Assured Guaranty Ltd

NYSE:AGO

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, and welcome to the Assured Guaranty Limited Third Quarter 2024 Earnings Conference Call. My name is Ezra, and I will be the operator for today's call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to our host, Robert Tucker, Senior Managing Director, Investor Relations and Corporate Communications. Please go ahead.

[Robert Tucker, executive]

Thank you, operator and thank you all for joining Assured Guaranty for our Third Quarter 2024 Financial Results Conference Call. Today's presentation is made pursuant to the safe harbor provision 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 or other items that may affect our future results. These stats 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're listening to a replay of this call or if you're 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 most recent presentations and SEC filings, most current financial filings and for the risk factors. This presentation also includes references to non-GAAP financial measures. We present the GAAP financial measures most directly comparable to the non-GAAP financial measures referenced in this presentation, along with a reconciliation between such GAAP and non-GAAP financial measures in our current financial supplement and equity investor presentation, which are on our website at assuredguaranty.com.

Turning to the presentation. Our speakers today are Dominic Frederico, President and Chief Executive Officer of Assured Guaranty Limited; Rob Bailenson, our Chief Operating Officer; and Ben Rosenblum, 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'd like to ask a question.

I will now turn the call over to Dominic.

[Dominic Frederico, executive]

Thank you, Robert, and welcome to everyone joining today's call. We continue to build value for Assured Guaranty shareholders and policyholders during the third quarter and first 9 months of 2024. Adjusted book value per share at $166.47 and adjusted operating shareholders' equity per share at $113.96 both reached record highs at the end of the third quarter. New business production has been strong this year with significant contributions from of our 3 market segments: U.S. public finance, non-U.S. public finance and global structured finance. For the fifth consecutive year, our PVP for the first 3 quarters reached or exceeded $240 million, coming in at $281 million for 2024, $32 million higher than the first 3 quarters of last year. We benefited from greater overall municipal bond issuance and strong investor demand for our insurance, including from institutional investors on some very large infrastructure transactions.

Rob will speak more about this shortly. Year-to-date, Assured Guaranty has earned adjusted operating income of $5.80 per share, 13% more than in the first 9 months of last year. As I mentioned in detail on last earnings call, AGM completed its merger into AG, formerly AGC on August 1 with AG as a surviving company. As we said at that time, we believe there are a number of benefits to this merger including improved operating efficiency and better capital utilization. After the merger, S&P, Moody's and KBRA, all issued statements affirming that there was no change to AG's ratings post merger. We believe AG is well positioned for future growth in its new structure. We still have excess insurance company capital above what is needed to maintain our high ratings. KBRA last month affirmed AG's AA plus financial strength rating owning our strong capital position, skilled management team, strong risk management framework and strengthening market position.

We continue to focus on optimizing the alignment of our capital and business opportunities to improve returns. In the first 9 months of 2024, we benefited from earnings generated by our alternative investments and mark-to-market gains on trading securities with solid performance totaling $135 million. The inception to date return on return on investments including funds managed by Sound Point and AHP was approximately 15% through September. We continue to focus on our capital management program, in which we have targeted for years repurchase of approximately $500 million annually of our common share outstanding. We remain committed to our share repurchase program and expect to reach our $500 million target this year. As of November 8, 2024, the company has repurchased 10% of the shares that were outstanding on December 31, 2023.

Our Board has authorized an additional $250 million, which brings our current authorization to approximately $385 million. For next year, we are targeting $500 million again for share repurchases. Touching on our unresolved [indiscernible] exposure, the [indiscernible] courts ordered the parties to continue in mediation and extended the time for them to resolve their differences. We remain committed to a fair and consensual resolution for all prepare stakeholders but are determined to enforce our rights as a secured creditor as a reasonable settlement may not be achieved. Overall, this has been a strong year since 2020, the value of our bond insurance provides has been more widely recognized by the market. More issuers continue to turn to Assured Guaranty to help control their borrowing costs and execute their transactions more cost efficiently. In 2024, specifically, we have seen an increase in the number of large high-profile transactions that use insurance. We believe that we're on a trajectory for future growth of our business as we strategically pursue new product opportunities, while our privately emerging risk and capital.

I will now turn the call over to Rob to discuss our production results.

[Robert Bailenson, executive]

Thank you, Dominic. Year-to-date, Assured Guaranty is having exceptionally strong production results across our 3 financial guarantee markets. As Dominic mentioned, our $281 million of year-to-date PVP is $32 million higher than the first 3 quarters of last year. Our year-to-date result includes $63 million in third quarter PVP, up $17 million from last year's third quarter. Municipal issuance in the first 9 months of 2024 was up significantly year-over-year, and so too was the total primary market par volume utilizing bond insurance. Sustained demand for Assured Guaranty's municipal bond insurance continue to make us the market leader, insuring 57% of all insured pars sold year-to-date in the primary U.S. municipal bond market.

During the first 9 months 2024, a Assured Guaranty insured $16.6 billion of new issue par 18% higher than in the same period last year. This is the second highest first 9-month primary market par we've insured over the last decade. So far this year, Assured Guaranty ensured some of the largest transactions that came to the municipal market, demonstrating the continued institutional demand for our guarantee and the increased market liquidity our insurance can provide. During the first 3 quarters, we insured a total of 33 transactions with $100 million or more in insured par. These included $1.1 billion of insurance for the Brightline Florida passenger rail project, $800 million for the new Terminal 1 at John F. Kennedy Airport and $831 million for [indiscernible] authority of the State of New York or DAS School district revenue bond issue. Third quarter transactions included $446 million for the Sante Cooper South Carolina Public Service Authority, $361 million for the Central Florida Expressway Authority and $350 million for the Lower Colorado River Authority in Texas.

This year, we also saw an increase in the use of our insurance among credits rated in the AA category by S&P and/or Moody's on an uninsured basis. Year-over-year, in the primary market, we ensured 26% more AA par and 36% more AA transactions for the first 9 months. This totaled approximately $3.5 billion of new issue insured par and 75 transactions. I am pleased to say that 3 of the transactions we insure this year have been awarded the Bond Buyer Deal of the Year in their respective categories. [indiscernible] passing around Brightline 1 in the innovative financing category, [indiscernible] in the health care financing category and the JFK Airport new Terminal 1 project, 1 in the Northeast region category. We believe that for issuers, our municipal bond insurance provides broad end market distribution on large transactions, a simplified credit story for complex bond issues and the ability to attract risk-averse investors through enhanced credit quality.

And for investors, it provides safety and security as well as potential market value support and improved market liquidity, even during unstable market conditions. Outside of U.S. public finance, our non-U.S. public finance business produced $44 million of PVP year-to-date, $6 million higher than at this time last year. We have a promising pipeline of additional infrastructure business across a number of sectors and regions. New business in the first 9 months of 2024 include [indiscernible] in the secondary market and on several U.K. regulated utility and airport transactions as well as the annual renewal of certain liquidity guarantees.

In Global Structured Finance, we also produced $44 million of PVP year-to-date, a significant contribution. Third quarter PVP was $19 million, $5 million higher than in last year's third quarter. Our strong year-to-date production results involved primarily insurance securitization, bank balance sheet relief and subscription finance transactions. We continue to look for opportunities to expand our core financial guarantee business by entering new geographic or product markets. For example, during the third quarter, our international structured finance business, we ensured a transaction for an Australian bank, which provided protection on approximately USD 600 million core lending portfolio. The transaction allowed that bank to manage their portfolio limits in a more capital-efficient manner. We are pleased to have returned to the Australian market and expect to continue to grow our presence there. Company-wide, the fourth quarter has gotten off to a strong start. Among transactions, we have already priced for closed in U.S. public finance this quarter, we insured [$929] million of senior special facilities revenue bonds related to the redevelopment of JMA Airport's Terminal 6 and $523 million for Thomas Cheson University in Philadelphia. I am happy to report demand for our product is strong. We are expanding our business into new markets and we are looking forward to a solid finish for the year.

I'll now turn the call over to Ben to discuss further our financial results.

[Benjamin Rosenblum, executive]

Thank you, Rob and Dominic, and good morning. I am pleased to report third quarter 2024 adjusted operating income of $130 million or $2.42 per share. A comparison in the third quarter of 2023 and we reported adjusted operating income of $206 million or $3.42 per share, which included a $190 million after-tax gain on the Sound Point and HP transactions net of expenses. Excluding this onetime gain, adjusted operating income increased significantly primarily as a result of a benefit in loss expense in the third quarter of 2024. Before I delve into the developments for the quarter, I would like to remind you that in the financial guarantee GAAP accounting model, loss expense, which included in adjusted operating income is different than economic loss development in that period.

GAAP loss expense reach below investment-grade insured transaction is reported only when its expected loss is in excess of its deferred premium revenue. As a result, loss expense may be higher or lower than economic loss development in a given period, but will converge over time as the deferred premium revenue amortizes. Third quarter 2024 economic loss development was a benefit of $34 million and includes a benefit of $56 million on our U.S. RMBS exposures, which continued to improve as home prices remain high and recoveries on both first and second lien loans improved compared with previous assumptions. And a $23 million benefit in the U.S. public finance sector, primarily due to improvements in certain health care exposures.

It also includes a $45 million increase in expected losses on certain U.K. regulated utilities that we downgraded to below investment grade in the third quarter, including our TMS exposures. It is important to note, however, that our temps exposures, our Class A senior debt at the operating company, not holding company obligations. In calculating expected losses we are required by GAAP to apply probability weights to all possible scenarios in determining expected losses, and therefore, may report a GAAP expected loss even if we do not expect one in our most heavily weighted scenarios. In the third quarter of 2024, and the loss component of adjusted operating income includes most of the benefit related to U.S. RMBS and health care. However, the economic loss development on U.K. regulated utilities is not included in loss expense because deferred premium revenue was sufficient to cover the effect of losses.

Turning to net earned premiums. We reported $101 million in the third quarter of 2024 compared with $99 million in the third quarter of 2023. Our deferred premium revenue which represents the storehouse of future earnings in the Insurance segment remained strong at $3.8 billion and is a direct result of the new business production that Rob discussed. Our investment portfolio continues to perform well and demonstrates the value of having both a stable stream of interest income from the fixed maturity portfolio as well as income from a diverse portfolio of alternative investments. In third quarter 2024, equity and earnings from our alternative investments was $28 million compared with $25 million in the third quarter of 2023. On an inception-to-date basis, alternative investments have generated an annualized internal rate of return of approximately 13%. Net investment income was $82 million in the third quarter of 2024 compared with $101 million in the third quarter of 2023.

Net investment income from our externally managed and short-term portfolio was consistent year-over-year. The decline in investment income is attributable to our portfolio of loss mitigation securities. As a reminder, these are sure guarantee insured bonds that had expected losses, which we had purchased at a discount to mitigate those losses. In recent years, we have not been actively purchasing loss megation securities and therefore, we expect this portfolio to continue to pay down over time with the proceeds reinvested in the alternative investment or externally managed portfolios. Breaking down the third quarter 2024 results by segment. Insurance was the largest contributor with $162 million in adjusted operating income and the Asset Management segment contributed $4 million, which is in line with our seasonally adjusted expectations as GAAP revenue recognition rules result in Sound Point's performance fees generally being recognized towards the end of the calendar year, which will be reflected in the fourth quarter and first quarter results due to the lag in reporting.

The corporate division loss was $29 million. On the capital management front, stock buybacks continue to be one of our most accretive strategies. And last week, our Board authorized an additional [$250] million in share repurchases. In the third quarter of 2024, we repurchased 1.7 million shares for $131 million at an average price of $78.87 per share. As of today, our remaining authorization is approximately $385 million and our holding company cash and investment balances are approximately $286 million of which $33 million resides in AGL. The share repurchase program, along with adjusted operating income and new business production collectively contributed to new records for adjusted operating shareholders' equity per share of almost $114 and adjusted book value per share of over $166. While adjusted operating income varies from period to period, the consistent quarterly increases in these book value metrics reflect how the successful execution of all our key strategic initiatives build shareholder value over the long term.

I'll now turn the call over to our operator to give you the instructions for the Q&A period.

[Operator]

[Operator Instructions] Our first question is from Brian Meredith with UBS.

[Unknown Analyst]

It's actually [indiscernible] Lobo on for Brian today. Maybe we could start with capital management. Specifically, how do the developments with the U.K. utilities impact your capital management outlook for 2025? And does it have any impact on the dividend capacity to the holding company?

[Dominic Frederico, executive]

Good question. But as you can see, we expect to reach the $500 million this year and expect to reach $500 million again next year. So obviously, it's not having any impact whatsoever on dividend capacity or the buyback program.

[Unknown Analyst]

Got it. Okay. And moving to municipal issuance. Could you give us a little bit more context around the slightly lower insured par market penetration this quarter? And what is your outlook for 2025 muni issuance? Do you think you can increase your insure penetration further?

[Dominic Frederico, executive]

Insured penetration has been increasing basically year-to-year. The value of the insurance is getting better recognized. And you can see that in a lot of ways, large deals we've been on this year, penetration in the AA market and the overall penetration as well. So we expect that to continue as bond insurance continues to be a really value in the marketplace, allows for execution in the spread environment that we're in, there's still savings to be made for the issuer. And obviously, the ease of execution makes it a real opportunity for these to benefit from. We expect issuance to remain high. There is a crying need of infrastructure investment across the country as well as internationally. So our volumes, we continue to expect to grow as well.

[Robert Bailenson, executive]

I want to add on the large transactions that we completed over the last year. We're capturing a significant portion of that spread. And it shows the benefit of our product in the execution of the transaction, both with the insured and uninsured transaction. It allows for the deal to be much more efficient from a liquidity standpoint in the market.

[Unknown Analyst]

That's helpful. And finally, if I could, any updated thoughts on how the 15% Bermuda income tax rate is going to affect your corporate tax rate in 2025?

[Robert Bailenson, executive]

Yes. So right now, as you know, for Bermuda, we will begin to use our tax benefit that we put up at the end of last year next year. So if you look forward at a corporate tax rate, assuming everything stays the same going forward, I'd expect a slight decrease in our corporate tax rate in 2025.

[Operator]

Our next question is from Jordan Hymowiz with Philadelphia Financial.

[Jordon Hymowitz, analyst]

Congratulations on continuing to perform an exceptionally profitable company and well run. Only the Eagles are doing better. MBA announced last week that they would consider putting themselves up for sale after PREPA clarity in Q2. I believe this is the third time, but my accounting is kind of difficult that they put themselves up for sale. In my opinion, there's only one likely bidder and that's you and it's just about price. And so I guess my question is, MBA has got to be looking at how well your stock done and how well your capital management has been. And no matter what the small dollars are, they're losing out dramatically. So I guess with that preamble, my question is, is there a possible way to consider a contingency payment based on the outcome of PREPA? And would you consider an offer based on a contingent payment depending how and if PREPA ended up?

[Dominic Frederico, executive]

Jordan, as you know, we've been in the market repeatedly to basically consolidate the industry where the other companies are not trading anymore. And of course, MBA is the largest one left. So you can assume that we've done everything we could in terms of making an offer that would make sense to them but make more sense to us. And I think you highlighted it properly that the price is not right. So we're standing here on the sideline weight until the price is right.

[Jordon Hymowitz, analyst]

And do you think with the new Republican governor -- governor of Puerto Rico, there might be any push to get rid of the independent authority or have more control or anything in that regard because there -- all this money is only money going out of the Puerto Rican economy to legal bills as they fight this out and all the money is not going to the new electricity that should be there?

[Dominic Frederico, executive]

Yes. I wouldn't cover the current governor elect to be Republican or Democrat, I think they're obviously Pro Puerto Rico. So we got to continue to look at that and what that means relative to our ability to recover on the PREPA exposure. I think the more important is the control board is there for the long haul, not the short haul, -- and now it has a change potentially new members could be on that board as we got a change in the presidency and the various members of the Congress. So we're looking forward to that as by the big activity coming up the year in the current 2025.

[Jordon Hymowitz, analyst]

Okay. Well, congratulations again. I'm wearing some AGO swag on this call. You've done a phenomenal job over many, many years.

[Dominic Frederico, executive]

Thank you, Jordan.

[Operator]

Our next question is from Geoffrey Dunn with Downing & Partners.

[Geoffrey Dunn, analyst]

I was hoping you could get into more deal on the water deals. I understand that relative to the exposure, the provision -- economic provision this quarter was de minimis. But can you get into what these water utilities actually do? What revenues support the bonds? And what protections are in there against an ultimate loss?

[Dominic Frederico, executive]

Sure Sure. So Jeff, these are obviously essential services, you're providing water for the U.K. water sector. And let's be clear, these are monopoly services. There's a lot of competition going on for the water, but there's a certain need of investment that exists right now that has to be supported and that they need to access the capital markets. U.K. government has been clear, they're not looking to nationalize the water utilities. So you really can't push down the bondholders too badly because you really be to access the capital markets to do that work. And let's talk about our exposure specifically. Our exposure is the senior debt at the operating company. So we're not at the holding company level, where I think there may be some infirmities and there is debt below us in the operating companies.

Also, as you know, all our exposures P&I went due. And we do not have any principal payments on any of our exposure to 2037. So we have plenty of time on our hands to work this out and let the markets work it out. And we know there's number of groups in the market right now, we're looking to supply some short-term funding to help them through to get -- to be able to raise more equity to support that sector. And obviously, we're very supportive of both new equity and new debt being raised as long as it doesn't significantly impair our position. So I think you're right in the assertion that we didn't put up a big loss this quarter. We don't see this as something that's particularly bothersome. I think it's just a natural order of how things have played out. and we're happy to sit there and support this, but it's not something that we're looking at and saying, well, this is going to be a problem from a capital basis from a reserve basis, I think this is just a natural or a we expect relatively insignificant, if any losses from this at all.

[Benjamin Rosenblum, executive]

And remember, Jeff, we rely on the capital markets to fund the entire operations. There's a significant amount of debt across the board in all the regulated utilities. They are highly regulated. They're required to maintain investment-grade ratings. We're in a senior position -- we expect no real issue here, except we're working on short-term difficulties they're having in terms of cash flow.

[Robert Bailenson, executive]

And let me just add, as required under the accounting model, when something goes below [indiscernible] grade, we have to probably wait all scenarios. So while we might not expect a loss, but we're required under gap to put all those scenarios in.

[Geoffrey Dunn, analyst]

Understood. What is causing the -- it sounds like a cash shortfall for these utilities?

[Benjamin Rosenblum, executive]

I think what's happened over the years is they've pulled money out, the equity owners have pulled money out, and they haven't reinvested the money right now in the water sector. So you can read the headlines and you'll see some articles that suggest that they're definitely permits in the system and they need improvements, just like every piece of infrastructure in probably a lot of the countries around the world. And I think that's what's driving the need to raise new equity to make the improvements going forward so the people in the U.K. can have clean drinking water.

[Dominic Frederico, executive]

I think it's a CapEx problem, not an operating problem, but the CapEx problem has got to be solved so that they continue to provide the services that are required to do by the regulatory bodies which are now saying in the areas like sewer waste treatment, you need to make significant improvements, which requires capital. So we've got to reach the capital.

[Benjamin Rosenblum, executive]

I think the other thing we're waiting on, obviously, there was a rate determination early in the year. that rate determination is being appealed. So we're waiting to see what the results of the appeal is. And my guess is if they don't get a successful resolution, they'll deal again. But I think that's really what's sitting out there. There is a need to increase the rate slightly to help support the capital improvements that need to be done for the water sector.

[Operator]

Our next question is from Tommy McJoynt with KBW.

[Thomas Mcjoynt-Griffith, analyst]

Staying on the U.K. water topic, it sounds like we're waiting for the sort of final determination of rates from the U.K. water regulator coming in December or January. Do you view that as sort of an important impactful event for how you'll have to adjust loss adjustments? Or is that not something that you guys are necessarily focused on.

[Benjamin Rosenblum, executive]

Obviously, you want to see -- you want to see outcome of what comes through. There is a CMA process to go ahead and they don't like the results, as I mentioned, they can appeal again. And historically, it's been a relatively decent process. for the water utilities. So I don't think this is something that I'm going to stay and tell you that in December, they get a bad resolution that it's really going to change our numbers. I think this is something that we'll have to play out over the next year or so as they work through what the right rate is to support capital investments that will improve the water sector. And obviously, we do not -- as we mentioned, we do not really expect losses. We just think this is a short-term issue that they have to raise rates to get that liquidity.

[Dominic Frederico, executive]

Remember, the rates of the opco in terms of its normal daily operations, the excess of the rates will help them fund the CapEx, which gets paid out over time. So obviously, we'll see how this continues to play out, but we're expecting the rates to be increased and therefore, enough funds to make the operations flow and then go out to raise equity for the CapEx.

[Thomas Mcjoynt-Griffith, analyst]

Got it. And I guess, the frequency of claims in this business is rather low. Is there a historical similar case study that you could point us to where an insured utility or even better a non-U.S. utility seemingly face financial distress for the headlines out there and then AGO with some insured exposure ultimately emerged on scape. Something you could just point us to for kind of learn about this process?

[Dominic Frederico, executive]

Not really. The -- remember, these are highly regulated utilities or essential services, the monopolies. So then typically, we're way out of the problem. That's why we've seen very little activity in terms of losses or even any write-downs relative to debt service or debt capacity because it's so critical. I mean think of it, they rely on market for funding they can't allow the market to take a loss and expect the funding to be there. So this is more an issue for the old cannot the opco.

[Thomas Mcjoynt-Griffith, analyst]

Yes. Okay. And then just to the extent that you do see the uninsured water bonds trading at a substantial discount to par in the market, which they appear to be doing so would you consider pursuing any loss mitigation security strategy in terms of purchasing those? Or is that not something you're interested in?

[Dominic Frederico, executive]

Our insured bonds don't take the same impairment, therefore, there is no loss mitigation you can do. And buying the onshore, we just increase our exposure. So yes, there's no opportunity for that like the other, like RMBS where we can actually buy our own RAP securities, a very deep discounts. -- that doesn't exist for the water utilities essentially, the market's expectation is pretty much money good. So...

[Operator]

Our next question comes from Giuliano Bologna with Compass Point.

[Giuliano Anderes-Bologna, analyst]

Yes, 10-plus years guarantee. Maybe to kick it off, there's a question about buyback capacity and the pace. I think you guys also have a lot of accumulated income on the alternative investments that are held in a subsidiary. I'm curious how much is there? And if I'm not mistaken, if you were to push some of that dividend up it would count towards the next year, your dividend [indiscernible]? I'm just curious how where that stands. And you obviously have some other levers and special even other ways around that. But I'm just curious how much how big that backlog is at this point?

[Benjamin Rosenblum, executive]

Yes. So at this point, we obviously are exploring -- we explore all options to increase our dividend capacity. There's no magic for us that in order to buy back our shares, we have to continue to push to find ways to move capital up to holding company level. Obviously, we do have obligations to Sound Point, so it's not as simple as I have money warehouse that and place download. I can't sell it. I could certainly move it up in cases that it works. It makes sense, we're happy to do it. But we do want to make sure it makes sense both the short run and the long run our ability to manage our capital appropriately.

[Dominic Frederico, executive]

And remember, our goal is the $500 million that we feel comfortable that we're making that this year. We're making it again next year. So that's obviously the strategy that we're deploying in terms of what assets we're moving where to make sure we can continue to fund that $500 million buyback.

[Giuliano Anderes-Bologna, analyst]

That's helpful. And then jumping over to the international side. I'm curious when you look at some of the transactions that you're doing or the Australian transaction, as an example. I'm curious what the premiums look like or how big grams to be? I know every transaction is different, but curious how that compares to domestic or other more common international transactions that you've done and that can impact the returns of some of that business?

[Robert Bailenson, executive]

Yes. I would tell you that the returns are better in that business, the tenor is shorter, and we're providing capital relief transactions to bank insurance companies. So we're really excited to continue to expand in that market.

[Benjamin Rosenblum, executive]

Yes. It's a very attractive business versus you can imagine, it's got a higher ROE content than any other business that we do and because of the short tenor to get to realize those earnings and we release that capital to accelerated earnings release of the capital quicker makes a higher return. So it's a great model, and that's why we continue to maintain our international presence. And as you can see, based on Rob's presentation, we continue to expand our international borders as well. that we want international to become a more significant segment of the overall company and taking pressure on the domestic market that really relies on issuance here, it's opportunity and the opportunity is global. We're trying to make an opportunity demand are making sure our global operations address it.

[Giuliano Anderes-Bologna, analyst]

That's helpful. And maybe one last one. But looking at the TMS exposure, as most of the exposures are very low coupons and very long dated. I think obviously, you're only ensuring the time in pain principal interest. So the MTV factor there has a huge benefit that's on your side. I'm curious if there -- because of that duration in both coupon dynamic, if there could be anything similar to the [indiscernible] exposures or things like that or you might have the ability at some point to consider loss situation. But I realize that you probably have to see a lot more weakness flow through before that would even become something to consider?

[Dominic Frederico, executive]

Well, I think we've proved Tom, I think we are on, I think we've proven our metal in terms of the loss mitigation, how we handle distressed credits. I mean you look at the results we've been able to achieve going way back to RMBS and the amount of money we've made off of the RMBS securities look at any troubled credit that we've had in the portfolio and how we exercise our rights within all those deals really made loss mitigation and key strength of the organization, and we will continue to look at that way for them as well. And as I said, based on our position, regulated senior position, opco, highly regulated, need to get access to the capital markets, and this is kind of something that we're very good at, and we'll continue to work hard to get it done rightly.

[Giuliano Anderes-Bologna, analyst]

That's helpful. And there's a comment about a similar way transaction it's a different entity in a different legal system, but the pro restructuring worked out pretty well as a regulated utility in Puerto Rico?

[Dominic Frederico, executive]

Right. That's not in these things in the market before. So we is it water and even Puerto Rico would have worked down.

[Operator]

Our next question is from Geoffrey Dunn with Dowling & Partners.

[Geoffrey Dunn, analyst]

My follow-up was actually asked and answered.

[Dominic Frederico, executive]

I was going to say, Jeff, you pay for the second question. So be careful.

[Operator]

This concludes the question-and-answer session. I would now like to turn the conference back over to our host, Robert Tucker for closing remarks.

[Robert Tucker, executive]

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.

[Operator]

This concludes today's conference call. Thank you all for attending. You may now disconnect your lines. Have a great day.