• Adjusted Book Value Per Share: $166.47, a record high at the end of the third quarter.
• Adjusted Operating Shareholders' Equity Per Share: $113.96, a record high at the end of the third quarter.
• Present Value of New Business Production (PVP): $281 million year-to-date, $32 million higher than the first three quarters of last year.
• Adjusted Operating Income: $5.80 per share year-to-date, 13% more than the first nine months of last year.
• Third Quarter Adjusted Operating Income: $130 million or $2.42 per share.
• Third Quarter Economic Loss Development: Benefit of $34 million.
• Deferred Premium Revenue: $3.8 billion.
• Net Investment Income: $82 million in the third quarter of 2024.
• Equity and Earnings from Alternative Investments: $28 million in the third quarter of 2024.
• Share Repurchases: 1.7 million shares for $131 million at an average price of $78.87 per share in the third quarter of 2024.
• Insurance Segment Adjusted Operating Income: $162 million in the third quarter of 2024.
• Asset Management Segment Contribution: $4 million in the third quarter of 2024.

• Warning! GuruFocus has detected 10 Warning Sign with AGO.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Assured Guaranty Ltd (NYSE:AGO) reported record highs in adjusted book value per share at $166.47 and adjusted operating shareholders' equity per share at $113.96.
• The company achieved strong new business production across its three market segments, with PVP reaching $281 million for the first three quarters of 2024, $32 million higher than the previous year.
• Assured Guaranty Ltd (NYSE:AGO) maintained its market leadership in municipal bond insurance, insuring 57% of all insured par sold year-to-date in the primary US municipal bond market.
• The merger of AGM into AG was completed, resulting in improved operating efficiency and better capital utilization, with no change to AG's ratings post-merger.
• The company continues to focus on capital management, repurchasing 10% of shares outstanding as of December 31, 2023, and targeting $500 million in share repurchases for next year.

Negative Points

• Third quarter 2024 adjusted operating income decreased to $130 million from $206 million in the third quarter of 2023, primarily due to the absence of a previous one-time gain.
• There was a $45 million increase in expected losses on certain UK regulated utilities downgraded to below investment grade.
• The company faces unresolved exposure related to technical difficulties in mediation, with a fair and consensual resolution yet to be achieved.
• Net investment income declined to $82 million in the third quarter of 2024 from $101 million in the third quarter of 2023, attributed to the portfolio of loss mitigation securities.
• The company is required by GAAP to apply probability weights to all possible scenarios, which may result in reporting a GAAP expected loss even if not expected in the most heavily weighted scenarios.

Q & A Highlights

Q: How do the developments with the UK utilities impact your capital management outlook for 2025, and does it affect the dividend capacity to the holding company? A: Dominic Frederico, President and CEO, stated that they expect to reach $500 million in share repurchases this year and next, indicating no impact on dividend capacity or the buyback program.

Q: Could you provide more context around the slightly lower insured par market penetration this quarter and your outlook for 2025 municipal issuance? A: Dominic Frederico, President and CEO, explained that insured penetration has been increasing year-to-year, with bond insurance being more recognized for its value. They expect issuance to remain high due to infrastructure investment needs, both domestically and internationally.

Q: What are your thoughts on the potential impact of the 15% Bermuda income tax rate on your corporate tax rate in 2025? A: Robert Bailenson, Chief Operating Officer, mentioned that they will begin using their tax benefit next year, expecting a slight decrease in the corporate tax rate in 2025.

Q: Can you provide more details on the UK water utilities, their revenue support, and protections against ultimate loss? A: Dominic Frederico, President and CEO, explained that these are essential services with monopoly status, requiring capital market access for investment. Their exposure is senior debt at the operating company level, with no principal payments due until 2037, allowing time to resolve issues.

Q: Regarding the UK water sector, how significant is the upcoming rate determination from the UK water regulator? A: Benjamin Rosenblum, CFO, noted that while the rate determination is important, they do not expect it to significantly change their numbers. They view the situation as a short-term issue requiring rate increases to support necessary capital investments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.