Assured Guaranty Ltd. Reports Results for Third Quarter 2024
Assured Guaranty reported net income of $171 million ($3.17 per share) for Q3 2024. Key financial highlights include gross written premiums of $61 million and adjusted operating income of $130 million ($2.42 per share). Shareholders' equity reached a record $111.09 per share, while adjusted book value hit $166.47 per share. The company returned $147 million to shareholders through $131 million in share repurchases and $16 million in dividends. The board authorized an additional $250 million for share repurchases. Year-to-date gross written premiums and present value of new business production increased by $33 million and $32 million respectively compared to the previous year.
Assured Guaranty ha riportato un reddito netto di 171 milioni di dollari (3,17 dollari per azione) per il terzo trimestre del 2024. I principali punti finanziari includono premi lordi scritti di 61 milioni di dollari e un utile operativo rettificato di 130 milioni di dollari (2,42 dollari per azione). Il patrimonio degli azionisti ha raggiunto un record di 111,09 dollari per azione, mentre il valore contabile rettificato ha toccato i 166,47 dollari per azione. L'azienda ha restituito 147 milioni di dollari agli azionisti tramite riacquisti di azioni per 131 milioni di dollari e dividendi per 16 milioni di dollari. Il consiglio ha autorizzato ulteriori 250 milioni di dollari per i riacquisti di azioni. Da inizio anno, i premi lordi scritti e il valore attuale della produzione di nuovi affari sono aumentati rispettivamente di 33 milioni e 32 milioni di dollari rispetto all'anno precedente.
Assured Guaranty reportó un ingreso neto de 171 millones de dólares (3,17 dólares por acción) para el tercer trimestre de 2024. Los puntos destacados financieros incluyen primas brutas escritas de 61 millones de dólares y un ingreso operativo ajustado de 130 millones de dólares (2,42 dólares por acción). El patrimonio neto de los accionistas alcanzó un récord de 111,09 dólares por acción, mientras que el valor contable ajustado llegó a 166,47 dólares por acción. La compañía devolvió 147 millones de dólares a los accionistas a través de la recompra de acciones por 131 millones de dólares y 16 millones de dólares en dividendos. La junta autorizó 250 millones de dólares adicionales para la recompra de acciones. Hasta la fecha, las primas brutas escritas y el valor presente de la producción de nuevos negocios aumentaron en 33 millones y 32 millones de dólares, respectivamente, en comparación con el año anterior.
어슈어드 과란티는 2024년 3분기에 1억 7,100만 달러(주당 3.17달러)의 순이익을 보고했습니다. 주요 재무 하이라이트로는 6,100만 달러의 총 경과 보험료와 주당 2.42달러의 조정 운영 수익인 1억 3천만 달러가 포함됩니다. 주주 지분은 주당 111.09달러로 기록을 세웠으며, 조정된 장부 가치는 주당 166.47달러에 도달했습니다. 이 회사는 1억 4,700만 달러를 주주에게 반환했으며, 이는 1억 3,100만 달러의 자사주 매입과 1,600만 달러의 배당금으로 이루어졌습니다. 이사회는 자사주 매입을 위한 추가 2억 5천만 달러를 승인했습니다. 올해부터 지금까지 총 경과 보험료와 신규 사업 생산의 현재 가치는 각각 3천3백만 달러와 3천2백만 달러 증가했습니다.
Assured Guaranty a rapporté un bénéfice net de 171 millions de dollars (3,17 dollars par action) pour le troisième trimestre 2024. Les points clés financiers incluent des primes brutes souscrites de 61 millions de dollars et un bénéfice d'exploitation ajusté de 130 millions de dollars (2,42 dollars par action). Les capitaux propres des actionnaires ont atteint un record de 111,09 dollars par action, tandis que la valeur comptable ajustée a atteint 166,47 dollars par action. La société a rendu 147 millions de dollars aux actionnaires par le biais de 131 millions de dollars en rachats d'actions et de 16 millions de dollars en dividendes. Le conseil d'administration a autorisé 250 millions de dollars supplémentaires pour les rachats d'actions. Depuis le début de l'année, les primes brutes souscrites et la valeur actuelle de la production de nouvelles affaires ont augmenté de 33 millions et 32 millions de dollars respectivement par rapport à l'année précédente.
Assured Guaranty meldete für das 3. Quartal 2024 ein Nettoergebnis von 171 Millionen Dollar (3,17 Dollar pro Aktie). Zu den wichtigsten finanziellen Highlights gehören brutto geschriebene Prämien von 61 Millionen Dollar und ein bereinigtes Betriebsergebnis von 130 Millionen Dollar (2,42 Dollar pro Aktie). Das Eigenkapital der Aktionäre erreichte einen Rekord von 111,09 Dollar pro Aktie, während der bereinigte Buchwert 166,47 Dollar pro Aktie betrug. Das Unternehmen gab 147 Millionen Dollar an die Aktionäre zurück, darunter 131 Millionen Dollar für Aktienrückkäufe und 16 Millionen Dollar an Dividenden. Der Vorstand genehmigte zusätzlich 250 Millionen Dollar für Aktienrückkäufe. Im bisherigen Jahresverlauf stiegen die brutto geschriebene Prämien und der Barwert der Neugeschäfte im Vergleich zum Vorjahr um 33 Millionen Dollar bzw. 32 Millionen Dollar.
- Record shareholders' equity per share of $111.09
- Net income increased 8% YOY to $6.44 per share for first three quarters
- Adjusted operating income up 13% YOY to $5.80 per share
- GWP and PVP increased by $33M and $32M YOY respectively
- Board authorized additional $250M for share repurchases
- Net investment income decreased to $82M from $101M YOY
- Adjusted operating income declined to $130M from $206M YOY
- Adjusted operating income per share decreased to $2.42 from $3.42 YOY
Insights
Third quarter results show strong performance with
The company's aggressive share repurchase program stands out - they've bought back
Insurance segment performance was particularly strong, with adjusted operating income jumping to
The merger of AGM into AG positions the company for strategic expansion into new markets and product lines. Their market penetration remains strong, representing
Loss development trends are favorable, with a
Investment portfolio diversification continues with
-
GAAP Highlights:
-
Net income attributable to Assured Guaranty Ltd. was
, or$171 million per share(1), for third quarter 2024.$3.17 -
Shareholders’ equity attributable to Assured Guaranty Ltd. per share was
as of September 30, 2024.$111.09 -
Gross written premiums (GWP) were
for third quarter 2024.$61 million
-
Net income attributable to Assured Guaranty Ltd. was
-
Non-GAAP Highlights:
-
Adjusted operating income(2) was
, or$130 million per share, for third quarter 2024.$2.42 -
Adjusted operating shareholders’ equity(2) per share and adjusted book value (ABV)(2) per share were
and$113.96 , respectively, as of September 30, 2024.$166.47 -
Present value of new business production (PVP)(2) was
for third quarter 2024.$63 million
-
Adjusted operating income(2) was
-
Return of Capital to Shareholders:
-
Third quarter 2024 capital returned to shareholders was
including share repurchases of$147 million and dividends of$131 million .$16 million -
Share repurchase authorization was increased by
on November 8, 2024.$250 million
-
Third quarter 2024 capital returned to shareholders was
“Assured Guaranty has continued to build both shareholder and policyholder value this year,” said Dominic Frederico, President and CEO. “Shareholders’ equity per share on September 30, 2024 was a record
“New business production has been strong this year. GWP and PVP for the first three quarters reached
“In our capital management program, as of November 8, 2024, the Company had repurchased
(1) |
All per share information for net income and adjusted operating income is based on diluted shares. |
|
(2) |
Please see “Explanation of Non-GAAP Financial Measures.” |
Summary Financial Results (in millions, except per share amounts) |
|||||||
|
Quarter Ended |
||||||
|
September 30, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
|
|
||||
GAAP (1) |
|
|
|
||||
Net income (loss) attributable to AGL |
$ |
171 |
|
|
$ |
157 |
|
Net income (loss) attributable to AGL per diluted share |
$ |
3.17 |
|
|
$ |
2.60 |
|
Weighted average diluted shares |
|
53.4 |
|
|
|
59.6 |
|
Non-GAAP |
|
|
|
||||
Adjusted operating income (loss) (2) |
$ |
130 |
|
|
$ |
206 |
|
Adjusted operating income per diluted share (2) |
$ |
2.42 |
|
|
$ |
3.42 |
|
Weighted average diluted shares |
|
53.4 |
|
|
|
59.6 |
|
Gain (loss) related to FG VIE and CIV consolidation (3) included in adjusted operating income |
$ |
(7 |
) |
|
$ |
(8 |
) |
Gain (loss) related to FG VIE and CIV consolidation included in adjusted operating income per share |
$ |
(0.12 |
) |
|
$ |
(0.13 |
) |
|
|
|
|
||||
Components of total adjusted operating income (loss) |
|
|
|
||||
Insurance segment |
$ |
162 |
|
|
$ |
59 |
|
Asset Management segment |
|
4 |
|
|
|
— |
|
Corporate division |
|
(29 |
) |
|
|
155 |
|
Other |
|
(7 |
) |
|
|
(8 |
) |
Adjusted operating income (loss) |
$ |
130 |
|
|
$ |
206 |
|
|
As of |
||||||||||
|
September 30, 2024 |
|
December 31, 2023 |
||||||||
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
||||
|
|
|
|
|
|
|
|
||||
Shareholders’ equity attributable to AGL |
$ |
5,728 |
|
$ |
111.09 |
|
$ |
5,713 |
|
$ |
101.63 |
Adjusted operating shareholders’ equity (2) |
|
5,875 |
|
|
113.96 |
|
|
5,990 |
|
|
106.54 |
ABV (2) |
|
8,582 |
|
|
166.47 |
|
|
8,765 |
|
|
155.92 |
|
|
|
|
|
|
|
|
||||
Common Shares Outstanding |
|
51.6 |
|
|
|
|
56.2 |
|
|
________________________________________________ |
||
(1) |
Generally accepted accounting principles in |
|
(2) |
Please see “Explanation of Non-GAAP Financial Measures” at the end of this press release. |
|
(3) |
The effect of consolidating financial guaranty (FG) variable interest entities (VIEs) and consolidated investment vehicles (CIVs). |
On a per share basis, shareholders’ equity attributable to AGL increased to
Insurance Segment
The Insurance segment primarily consists of (i) the Company’s insurance subsidiaries that provide credit protection products to
Insurance Segment New Business Production
Insurance Segment New Business Production (in millions) |
||||||||||||||||||
|
Quarter Ended September 30, |
|||||||||||||||||
|
2024 |
|
2023 |
|||||||||||||||
|
GWP |
|
PVP (1) |
|
Gross Par
|
|
GWP |
|
PVP (1) |
|
Gross Par
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Public finance - |
$ |
35 |
|
$ |
34 |
|
$ |
5,387 |
|
$ |
29 |
|
|
$ |
30 |
|
$ |
5,098 |
Public finance - non- |
|
7 |
|
|
10 |
|
|
665 |
|
|
(5 |
) |
|
|
2 |
|
|
61 |
Structured finance - |
|
4 |
|
|
5 |
|
|
551 |
|
|
15 |
|
|
|
12 |
|
|
267 |
Structured finance - non- |
|
15 |
|
|
14 |
|
|
834 |
|
|
1 |
|
|
|
2 |
|
|
522 |
Total |
$ |
61 |
|
$ |
63 |
|
$ |
7,437 |
|
$ |
40 |
|
|
$ |
46 |
|
$ |
5,948 |
________________________________________________ |
||
(1) |
PVP, a non-GAAP financial measure, measures the value of the Insurance segment’s new business production for all contracts regardless of form or GAAP accounting model. See “Explanation of Non-GAAP Financial Measures” at the end of this press release. PVP is based on “close date,” when the transaction settles. PVP was discounted at |
|
(2) |
Gross Par Written is based on “close date,” when the transaction settles. |
In third quarter 2024, non-
Global structured finance GWP and PVP in third quarter 2024 were higher than the comparable GWP and PVP in third quarter 2023. In third quarter 2024, the Company insured a transaction in
Insurance Segment Adjusted Operating Income
Insurance segment adjusted operating income increased to
Insurance Segment Results (in millions) |
|||||||
|
Quarter Ended |
||||||
|
September 30, |
||||||
|
|
2024 |
|
|
|
2023 |
|
Segment revenues |
|
|
|
||||
Net earned premiums and credit derivative revenues |
$ |
101 |
|
|
$ |
99 |
|
Net investment income |
|
82 |
|
|
|
101 |
|
Fair value gains (losses) on trading securities |
|
9 |
|
|
|
4 |
|
Foreign exchange gains (losses) on remeasurement |
|
1 |
|
|
|
(2 |
) |
Other income (loss) |
|
11 |
|
|
|
6 |
|
Total segment revenues |
|
204 |
|
|
|
208 |
|
|
|
|
|
||||
Segment expenses |
|
|
|
||||
Loss expense (benefit) |
|
(53 |
) |
|
|
101 |
|
Amortization of deferred acquisition costs (DAC) |
|
5 |
|
|
|
4 |
|
Employee compensation and benefit expenses |
|
40 |
|
|
|
37 |
|
Other operating expenses |
|
36 |
|
|
|
23 |
|
Total segment expenses |
|
28 |
|
|
|
165 |
|
Equity in earnings (losses) of investees |
|
28 |
|
|
|
25 |
|
Segment adjusted operating income (loss) before income taxes |
|
204 |
|
|
|
68 |
|
Less: Provision (benefit) for income taxes |
|
42 |
|
|
|
9 |
|
Segment adjusted operating income (loss) |
$ |
162 |
|
|
$ |
59 |
|
The components of the Insurance segment’s premiums, losses and income from the investment portfolio are presented below.
Insurance Segment Net Earned Premiums and Credit Derivative Revenues
Insurance Segment Net Earned Premiums and Credit Derivative Revenues (in millions) |
|||||
|
Quarter Ended |
||||
|
September 30, |
||||
|
2024 |
|
2023 |
||
Scheduled net earned premiums and credit derivative revenues |
$ |
87 |
|
$ |
84 |
Accelerations |
|
14 |
|
|
15 |
Total |
$ |
101 |
|
$ |
99 |
Insurance Segment Loss Expense (Benefit) and the Roll Forward of Expected Losses
Loss expense is a function of net economic loss development (benefit) and deferred premium revenue. The difference between loss expense and economic development in a given period represents the amount of deferred premium revenue absorbing expected losses to be paid.
Insurance Segment Loss Expense (Benefit) (in millions) |
|||||||
|
Quarter Ended |
||||||
|
September 30, |
||||||
|
|
2024 |
|
|
|
2023 |
|
Public finance |
$ |
(8 |
) |
|
$ |
138 |
|
|
|
(44 |
) |
|
|
(38 |
) |
Other structured finance |
|
(1 |
) |
|
|
1 |
|
Total |
$ |
(53 |
) |
|
$ |
101 |
|
The table below presents the roll forward of net expected losses for third quarter 2024.
Roll Forward of Net Expected Loss to be Paid (Recovered) (1) (in millions) |
||||||||||||||
|
Net Expected
|
|
Net
|
|
Net (Paid)
|
|
Net Expected
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Public finance |
$ |
411 |
|
$ |
23 |
|
|
$ |
(115 |
) |
|
$ |
319 |
|
|
|
— |
|
|
(56 |
) |
|
|
10 |
|
|
|
(46 |
) |
Other structured finance |
|
36 |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
33 |
|
Total |
$ |
447 |
|
$ |
(34 |
) |
|
$ |
(107 |
) |
|
$ |
306 |
|
________________________________________________ |
||
(1) |
Net economic loss development (benefit) represents the change in net expected loss to be paid (recovered) attributable to the effects of changes in the economic performance of insured transactions, changes in assumptions based on observed market trends, changes in discount rates, accretion of discount and the economic effects of loss mitigation efforts, each net of reinsurance. Net economic loss development (benefit) is the principal measure that the Company uses to evaluate the loss experience in its insured portfolio. Expected loss to be paid (recovered) includes all transactions insured by the Company, regardless of the accounting model prescribed under GAAP and without consideration of deferred premium revenue. |
The net economic benefit was
Insurance Segment Income from Investment Portfolio
Insurance Segment Income from Investment Portfolio (in millions) |
|||||
|
Quarter Ended |
||||
|
September 30, |
||||
|
2024 |
|
2023 |
||
Net investment income |
$ |
82 |
|
$ |
101 |
Fair value gains (losses) on trading securities (1) |
|
9 |
|
|
4 |
Equity in earnings (losses) of investees (2) |
|
28 |
|
|
25 |
Total |
$ |
119 |
|
$ |
130 |
________________________________________________ |
||
(1) |
Primarily includes contingent value instruments issued by |
|
(2) |
Equity in earnings (losses) of investees primarily relates to funds managed by Sound Point Capital Management, LP and certain of its investment management subsidiaries (Sound Point) and Assured Healthcare Partners, LLC (AHP). Investments in funds are reported on a one-quarter lag. |
Net investment income, which represents interest income on available-for-sale fixed-maturity debt and short-term investments, decreased to
As of September 30, 2024, the Insurance segment had
The inception-to-date annualized internal rate of return for all alternative investments, which are primarily in the Insurance segment and Corporate division, was approximately
Asset Management Segment
Since July 2023, the Company participates in the asset management business through its ownership interest in Sound Point. In third quarter 2024 asset management adjusted operating income of
Corporate Division
Corporate Division Results (in millions) |
||||||
|
Quarter Ended |
|||||
|
September 30, |
|||||
|
|
2024 |
|
|
2023 |
|
Revenues |
|
|
|
|||
Gain on sale of asset management subsidiaries |
$ |
— |
|
|
$ |
255 |
Other |
|
4 |
|
|
|
4 |
Total revenues |
|
4 |
|
|
|
259 |
Expenses |
|
|
|
|||
Interest expense |
|
24 |
|
|
|
26 |
Employee compensation and benefit expenses |
|
7 |
|
|
|
10 |
Other operating expenses |
|
6 |
|
|
|
21 |
Total expenses |
|
37 |
|
|
|
57 |
Adjusted operating income (loss) before income taxes |
|
(33 |
) |
|
|
202 |
Less: Provision (benefit) for income taxes |
|
(4 |
) |
|
|
47 |
Adjusted operating income (loss) |
$ |
(29 |
) |
|
$ |
155 |
Corporate division adjusted operating income in third quarter 2023 included a pre-tax gain resulting from the Sound Point and AHP transactions of
As part of the share redemption that occurred on August 5, 2024, AG transferred certain alternative investments to Assured Guaranty Municipal Holdings Inc., whose results are now reported in the corporate division.
Reconciliation to GAAP
The following table presents a reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).
Reconciliation of Net Income (Loss) Attributable to AGL to Adjusted Operating Income (Loss) (in millions, except per share amounts) |
|||||||||||||||
|
Quarter Ended |
||||||||||||||
|
September 30, |
||||||||||||||
|
2024 |
|
2023 |
||||||||||||
|
Total |
|
Per Diluted
|
|
Total |
|
Per Diluted
|
||||||||
Net income (loss) attributable to AGL |
$ |
171 |
|
|
$ |
3.17 |
|
|
$ |
157 |
|
|
$ |
2.60 |
|
Less pre-tax adjustments: |
|
|
|
|
|
|
|
||||||||
Realized gains (losses) on investments |
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
(0.16 |
) |
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives |
|
(2 |
) |
|
|
(0.03 |
) |
|
|
6 |
|
|
|
0.12 |
|
Fair value gains (losses) on committed capital securities (CCS) |
|
(3 |
) |
|
|
(0.06 |
) |
|
|
(20 |
) |
|
|
(0.33 |
) |
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and loss adjustment expense (LAE) reserves |
|
54 |
|
|
|
1.00 |
|
|
|
(37 |
) |
|
|
(0.61 |
) |
Total pre-tax adjustments |
|
49 |
|
|
|
0.91 |
|
|
|
(60 |
) |
|
|
(0.98 |
) |
Less tax effect on pre-tax adjustments |
|
(8 |
) |
|
|
(0.16 |
) |
|
|
11 |
|
|
|
0.16 |
|
Adjusted operating income (loss) |
$ |
130 |
|
|
$ |
2.42 |
|
|
$ |
206 |
|
|
$ |
3.42 |
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) related to FG VIE and CIV consolidation included in adjusted operating income |
$ |
(7 |
) |
|
$ |
(0.12 |
) |
|
$ |
(8 |
) |
|
$ |
(0.13 |
) |
Non-credit impairment-related unrealized fair value gains on credit derivatives in third quarter 2023 were primarily generated by lower collateral asset spreads. Except for credit impairment, the fair value adjustments on credit derivatives in the insured portfolio are non-economic adjustments that reverse to zero over the remaining term of that portfolio.
Fair value losses on CCS in both periods were primarily due to a tightening in market spreads. Fair value of CCS is heavily affected by, and in part fluctuates with, changes in market interest rates, credit spreads and other market factors and is not expected to result in an economic gain or loss.
Foreign exchange gains (losses) primarily relate to the remeasurement of premiums receivable and are mainly due to changes in the exchange rate relative to the
Common Share Repurchases
On November 8, 2024, AGL’s Board of Directors (the Board) authorized the repurchase of an additional
Summary of Share Repurchases (in millions, except per share amounts) |
|||||||
|
Amount (1) |
|
Number of Shares |
|
Average Price Per
|
||
|
|
|
|
|
|
||
2024 (January 1 - March 31) |
$ |
129 |
|
1.54 |
|
$ |
84.07 |
2024 (April 1 - June 30) |
|
152 |
|
1.93 |
|
|
78.50 |
2024 (July 1 - September 30) |
|
131 |
|
1.66 |
|
|
78.87 |
2024 (October 1- November 8) |
58 |
|
0.69 |
|
|
83.61 |
|
Total 2024 |
$ |
470 |
|
5.82 |
|
|
80.69 |
________________________________________________ |
||
(1) |
Excludes commissions and excise taxes. |
The timing, form and amount of the share repurchases under the program are at the discretion of management and will depend on a variety of factors, including funds available at the parent company, other potential uses for such funds, market conditions, the Company’s capital position, legal requirements and other factors. The repurchase program may be modified, extended or terminated by the Board at any time. It does not have an expiration date.
Financial Statements
Condensed Consolidated Statements of Operations (unaudited) (in millions) |
|||||||
|
Quarter Ended |
||||||
|
September 30, |
||||||
|
|
2024 |
|
|
|
2023 |
|
Revenues |
|
|
|
||||
Net earned premiums |
$ |
97 |
|
|
$ |
95 |
|
Net investment income |
|
82 |
|
|
|
100 |
|
Net realized investment gains (losses) |
|
— |
|
|
|
(9 |
) |
Fair value gains (losses) on credit derivatives |
|
3 |
|
|
|
9 |
|
Fair value gains (losses) on CCS |
|
(3 |
) |
|
|
(20 |
) |
Fair value gains (losses) on FG VIEs |
|
(7 |
) |
|
|
6 |
|
Fair value gains (losses) on CIVs |
|
21 |
|
|
|
(4 |
) |
Foreign exchange gain (loss) on remeasurement |
|
55 |
|
|
|
(39 |
) |
Fair value gains (losses) on trading securities |
|
9 |
|
|
|
4 |
|
Gain on sale of asset management subsidiaries |
|
— |
|
|
|
255 |
|
Other income (loss) |
|
12 |
|
|
|
6 |
|
Total revenues |
|
269 |
|
|
|
403 |
|
Expenses |
|
|
|
||||
Loss and LAE (benefit) |
|
(51 |
) |
|
|
100 |
|
Interest expense |
|
22 |
|
|
|
24 |
|
Amortization of DAC |
|
5 |
|
|
|
4 |
|
Employee compensation and benefit expenses |
|
47 |
|
|
|
47 |
|
Other operating expenses |
|
44 |
|
|
|
44 |
|
Total expenses |
|
67 |
|
|
|
219 |
|
Income (loss) before income taxes and equity in earnings (losses) of investees |
|
202 |
|
|
|
184 |
|
Equity in earnings (losses) of investees |
|
18 |
|
|
|
18 |
|
Income (loss) before income taxes |
|
220 |
|
|
|
202 |
|
Less: Provision (benefit) for income taxes |
|
44 |
|
|
|
43 |
|
Net income (loss) |
|
176 |
|
|
|
159 |
|
Less: Noncontrolling interests |
|
5 |
|
|
|
2 |
|
Net income (loss) attributable to AGL |
$ |
171 |
|
|
$ |
157 |
|
Condensed Consolidated Balance Sheets (unaudited) (in millions) |
|||||||
|
As of |
||||||
|
September 30, 2024 |
|
December 31, 2023 |
||||
Assets |
|
|
|
||||
Investments: |
|
|
|
||||
Fixed-maturity securities available-for-sale, at fair value |
$ |
6,284 |
|
|
$ |
6,307 |
|
Fixed-maturity securities, trading, at fair value |
|
163 |
|
|
|
318 |
|
Short-term investments, at fair value |
|
1,487 |
|
|
|
1,661 |
|
Other invested assets |
|
912 |
|
|
|
829 |
|
Total investments |
|
8,846 |
|
|
|
9,115 |
|
Cash |
|
147 |
|
|
|
97 |
|
Premiums receivable, net of commissions payable |
|
1,513 |
|
|
|
1,468 |
|
DAC |
|
172 |
|
|
|
161 |
|
Salvage and subrogation recoverable |
|
412 |
|
|
|
298 |
|
FG VIEs’ assets |
|
156 |
|
|
|
328 |
|
Assets of CIVs |
|
359 |
|
|
|
366 |
|
Other assets |
|
686 |
|
|
|
706 |
|
Total assets |
$ |
12,291 |
|
|
$ |
12,539 |
|
|
|
|
|
||||
Liabilities |
|
|
|
||||
Unearned premium reserve |
$ |
3,631 |
|
|
$ |
3,658 |
|
Loss and LAE reserve |
|
253 |
|
|
|
376 |
|
Long-term debt |
|
1,698 |
|
|
|
1,694 |
|
Credit derivative liabilities, at fair value |
|
39 |
|
|
|
53 |
|
FG VIEs’ liabilities, at fair value |
|
392 |
|
|
|
554 |
|
Other liabilities |
|
496 |
|
|
|
439 |
|
Total liabilities |
|
6,509 |
|
|
|
6,774 |
|
|
|
|
|
||||
Shareholders’ equity |
|
|
|
||||
Common shares |
|
1 |
|
|
|
1 |
|
Retained earnings |
|
5,957 |
|
|
|
6,070 |
|
Accumulated other comprehensive income (loss) |
|
(231 |
) |
|
|
(359 |
) |
Deferred equity compensation |
|
1 |
|
|
|
1 |
|
Total shareholders’ equity attributable to AGL |
|
5,728 |
|
|
|
5,713 |
|
Nonredeemable noncontrolling interests |
|
54 |
|
|
|
52 |
|
Total shareholders’ equity |
|
5,782 |
|
|
|
5,765 |
|
Total liabilities and shareholders’ equity |
$ |
12,291 |
|
|
$ |
12,539 |
|
Explanation of Non-GAAP Financial Measures
The Company discloses both: (i) financial measures determined in accordance with GAAP; and (ii) financial measures not determined in accordance with GAAP (non-GAAP financial measures). Financial measures identified as non-GAAP should not be considered substitutes for GAAP financial measures. The primary limitation of non-GAAP financial measures is the potential lack of comparability to financial measures of other companies, whose definitions of non-GAAP financial measures may differ from those of the Company.
The Company believes its presentation of non-GAAP financial measures provides information that is necessary for analysts to calculate their estimates of Assured Guaranty’s financial results in their research reports on Assured Guaranty and for investors, analysts and the financial news media to evaluate Assured Guaranty’s financial results.
GAAP requires the Company to consolidate entities where it is deemed to be the primary beneficiary which include:
- FG VIEs, which the Company does not own and where its exposure is limited to its obligation under the financial guaranty insurance contract, and
- CIVs in which certain subsidiaries invest.
The Company discloses the effect of FG VIE and CIV consolidation that is embedded in each non-GAAP financial measure, as applicable. The Company believes this information may also be useful to analysts and investors evaluating Assured Guaranty’s financial results. In the case of both the consolidated FG VIEs and the CIVs, the economic effect on the Company of each of the consolidated FG VIEs and CIVs is reflected primarily in the results of the Insurance segment.
Management of the Company and AGL’s Board of Directors use non-GAAP financial measures further adjusted to remove the effect of FG VIE and CIV consolidation (which the Company refers to as its core financial measures), as well as GAAP financial measures and other factors, to evaluate the Company’s results of operations, financial condition and progress towards long-term goals. The Company uses core financial measures in its decision-making process for and in its calculation of certain components of management compensation. The financial measures that the Company uses to help determine compensation are: (1) adjusted operating income, further adjusted to remove the effect of FG VIE and CIV consolidation; (2) adjusted operating shareholders’ equity, further adjusted to remove the effect of FG VIE and CIV consolidation; (3) adjusted book value per share, further adjusted to remove the effect of FG VIE and CIV consolidation; and (4) PVP.
Management believes that many investors, analysts and financial news reporters use adjusted operating shareholders’ equity and/or adjusted book value, each further adjusted to remove the effect of FG VIE and CIV consolidation, as the principal financial measures for valuing AGL’s current share price or projected share price and also as the basis of their decision to recommend, buy or sell AGL’s common shares. Management also believes that many of the Company’s fixed income investors also use adjusted operating shareholders’ equity, further adjusted to remove the effect of FG VIE and CIV consolidation, to evaluate the Company’s capital adequacy.
Adjusted operating income, further adjusted for the effect of FG VIE and CIV consolidation, enables investors and analysts to evaluate the Company’s financial results in comparison with the consensus analyst estimates distributed publicly by financial databases.
The following paragraphs define each non-GAAP financial measure disclosed by the Company and describe why it is useful. To the extent there is a directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure and the most directly comparable GAAP financial measure is presented below.
Adjusted Operating Income
Management believes that adjusted operating income is a useful measure because it clarifies the understanding of the operating results of the Company. Adjusted operating income is defined as net income (loss) attributable to AGL, as reported under GAAP, adjusted for the following:
1) Elimination of realized gains (losses) on the Company’s investments, except for gains and losses on securities classified as trading. The timing of realized gains and losses, which depends largely on market credit cycles, can vary considerably across periods. The timing of sales is largely subject to the Company’s discretion and influenced by market opportunities, as well as the Company’s tax and capital profile.
2) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives that are recognized in net income, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments. Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, the Company’s credit spreads, and other market factors and are not expected to result in an economic gain or loss.
3) Elimination of fair value gains (losses) on the Company’s CCS that are recognized in net income. Such amounts are affected by changes in market interest rates, the Company’s credit spreads, price indications on the Company’s publicly traded debt and other market factors and are not expected to result in an economic gain or loss.
4) Elimination of foreign exchange gains (losses) on remeasurement of net premium receivables and loss and LAE reserves that are recognized in net income. Long-dated receivables and loss and LAE reserves represent the present value of future contractual or expected cash flows. Therefore, the current period’s foreign exchange remeasurement gains (losses) are not necessarily indicative of the total foreign exchange gains (losses) that the Company will ultimately recognize.
5) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
See “Reconciliation to GAAP” above for a reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).
Adjusted Operating Shareholders’ Equity and Adjusted Book Value
Management believes that adjusted operating shareholders’ equity is a useful measure because it excludes the fair value adjustments on investments, credit derivatives and CCS that are not expected to result in economic gain or loss.
Adjusted operating shareholders’ equity is defined as shareholders’ equity attributable to AGL, as reported under GAAP, adjusted for the following:
1) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments. Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, credit spreads and other market factors and are not expected to result in an economic gain or loss.
2) Elimination of fair value gains (losses) on the Company’s CCS. Such amounts are affected by changes in market interest rates, the Company’s credit spreads, price indications on the Company’s publicly traded debt and other market factors and are not expected to result in an economic gain or loss.
3) Elimination of unrealized gains (losses) on the Company’s investments that are recorded as a component of accumulated other comprehensive income (AOCI). The AOCI component of the fair value adjustment on the investment portfolio is not deemed economic because the Company generally holds these investments to maturity and therefore would not recognize an economic gain or loss.
4) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
Management uses adjusted book value, further adjusted to remove the effect of FG VIE and CIV consolidation, to measure the intrinsic value of the Company, excluding franchise value. Adjusted book value per share, further adjusted for FG VIE and CIV consolidation (core adjusted book value), is one of the key financial measures used in determining the amount of certain long-term compensation elements to management and employees and used by rating agencies and investors. Management believes that adjusted book value is a useful measure because it enables an evaluation of the Company’s in-force premiums and revenues net of expected losses. Adjusted book value is adjusted operating shareholders’ equity, as defined above, further adjusted for the following:
1) Elimination of deferred acquisition costs, net. These amounts represent net deferred expenses that have already been paid or accrued and will be expensed in future accounting periods.
2) Addition of the net present value of estimated net future revenue. See below.
3) Addition of the deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed, net of reinsurance. This amount represents the present value of the expected future net earned premiums, net of the present value of expected losses to be expensed, which are not reflected in GAAP equity.
4) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
The unearned premiums and revenues included in adjusted book value will be earned in future periods, but actual earnings may differ materially from the estimated amounts used in determining current adjusted book value due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults and other factors.
Reconciliation of Shareholders’ Equity Attributable to AGL to Adjusted Operating Shareholders’ Equity and ABV (in millions, except per share amounts) |
|||||||||||||||
|
As of |
||||||||||||||
|
September 30, 2024 |
|
December 31, 2023 |
||||||||||||
|
Total |
|
Per Share |
|
Total |
|
Per Share |
||||||||
|
|
|
|
|
|
|
|
||||||||
Shareholders’ equity attributable to AGL |
$ |
5,728 |
|
|
$ |
111.09 |
|
|
$ |
5,713 |
|
|
$ |
101.63 |
|
Less pre-tax adjustments: |
|
|
|
|
|
|
|
||||||||
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives |
|
45 |
|
|
|
0.89 |
|
|
|
34 |
|
|
|
0.61 |
|
Fair value gains (losses) on CCS |
|
1 |
|
|
|
0.02 |
|
|
|
13 |
|
|
|
0.22 |
|
Unrealized gain (loss) on investment portfolio |
|
(211 |
) |
|
|
(4.10 |
) |
|
|
(361 |
) |
|
|
(6.40 |
) |
Less taxes |
|
18 |
|
|
|
0.32 |
|
|
|
37 |
|
|
|
0.66 |
|
Adjusted operating shareholders’ equity |
|
5,875 |
|
|
|
113.96 |
|
|
|
5,990 |
|
|
|
106.54 |
|
Pre-tax adjustments: |
|
|
|
|
|
|
|
||||||||
Less: DAC |
|
172 |
|
|
|
3.33 |
|
|
|
161 |
|
|
|
2.87 |
|
Plus: Net present value of estimated net future revenue |
|
189 |
|
|
|
3.67 |
|
|
|
199 |
|
|
|
3.54 |
|
Plus: Net deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed |
|
3,370 |
|
|
|
65.35 |
|
|
|
3,436 |
|
|
|
61.12 |
|
Plus taxes |
|
(680 |
) |
|
|
(13.18 |
) |
|
|
(699 |
) |
|
|
(12.41 |
) |
ABV |
$ |
8,582 |
|
|
$ |
166.47 |
|
|
$ |
8,765 |
|
|
$ |
155.92 |
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) related to FG VIE and CIV consolidation included in: |
|
|
|
|
|
|
|
||||||||
Adjusted operating shareholders’ equity |
$ |
(5 |
) |
|
$ |
(0.08 |
) |
|
$ |
5 |
|
|
$ |
0.07 |
|
ABV |
|
(9 |
) |
|
|
(0.17 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
||||||||
Shares outstanding at the end of the period |
|
51.6 |
|
|
|
|
|
56.2 |
|
|
|
Net Present Value of Estimated Net Future Revenue
Management believes that this amount is a useful measure because it enables an evaluation of the present value of estimated net future revenue for non-financial guaranty insurance contracts. This amount represents the net present value of estimated future revenue from these contracts (other than credit derivatives with net expected losses), net of reinsurance, ceding commissions and premium taxes.
Future installment premiums are discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than Loss Mitigation Securities. The discount rate is recalculated annually and updated as necessary. Net present value of estimated future revenue for an obligation may change from period to period due to a change in the discount rate or due to a change in estimated net future revenue for the obligation, which may change due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults or other factors that affect par outstanding or the ultimate maturity of an obligation. There is no corresponding GAAP financial measure.
PVP or Present Value of New Business Production
Management believes that PVP is a useful measure because it enables the evaluation of the value of new business production in the Insurance segment by taking into account the value of estimated future installment premiums on all new contracts underwritten in a reporting period as well as additional installment premiums and fees on existing contracts (which may result from supplements or fees or from the issuer not calling an insured obligation the Company projected would be called), regardless of form, which management believes GAAP gross written premiums and changes in fair value of credit derivatives do not adequately measure. PVP in respect of contracts written in a specified period is defined as gross upfront and installment premiums received and the present value of gross estimated future installment premiums.
Future installment premiums are discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than certain fixed-maturity securities such as Loss Mitigation Securities. The discount rate is recalculated annually and updated as necessary. Under GAAP, financial guaranty installment premiums are discounted at a risk-free rate. Additionally, under GAAP, management records future installment premiums on financial guaranty insurance contracts covering non-homogeneous pools of assets based on the contractual term of the transaction, whereas for PVP purposes, management records an estimate of the future installment premiums the Company expects to receive, which may be based upon a shorter period of time than the contractual term of the transaction.
Actual installment premiums may differ from those estimated in the Company’s PVP calculation due to factors including, but not limited to, changes in foreign exchange rates, prepayment speeds, terminations, credit defaults or other factors that affect par outstanding or the ultimate maturity of an obligation.
Reconciliation of GWP to PVP (in millions) |
||||||||||||||||
|
|
Quarter Ended |
||||||||||||||
|
|
September 30, 2024 |
||||||||||||||
|
|
Public Finance |
|
Structured Finance |
|
|
||||||||||
|
|
|
|
Non - |
|
|
|
Non - |
|
Total |
||||||
GWP |
|
$ |
35 |
|
$ |
7 |
|
|
$ |
4 |
|
$ |
15 |
|
$ |
61 |
Less: Installment GWP and other GAAP adjustments (1) |
|
|
2 |
|
|
(1 |
) |
|
|
2 |
|
|
15 |
|
|
18 |
Upfront GWP |
|
|
33 |
|
|
8 |
|
|
|
2 |
|
|
— |
|
|
43 |
Plus: Installment premiums and other (2) |
|
|
1 |
|
|
2 |
|
|
|
3 |
|
|
14 |
|
|
20 |
PVP |
|
$ |
34 |
|
$ |
10 |
|
|
$ |
5 |
|
$ |
14 |
|
$ |
63 |
|
|
Quarter Ended |
||||||||||||||
|
|
September 30, 2023 |
||||||||||||||
|
|
Public Finance |
|
Structured Finance |
|
|
||||||||||
|
|
|
|
Non - |
|
|
|
Non - |
|
Total |
||||||
GWP |
|
$ |
29 |
|
$ |
(5 |
) |
|
$ |
15 |
|
$ |
1 |
|
$ |
40 |
Less: Installment GWP and other GAAP adjustments (1) |
|
|
6 |
|
|
(5 |
) |
|
|
15 |
|
|
1 |
|
|
17 |
Upfront GWP |
|
|
23 |
|
|
— |
|
|
|
— |
|
|
— |
|
|
23 |
Plus: Installment premiums and other (2) |
|
|
7 |
|
|
2 |
|
|
|
12 |
|
|
2 |
|
|
23 |
PVP |
|
$ |
30 |
|
$ |
2 |
|
|
$ |
12 |
|
$ |
2 |
|
$ |
46 |
________________________________________________ |
||
(1) |
Includes the present value of new business on installment policies discounted at the prescribed GAAP discount rates, GWP adjustments on existing installment policies due to changes in assumptions and other GAAP adjustments. |
|
(2) |
Includes the present value of future premiums and fees on new business paid in installments, discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than certain fixed-maturity securities such as Loss Mitigation Securities. Nine months 2023 also includes the present value of future premiums and fees associated with other guaranties written by the Company that, under GAAP, are accounted for under ASC 460, Guarantees. |
Conference Call and Webcast Information
The Company will host a conference call for investors at 8:00 a.m. Eastern Time (9:00 a.m. Atlantic Time) on Tuesday, November 12, 2024. The conference call will be available via live webcast in the Investor Information section of the Company’s website at AssuredGuaranty.com or by dialing 1-833-470-1428 (in the
A replay of the conference call will be available approximately three hours after the call ends. The webcast replay will be available for 90 days in the Investor Information section of the Company’s website at AssuredGuaranty.com and the telephone replay will be available for 30 days by dialing 1-866-813-9403 (in the
Please refer to Assured Guaranty’s September 30, 2024 Financial Supplement, which is posted on the Company's website at assuredguaranty.com/agldata, for more information on the Company’s financial guaranty portfolio, investment portfolio and other items. In addition, the Company is posting at assuredguaranty.com/presentations its “September 30, 2024 Equity Investor Presentation.”
The Company plans to post by early next week on its website at assuredguaranty.com/agldata the following:
-
“Public Finance Transactions in 3Q 2024,” which lists the
U.S. public finance new issues insured by the Company in third quarter 2024, and
- “Structured Finance Transactions at September 30, 2024,” which lists the Company’s structured finance exposure as of that date.
In addition, the Company will post on its website, when available, the Company’s separate-company subsidiary financial supplements and its “Fixed Income Presentation” for the current quarter. Those documents will be furnished to the Securities and Exchange Commission in a Current Report on Form 8-K.
Assured Guaranty Ltd. is a publicly traded (NYSE: AGO),
Cautionary Statement Regarding Forward-Looking Statements
Any forward-looking statements made in this press release reflect the Company’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Among factors that could cause actual results to differ adversely are:
(i) significant changes in inflation, interest rates, the world’s credit markets or segments thereof, credit spreads, foreign exchange rates or general economic conditions, including the possibility of a recession or stagflation; (ii) geopolitical risk, terrorism and political violence risk, including those arising out of Russia’s invasion of
Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are made as of November 11, 2024, and Assured Guaranty undertakes no obligation to update publicly or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241107954631/en/
Robert Tucker
Senior Managing Director, Investor Relations and Corporate Communications
212-339-0861
rtucker@agltd.com
Ashweeta Durani
Director, Media Relations
212-408-6042
adurani@agltd.com
Source: Assured Guaranty Ltd.
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