AGO - Earnings call transcript Q4 2021

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Operator

Good morning, and welcome to the Assured Guaranty Limited Fourth Quarter and Year-End 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Robert Tucker, Senior Managing Director, Investor Relations and Corporate Communications. Please go ahead sir.

Robert Tucker

thank quarter for financial and call. and for Assured results operator, fourth our year you, you joining all Guaranty conference Thank end XXXX presentation Harbor the Securities Today's Reform pursuant the Litigation XXXX. of Private Safe of Act made is provisions to statements forward-looking financial credit may spreads, our new loss affect items that reserves, financial our contain outlook, may business conditions, results. market presentation about The other future credit ratings, and results or to subject events. change due information new future are to or statements These on reliance revise them we Therefore, required you undue should to or place undertake not update by obligation them, as any not do as law. publicly except

If to GAAP since filings on transcript of financial recent the this of financial website non-GAAP for risk this factors. such most non-GAAP to the call. you may section our call, a please a filings, current call, financial today reading that Please current our at presentation most note refer to you're referenced are our measures listening directly financial equity financial Information present financial along presentation, We measures the website investor reconciliation non-GAAP in for in measures the measures. comparable statements This GAAP presentations a Investor to updated or of SEC and been are between replay and and made presentation if this our most also includes supplement with which references and assuredguaranty.com. the our have

call Chief Frederico, Officer. to today the Dominic and speakers presentation, President Chief we our to Turning Guaranty our remarks, questions. will After of Financial are Limited; Executive and the Rob your Bailenson, their open Officer Assured

into now like ask is call to turn not a enabled question. dial the if call you'd will webcast to Dominic. As the over I for Q&A, the please

Dominic Frederico

welcome and you, call. Thank to everyone today's joining Robert,

operating strategies deliver income, of during notable Assured new earned to Guaranty's results value adjusted of and year. to per We than in XXXX. many the shareholder we $X.XX loss all than and million XXXX income XX% share. adjusted combined outstanding to operating accomplishments per in had capital We highs. more doubled of more management We production, three mitigation measures insurance $XXX brought share our

direct new year, X%. to years X.XX% exceeded the With $XXX taking million, new of year public $XX.XX with of outstanding company finance to $XXX the structured increased issued a book we we industry totaled XX% million in and $XXX million U.S. grew markets, returned sold in financial Direct penetration share infrastructure decade share $XXX.XX. issue a XXXX XXXX to our than of business adjusted $XXX each holding of U.S. third to shareholders' at total of U.S. par more X% value penetration, PVP XX, from making almost $XX the per X.XX% of debt financial our in insurance production. to average best XX% and more PVP shareholders. Through rose share million million shares million XX% business direct average for interest of with a strong its in price dozen exceptionally of million with annual XX-year higher XX-year for XXXX, to the And million bond equity Those dividends, approximately operating We a shareholders total to the December coupons highest per X% low and XX% refinance common Over from per repurchases finance global $XXX $XX.XX. last XX.X our $XXX of XXXX. senior equity finance, $XXX an of addition market and repurchased shares years. production total or consecutive PVP of insured at a of ranging rates, a debt an generated million lead share than our $XX.XX. to international public three a new we compared advantage of guaranty Adjusted

service savings million the result, $X.X date. annual As will dollars a be debt through next maturity

Our our production public U.S. financial million PVP second in well $XXX its results. previous best of year's a direct across surpassed guarantee markets. by included diversified finance all at was decade, of production least the only

Our production direct marks million Global million of $XX million that of the $XX finance in that PVP $XX fourth international year sector. was of second exceeded infrastructure best out structure since the in five XXXX. PVP we've direct of last the PVP

billion reflected environment of of for municipal on partly exempt and higher opportunities both and economic the and a state deductions rates demand XXXX. amount tax during local bonds offered U.S. federal tax level. paper in $XXX challenges and markets tax at investors continued Issuance This increased Our XXXX. expectation par of limitations reached record in

Additionally to were bonds advantage eager interest of issuers past extremely low to at refinance municipal take the in issued higher rates. rates

growth a on just management investors. two experienced economic pandemic execute prior that the replace during rate higher has lasting by X.X% exempt of a which resulting Guaranty XX% to the that during also insured seen from of been already unpredictable increase in the volume risk claims minimal increase option have advance refundings by also and construct XXXX was table, XXXX past the onset X.X% market taxable of years XXXX. market over of most penetration to annual issued, We impression the insured We've year, tax a insured brought of indicates in X.X% market insured XX of to Assured made skills home in Total billion believe XXXX, exempt and of since years portfolio The reimbursed. tax disruption the the XXXX XX% increased the the the coupon caused up in the $XX.X With the heels that XXXX. a debt. this developments, increased XX% in turned COVID-XX and which from to has par par underwriting the many still to ph an off issuers pandemic, the on risk highest represented annual

annual as leading new the of since growth our in market share was XXXX this we production and behind XX% XX% over than insured insured XXXX. Guaranty's highest more issue sold in par XXXX, force Assured

insured the guarantee of new the such and one recent uniquely transactions billion in guarantee use our on of insured significant more has AA our S&P totaling in provide. in XXXX by value large $X.X continue than of indicates XX liquidity more in guarantee of generated or in stability from we of diversified launched of and billion up $X was billion in almost in Significantly, which and than largest of strategy. to some was relative municipal An bond more ensuring we par add transactions XX individual XXXX XXXX credits help important $XX volume XXXX. markets trend the with A Moody's, and of for been the insured launch both years Our dollars price transaction. can XXXX million underlying issues market XXXX, institutional on to each guarantee from We U.S. category $XXX XXX XX the transaction, demand more financial the growing par. part public our finance security, than our or largest forms ratings issue

when market throughout targets outside the the insurable Our finance times transactions and we another demonstrating one States, finance are business, it projects. both our or temporary us infrastructure in three shows structured higher markets. the Spanish and financings XXXX world. facilities, United strategy in healthcare power the great diversity in and UK and results of weaknesses, we helps all This pronged when also XXXX, like thriving education our of in years Further of guaranteed solar in drives three

as to extend company water UK liquidity a a with alternative an is facilities. which guarantee, a we worked developed we product Additionally, service bank reserve to debt unique

We of secondary also provided guarantees. number a market

Our business the Union. European previously which UK, was us the to business in historically do European based throughout allowed

we and active diverse where have they and continue been opportunities. plentiful believe long to We have

Paris left business asset insurance now grew their serve in in of which our structured of opened Our business important especially is institutions finance or A the further and originations Union, tools capitalization portfolios. effectively, to optimize UK more the provide XXXX, like with that its to an Europe subsidiary, European companies banks has XXXX. global part the we continental to

During the large and CLO guaranteed we year, increased securitizations, significantly our insurance activity.

trend net forward revenue, portfolio going future year for to in and the be stabilize deferred increase end years. of par portfolio of [ph] guarantees we structured uninsured increasing to earnings. across higher time requirements insured otherwise our investors business by increase in insured amount first many Our opportunities par we which and help our consumed the amount to investors new further our capital be discouraged The and new CLOs wrote and capital all finance more or might exposures existing markets both seeing help who continue believe the store premium attract CLOs, new We will us the are our will reduce grow of of by our enabled the investments. XXXX the

and turns Puerto are as this more in can executed. as risk years believe to figure have occurred business. credits investment portion the settlements X% insured year, that We continue twists than fall should restructuring certain the the progress below continued to and drop along After approved and for January Board's that [indiscernible] The X.X% portfolio year. Rico revision investment Puerto new occur we continue to the of related of our government, Puerto our the scheduled We court support of XXXX. declined other insured is grade creditors Almost Title write approved on of debt, portfolio reduce XX of below grade XXXX. of to March to grade and with central below the Court agreed and Oversight our continue in to half to investment expect net more of the Rico barely to of III XX, in of GO we our to restructuring the Commonwealth so as and to settlements December the which other Rico plan final do decisive with the this we pertaining

groundwork mid Government's result, Court to Rico such expected this that a debt March. III is for positioned awaited Oversight to island begin proceeding from its agreements that for other the the is The As latest Authority. fiscal certain well, Transportation also and All of bankruptcy stability, highways years additional the the Rico's Title according restructurings, long means consideration in as Puerto of for Puerto support unpaid is laid and of Commonwealth favorable plan. fiscal resolution Board's exit

significant made XXXX, also the financial the overall progress addition In asset business, for our towards success goals strong. to management in was investment our performance business guarantee we where in

participate obligation by were assets As issuance. collateralized to the record market well positioned we of under and one XX management, of managers level top in a the CLO loan reached

six earning selling and management, fee earning these to Through we substantially by new we funds, where more converted $XX efforts CLOs we fees. AUM by AUM than representing of in XXXX non-fee legacy had $X.X of issued all double the $XX in XXXX. what AssuredIM XXXX, billion During we management assets rebating launched CLO equity from been XXXX under to still million million held increased CLO in we management fees a

reset we continuation States XX in sector, the Europe. United and fund finance refinanced In and a the auto holding an closed CLOs asset we investment. Additionally, backed

was to healthcare continued portfolio Partners by grow Healthcare managed as the Additionally, Assured capital deployed.

much for resilience underwriting, value capital shareholders. disciplined higher rates drive value management our business model we provide delivering investors our the Looking the our careful year the proven help success our responsibility our and mitigation, back reliability The to bond first interest growing the loss this demand of rise. to view, tireless and to and and and to clients. on embodied guarantee heightened of financial believe while of other approach also in markets as reflected benefits Assured In security could protect risk financial strength financial and policyholders appreciation class strategic guarantees Guaranty's recognition service issuers we management the of create or

expect different in and to We market conditions be beyond of very those XXXX. XXXX from

the is Rising tend history. success credit and interest Fed strives better and to social positioned believe financial recedes, of Guaranty increase long-term volatility of for time continue extraordinary in to the federal governments developing widening the We COVID-XX our the any end to As spreads economic markets, prepare geopolitical inflation, for municipal impact the the support. events Assured and rates accompanying in than contain demand. disrupt guarantee

been strength our largely credit The has behind us. never stronger. in Our insured portfolio financial legacy are challenges

business turn our We Our our of decades over to policyholders, high clients exceptional, proven economic shareholders. forward of markets cycles. are our opportunities now fulfilling our through will call I expectations the and and large, diverse, the Rob. human capital look to model

Robert Bailenson

$X.XX came of I'm $X.XX XXXX call. Dominic, of certainty increased in value in you, of the quarter Thank settlement fourth the million particularly negotiation, from significant of adjusted on gross benefit Puerto to this Rico quarter is, adjusted to for income that fourth PREPA we recoveries Rico our to morning are settlement under over Rico insurance or expected the segment $XXX the mitigation of mitigation other Puerto was of XXX% a income improved adjusted quarter report associated efforts, increase billion good and our economic million $XXX with $XX GO, XXXX, and and income the our income from operating with loss everyone in quarter of exposure. per share. total The very quarter our $XXX increase per in and $XXX exposures. the was The to combined many increased XXXX. agreements, which the the output, strategies, was years fourth operating share, our loss fourth increased Puerto where the of million. actual of $X.X primary primary operating driver operating over After economic million million fourth PBA, were adjusted the resolving XXXX the drivers CCDA, Much pleased or close XXXX par benefit

to the In PREPA fourth of Salvage recoverables, contingent our GO the exposures, continued the and we resulting expected market the XXXX. of Puerto income earnings $XX assumptions prices the are Salvage proceeds the the maturity and funds well quarter the well that receiving investments, realizing Other was the and of million thereby also in from at value compared and instruments, AssuredIM environment, and project of on additional as $XXX investments, in the Total consists and $XX and equity in fourth million, bonds, in the of of with these value Subrogation forward Subrogation of sold million XXXX. recoveries funds we instruments XXXX, $XXX large Puerto the Collectively, investments recovery of sell in from recoverable, and alternative a we our and PBA investment on increased fourth and investees early. of the in with million. investment for matured earnings reflected interest in some in PREPA XXXX, fixed of XXXX, settlements. observed value mainly investments in associated in a certain on remaining The of of $XX quarter portfolio, quarter million updated to recoveries a components equity Rico net AssuredIM other with and the During GO, the segment which fourth similar proceeds our Rico performed rate of insurance fourth portion fund. quarter quarter fair gain income portions resulting of which and generated we pricing private of attributable in as alternative crystallized increase other specific equity a $XXX various million XXXX

the income other maturity movements fixed and net earnings function than alternative and period the a reminder, period. investees to attributable mark equity investments. a will fluctuate on the to is AssuredIM investment from funds volatile and more As of is market of It to portfolio

short-term the account million portion quarter largest the of with generating income the for and XXXX. fourth $XX fourth portfolio, net in of of maturity $XX investments the quarter in investment million XXXX, of fixed Our compared

we fixed investments, maturities net income from assets maturity As alternative may shift into decline. investment fixed

maturity fixed the on our over long over enhanced alternative exceeds investment projected returns returns on which portfolio. the we targeting of However, XX%, are portfolio the term,

in operating XXXX of Asset $XX right-of-use In a the million transactions primarily million due of decreased compared earned refundings nonrecurring increased quarter adjusted two in Asset the million when quarter to Management million. XXXX million in launched fourth $XX is the XXXX strategies in the with dollars terms XXXX Management large fourth segment the in $XX were premiums of of in with impairment improvement fourth loss $X XXXX. fourth quarter was of of lease acquisition and compared The million, with attributable BlueMountain million of quarter earnings fourth premiums fees since and management Premium of slightly refunded. the XXXX. compared and to The to we XXXX XXXX the scheduled fourth asset quarter results in segment net terminations $XX quarter $XX $XX

a Asset XXXX of the more fees the opportunity CLOs million distributions the Management decrease continued. fees fourth Higher in in fourth $XX investors in funds fees from healthcare from than basis million $XX were on segment with quarter of quarter compared and offset wind-down as funds XXXX. to

only quarter full execution initiatives. on includes effective of uncertain are million tax operating Despite the extinguishment period quarter of successful debt of strategic December included of adjusted year XX.X% finance adjusted in XXXX, of tax $XXX benefit finance $XXX in XX.X% U.S. As XXXX. primarily compared the achievements benefit overall to of million reflected RMBS compared exposures. million, million of of for jurisdictions. exposures operating of in on pre-tax the the income RMBs operating $XXX $XXX our a includes earlier U.S. Insurance the for XXXX. adjusted loss of revenue for segment XXXX and $XX with December operating of that XXXX adjusted a in income public with The a public $X.X from The the $XXX the represents XXXX loss U.S. of increase income XX% primarily to fourth million period total Insurance driver XXXX exposures year was with off the which is was adjusted XXXX million benefited U.S. year I million income with portfolio. consists which assumptions expense adjusted In The portfolio compared component and or as with income Asset investment XXXX, $XXX fourth tax. XX, effective rate the investment of positions. XXXX. excludes Puerto based the full benefit extinguishment the returns home across a $XXX of was operating million million operating benefit price segment. XXXX in release business, the The recovery AUM portfolio rate $XXX earning an Puerto in of compared $XXX was effects of the in a XXXX, fee attributable for in debt portion our after which deferred was not appreciation. Management $XXX charge, tax Economic a an segment, premium Loss Rico as million from million income demonstrates advisor wind-down full function reserve important was of AssuredIM compared mentioned with increased this These benefits a development, primarily million, $XXX quarter funds million of million. primary the funds in the in Insurance On a segment, investment fourth which Overall our on the on as million, whole and but basis, XXXX of of XX, XXXX proportion the income fluctuates capped the $XXX an $XXX Rico. tax income a of invested different was of year increase

in XXXX, available fixed Management in maturity yields, X.XX% drivers fixed $XX [ph] of million expenses basis, acceleration minimum funds $XXX of These $XXX which In the million $XXX in mentioned earlier. CLO, third $XX occurred new balances liquidate division portfolio, and on financed and proceeds of redemptions year, $XX to all particularly reduction Management XX-year revenues income extinguishment million. or debt, debt AUM XX-year through was CLOs which AssuredIM our which average of in with decline to a gains a offset two in million $XX including tax The opportunity were debt net gains healthcare $XXX Asset $XX reduced from in earning wind-down charge healthcare, million million in gains reinvestment year-over-year resulted increase have debt the prior in XXXX. we which the equity the CLO with asset was from after loss adjusted including the funds. generated and Higher $XXX $XX operating strategies, the million compared million Lower asset based would issuance of management additional more in also year-to-date the time. The XXXX, than XXXX, in $XX X.XX%, respectively. driven accelerations XXXX funds. million from Asset redeemed in corporate and million over than loss million million new which CLOs loss and of resulted increase raised in the credit generated securities in needs. from CLO that fund generated primarily make $XXX Dominic the fees compared down of attributable to mitigation an investments from of were XXXX to Total gains This $XXX $XXX sale loss capital premiums on X.X third division $XXX is million debt late funds to alternative of opportunity adjusted the debt in capital legacy in variance. the new compared with the were to healthcare, in XXXX the $XXX in $XX income party an portfolio, in our The late XXXX. in more XXXX. and and gains have primary to $XXX raised continued return we base, attributable in XXXX across of party XXXX, wind-down with of invest, subsidiaries Other out million investment The from insurance million redemptions sell offset XXXX. on continue funds party billion XX.X%. loss million million coupon segment $XXX million were premium was in in from CLOs an increase maturity $XX [ph] in average million the the to XXXX, fees assets XXXX. and funds and the third strategies. improvement XXXX, a in had The fees great operating XXXX simply In and operating in XXXX. progress the segment, We in We that issuance primarily and was from fee in fees of in in on corporate reduced debt refinancing launched of million million,

shares expenses of X.X helps of per this addition million date, of an repurchase next Directors per all the standpoint, to per In benefit drive price our We adjusted to shareholders holding this provided book program, savings year From to program beginning over companies new $XX.XX generated of reduction share AGL. the affecting year. The interest leverage, operating under in outstanding. additional initiatives refinancing continued XXXX XXXX. repurchase book for represents share metrics service which of resulting shares without returned the for million. $XXX million in total of until coverage at equity we quarter $XX XX% debt $X.X in or or use Since January the debt an additional $XX or shares. maturity capital. used shareholders outstanding the Subsequent of this debt for purchases and an the needs, manage repurchased this authorized purchase shares. $XXX these to to in This The cash for approximately million were metrics and our to at of full were ratios. shares in of proceeds we was its adjusted of record these share. program value of available of pursuit value is of million $XX The to our in XX.X $X.X additional shares we drive helped share the which resides total now XX% has have $XXX XXXX our to shares company significantly investments million, accomplish the success the repurchased common $XXX million flexibility up the annual liquidity a primarily cumulative of week, shares repurchases strategic a share of close, XXX which quarter $XXX repurchases. December common record share, million billion to for highs beginning Under to have as debt continue In the fourth XX, currently brings a million, million our XXXX, of repurchases. able average and the Board repurchase million expand of per liquidity effect of and authorizations, in the or business highs. This the previous for authorized either funds are These to million X.X XXX

declared of In of of share. of which dividend per XX.X% dividend increase addition, share, $X.XX $X.XX we previous a the per represents an

insurance exposure, turn are the will operator single over that look towards strategic goals. will more I new interest to the we XXXX conducive optimistic now end instructions our beyond, Asset its the call continue we that Management and segment progress company's the you substantially period. this Q&A to Thank and largest Alternative year. As our of Rico, The BIG Asset Puerto environment strategies will to the will to for be contribute production, to by business give resolved be rate the to you. long-term and

Operator

go McJoynt-Griffith comes KBW. [Operator Please Thank our Instructions] Thomas ahead. today first And question you. at from

Thomas McJoynt-Griffith

morning, good morning. this taking for my questions Thanks Hey, here guys.

portfolio in exposure So at would be that risk international does any potentially insurance Eastern first, an have the areas ongoing of to Europe? conflict

Dominic Frederico

No, do small and we but have no exposure We the Ukraine Hungary, in have to exposure vastly amortizing. Russia. it's or it's

Thomas McJoynt-Griffith

I then have next few value Okay, questions that. thanks around instrument. a And contingent clarifying the

unfinalized based those through fiscal outlooks pieces? the And related then receiving second, the Can well already with as CVIs CVI actual walk get tax future of or receipts contemplated as things So does settlements? are market the CVI there? received you it quarter the the like just marks on every first, kind updated that in that in have is were Puerto you Rico of to

Dominic Frederico

and the So, receive are remember being but in on obligation general future not actually CVI received one XX. with related any first credits, number all would restructurings yet, one, those so starting still we've we the the instruments March

know, is many many, volumes sales long over CVI It's duration predicated on the instrument. years. You a tax

relative is, of to expectations think add. to got assessment make might performance you've So that current any what and you value future you other an present

So view to as already is early will number mark benchmarks value. investment revenue. solid of solid a the for on that that Obviously, based exceeded long-term or the we know substantially relative is obviously, that a value. fluctuate mark returning they've And -- number we think security they

Thomas McJoynt-Griffith

And March you'd the monetization, how did that the immediately? monetize are you that in quarter, XX, receive now? you to also, CVI again it satisfied thanks. you be to Okay, satisfied do there claims And do fourth claims of the the fully be come quarter able when monetize first the speaking same fully in and much able will additional

Dominic Frederico

Okay, questions. so are these complicated

So XX principle driving allowed exposure, you know of to risk It that's strategy relative transportation management bonds fairly we or when the to the so have right coming that's on us Puerto to at not the you to and was opportunities a into Rico news, as obligation. the monetize substantial balances do and we that us receive the related the structure, security to we manage as of so obligations credits relative settle to have, terms we really those you one. be sold existing the convert exposure looked It better around able this marketplace, have based obviously also to into kind of to March allowed Puerto old be can for some It's Rico. in cash benchmark to have have the monetization, the a it of our to And number all general of settlement expected value. view a value.

in in first can't question, And really time, at terms lot Your uncertainty obviously there's second question. we still value. point this of of a then

CVI, as things further prices market watch, that start the These that have issued, are to what and manage on rates, marketplace to the unrest. opportunities we and trade the we see and In the but it soon will future, relates as have variables continue variables geopolitical hope with monitor, we will in terms are to as the these really demand available. in of variables; based the security of interest it's you all that of you unfolding

in You Rico, to Puerto of terms of pay. perception their of have variables market’s willingness

best securities to the value. to is you’re is is value that So, provide, these dictate the will willing the there’s that market in the issued a of air are established. lot once and going obviously, ultimately market balls the have, But one

Robert Bailenson

add March our were going fourth this first and subrogation what and get will consummated, of CBI consists new mean this quarter, GO XX we I sold just Tommy is when me to include rights Let that which quarter on cash. when we quarter, bonds, that

So, that paid. we XX, March so been actually in getting has the sold before subrogation those that we we rights have to par extent them are

over say rough we $X.X those on will billion effectively, of new March subrogation CBI, and So CBIs will and economic an them And then selling execute been look benefit through selling bonds XX, numbers, our additional, rights. time. our and and recovery cash, maximize we get we've to sell

Thomas McJoynt-Griffith

year? yes, then or And the to timeline? timing actions this acquisitions timelines most the actual resolution know expected strategic of that that like likely special throughout and that sense. into little dividends year. actions by do tune the the put factor through any make mentioned a then resolved you you for how walk Puerto And you will finer of capital such Rico the HTA as Right, on could be lastly, you just just I Can end expect PREPA?

Dominic Frederico

the Rico. to get Puerto timelines Let's of

that to these the of expect March, slide, are as seen happening end been general dates So, of it have obligation, and the could we've really the that doesn't obviously, year. done by course, we now in could get and

significant to see drag on current company we've start on of gets general capital perception, to provides our kind which to drags transportation between So, year. quarter quarter, the the we but this it's burden, the further of that the end opportunities, that little realize been been fourth principally the to around because you not And accelerate least transportation, on management opportunity bit expect by benefit is can and free then for third capital the of a mediation, that's once re-engage we think of and relative fourth to we look dividends based third economic perceived on a saw management right, doing. we quarter, but our at that special resolution. PREPA, immediate the reality as settlements you're expectation then request value be predominantly resolved a you still back, at it obligation, obviously PREPA in then it and quarter we're for us maybe people's

us So, legal opportunities Puerto up as rear-view the behind the we in host cetera, of mirror, process of it pointed believe still which having finally opens but there, technicalities get as a out. the et we whole Rico for have economically we Rob us is through go to the of exchange,

Thomas McJoynt-Griffith

Okay. appreciate the all I comments.

Dominic Frederico

No problem.

Operator

comes Jackie [ph] question go ahead. and gentlemen, [indiscernible]. next Ladies Please from our

Unidentified Analyst

me hear you guys. Hi, Can okay?

Robert Bailenson

hi Yes, Jackie.

Dominic Frederico

are How Jackie. you? Hi,

Unidentified Analyst

so good. quick time Hi, for your guys. had morning. just Thank two I questions. I’m this you much

but sold, redeployment I’m One the are I you kind that you assets Is just that claims think proceed capital that withheld available March what on for the on answered, Dominic satisfy be of will but sold, that the them XX. supplicated have expect you the to for not of the might assuming indicated?

Dominic Frederico

Yes.

Unidentified Analyst

Okay.

that now. So, in shouldn't as be excess we penciling cash

Dominic Frederico

CBI. of significant a the the bonds get where and new on the cash event have We bonds, we settling liquidity the the old

to So, second. we got pay first, we receive before

So, this allows…

Unidentified Analyst

it. Got

Dominic Frederico

basically in to responsibility. cash. us for took some opportunities cash These that sales that short-term We further alleviate the form the of to portfolio allow

Unidentified Analyst

Okay, great. then just, sorry… And

Robert Bailenson

why want just we respect you're analysis that, reserves. higher Rican reserve than remember and I values Puerto we that's subrogation our those just significant to to at rights benefit Jackie seeing our with also significantly sold a to expected add

Unidentified Analyst

Right.

on we my Puerto of that reflection full correct? sat So, benefit that be the where that sales, expectation question those reserves, second we Rico the that to of just Rob, so XX, a was the saw not for is that's going December incorporates

Robert Bailenson

we March adjustments, we also and sensitivities that’s us to the rate related The judge appropriate then It's in plan the taken the looked as other all at and look put happened and we and you in that's Puerto at reflection that possible at loss getting accepted that with instructs future, benchmark PREPA a at all a a our interest news correct. the are we’re the we to Yes, quarter. into extrapolate know exposures. at couple Rico. at that we the scenarios We account adjustment. We of coming, look this it of and XX fact transportation sort on We GOs look as things. looked inflation all reserves of that of look that or then, respect to

Unidentified Analyst

when you And over in then, benchmarks anticipate, times coming rising we the may Dominic, whether now just back this would the seen anticipate Great. to years, know some know on actually some XX-year, then it's the seeing that and of about to you are I market in just I think size? business rates key you terms you refresh demand talked really also on we've And be to what I many production new could Fed, that maybe but start XX-year? watch municipalities in strong spreads, our but like really you've both memory already, the it's terms pretty would of, see

Dominic Frederico

long rates look to finally importantly, of to been back to overall the rising is more Well, Jackie, But interest which your rates, to it treasury. and the actually on predicting we as the irrespective because come is well because kind We aggregate, business remember, at widens rise, but look rates. economic aggregate. markets But of the XXXX, of and realization. predominantly to question they're awaited as the interest credit percentage related, came interest may condition credit fruition it we've starting a be going answer at, global spreads the surrounding that what uncertainty is the rate rates political uncertainty, typically creates an one the opportunity widen obviously, our one XX-year for of environment,

a kind but as our XX-year benchmark look have at. rate biggest of since the call bonds most we of So, XX-year key at uncertainty the the driver, on a look of them. treasury That's kind we that is

in use at grow investor. and starting the insurance obviously of we acceptance institutional across markets look seen the the our the you've anyway as of that movement rate, So, penetration potential the to relative to

believe interest not if we rates opportunities. exacerbates, the rise in that those further enhances, So,

So, whereas calculation. we treasury overall inflation, whereas then XX-year things into because where the all rates other geopolitical the the and is watch recession, surrounding the kind feed of versus economic those overall, spreads environment growth

Unidentified Analyst

it Got really think it. your demand Dominic, in And is more sliding number in is a is step head, function a scale? change there or it where a you

Dominic Frederico

that Jackie, I’ve I number you sliding been years. can’t how you. many for tell

X% a place how now you can probably, right X-year, XX-year X-year or treasury. So,

Unidentified Analyst

it. Got

ask. Okay, thanks. I do I figured I'd wanted that, but to

Dominic Frederico

there Jackie, along a and need going able will to market remember, rates, of has they'll all refinancing us. comparable obviously to need they’re feed to for would gotten a A only use panacea. experience. get used relative news great the enhance terms way to a curve substantially But market rising opportunity market is growth significantly than what currently which very movements we Yes. think the it very on kind we in book, Remember, it's Obviously, to different we demand. so to they’re low that X-year, at XX-year would continue be that the is and it’s be to a Right? treasury insurance, more different production

Unidentified Analyst

you, it. Great. for really all doing Hope guys Thank your well. appreciate you time. I are

Robert Bailenson

Jackie. you, Thank

Dominic Frederico

you. Thank

Operator

Simple, investor. ahead. today the a comes question from go private Please And next Michael

Unidentified Analyst

morning, Good and congratulations. gentlemen,

Robert Bailenson

Mike. you, Thank

Unidentified Analyst

Yes, few questions. a

beyond you what didn't I'm you debt fund additional raise that if opted route you how affected company previous buyback rather instead In repurchase. in noted just this special curious, year your holding go right. And $XXX a that for do refinancing and as maybe refinanced that go last that affected the which dividend? share million an and a to I'm that which went appears was curious. special dividend a million, just so, decade, You of have of request in buyback I the by the And your was it towards your and bond traditional additional instance, regulators. share to from QX correct? you $XXX raise annual that route but than to request motivated above for

Dominic Frederico

a great Michael. question, It's

a regulators the one company. of special at dividend look we on is of and with obviously, is but dividend, of regulators special view really predicated things, the our lot that things the the the So relationship

us from performance that the we'd spectrum would So didn't across uncertainty issues though on in company to and broad chins a and state, we wiser to I obviously, because get thought worry COVID, Rico, out walk kind they much still to kind of, then really have even the going well, for whenever not say, significant about. just and you be hands, delay we there nod heads worry the so where a COVID of but room. of and impact they're grapple that to it the that insured our supposed other their point of to rub to companies Puerto sit terms states smarter the shake of with their about, other the of portfolio, be as the a let go have this

behind better and Puerto hopefully really dividend more us, the we approval would a special of and be us position lot with So both Rico feel the with think in any COVID lot state behind request. a comfortable

of to probably dividend your last obviously, two sorry. had than we means more found our to years, I'm So special we that. capital other accomplish goals a request go obviously still the management And in point, ahead, Bob, haven't and

Robert Bailenson

ahead, now. go I'm sorry, finish

Dominic Frederico

think therefore, we was going can think that our finally as a I Special out, to XXXX, COVID going goals to speak, to to opportunities burn said, get also Rico, we still and in we And we I for to just to great without said, enhance rest dividend. a capital have through Then the position the Puerto books back dividend finally I management. accomplish as say special the as obviously a relative us normal further be request so that lifestyle. look year, resolve leave our and off would of we're we specific go

Robert Bailenson

XX leverage significantly we And where And cost second of And curve remain refinancings, coverage we rates saw cheapest we addition first year. And third and saves our which ratios looking execute executing ratios XX-year call. and as us what were at capital at we our on the and one, and very money want looked and at one. very at to and capital could or increased makeup and the always we -- debt of of didn't in it your XXX didn't the our that capital Michael, strong. last cost our small, stated about increase to lowered get XX-year the XXX by your our in year we significantly the you're

that out as was changing very that funds move to by without very use for go a strategic the excess and ratios. So those company it and and management opportunistic execute capital

Unidentified Analyst

such issue so mean, I you chose No, debt. in of perfect time Understood. amount the hindsight, to

questions. that. on other couple congratulations A So of

know wonder As rate benefits just speak, trends indicated is you once maybe that were reach marked profitability to I'm that rate have I losses previous portfolio, behind going in as And guidance. like revenue, the, QX, the so that credit run the to that just are I to finally, the to do expect year. one-time able guidance you that the next to you to alternative that returns provide run wondering until what provide platform of performance turmoil you improving didn't year? But into think with you you perhaps back the while listen are the profitability does that's meaningful be and the all get had pushed if and all you provided I and were to good. to could look in to Assured call where you finally at can cross threshold QX well markets date? the we stage of put this

Dominic Frederico

Okay.

of all of operation. huge at firm, And contribution So boundaries the across asset to we in on think said it specific as I look made progress positive that tremendous if net terms call, us. we the management, a we it's total to

through worthwhile able help that been there to our substantial it having returns the with of therefore benefit to to been and really proposition. investments the So we've make alternative management has the a own and ability do that the realize

end look the that million the lost and operations itself, to quarter depreciation amortization. of includes we remember, in $X and We still you the thought If by year. this get breakeven we'd to able at be

you management asset in to we the number And what's Number public we got sauce the AUM this look obviously, cash is year. grew expenses other being fixed we made AUM enhance the two, our if at against terms of the grow turning got One, So one. two growth in cash, relative positive, in not company really We've XXXX. on to that plans a corner there things. further to secret public AUM have in space. it's still

of relative any XXXX, and Number legacy hopefully end if So we no the funds. is two, of legacy that help funds equation of and the distraction longer profitability. should expense the with will the have the by

So get legacy to that to I will business. has profitable that's more us. of investments think turn and growth hugely getting use own rid our as a the been of scale assets it and continued And of the scale. of alternative the We profitability, need for manager funds a beneficial

we to be look further them increase of the you we'll strategies there's get new as and asset direction. got you we we at the those uncertainty for get very provide we and fee XXXX, the more as able a of we've going get classes are scale operations and lot comfortable to propositions result. on Once the execute to So launch positive new and breadth management performance, as But obviously, expectations. a further beginning to them, through

Robert Bailenson

the I'm I Michael, that just I might want Group. getting add to for text something said have incorrectly.

a increase. dividend to said we of remember be Thanks. per was and So share. per just XX.X% declared a $X.XX, -- $X.XX $X.XX it's If but $X.XX share, previous the dividend clear, share, over we I it, I don't saying per last

Unidentified Analyst

final one just you the followup question, of team. a the had Putnam question then And from to sort

in wider of you? for for underwriting for that and where theoretically spread a clearly new win win a think terms issuance In an much it's the spreads spreads. is XX figure them basis an you you choosing enhanced and that the environment that with run-up in are as issue rates arbitrary work in interest again, assumption credit in the us points the given can how basis points it's issuers, XX wider where of Let space, widening capture do new just

Dominic Frederico

good Well, that's another question.

So which the captured business, remember, you companies the the debt if rate, there when spread, you AAA premium is seven for you to back is competing think our our of go times premium for percentage about it, purposes. And a if typically service. were

when of your a so of the have the what spreads calculation then, for course, to goes rates, able of and increase hey, increases which basis also widening and spreads you it's you're a So widening up, win-win. chart, and

and XX% XX% Today, getting say, you the we to the of XXXX, So if say, you XX% get spread. were between XX% maybe spread. between back of anywhere and go XXXX,

and entire math across you relative you to spectrum, XX the of do spread okay basis I good of X, goes your if that's that the can what Y, increase XX and of points, idea So points basis is capture get basis debt up on XX% service can points, means It's the debt is say, par a average if service number. an XX the premium. that

Operator

[indiscernible] next comes you. Thank today our and question Jonathan with Deutsche from Please gentlemen, go Ladies Bank. ahead.

Unidentified Analyst

Yes, Thanks good the morning taking guys. question. for

So liability more I go just the time. want management to to debt one back

had obviously coupons, XXXX interest your good expense that guys very success lower. the So getting lowering you with in

a preferred language. securities of LIBOR have number still contingent lack outstanding that You fallback modern

in the with LIBOR things is two, management So language in around you LIBOR out do or deal those do I debt question additional And plans those coupons to to see on if the one, on not, my part; securities any then do you have guess XXXX liability securities? two half perhaps address the playing of how back language?

Dominic Frederico

Well, every time we end date a be of continues the extended. see to LIBOR

I it two, that security we'll So as financing hold number is. cheap. contingent And guess incredibly the is

a working So legal other very this the capital. form cheap of language, logistics the around LIBOR is than of

Robert Bailenson

per point at this Yes, form of rating perpetual, dollar agencies. cheapest it's it's it's our capital and for credit and dollar the

Dominic Frederico

what debt going to refinance to there, Rob, and…? XXX look still out any percentage we're we some Yes, X more got

Robert Bailenson

have XXXX. due that's we coming $XXX in million Yes,

Unidentified Analyst

thank Great, you.

Dominic Frederico

You are welcome.

Operator

ahead. today And Geoffrey our comes next from question at Please Dowling. Dunn go

Geoffrey Dunn

Thanks, good morning.

Dominic Frederico

Geoff. Hey,

Robert Bailenson

Geoff. Hi

Geoffrey Dunn

were some off asset basis, becomes that and the XX, management year a Puerto is forward headwind when about big we business ago. to kind posting new obviously, liability can and and to management business a fast management, and back way maybe we is GAAP single-digit then a and story manage, you're Rico If going residual the digit. have the ROEs XX underlying on assets side you of assume the then capital double years is And the things capital FG

ROEs is what else run the management past financial us back kind So credit idea, try be how mini Dominic, get anything to an to help you business excess point that to rough rightsizing you headwind? platform, there, question us you need targeted that underlying the guarantee and of of get of can triangulate largely us is a of the idea help should really can and be what to and the going once business

Dominic Frederico

my it my probably about will question. I'll because shake answer must, I'll Hi shot all if of give Geoff, get question and a complicated be I head that's a concerned as stand say. lot I best you what this

me let a you commercial. give So first

We've had day we So my play public. to the in as follows. commercial is company this went defense since

split rated, we If you of smallest were company out think market minimum us share us. it a market share. the there. guarantee for in We to about Moody's XXXX financial were were we struggling gave upgrade

three So We to recognition think finally we get we remember which had. get the acceptance. was years can't but I else break it struggled everybody finally those in early XXXX, through, I all date, exact and AAAs, and

crisis. taken So we're away with us it financial the gets of three because on from platform and in a now competing months them,

doom we're and even huge had believed we obviously, better day, in we to of which get Assured everybody So at how of we them. knows because our the now a ability trust where than me, our the books and knew around Guaranty, us, our books course, knew we else knew expectation of into the of crisis financial confidence the where company we had and full exposures nobody knew the anybody end the though better of

that So of for we a fight number years.

that new but competitors our that companies we a So advantage X.X own of very marketplace. writing bought very it. took our at in behind business We I we included really finally, discounts, said, bought portfolio us. got the enhanced created we We impaired steep okay, a earnings, plus

not definition, of impossible. could you it's that the by So volume replace earnings,

we basically survivor Puerto okay, we and in We're fight survivor. the what the declares taking And got we're have. people the guys advantage to that with fight. get don't that Rico of say, anyway, bankruptcies. we're happens, We We're plan. one finally the other being companies' You've have market. X.X problems impaired to proving through the writing going company portfolios But

So here Puerto we are $X.X billion exposure again, of back in to a Rico. with fireside

then we basically okay, We though and didn't So we the criticisms said, us, to and going our Puerto those much a got had thing Puerto what have be us Rico we'll get that of we market of exposure, defeated even have was see I premiums now fine, we did but recapture this pandemic. okay, because think Rico the actually too to take the that behind a economically lot for. hit doing believe we've it that by we to to finally, benefit, and paid as through came that fight. fight what think always still got well We're surprise. happens, a it's acquisitions back pleasant very net-net by the And analysis we then going we

battle entire So a time. we been say we've XXXX, the so okay, from in

diversified mirror finely obligations of all withstood many look because with at pandemic XXXX, well of of our to the natural looking settlements like it's and it's a Rico matter test have very pandemics. the agreed portfolio resolving, I disasters, much structured, that our Puerto which had and already just is As in them rearview across been the of execution, recessions,

can we for So offensive on go feel we that confident really defensive. the once and now not

billion being part people people had when because got doom very as excess defensive, in of balance they're nuts, capital they'd of were capital cushion Now predicting their going a and We rid those these Rico. gloom. years, to they've had if large kept we $X.X you of to. And say, we were Puerto addressing get

to what? hands. You going organization. manage be allowed off Well, tied. are hands were The to couldn't, coming our times your guess the aggressively We're

get us will the the of two while in the moving R management enhancing support legacy best we're asset B can, you yet. as organization we really portfolios challenges things, the right But and market on doing. ROE, in A, what haven’t as key, nail XXXX we're management on the asset in that. well to the So the which that strategies one hit new is is head, on growth rid further We've the way coming are we the got announced

management. finance we're So through on ARPU guarantee and working the asset

the X go course recipe interest take our you and becomes like we X find out reserves to our today's you you capital ourselves. innovate excess regular or environment, a the double-digits if rate which were back really it's E, biggest the and continues competitive the Now in excess obviously our the Do really take in get capital, driver. and of and you'll bad ROE is transactions can a E we pricing Well, high out ROE on is with not episodic basis had done. number,

move no that's well, when of challenged, working the the I objective see we we've to that you R, never to We're evaluation do to therefore going organization. for the the E company because look then an the to of company, at equity this managed of in if set And different but hard look and excess goal, really the had at drop I fail other strategies we hard can as it the past, that be please we're to and get get ROE a that's going this typically be objective. cost whether can the need, enhance we've So done. opportunity had our if to company's performance manage those was

Geoffrey Dunn

excess over AAA? last and remind, was S&P what July, Okay, the modeling against you full last And… under can estimate capital year the

Dominic Frederico

sorry was it $X.X XXXX, it Geoff, billion. I'm was

Robert Bailenson

underlying double-digit guarantee a to business the is that And say financial return far? fair so

Dominic Frederico

very the have very, do If you, every [indiscernible] we our the they to on I results but year. I'd told calculate positive. We for summary shoot as transaction exact you are

Geoffrey Dunn

you. thank Okay,

Dominic Frederico

You are welcome.

Operator

ladies the like and this session. And question-and-answer Tucker I'd to remarks. Robert gentlemen, back concludes turn over to for call the closing

Robert Tucker

operator. like on joining call. to thank today's everybody you, I'd for us Thank

additional give please If you a to Thank questions, have very call. us feel you much. free

Robert Tucker

today's all attending presentation. Thank We thank you today's call. conference you. This for concludes

lines now may You disconnect a wonderful your have day. and

Assured Guaranty (AGO) 25 Feb 222021 Q4 Earnings call transcript