Burford Capital Ltd. Q4 FY2025 earnings call

• New business was a standout in 2025 with a 39% increase in new definitive commitments, moving well towards doubling the base portfolio by 2030. - Realization activity in 2025 was not as strong as 2024 due to fewer big, chunky wins, but the portfolio still had significant activity, cash generation, and stable loss rates and returns. - Discussed examples of unrealized losses in the book due to factors like changes in duration, cost, and extrinsic factors, such as the proteins cases and the bankruptcy case. - Mentioned YPF, with the main appeal awaiting a decision from the Second Circuit Court of Appeals, and other related proceedings in various jurisdictions. - The principal finance segment's portfolio is diverse in geography and asset type, and the asset management segment's funds are in runoff with certain partnerships continuing.

The principal finance segment's portfolio was $3.9 billion as of December 31, 2025, with YPF representing slightly below $1.7 billion, deployed costs of slightly over $1.7 billion, and unrealized fair value above that of around just under $500 million. New definitive commitments had a 39% increase, with growth coming from lower risk buckets. The asset management segment had cash receipts from asset management of $32 million in 2025, income of $36 million overall, and funds predominantly in runoff.

Management does not provide quarter-by-quarter projections for realizations as the timing of case movements is unpredictable. The long-term ROE target is around 20%, which is achievable over a longer period based on unit economics discussed at investor day.

Litigation process has uncertainties such as court congestion leading to longer court times which can impact realizations. There are also risks associated with specific cases like YPF's appeal and other collateral appeals where outcomes are not certain. Additionally, the accounting and fair value marks can be affected by factors like changes in duration and case pendency which may lead to negative marks not related to underlying case merits.

Q: Looking across all matters in the portfolio, sense for outlook of realizations in 2026 relative to 2025?

A: No, as a matter of policy they don't guide that way and case timing is unpredictable.

Q: What's driving the four lanes merging into two dynamic?

A: Court closures during pandemic led to court congestion reducing settlement pressure.

Q: Accounting question about conservative duration assumptions?

A: They are constantly looking at models and can be more conservative on duration assumptions.

Q: Color on composition of new definitive commitments?

A: Diversified across case type, industry, geography, and size.

Q: Potential gains for Cisco Proteins case?

A: Not releasing individual case modeling data due to legal privilege.

Q: Collateral in bankruptcy case?

A: Claims are only for proceeds from underlying claim outcomes.

Q: Bridging gap to long-term ROE target?

A: Done on a rolling basis with multi-year ROE in teens currently.

Q: Reluctance to buy back shares instead of dividends?

A: Concern about turning UK income-focused fund investors into forced sellers.

Q: Underwriting change for longer court times?

A: Constantly updating modeling and structuring deals to reward for delay.

Q: Debt structure for better matching capital unpredictability?

A: Constantly exploring but haven't found perfect match yet