includes the OCI capital model, which provides us with a new regulatory framework and clarity on the capital requirements at AEC. Speaker 200:08:10In addition, the assessment of strategic options for this business, which we announced last quarter is progressing as planned. We look forward to updating the market once there is something definitive to report. In advancing the preparation for our strategic review in 2023, we continue to improve the quality of the insured portfolio through various de risking initiatives, which for the full year saw net par outstanding reduced by 14% and adversely classified credits reduced by 26%. I will now turn the call over to David to discuss our financial results for the quarter. David? Speaker 300:08:48Thank you, Claude, and good morning, everyone. For the Q1 of 2023, Ambac reported a net loss of $16,000,000 or $0.24 per diluted share, compared to net income of $175,000,000 or $3.86 per diluted share in the Q4 of 2022. Adjusted net income was $10,000,000 or $0.32 per diluted share compared to adjusted net income of $183,000,000 or $4.03 per diluted share in the Q4 of 2022. The change in net income and adjusted net income was mainly driven by a $193,000,000 of gains related to the Bank of America and Nomura RMBS litigation settlements recognized in the Q4 of 2022. Everspand's net premiums written in the quarter of $37,000,000 were up 2 69% over the prior year period. Speaker 300:09:52Growth in existing programs and the addition of new programs, including assumed reinsurance programs accounted for the significant advance. Everspan's retention rate was approximately 40% of gross premium compared to 19% last year. The increased retention level stem mostly from workers' compensation and non stated auto programs written in the 3rd and 4th quarters respectively as assumed reinsurance. Earned premiums and program fees were $25,000,000 $2,500,000 up 3 41% and 77% respectively from the Q4 of 2022. The loss ratio of 67.4% in the Q4 of 2023 was up from 65.1% last year. Speaker 300:10:43The increase was primarily driven by higher commercial auto liability claim frequency in 2023. For the full year 2023, the loss ratio was 70.7% compared to 65.4% for 2022. The increase for 2023 entirely related to the 2023 losses, particularly commercial auto liability frequency as previously noted, as well as the addition of the assumed non standard auto program. Several of our programs benefit from a sliding scale commission structure, which helps moderate loss activity within certain ranges. The Q4 and full year of 2023, the sliding scale benefit recorded through acquisition costs was 1.2% and 3.2% respectively. Speaker 300:11:38Our loss ratios net of the sliding scale benefit was 66.2% and 67.5 percent respectively. The expense ratio was 32.9% in the Q4 of 2023, down from 59.2% in the prior year quarter. It was driven lower mostly due to the scaling of the business. Combined ratio for Q4 2023, the full year 2023 was 100 0.3% and 106.5 percent respectively, an improvement of 24 50 percentage points from their respective prior periods. For the quarter, Everspan generated just over a $1,000,000 pre tax profit compared to a loss of less than $1,000,000 for the Q4 of 2022. Speaker 300:12:29Everspin was profitable for full year 2023. Everspan continues to see and evaluate a steady stream of submissions, but remains highly selective and focused on maintaining underwriting profitability. We continue to expect Everspan to generate a mid single digit ROE in 2024. XERADA, our insurance distribution platform generated revenue of $12,000,000 in the 4th quarter, up 38% compared to the Q4 of 2022, benefiting from both recent acquisitions and organic growth. The Insurance Distribution segment produced nearly $2,000,000 of EBITDA for the 4th quarter, down slightly from the Q4 of 2022. Speaker 300:13:15The EBITDA margin of 14.3% this quarter compared to 23.2% last year. The margin contraction was largely driven by the impact of recent acquisitions, some business mix shift during the quarter and expenses related to organic growth initiatives and integration costs. It's worth noting that the Q4 is a seasonally light quarter for the segment that Serata's full year margin of 22.3% is on plan and in line with our 20% plus margin expectation for 2024. For the Q4, the legacy Financial Guarantee segment generated a net loss of $12,000,000 versus net income of 180,000,000 in the prior year period. The year over year change was primarily driven by the previously mentioned net gains related to RMBS litigation settlements in the prior quarter. Speaker 300:14:12Consolidated investment income for the Q4 was $40,000,000 compared to $23,000,000 in the Q4 of 2022. The improvement stem from higher average yields on fixed income securities, which increased nearly 90 basis points in the Q4 of 2023 compared to last year. Supplementing the yield generated by our core fixed income portfolio was a $10,000,000 increase in alternative investments compared to the Q4 of 2022. Separately, during the Q4, we realized a $12,000,000 intent to sell charge on owned AAC insured student loan bonds related to our recently completed commutation of the associated insured obligation. Consolidated loss and loss adjustment expenses were $19,000,000 in the Q4 of 2023 compared to a $55,000,000 benefit in the Q4 of 2022. Speaker 300:15:13Everspend losses grew by $13,000,000 compared to the prior year to $17,000,000 in line with its larger earned premium base. Legacy Financial Guarantee losses of $2,000,000 were favorably impacted by a benefit from student loan commutations and higher RMBS recoveries, but adversely impacted by lower discount rates. Comparison, legacy financial guarantee losses benefited from a $43,000,000 gain from the Nomura settlement during the Q4 of 2022. Dental and administrative expenses were $35,000,000 for the 4th quarter, down from $51,000,000 in the Q4 of 2022. The improvement in operating expenses was largely due to over $20,000,000 of reduced defensive litigation and other non compensation costs at AAC compared to the Q4 of 2022. Speaker 300:16:08These savings were partially offset by growth in our P and C businesses and performance compensation adjustment. Interest expense was approximately $16,000,000 down from $30,000,000 in the Q4 of 2022 following a significant deleveraging of AAC. AAC's remaining surplus note debt as of December 31, 2023 was $994,000,000 inclusive of accrued and unpaid interest. As it relates to the balance sheet, shareholders' equity of $1,360,000,000 or $30.13 per share at December 31, 2023 was up from $28 per share at September 30, 2023. The increase was driven by a $69,000,000 increase to unrealized gains on available for sale investments, which foreign exchange translation gains related to AUK of 32,000,000 dollars somewhat offset by the $16,000,000 net loss in the quarter. Speaker 300:17:12Adjusted book value of 1,300,000,000 or $28.74 per share at December 31, 2023 was up over 3% from $27.90 per share at September 30, 2023. At December 31, 2023, AFG on a standalone basis excluding investments in subsidiaries had cash investments and net receivables of approximately 211,000,000 dollars 4.68 per share. I will now turn the call back to Claude for some brief closing remarks. Speaker 200:17:50Thank you, David. I am very excited about our prospects for 2024. For our Specialty P and C Insurance business, we remain focused on delivering strong earnings growth in coming periods. Our 3 year plan aims to scale our Permian production to over 1,500,000,000 with over 100,000,000 of EBITDA on a combined basis from Everspan and Serrata. We are well positioned to meet our goals with a strong foundation we have built and leadership talent we continue to attract. Speaker 200:18:19We are also laser focused on progressing the legacy business strategic review process launched in December, and we will update you when we have more information to share. 2024 is positioned to be a year of transformational change for Ambac, And I look forward to updating you on our progress in the coming quarters. Operator, please open the call for questions. Operator00:18:42Thank you. We will now be conducting our question and answer Our first question is coming from the line of Dennis Chua with Repertoire Partners. Please proceed with your question. Speaker 400:19:18Hey Claude, congrats on the great quarter and the great execution on both the legacy business and the spec P and C businesses. And I think we weren't expecting an update on the AAC review, but looking forward to that. But on the OCI process, it sounds like the capital model framework or the capital model itself is finalized. And maybe help us think about whether the OCI approved contingency reserve release at AAC has any impact on thinking about distributions from AAC? Thanks. Speaker 200:20:02Thanks, Dennis. I'll pass that one over to David. Speaker 300:20:06Dennis, thanks for the question. So the impact of the contingency reserves really is not on the capital model. So the capital model is quite comprehensive and factored in those contingency reserves as part of the capital structure of AAC. I think the contingent reserve release for us does a couple of things that helps progress the cleanup of the balance sheet at AAC. It also is indicative of, I believe, our recognition, OCI's recognition of the of AEC's balance sheet. Speaker 300:20:47I think it puts us in a little simpler position from understanding of our statutory statements. And also, we also don't expect to be contributing to additional contingency reserves in the future. So overall, I think it's a positive for us, but it was has been factored into the OCI contingency capital models that doesn't have a direct impact on distributions in the short term. Operator00:21:28Thank you. Thank you. There are no further questions at this time. This concludes today's teleconference. We thank you for your participation. Operator00:21:59You may disconnect your lines at this time.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAmbac Financial Group Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) Ambac Financial Group Earnings HeadlinesShareholders in Ambac Financial Group (NYSE:AMBC) have lost 54%, as stock drops 16% this past weekApril 10, 2025 | finance.yahoo.comAmbac extends legacy guarantee sale agreement to JulyApril 7, 2025 | msn.comElon Reveals Why There Soon Won’t Be Any Money For Social SecurityElon Musk's Near-Death Experience Sparks Dire Warning for Americans After cheating death twice—once in a terrifying supercar crash with billionaire Peter Thiel, then from a deadly strain of malaria—Elon Musk emerged with a stark warning for Americans about looming financial dangers. 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Email Address About Ambac Financial GroupAmbac Financial Group (NYSE:AMBC) operates as a financial services holding company. It operates three businesses: Specialty Property and Casualty Insurance, Insurance Distribution, and Legacy Financial Guarantee (LFG) Insurance. The Specialty Property and Casualty Insurance business provides specialty property and casualty program insurance with a focus commercial and personal liability risks. The Insurance Distribution business includes the specialty property and casualty insurance distribution business, which includes managing general agents and underwriters, insurance wholesalers, brokers, and other distribution businesses. The LFG Insurance business offers financial guarantee insurance policies that provide an unconditional and irrevocable guarantee, which protects the holder of a debt obligation against non-payment when due of the principal and interest on the obligations guaranteed. Ambac Financial Group, Inc. was incorporated in 1991 and is headquartered in New York, New York.View Ambac Financial Group ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 5 speakers on the call. Operator00:00:00Greetings, and welcome to the Ambac Financial Group, Inc. 4th 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. As a reminder, this conference is being recorded. Operator00:00:22It is now my pleasure to turn the call over to Charles Sebaske, Head of Investor Relations. Speaker 100:00:28Thank you. Good morning, and welcome to Ambac's Q4 2023 call to discuss financial results. Speaking today will be Claude LeBlanc, President and CEO and David Trick, Chief Financial Officer. They 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 on the webcast, during the prepared remarks, we'll be highlighting some slides from the investor presentation, which can be located on our website. Speaker 100:00:59Our 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 ks filed with the SEC. We do not undertake any obligation to update forward looking statements. Speaker 100:01:32Also, in our prepared remarks or responses to questions, we may mention some non GAAP financial measures. Reconciliation to those non GAAP measures are included in our recent earnings press release, operating supplement and other materials available in the Investor Relations section of our website, ampec.com. I would now like to turn the call over to Mr. Claude LeBlanc. Speaker 200:01:58Thank you, Chuck, and welcome to everyone joining today's call. On a consolidated basis for the full year 2023, we generated net income of $4,000,000 and adjusted net income of 93,000,000 dollars List value per share stands at $30.13 up 8% from the start of the year. David will discuss our Q4 financial results shortly. Turning to our strategic priorities for 2023. Our focus during the year was twofold. Speaker 200:02:271, scaling our specialty P and C insurance platform and 2, progressing additional value enhancing initiatives for our legacy Financial Guaranty business. With regards to our Specialty P and C Insurance platform, I am pleased to report that we exceeded our strategic objectives for 2023, including generating over $500,000,000 of premium for the year, a 79% increase over 2022. Our results were driven by our Specialty P and C Insurance franchises, Everspan and Serata. Each platform produced positive net income for the quarter year in line with our projections. And while it's early days, both are on target to deliver strong results in 2024. Speaker 200:03:10As we look ahead to the future, we are well positioned to leverage the strong growth generated in 2023 and we believe that our specialty insurance platform is poised to deliver significant incremental value for Ambac shareholders. Our vision is to create the premier destination for MGA and program operators, and I believe we have built a strong foundation to deliver on that goal. The MGA program market remains attractive to us for a number of reasons. Firstly, the MGA market has nearly doubled in size over the last 5 years, meaningfully outgrowing the P and C market at large. Forecasts predict the specialty market to nearly double in size again to $160,000,000,000 by 2,030. Speaker 200:03:55Secondly, MGAs are more aligned with the E and S market, which has been generating superior underwriting results compared to the standard P and C market. The E and S market's loss ratio has diverged from the standard market in each year since 2020. And in 2022, E and S posted a 91% combined ratio, which was 12% lower than the standard market. Lastly, and most importantly, these strong results point towards what we view as a secular shift towards specialization within the insurance industry as the risk landscape becomes more complex. Our P and C franchise is well equipped to effectively underwrite and support specialized risks. Speaker 200:04:36Ambac's differentiated offering addresses distribution and risk assumption needs in the following ways. We provide capital, whether it is risk capital in the form of a weighted balance sheet at Everspin or growth capital as a portfolio company under Serrata. We provide our MGAs and program partners with leading risk and oversight controls. We facilitate reinsurance for our MGAs and program partners. We support our partners with a broad technology focused shared service offering, and we provide our partners with business agility solutions to rapidly react to changing business or market conditions. Speaker 200:05:15As we laid out last quarter, we now forecast our P and C business, Everspan and Serata, to generate on a combined basis over $700,000,000 of premium production in 2024, setting aside any future acquisitions. That implies growth of over 40% from 2023, while maintaining very attractive margins. Turning now to Everspan's results for 2023. Everspan had a very strong year generating gross premium written of $273,000,000 which is up 87% over 2022. The business continues to diversify its program partners, which currently stand at 23, up from 14 programs a year ago and includes among other classes, commercial auto, excess liabilities, workers' comp and general liability programs. Speaker 200:06:05Overall, Everspin's book is more balanced across risk classes, which should have the long term benefit of more stable and predictable underwriting results. Following its launch in 2021, Everspan has now achieved the necessary scale to start generating underwriting profits, reporting a 100% combined ratio for the 4th quarter, the 5th consecutive quarterly improvement. We are now on a pathway to generating mid teen ROEs at scale over the cycle. Dorada had similarly strong performance in 2023, generating $231,000,000 of premium, up 70% over the prior period, while producing over $11,000,000 of EBITDA, supported by the ongoing benefit of organic growth initiatives and the financial performance of last year's acquisitions. After onboarding 3 partners over the last 15 months, we now operate 4 programs at Serrata across various classes of business, including specialty commercial auto, professional liability, inland marine, employer stop loss and affinity programs. Speaker 200:07:12We continue to see significant opportunities for growth at XERATA whether by a product expansion across our current businesses or through additional M and A transactions. Having exceeded our 2023 targets of $200,000,000 of place premium, dollars 45,000,000 of gross revenue with in excess of 20 percent EBITDA margins. We now have our sights set on our 2024 business plan forecasting over $300,000,000 of premium and $60,000,000 of gross revenue, while maintaining our plus 20 percent EBITDA margins. These figures exclude potential M and A opportunities, which could materially and favorably impact our results. Regarding the legacy Financial Guarantee business, late last week, the OCI finalized AAC's new stipulation and order, which includes the OCI capital model, which provides us with a new regulatory framework and clarity on the capital requirements at AEC. Speaker 200:08:10In addition, the assessment of strategic options for this business, which we announced last quarter is progressing as planned. We look forward to updating the market once there is something definitive to report. In advancing the preparation for our strategic review in 2023, we continue to improve the quality of the insured portfolio through various de risking initiatives, which for the full year saw net par outstanding reduced by 14% and adversely classified credits reduced by 26%. I will now turn the call over to David to discuss our financial results for the quarter. David? Speaker 300:08:48Thank you, Claude, and good morning, everyone. For the Q1 of 2023, Ambac reported a net loss of $16,000,000 or $0.24 per diluted share, compared to net income of $175,000,000 or $3.86 per diluted share in the Q4 of 2022. Adjusted net income was $10,000,000 or $0.32 per diluted share compared to adjusted net income of $183,000,000 or $4.03 per diluted share in the Q4 of 2022. The change in net income and adjusted net income was mainly driven by a $193,000,000 of gains related to the Bank of America and Nomura RMBS litigation settlements recognized in the Q4 of 2022. Everspand's net premiums written in the quarter of $37,000,000 were up 2 69% over the prior year period. Speaker 300:09:52Growth in existing programs and the addition of new programs, including assumed reinsurance programs accounted for the significant advance. Everspan's retention rate was approximately 40% of gross premium compared to 19% last year. The increased retention level stem mostly from workers' compensation and non stated auto programs written in the 3rd and 4th quarters respectively as assumed reinsurance. Earned premiums and program fees were $25,000,000 $2,500,000 up 3 41% and 77% respectively from the Q4 of 2022. The loss ratio of 67.4% in the Q4 of 2023 was up from 65.1% last year. Speaker 300:10:43The increase was primarily driven by higher commercial auto liability claim frequency in 2023. For the full year 2023, the loss ratio was 70.7% compared to 65.4% for 2022. The increase for 2023 entirely related to the 2023 losses, particularly commercial auto liability frequency as previously noted, as well as the addition of the assumed non standard auto program. Several of our programs benefit from a sliding scale commission structure, which helps moderate loss activity within certain ranges. The Q4 and full year of 2023, the sliding scale benefit recorded through acquisition costs was 1.2% and 3.2% respectively. Speaker 300:11:38Our loss ratios net of the sliding scale benefit was 66.2% and 67.5 percent respectively. The expense ratio was 32.9% in the Q4 of 2023, down from 59.2% in the prior year quarter. It was driven lower mostly due to the scaling of the business. Combined ratio for Q4 2023, the full year 2023 was 100 0.3% and 106.5 percent respectively, an improvement of 24 50 percentage points from their respective prior periods. For the quarter, Everspan generated just over a $1,000,000 pre tax profit compared to a loss of less than $1,000,000 for the Q4 of 2022. Speaker 300:12:29Everspin was profitable for full year 2023. Everspan continues to see and evaluate a steady stream of submissions, but remains highly selective and focused on maintaining underwriting profitability. We continue to expect Everspan to generate a mid single digit ROE in 2024. XERADA, our insurance distribution platform generated revenue of $12,000,000 in the 4th quarter, up 38% compared to the Q4 of 2022, benefiting from both recent acquisitions and organic growth. The Insurance Distribution segment produced nearly $2,000,000 of EBITDA for the 4th quarter, down slightly from the Q4 of 2022. Speaker 300:13:15The EBITDA margin of 14.3% this quarter compared to 23.2% last year. The margin contraction was largely driven by the impact of recent acquisitions, some business mix shift during the quarter and expenses related to organic growth initiatives and integration costs. It's worth noting that the Q4 is a seasonally light quarter for the segment that Serata's full year margin of 22.3% is on plan and in line with our 20% plus margin expectation for 2024. For the Q4, the legacy Financial Guarantee segment generated a net loss of $12,000,000 versus net income of 180,000,000 in the prior year period. The year over year change was primarily driven by the previously mentioned net gains related to RMBS litigation settlements in the prior quarter. Speaker 300:14:12Consolidated investment income for the Q4 was $40,000,000 compared to $23,000,000 in the Q4 of 2022. The improvement stem from higher average yields on fixed income securities, which increased nearly 90 basis points in the Q4 of 2023 compared to last year. Supplementing the yield generated by our core fixed income portfolio was a $10,000,000 increase in alternative investments compared to the Q4 of 2022. Separately, during the Q4, we realized a $12,000,000 intent to sell charge on owned AAC insured student loan bonds related to our recently completed commutation of the associated insured obligation. Consolidated loss and loss adjustment expenses were $19,000,000 in the Q4 of 2023 compared to a $55,000,000 benefit in the Q4 of 2022. Speaker 300:15:13Everspend losses grew by $13,000,000 compared to the prior year to $17,000,000 in line with its larger earned premium base. Legacy Financial Guarantee losses of $2,000,000 were favorably impacted by a benefit from student loan commutations and higher RMBS recoveries, but adversely impacted by lower discount rates. Comparison, legacy financial guarantee losses benefited from a $43,000,000 gain from the Nomura settlement during the Q4 of 2022. Dental and administrative expenses were $35,000,000 for the 4th quarter, down from $51,000,000 in the Q4 of 2022. The improvement in operating expenses was largely due to over $20,000,000 of reduced defensive litigation and other non compensation costs at AAC compared to the Q4 of 2022. Speaker 300:16:08These savings were partially offset by growth in our P and C businesses and performance compensation adjustment. Interest expense was approximately $16,000,000 down from $30,000,000 in the Q4 of 2022 following a significant deleveraging of AAC. AAC's remaining surplus note debt as of December 31, 2023 was $994,000,000 inclusive of accrued and unpaid interest. As it relates to the balance sheet, shareholders' equity of $1,360,000,000 or $30.13 per share at December 31, 2023 was up from $28 per share at September 30, 2023. The increase was driven by a $69,000,000 increase to unrealized gains on available for sale investments, which foreign exchange translation gains related to AUK of 32,000,000 dollars somewhat offset by the $16,000,000 net loss in the quarter. Speaker 300:17:12Adjusted book value of 1,300,000,000 or $28.74 per share at December 31, 2023 was up over 3% from $27.90 per share at September 30, 2023. At December 31, 2023, AFG on a standalone basis excluding investments in subsidiaries had cash investments and net receivables of approximately 211,000,000 dollars 4.68 per share. I will now turn the call back to Claude for some brief closing remarks. Speaker 200:17:50Thank you, David. I am very excited about our prospects for 2024. For our Specialty P and C Insurance business, we remain focused on delivering strong earnings growth in coming periods. Our 3 year plan aims to scale our Permian production to over 1,500,000,000 with over 100,000,000 of EBITDA on a combined basis from Everspan and Serrata. We are well positioned to meet our goals with a strong foundation we have built and leadership talent we continue to attract. Speaker 200:18:19We are also laser focused on progressing the legacy business strategic review process launched in December, and we will update you when we have more information to share. 2024 is positioned to be a year of transformational change for Ambac, And I look forward to updating you on our progress in the coming quarters. Operator, please open the call for questions. Operator00:18:42Thank you. We will now be conducting our question and answer Our first question is coming from the line of Dennis Chua with Repertoire Partners. Please proceed with your question. Speaker 400:19:18Hey Claude, congrats on the great quarter and the great execution on both the legacy business and the spec P and C businesses. And I think we weren't expecting an update on the AAC review, but looking forward to that. But on the OCI process, it sounds like the capital model framework or the capital model itself is finalized. And maybe help us think about whether the OCI approved contingency reserve release at AAC has any impact on thinking about distributions from AAC? Thanks. Speaker 200:20:02Thanks, Dennis. I'll pass that one over to David. Speaker 300:20:06Dennis, thanks for the question. So the impact of the contingency reserves really is not on the capital model. So the capital model is quite comprehensive and factored in those contingency reserves as part of the capital structure of AAC. I think the contingent reserve release for us does a couple of things that helps progress the cleanup of the balance sheet at AAC. It also is indicative of, I believe, our recognition, OCI's recognition of the of AEC's balance sheet. Speaker 300:20:47I think it puts us in a little simpler position from understanding of our statutory statements. And also, we also don't expect to be contributing to additional contingency reserves in the future. So overall, I think it's a positive for us, but it was has been factored into the OCI contingency capital models that doesn't have a direct impact on distributions in the short term. Operator00:21:28Thank you. Thank you. There are no further questions at this time. This concludes today's teleconference. We thank you for your participation. Operator00:21:59You may disconnect your lines at this time.Read morePowered by