Ambac Financial (AMBC) 9 Nov 222022 Q3 Earnings call transcript

Greetings and welcome to the Ambac Financial Group, Inc.

Third Quarter 2022 Earnings Call. [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. Thank you.

you. Thank welcome quarter and discuss call Ambac’s results. financial to morning, XXXX third to Good

be President your the Claude David will remarks, current today Speaking LeBlanc, after And Financial our and prepared They market of environment. Trick, will and Officer. will results discuss take financial we business the questions. Chief and CEO;

These may is due that differ any are our to forward-looking a performance. obligation involve statements. risks to with statements Our includes the statements. forward-looking forward-looking variety of our expressed future filed those release call from XX-K statements of under The factors. in uncertainties materially any forward-looking update and forward-looking not earnings SEC. and and press or today Actual factors statements We the guarantee results company undertake cautions investors in the a and not XX-Q recent most described do implied

to financial Investor measures may in supplement in of or we press release, the materials mention our or non-GAAP ambac.com. website, our those section questions, to operating other non-GAAP responses available some are recent Reconciliations earnings on remarks prepared Relations our Also, included measures.

call I Claude Mr. turn would the over LeBlanc. now to like to

welcome Chuck to today’s you, joining and Thank call. everyone

the billion our exposure, X for of moment marked Guarantee This a of business. our Rico Legacy value Financial Puerto and of and pursuit quarter impacting from remaining near- to of represents maximize pivotal the the long-running against America outstanding by settlement the Bank Ambac, long-term litigations $X.XX our of RMBS near-term obstacles options resolution largest

this which our with delivered we core business, P&C make quarter. excited to progress in I’m very the also material growth again Specialty continue

book share. million per XX, net value reported financial September was a David quarter discuss adjusted more billion. $X income our Ambac shortly. results diluted of at or $XXX will detail For value was and in end the $X.XX billion, quarter ending $X.XX Book XXXX,

seeking have recoveries we these substantially Settlement largest decade. billion a size of for for the value. of marked Ambac peak, several RMBS which litigations from our rep more XX% book receivable. was $X.X received rep XX. been single Bank RMBS litigation removed its America, On nearly subrogation to October October of our At the balance with down proceeds than by the receivable remaining our litigations than settled But subrogation X, we on recoverable adjusted adjusted sheet, settlement from uncertainty less last of and twice and today, all quarter’s warranty value. of is book warranty the

in the Ambac par supported places Puerto resolution the near-term from of position since great strongest Rico our In addition, approximately exposure our with together insured $XX exposure, settlement, financial crisis. remaining last Bank $XX HTA, of our reduction today. billion XXXX derisking accomplishments the America to expected have of the the financial significant billion at beginning This, and unrestructured of the

In relative value and legacy book our crystallize is assessing are loss exposure leverage derisking to our since down is is runoff credit XX%, improved outstanding of from platform to our adjusted achieved book quality pro down towards the down value. nearly legacy value and progressed, and nearly have business. our debt our accelerate plans deleveraging a adverse achievements net milestone, par XX%. pivotal forma XX% down XX%, net reserves These achievements now can this stable we Having materially XXXX,

options our realizing strategy we pursuing. from in of positioned time engage towards to actively light strategy. number we as progress business legacy are business, our with are are to and active legacy We our line accelerate for value recent now we achievements, In continue a the the which shareholders dialogue there of

of value-maximizing desire the any opportunities; to; such that constraints one, two, the in market existing are subject we have to speed formed dynamics to shareholders. timing our create the also maximum for against: value balance options we have However, for and order regulatory three,

the any has Sitka regarding $X.XX ultimate all capital approximately Department movements Stipulation billion the outstanding operate remember under under authority that of and from and remains decision-making the regulatory has Wisconsin AAC. million contractual Tier and AAC limitations, settlement, as enhanced well as of Bank which X to to important Insurance debt to supervision subject AAC It’s the Order that continue Agreement, XXXX means Since representing Notes, repaid outstanding Notes. $XXX XXXX we Settlement

next liability opportunistically coupled our with three, initiatives; and options with two, derisking initiatives. This, capital management way revised business; accomplishments, near-term regulator strategic our all and towards these our continuing these working steps, including: available to derisking of actively critical the for in and and legacy actively four, one, regulatory value. pursuing operating our paves several a asset for inform transactions; initiatives additional recovery management maximize asset Success accelerated expense will framework

ABV, initiatives other a in As for which over some dissipate the we company stable expect we and progress position our and continued volatility to resolve should risks time. do earnings runoff,

generate a that steps, broader derisking towards regulatory full are these various goal look parallel, legacy considering we in subject are constraints strategic we and should the business. position; we accreting up in a partial number options, three, runoff future financial enhanced legacy of existing Shareholders freeing of further strategic expeditiously rest to a capital; two, continued with and the or materially transactions one, value. business and including: of initiatives aggressively profitable efforts As sale a the to assured of pursuing reinsurance

six-fold the to Group, strategic our another operating increase $XX Specialty with businesses. Now premium growth had Everspan year quarter of hybrid P&C from representing of prior strong core platform, written gross period. on our million, a

For were million year. gross the same $X the $XX premiums for year, of period to X written compared last the million months first

submissions new expand strong quarter. Everspan which to leading continues rated currently operating partners, specialty XX last a insurance remains backed for programs of strong to XX received by with see diversify of stands underwriting-focused of MGA partners, The continues and growth and a this remains program pipeline XX, The reinsurers. from supportive on focused its up with at Everspan panel highly environment team and MGAs quarter. total of robust the program

a property markets, of in spillover which exposure, the balance will, into business, We has risk the the changes Everspan. availability, sheet for reinsurance effect opportunities the and a end for including no casualty category believe way to that pave turn, have strong will for essentially which new events risk cat-exposed appetites at Everspan like companies for program

and commercial addition, strength will continued with cost while factors, increasing provide In of above P&C strong opportunity certain us the resources loss support growth. premium Everspan’s These business, current still in and along the pricing, of lines to moderating is trends. remains programs,

generate gross in of to subject growing As nearly next conditions. premium we million look million approximately forward, $XXX we expect year, XXXX-XXXX to timeframe the $XXX market Everspan to

distribution now Turning our Cirrata, insurance to business.

premium. This returns. including expand All at million together accretive MGAs offering, of transportation the transaction We increasing are will Cirrata’s value placed diversification about our very XX-year-old specialty has strategic $XX business and acquisition led be risk Trans well-established of wholesale capital its a Solutions, footprint, our to and approximately Risk broker, international service recent positioning, excited and Capacity will Marine, MGA of MGA; which two shared opportunities immediately Cirrata: at attractive marine deploy a and network. to

$XX XXXX. with period are market de addition services Cirrata Parisoff, de deliver over rate on in corresponding from and All opportunities XXXX, Capacity On of of the track $XXX to a is written premium Trans X% combined conditions. to in million basis, run we Marine, the the attractive our of actively we gross premium, also which pursuing. novo front, team seeing million up human MGA On by are led Cirrata many novo to addition in placed Penny Year-to-date, subject

the quarter. I will now to the turn financial results David? over to David call discuss for our

you, good Thank morning, everyone. Claude, and

For or share per the of the share $X.XX $XXX per of diluted of net in third third or compared million quarter million reported diluted net XXXX, to income $XX income quarter XXXX. Ambac of $X.XX

to net was Adjusted transaction Bank of XXXX previously XXXX between difference insurance to share a per America income of compared for warranty rate income and amortization related the settlement $XXX gain gains. third RMBS in of and net $XXX net million million exclusion earnings earnings for the of for compared share of foreign diluted $X from of exchange $XX announced in of quarter of $XX $X.XX a the to the with XXXX a representation or third $X increase per and million macro third adjusted The to the in $X.XX The million XXXX million compared hedge diluted the adjusted $XXX or related interest and litigation quarter $X third third million earnings quarter the XXXX. to third expense quarter gain million of the gain million our intangible GAAP quarter on XXXX. of were quarter

in the $XX.X million the in $XX.X below the were of third earned quarter, XXXX. quarter third earned Premiums slightly million

$X.X portfolio, offset the mostly Legacy earned For premium million. the Everspan’s in Guarantee million $X quarter, earned contraction Financial the premium growth million $X.X earned which

eventually As offset than premium in premium. to in base, more the its earned will growth Financial contraction Everspan the Guarantee continues grow Legacy earned its premium

Active trend by This from the positively earned of third proactive million. to the primarily organic will negative Financial of negatively be resulted Guarantee portfolio. premium trending insured lower. insured derisking $X.X the in accelerated portfolio quarter of accelerated resulting In runoff earned continue derisking result will Legacy XXXX, this and for of proactive net segment or impacted earned in premiums, premiums derisking

the $X.X earn XX% Everspan in would Everspan’s quarter. fees allows collected we to gross or million written hybrid retained million. of Everspan next Specialty of also retain in premiums and the the will P&C highlight premium. $XX in $XXX,XXX over year. earned business addition, to premiums million us that of up of like model program written the In about gross These $X to XX% approximately quarter,

similar premium Therefore, gross significantly. a in program will fees and to As a premium and how premium, programs is earned earn both of grow add the continues fees grow policy Everspan reminder, as earned. program written course over our to

Cirrata, both to also our segment, organically strategically. distribution continues and grow

Insurance of a quarter $XX flat from the year, of While placed are X% Distribution million in the placed placed. up with EBITDA premium and year-to-date quarter-over-quarter. as prior revenue comes premiums the commissions premiums essentially percentage rose earned business were

total gross up million, year from period, the up from $X prior commissions were quarter, XX% million, were the $X.X prior X% period. year For the and revenues

The third acquisition commissions these The Capacity $X.X Gross the $X.X of and segment transaction. expected levels and quarter rights up are slightly effective Insurance XXXX. accretive quarter, EBITDA mix, new All Distribution the will include favorably the and EBITDA of were to partial results of the businesses, for fourth by our quarter produced renewal therefore, impacted results commission Trans third business produced was X, in million million changes to Marine be in November EBU which EBITDA. from and for

fund third across changes income markets. million macro of for More investments third was to compared down quarter to the million on loss gain income quarter investments XXXX. broad the million net of $X third of about in quarter related of during the approximately quarter XXXX in in the reduced $XX fund $XX $X have million, a $XX been to specifically, million the investment a Allocations Investment from year-to-date. by on account decrease third alternative

last was a $XX particularly yields, from average higher the Income benefit million a securities in quarter million the income were from floating third XXXX. loss million Loss the up third compared of of quarter year and fixed XXXX benefit expenses due to to $XXX securities. in to same $X period rate compared

The settlement. The in a The Bank recognition to benefit of last by results gain total quarter of $XX quarter’s the the quarter $XX $X this of in a debt-related and America million year. investment gain of million million $XX $XXX the driver structured the the million a third includes $XXX finance from this million is benefit fourth itself quarter $XXX of remaining million the offset million. litigation be of from generated a portfolio compared from will litigation $XXX and was million of to recognized gains, principal partially settlement approximately gain charges. The

against $X a quarter hedge third Net third XXXX. derivative guarantee interest the million exposure in quarter the financial rate positioned the compared which $XX for and a investment gains million gain for as contracts, on are were partial of the of portfolios, to economic

in of we generally year-to-date, sensitivity with beginning are reduced approximately line we the the and hedging. sensitivity $XXX,XXX over macro from fourth DVXX have Year-to-date, of year. the During the quarter, quarter the the a we into of hedge, the exposure to $XXX,XXX have reduced at

in increase litigation Guarantee the compensation third in business Operating and expenses at higher by higher the Specialty $XX commissions and and P&C with expenses to at to P&C $XX Financial in higher underwriting net incentive with for operating growth increases resulting sub-producer the Insurance the mix. AAC, headcount related from quarter, costs, plan from partially expenses to Platform for Legacy lower associated in XXXX. third defensive in the Specialty Distribution million headcount offset were for segment expenses The business, up business growth the changes associated due million quarter were litigation expenses

third Interest in or of debt the $XX from of million proceeds interest the Approximately that from approximately the related expense was XX the in up was settlement. $XX October billion Bank million on $XX of this $X.X repaid quarter million, expense quarter XX% America quarter’s third of XXXX. from to

of as consisting remaining with surplus of debt and billion result redemption, interest. significantly accrued debt October Tier X de-levered the a this $X.X As million XX has AAC unpaid approximately of of of $XXX of and notes, inclusive been

settlement and from gain, The increased to million $XX.XX of per by available-for-sale $X.XX XX, increase AUK the the per of exchange equity $XX Shareholders’ the the losses primarily billion offset of to September on end share and investments to translation $X foreign pound was due at unrealized XXXX, million. losses somewhat quarter. share weakening second $XX million or the $XXX of related

$X.XXX due $XXX Adjusted premiums. to September on from guarantee the by $XX.XX of share XXXX. adverse increased gain, XX, effect of settlement foreign $X.XX The $XX.XX per June and losses million $XXX or PV value exchange discount XX, increase book the XXXX, financial installment to higher per offset partially the is rates or billion share at translation share per million at

I will for call Claude brief now turn back to closing some remarks. the

Thank you, David.

our milestone than for Specialty decade. we positioned company growing shareholders. Ambac to for in point business, another with deliver P&C the we believe well the a marked any core legacy value quarter This Insurance believe last Ambac’s financial and position material Combined over business, long-term stronger today is at is our

pursue MGA Guarantee for create secondly, Financial growth to options to P&C strategic order both and Platform Our longer-term plan business economic Specialty Legacy pursuing and and is initiatives, our de-novo in build-outs; organically strong and to continue aggressively select our M&A strategic through including: short- our pursuing in transactions value.

for always the options to protection to options our available ability our capital As assets us our to from return we value unlock against we deploy as well capital, order preserve of NOLs. as relative shareholders evaluate the the to measure of in such our future tax significant to considerations

buybacks options mitigate and $XX to risk program. have capital We authorized alternate continue to for evaluate currently share available million NOL our associated with in

core transform investor in seeking to the business, look our initiatives Now and Legacy in we that we achieved to now have continue a the Financial Guarantee stability and company. we are level of as actively updating forward growth We our upcoming you base P&C various quarter. broaden to on our

for call the open please Operator, questions.

Instructions] first comes Dennis Dennis. from [Operator proceed Chua from Partners. Repertoire Please question, your The question with

Congrats various on Claude. you’re scenarios to to Specialty AAC and potential Platform. particularly it’s great grow P&C providing that the And settlement. on at the attractive the value the the segments, details Hi, opportunity unlock

hand, billions done Section And the buyback want have our great get there we capital But investing has protecting, XXX. of grow briefly value-accretive of at a competing job you don’t topic on are this, dollars addition, I these NOLs. the other we to of move. is NOLs On these on utilize Obviously, straightforward considerations. a trip allocation, to a think by but that touched prices and we in to the earnings, various company

to So about give maybe investing Thanks. the us more little balance how and can the buybacks in you in between near-term? earnings a thinking grow you’re detail bit

one. this I’ll let handle Sure. David Dennis,

Dennis. Thanks,

is in as we’re remains return our – the consideration undervalued. stated at when believe – we on As stock deploying we past, And is primary capital our really AFG capital.

we – opportunities to to but businesses value, share there capital buyback we new returns we with As create balance struck. stock. – long-term me, capital deploy in not and a will on see you say And market shareholder attractive excuse create accretively that’s be the wanting long-term not that are know, tremendous is to in to

we have we’ve same been value protecting which have reminder, maintain have to And X.X% those shares X.X a ways exploring or that own are effect to, explicit value in are we including, our and time At so and buybacks Therefore, and in as at new we NOLs. the expressed price requirements, preserve that interest to views, we quarter time, the of by $X.XX. know, because valuable And which the purchased approximately third-parties but to valuable time, operate we As average for at the while, our believe legacy the second both by limited same been validated can in over NOLs, requirements you protect we also million protect them we’ve our our shares businesses. a NOLs. at very respect asset, we outstanding protect diligent, of this the been of this has to asset. regulatory regulatory to our the believe constraints an not the but under they

believe he ultimately further value comments, NOLs we under So significantly the as realize question? Did to address your out. will options any contribute AAC laid result, a Claude’s earlier to and we strategic that other the that from

Yes.

mute. much. was on I Thank so you Sorry,

My pleasure.

comes proceed Thank is from The Please your next Richard Burns Private Richard. who question Investor. you. a question, with

And you. call what risk exchange? foreign through Thank question. you your taking AUK question This to on exposure foreign and for portfolio? you. exposure. is is insurer to discuss international thank your Thank European guys your Also, exposure you, my Can

of well the to small exposure of and receivable. about About a exposure have in exposure about I’ll UK which to £XX Claude we third to the as exchange, held dollars, has of on liabilities pound, UK. and assets Thanks. million the £XXX will and euros. are million invested touch question the assets lies a foreign and British about with risk. foreign million exchange the address $XX say, Ambac exposure of European our assets main of – UK Rich. on Sure, of in should I then premiums invested Ambac leaves But the to £XXX million

On we British the relatively reserves. side, is about pound insured modest and billion exposure $X against billion and exposure, have about insured portfolio exposure those the €X another of

story is the So lies that long the with all is exposure UK operation. foreign the our currency to British pound, primary and

the support far – of UK – guarantee but that really of the the sectors and corporate believe bulk we with as done And we strong. significant guarantees the our a areas regulated entities those the and number really credit where UK we’ve entity and today remains the regulated are being exposure And main years, as very our derisking goes, exposure some PFI our over PFI, there is significant securitizations, our last resilience. and believe underlying

well With increasing the as exposures, up, of as better of increase index-linked the also we when also the able rates which rate capital. adjust environment the premium tend on as exposures, on Solvency II are our which helps some capture more to go premiums to value our the out inflationary to environment, index-linked

resilience So as exposures, the and based feel we for with exists and sit today, comfortable our we AUK trend believe strong currently in the we that on projected economic UK very Europe.

Thank you.

Please The Giuliano next Thank Giuliano. question, your Compass question comes Bologna with proceed Point. you. from from

morning, congrats on Good litigation after Countrywide the many and years. resolving

little – I some notes X to Tier a you guys and notes. surplus you took of quarters, past the actions bit couple think some bought diving you’re guys of the over some

the we then move is, September quarter value those in I think should to own securities some that? of Is quarter, that about obviously surplus about that fourth right are market those guess million the the there after then higher the assuming mark-to-market both is after in notes. how of of $XX sold for end? again mark-to-market XX? end? completely I I’m curious, footnote, think you on as the being of And thinking And have prices way that follow-on this presentation, quarter fair the any of some the of

Giuliano. Thanks, Yes.

surplus at the probably marked And time. $X.XX a so million company $XX of number X/XX. on are as they or of we the So, hold a believe I holding That’s mark-to-market mark-to-market. at notes were around $X that

quarter. obviously will the – be they the So, remarked for fourth at

Notes Tier did We buybacks, notes. at of investment Sitka AAC. haven’t other terms we X in bought the have In an

we AAC. held of Sitka of Notes par So, $XX million about at

be of those due about result we And premium, the to booking a bought million will premium. the plus a them call the notes, so be of $X.X redemption we what as X% gain at should call discount

very and great That’s helpful.

of value basis, to the mechanics you be coming few I settlement But notes a next you on taking kind to of will that that opportunities is value about on it basis the obviously, also amount additional generate that will in investing pay-offs, way settlement-related acceleration have remarking there? through settlement bit will the net that capital, strategically in and think the recognize capital to of So, at you from if the to best little additional accelerate just quarter. kind other use quarter, are on investment more creation – a enhance of a a When quicker those of it go and you the AAC next cash more to million of gains guys market use have and proceeds. or there income, a go-forward of hundred the help the

Yes.

have to risk-adjusted decisions new we make regulatory the I that think you deploying of past, the requirements. Giuliano, based continually for about capital we have as framework in our context our expectations our against both capital. and for capitalization it are have opportunities in as in the And talked well we capital on returns know, evolving that we about particular, reviewing that think

a – of great that situation. So, and ours an key is it’s something that’s focus is certainly evolving a question,

that, related guys as or they a whatever you given of a to that bottom of would separate of platform has back as from scenario, retaining businesses? would NOL, spin-off a as platforms be as one separate may been to the AAC some of without is kind sort things and a quarters business consider value you one a market runoff Thanks. up impact resolve the essentially in a or of coming around as couple kind might would sense up? doesn’t back of last and roll higher have back to turn an much I rate transaction on is obviously – the when considerations. actually try But using curious and equity obviously other there scale And guys securities help like realized you to have the strategic be if it trend. And I of to AAC to if growth the the some currency related NOLs or complicated able this make AAC, be, the industry make environment. to

Thanks Giuliano. Yes.

I sale As I We preserved broad there transactions for carefully a NOLs transactions, sale reinsurance we strategic redeployment of of partial that’s could completed be potentially benefit including the through other will and in that are at. are as and buyer, transaction and for involving that capital and of investors. also opportunities also our we a full be certainly looking very the there accretive prove partial platform. It sale earlier, transactions mentioned to range the the be be But or other is a to something indicated, considering options of types valuable a AAC a is where can category. that believe in transactions category, would that

not into currently any companies guarantee at transactions any other by AAC are or We looking guarantee platforms. other financial other financial involving investments transactions involving

we to acquisitions, business of of that to partial the near-term new company. holding but sale, will currently or the focus bring through then of to on shareholders. our extent really on a that’s evaluate to AAC looking And the a how do, or the we up both to distribution can Our capital And what’s is activity sell also company, at terms other we either going deployment deploy initiatives, clearly, really longer in limited capital as holding capital strategy side term. and the return the in capital opportunities strategic at

back will the taking in I for question and you Thank Thanks. my jump queue.

Thanks.

comes Sea from from Associates Please and Paul. [Operator your proceed The Divine Divine question, next with [ph]. question Instructions] Paul

on everybody And getting certainly congratulations Two questions It you. absolutely journey involved. for the was for called. settlement a

and out novo some Distribution to anticipate the playing referenced this, or see so? capital that And you then as segment, to you if next de look you growth more more give M&A? going the maybe the and first Everspan Is deploy. how or acquisition do launch see willing to us year out? to its support it in how you over And your is might do First, going second, your capital about novo, you you much could just de be do you more thoughts be require

me let first I David. the question, take the second Well, back and pass one to will

capital seeing segments. On our a has the deploy opportunities competitive, market you distribution number to business we attractive very been the front. probably in new insurance are of aware, acquisition The side, very on as are

the market, However, opportunities. the in small out what’s are is very offering seeing segment attractive midsize different our there And of than to the we in market.

to looking make stake, We not their are would We acquisitions. roll we have controlling do we have and outright a look to acquisitions interest. where management

them the to them very take do able attractive investment to market. the believe longer been flexibility enhance MGAs proven they has attract model brought The obviously novo And have their existing teams to us through in is the it’s to services to mix. partner and our model grow that right to with scale. us that further infrastructure side teams running really to has a But who very growth. two accretive, limited and we but their very operating transaction. we and really that have valuations attractive of is able allow So, very and blend to are de where available we MGAs and been consider our to upfront, a believe control We enhance be really business make then we

are going shareholders the capital to given de utilize deployment that will And highly looking for longer slight two But opportunities is the acquisitions. bias I the our term we requirements of blend that focus opportunities will of forward. a benefit novo We potentially have really believe that driving on. those we is for the a towards continue likely accretive model for the

year. will even anticipate next mid with Everspan, Everspan sometime And regards still we break to around

don’t requirements that there leveraged anticipate in material additional for But true – levels their Xx. capital business general, Xx to will can So, a capital capital given be – maybe we be to and Everspan, small up. dollars few

way right the for long-term in profitable very capitalized growth. it’s long-term believe we So, –

thank thank David, you, very much Claude. you and

Paul. Thanks

Thank proceed Geoffrey Dunn you. with from next Partners. & question Please Dowling Geoffery. your from The question, comes

you David, morning. expense now maybe below First legacy Good to in on you of think there. run you, Thanks. quarterly to at on a all, two the position going can that accelerated levels had guarantee in rate expense financial with million $XX are looking respect I a forward? initiative you areas? rate elaborate Countrywide with you now basis behind said Are get business, run an

Thanks Yes. Geoff.

I is And expense. – interest would there One is then a obviously, expenses. Two, So, there categories. is there put into generally three is the expenses LAE. operating

as obviously, So, see remarks, on in said over quarterly my we reduction in interest a basis. forward prepared will substantial expense going XX% a I

that, year, addition to last related $X bring going to was of expenses, operating the LAE, will related the core running of a focus America the to and In That expenses. yes, OpEx that million of preparations be then that trial away. And of to a the in definitely down in Bank ours continue about terms business. quarter. something is at legacy Most it was

doing through that that are multiple and We channels ways. different approaching and

sheet. now the have this on things resolved risk the is expect with some hope our and to major down that of an regulator sort One we and balance costs, the as of also of example, given regulatory are bringing working we

our So, reducing focus is the on clearly expenses.

for continue bring And will budget expenses course, to some defend. noted also the down as in the ours lot of of of quarter, with. a We has proven still new those bases definitely do managing regard grow our which be on business. focusing not focus to cheap season time some the litigation, to And have a the volatility We businesses, grow, spending and efficiency of business. again, through generally there. But those defensive there the to cost terms of are will as, going to businesses of with be expense now

Okay. with be explore and under then And currently I some are you capital of I that comments so areas might respect the model a to with area, or to up? know the the understand this limited. are of to restraints what the that Wisconsin could changing, sensitive But try are Wisconsin, work you is what could lighten you

Yes.

even will from regime have post under as had we traditional regulator. and never type in had years, most capital the of that operate very, capital call it, account guarantors with put you the place of P&C know, regime. risk-based number last a the historically, And rehab, segregated haven’t So, really the transparent I model, companies a exit

look the for much the very And runoff you the of sort in well do course, portfolio need quality portfolio, it we remains the capital welcome terms that process be we so probably a much requirements I with manage of around you of getting very you much the capital big upon again very to definition the of think embarking needed risk portfolio, we business. the to insured the is and And how focus of which that welcome are been that, When that the contained. on proactively insured we risk more focused insured remaining at that transparency something more going have regulator the and is is know, because, are in book. as de-risking very within

an that’s other types asset of be one. a will regulator, think of And sure, will risk looking the risk be assigning am that. at well as and operating then, we course, process So, in I to that charges efficient

we So, regulator will there. we working with the in possible At best But and can the it’s authority the do work of be our course, get these the will has that something situations, the day, actively. from very much of to best to outcome that ultimate decision-making the end very regulator, get. we actively as closely exercise all

have rating get it? to agencies the for effectively hands might rating process around Historically, historically, their them for regulators longer regulators so defer de state this kind capital. the the be a Okay. agencies Do been to the facto of

agencies from I time, in was have pre-XXXX, experience, capital that say right, industry. would management of the regulators an say at have mean the the would insurance of the think there with much I agencies. the But biased own certainly opportunities and more rating But the proactive think my become since publicly of disclosed. terms borrow some the then, methods I same I issue is I that to rating

Okay. Thank you.

Yes.

you. concludes closing over like to may LeBlanc remarks. proceed the would Thank the I closing to remarks. our This session. question-and-answer for you. Thank with Claude, now Claude you hand call

you our Thank you. everyone. Thank call. concludes This

lines. you much. very Thank conclude Thank for disconnect may does now your today’s very call and This your you you much participation.