- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the Assured Guaranty Ltd.

Third Quarter 2022 Earnings Conference Call. My name is Bailey and I'll be the operator for today's call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to our host, Robert Tucker, Senior Managing Director, Investor Relations and Corporate Communications. ahead. go Please

Robert Tucker

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

you you're call. filings, listening presentations of the risk have for to a this website the replay updated transcript today of If Investor Information SEC are the recent to refer our our please most this that for since and made current our are filings financial and been most of may statements factors. reading Please call, note section if call, the

are this current at financial which investor in Turning measures in most referenced directly financial also this and financial the financial on such along includes assuredguaranty.com. GAAP financial our GAAP presentation supplement equity present reconciliation to between measures the measures non-GAAP presentation, measures. comparable the references with our website to presentation, We and non-GAAP non-GAAP a to presentation,

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

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

Dominic Frederico

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

X continue XXXX. during of shareholder first Assured of months to and quarter build Guaranty We value the third

As share with share adjusted of third XXX% and periods. both value the $XXX.XX year's Guaranty's of $X.XX Adjusted XXXX, $X.XX per income operating for compared adjusted and of last respectively, per $XX.XX were the first equity share months per XX, quarter operating book of Assured record and represented and September shareholders' X for XX%, highs. of increases

pandemic, in climate-related first benchmark tendered the over dramatically unpredictability reminded geopolitical global investments. have somewhat have Municipal their yields, risen geo the volatility at the spreads course was PVP our far XX-year year, business to investors New production strong third so quarter substantially this with half been so and in Credit continue same economy, in quarter the best continued with X.X%. in This and third to the of the our been the yield quarter best We bonds third third climb year. of this $XX year. of public remain they year's value and widened natural quarter the the in markets of of the in the market year last be for quarter more permanent the over had third of as million than the bond its vulnerabilities decade. shift which there's of finance as the in and proposition quarter and greater the best finance public although decade, typical a AAA our past in have finishing a in disasters toward a international second appreciation U.S. believe

rates. the year, past year's. drive year fewer where have issue rates interest volumes total are interest spreads high not refundings There been years pace increases U.S. kept bond new has helped municipal facts, this credit While in issuance during promising last and widening volume with of have ultra-low refundings

curtailed in been reduced billion insured the bond issuance has consecutive of net first this X volume, volume $XX funds year with Even demand was by the third from which year-to-date market months. outflow and approximately the during $XX in EPS. municipal Additionally, primary billion exceeded the

to issued, to You'd to in At for volume. over back higher see quarters. penetration three a highest go industry was of X.X% the a second first insured the XXXX have the decade rate part

first For we bond lower of than secondary XXXX Assured three some X-month market in any wrote for in impact our first municipal more In period offset the of of Guaranty insured year-to-date, market, last issuance. secondary strong demand overall insurance par of the the decade. quarters

the of compared potential position last in valuable Our that the purchased returns. we've reflected of year's volume more uninsured times the to investors than primary position market, first under market of our of as $X.X the through sign insured which With XX the a should fundamental come is likely has Holders guaranty believe it to of stabilize security to demand totaled opportunities because and the been quarters. have bonds the stress. other market, be market is seeking primary par three that we fewer may also in insurance benefits billion secondary bonds in credit the secondary insured want evident financial uninsured

Our secondary market and command policies important have contribution to year. strong premiums our comparatively PVP an made higher this

sold at we each XXXX. decade. primary million during of have approximately last largest any insured public the first transactions In all in billion bond the remains par. the least from of year during of amount of X the Guaranty insured for billion, $XXX U.S. included the our months $X.X and was first par XX leader ensuring XX% insured This that third involved X the finance months insured market market total, $XX.X secondary in market par of primary sold Assured pars insurance,

quarter in the the billion, million third $X.X par. XXXX, primary insured sold which market of par secondary totaled secondary was our markets and During $XXX of

of pleased were to credits, investors a are risks. on on - as to continue we various We guarantee believe see value we credits where AA add pleased our high-quality mitigant

secondary ratings. the assigned AA first XXXX, underlying primary finance, $XXX of quarter in its par million of market of third public had utility secondary with XXXX, bringing PVP transportation months insured par S&P other and best we our In on AA $XX business and million. for quarter, transactions the primary $XX international PVP public since its we $X.X insured and third to the had both guarantee that at airport, billion Moody's either transactions year-to-date million aggregate, XX ratings. on U.S. or X more producing Outside sectors. than During and underlying or water XXX the We transactions finance

such debt finance, whole diversified insurance a We Structured for transactions. and and banks business we mandates portfolio of payment In have for other capital Finance, Global currently processing areas strong securitizations subscription finish rights, good the prospects authority local in year, and including companies. to management are

as Puerto total month, Resolving in loss The as years. resume XXXX investment-grade subsidiaries. District regard NPAs to ratings. has reports further a skilled concurrently. while And insured important strength efforts. plan exposure have proceed, to par prefer last the after of Also mediation the the exposure With Our scenario HCA net significantly Puerto of and management exposure Transportation our our many to insured to robust be years, ever recent to protection consensually new from produce improved the portfolio remember the that portion from in to diminishing losses. AGM only before benefits continue European we In and total Agency below X.X% highlighted of year-end. about outstanding resources, X AA+ possible directing production quarter X% matured the result to and Rico, we the on of substantial implemented portfolio. and expected our approved team. withstand do on and and is that always, month, it's certain X.X% Authority to plan applies PREPA, claim But to it mediation Rico and reduces our a KBRA's insured the by is resolve September affirmed credit losses and BIG the have net actual strong Rating conservative remaining PREPA Puerto was Bond matter if in likely protections. last our stress of AGC, allowed Highway company's mitigation to our adjustment separate U.K. to the Kroll the Court Rico KBRA Overall, [ph] litigation creditor X.X% attempted business insurance our as par for settlement with rating financial ability Last U.S., paying to today, bonds

a many our and investment of legacy sources asset platform the returns As our fully that management the stream, an our by you revenue exit. refurbished We know, funds and revenue the through fee-based to acquired business of two, have wound we XXXX, alternative we increase almost adding one, investments. firm to wish now October in-house on down diversifying gains getting

substantially assets the of earning. earning. XX, September of $XX.X as objectives is business of was all key more fee of which half of than end with asset our of amount management, than at comparison billion fee had terms comparable AUM, In less our a management under XXXX In

progress generated investments. XX%, internal segment than fixed over volatility We on these our higher have an will return insurance which income those Keep on of investment. annualized we've the than mind made therefore been are investments markedly in AssuredIM show the objective. Funds, investments mark-to-market investing second in also any income and of Since rate statement is more other

went volatility. added returns. Capital the for X% above committee In basis XXXX. municipal our our the week, a to time However, of level XXXX. exempt yields to muni not yield yield points Fed last ultimate now rate. current do X% XX the continued the than marks geos since change market the And XX-year In in tax another they expectation market treasury are open in on market, of experience the exceeded what have last points October, last also XXX first XX-year averaged higher basis benchmark month, XXXX. funds The seen the roughly markets AAA January

of for the from occur, current should tell spread greater increased can weakening ensure with and while higher appears these Assured insured fourth so would a you and transactions higher par Guaranty far return the to that municipal what to in widening volume penetration, be to of bond markets we expect levels. increase. rates opportunities saw benefit market economy, I interest municipal Given insurance demand insurance If to the potential share further environment a its And in October [indiscernible] quarter, amounts. municipal larger

finance structured in offer we reasons to and to volatile the are We participants employ that personal likely global many also markets, tools risk. the good in manage have to infrastructure believe

is of Rob. management customer continue call risk now benefits to disciplined over excellent of on policyholders, and optimized principles focus to our our the positive clients management, the capital Our core we turn for service, prudent is and outlook as shareholders. I'll that

Rob Bailenson

represents to in $XXX a a XXX% strong adjusted XXXX report good to am morning Thank income with million on you, third This Dominic, of per everyone or compared operating $X.XX the basis pleased quarter call. on quarter I share increase and of share. per the third XXXX.

on of long-term As a million third we year, debt, $XXX quarter loss of extinguishment resulted the reminder, higher a long-term which of coupon million $XXX the debt. in last in refinanced

in operating movements and strong include quarter results These investment Third investments. other guarantee adjusted offset $XXX segment financial and relatively by and earnings with income portfolio, million by the generated Insurance some fixed our prior year. compared contracts scheduled maturity value $XXX was million predictable fair

premiums, were been expectations. to terms the is certain in million which [ph] debt third $XXX consistent quarter with Refundings year. net third of million XXXX in investment-grade recur $XX compared book last quarter of the primarily the last XXXX, the XXXX for credit our relates million has $XX were replenished new in not premiums business. premiums in of that third and of updates of each did the Deferred in XXXX business million of approximately quarter and on same and million $XX to of quarter accelerations the exposures XXXX. lower our the service normal third net quarter The quarters, third with has derivative $X.X premium the on revenue of of billion assumptions $XX amortization decrease with transactions as the earned In and period compared production of eight in-force revenues earned

production a third interest market the from and also business of short-term income and basis quarter new issuance. consistent market portfolio $XX investment guarantee to on in income predictable of quarter-over-quarter of financial was sale XXXX stable stream Higher is was mentioned, million. strong a level contributed deferred at Net primary and premium revenues. despite active more reduced the investment Dominic As secondary relatively a rates available

income market is and the by investments. variance of interest characterized environment economic operating the for adjusted the adjusted components mentioned, also attributable Dominic income, quarter-over-quarter rising As rates the several movement Insurance segment's The and adjusted operating value. largest operating to adjusted shareholders' volatility fair book of component impacted equity value

and proportionally XX.X% million $XXX related the instruments, our first in $XX [ph] third of in the support development, of a investments as whose to of XXXX, quarter benefit the manage enhance included interest value quarter due GEO, rising of a of a of loss on mainly economic date third representing million $XX rep the benefit a where and Economic warranty the line recoveries economic benefit The agreements, Rico transactions. the now loans of settlement; security, deferred of discount several certain was under annualized instruments a updated we improved million rate U.S. of The plan expected purchase to inception quarters Specifically, compared the HTA and quarter of higher share fair default in company's third gains additional XXXX. RMBS, premium related benefits In assumptions, is on amortization driven of we was related the loss these in environment of and basis, value by benefit investment in related charged-off pretax the components, second to second losses to respect including XXXX a loss quarter million third to and ceding million benefit and targeted lien the trading $XX the lien strategy adjusted loss benefit the benefit in related operating Funds Asset Management our This million, a recoveries over million segment's assumed loss of in XXXX RMBS, losses. $XX affected has higher primarily performance used also loss with net with gain a includes improvement development to and expense results in related million a investments in AssuredIM $X other in in which the mitigation on $XX alternative PBA The by of company in a pretax more to earning third which fair operating the an value overall to opportunity AUM risk-free quarter fees third was associated million. returns. were of of return. a value as to million With rates in funds offset is rising higher interest in lower and quarter resulted quarter of revenue demonstrating it adjusted net expenses. securities. with third return, was year's compared the more fee $XX XXXX, $X segment increase decline asset in third the XXXX. The these contingent to of wind-down favorable XXXX XXXX, This rates. with due last fund AUM management as received loss diversification was operating Puerto than the mark $X effect

XXXX. funds as $X to of of as of $X.X AUM As of strategy. funds up September XX, XX, September XXXX, of was of about as have $XXX million billion, XX, AUM in XX, only XXXX, from million $XXX September wind-down - health billion AUM with September care due fundraising compared in our XXXX, we our opportunity

metrics. well also a in across adjusted rates on as the third net million. X.X shares have the XXXX. material dollar a it And rate the third GAAP to our pound the exchange objectives, varies function does respect operating we strengthening to attributable adjustment. taxable value significantly income, quarter of to XXX,XXX quarter. as not to The jurisdictions million is to the income repurchased while Foreign book the we tax material million on can $XX U.S. million have $XX tax third British repurchased relative period our With of and Subsequent third non-GAAP included in provision effect a for shares capital return quarter In provision quarter of a effect income, moved all management of $XX to the tax XXXX, from period. effective benefit close, for

As to is of repurchase remaining authorization now, million. shares $XXX the

with to adjusted of share equity per has along positive adjusted shareholders' $XXX, and production repurchases, records and operating value new increased new share our $XX favorable and loss over income, operating respectively. book Continued development business

we Since beginning $X.X a of standpoint, program the currently for term. the million, cash XXXX, returned to liquidity in this to long pursuit repurchase our exposure. the quarterly outstanding. value our repurchase either $XXX metrics build of or the in available under shareholders reflect for use results initiatives shares holding from period, has operating consistent XXXX in liquidity to the our key shareholder shares Puerto business value Rico resulting in million $XX period resides successful our in particularly quarterly companies From strategic or While these progress, have great funds in increases of a which to our billion and XX% of needs These year expand how of of capital. execution reduction investments the over a vary initiatives have our book program, AGL. terms strategic manage are approximately in of been total

in defaulting exposure settlement. and are the Aside for million pending part our announced. covered from waiting the which PREPA, received to cash in under $XXX remaining plan, HTA as of quarter, third we instruments effective HTA date notional million In Rico the original contingent to value $XXX credits we Puerto are be

recovery bonds to arise to salvage exposure and sell also been in as form assets Our Rico securities. Puerto those CDIs the of declining opportunities have

received quarter, a of of agreement reduction value sold third a on [indiscernible] XX% settlement par total XX% the under approximately During the amounts we of for basis. year-to-date

million CDIs quarter to end. subsequent down $XX addition, paid the In of

asset - issuance the new forward contribute beyond, optimistic interest benefit continue asset to strategies turn insurance today give the quarter the the to to goals. business [Operator that of remain we alternative the and environment look ahead. and we to and new operator Please progress towards UBS. production As first instructions go management company's call will will strategic fourth our from rate question the Thank Meredith Brian from you. long-term I'll comes the Thank you. line now Q&A period. over its Instructions]The for to

open. is Your line now

Brian Meredith

questions was on of some Dominic, there good there? opportunities would I'm couple a your that that Hey, strategic just here thanks. with A just by first. strategic make of fit undergoing evaluation thoughts a curious, I'm curious any kind Barclays. disclosure of MBIA AGO, whether they're

Dominic Frederico

one we've opportunity, the well. as been the the for if like is what makes sense thanks Brian, if and any the we'll And same portfolio. always look market of the consolidate meet Well, credit objectives We our whether at it opportunity need that to it other in heard lines. at terms - our else in other is can remaining model comment the to Obviously, continued [ph] strategic look given we see standards, credit question. as of and underwriting and

Brian Meredith

And relatively Great. dividend I'm insurance done? just Thanks. through curious, views question, second everything kind Maybe and to out comes it's the of maybe a could low. give right look then you ultimately finally at top HTA the one now, dividend, get special of the gets us of capacity particularly,

Dominic Frederico

COVID continues let obviously, we, giving back of even hit holding which to But changed operate in down, to capital a And were strategic is look means in we as allow or Puerto company objectives, yeah, regulators management. then, terms and our a at Obviously, remember, our other which Rico execute the with wind all requirements Well, Rob dramatically. cash special flow PREPA. I'll the the to dividends things get specifics. day answer meeting obviously, one to down basically and one of Rico to us exposure is them Puerto

environment company. the the think or to be regulators in increase the special have or to us dividends. getting back to cash to want flow to if achieve able that's the back go the Obviously, we holding go structure for to is further market the for objectives, discussion strategic right us important about our we So and accelerate to

Rob Bailenson

see AGM AGC, but investment remaining you And then, and year. Page capacity the at at of Brian, the XX for that's as you look just can this equity presentation,

the in replenished next be will year. that So

remember, investment So surplus or policy your or of XX% it's income. either net

will So be replenished. that

will well. AG [ph] going In Re capacity year as addition Rich into more have to next

and - U.K. capacity dividend obviously, that to through looking increase our we're So dividends from always operations. possible

maximize we so operating subsidiaries. And to our continue to try capacity dividend with our

Brian Meredith

to Got first my And just then back to go quickly Dom, want you. I question.

there a Just from on the Or AGO for something of ability you do transaction focused perspective, curious for your MBIA? if possible? to national be was is would all purely

Dominic Frederico

stuck into, pretty that's Well, Brian.

But would the in So then, reinsurance understanding if this obviously, we've obviously, complete we at makes to have what the makes of what's our see consider there's a we update of of point, day, each perspective a organizations and the it. end the looked - time. And from of at sense. portfolio at sense, really that do we'd something over

Brian Meredith

Great. Thank you.

Dominic Frederico

problem. No

Operator

Please ahead. The Tommy Thank next you. the go from Instructions] comes from of [Operator question today line McJoynt KBW.

Your now open. line is

Tommy McJoynt

Hey. taking Good morning, question... for my guys. Thanks

Dominic Frederico

Good morning, Tommy.

Rob Bailenson

Tommy. morning, Good

Tommy McJoynt

Yeah. morning. Good

other that Puerto I guess likely to bond of So possible this aim market, and stigma from kind is might positive could I said in about the standpoint, I to other that like unique outlook but rates won't the entrants perhaps market? wider just higher with to say an the your guess a insurance have another of away interest keep way, that? of interest Or spreads? seat, specifically it multiline from in guarantee really ask think NBI, your you some Rico is companies do enter insurers asset

Dominic Frederico

Rico don't speaking all difference I perspective, at this time. Well, a any stigma this make at third-party point in from Puerto

activities getting another it's insurance actions of I the that's for think to get for Obviously, day. to forward the government another credit them but way its to a bond and the it's and supplied difficult was resolving. going day, that's creditworthiness based making on further

Puerto don't Rico at I think all. matters So

I environment. think really at it looks regulatory the

once or speculate for welcome a a P&C to guarantee us again, a look And the they regulators, you those title hurdles company And But we to rating high and life it. willing whether company company, is which have company to two get the business, business. not So competition. remember, the try take have would at if on when hurdles. a you are you this very into agencies, or only climb financial

at standing our easy track Assured very our is and positioned that to in use and the Plus, record really a this which to record, you sense play. the well need with we've need make capital only done a performance in point the revenue track to that think deferred relative earnings this marketplace, you not business, duplicate the and time. I taken clients a we've to make, source for is we

So big that to if you see And have establish it's competition. that as attractive these foothold left that or Like and or to it's to us the not. to say allow enough go business. we in whether you that said, to forward companies you benchmark we that determine us to determine not just see us competition for

Tommy McJoynt

an agencies last capital Got agencies - the the dividend trying on work might? think of regulators excess that look it updated and guess size really it, had it estimating rating thinking up I the of topic rating you guess, I was, than and a AAA an about was much potential figure dealing kind report on rating in differently a think, special I of it. with I guys at on XXXX. topic coming know I out you of and of both, were S&P excess how with to that of in do Thanks. regulators

perspective any it thinking look really just regulators that kind agencies? about the just from So and on rating at update how versus of

Dominic Frederico

rating have a than a different probably scenario. do have model a special think right? based criteria. perspectives, Regulators regulator Well, They for more the more capital I agencies lot do have guarantor rating rating Obviously, different a both. responsible agencies are financial you on the and as yet agencies the are

capital, excess anticipated the question. we so of terms In the

X this. so prepared - our So reading our due the with over numbers come me on bear to last down remarks, years I'm the

time information AAA approximately a the years very on due capital. year-end this very excess it's $X.X basically gave X for of important note, the related So basis. was our and we we substantial program, XXXX, resolutions Rico, last billion we successful to over excess the capital, numbers had management The you come S&P to past comfortable that AAA where capital have down Puerto to we're

$X over despite still However, our billion invested par S&P between year-end we of other And approximately XXXX, charge dividends, XXXX. then settlements, through in common as $X.XX $X of AAA service, this million capital, and and over debt $X.X paid billion repurchased shares, of of excluding of billion the million our using billion high $XXX paid shares, worth investments. excess capital $XXX AGS $XXX cap common million year-end is

So gives hopefully, you answer. that your

Tommy McJoynt

that's for looking having that Thanks us. for. Yes, for what prepared we're

Dominic Frederico

No problem.

Tommy McJoynt

And last third quarter, base looked in think compare the first that in first little months. it slides then U.S. dipped the in X bit it just if penetration question industry's was and to the it the insurance I half like bond what and the looks public actually a like I see just penetration for it the

looks what surprising it which a of it Any sense drove So that? like declined sequentially, bit is a bit given the backdrop.

Dominic Frederico

in the course, of is period mean market to marketplace way, down. way time. given And very Yeah. of at relative any the who's that's remember, volume I

So the are lease probably going to are issuers that more bond are in probably the insurance market liquid issuers the that lease.

penetration the with relative rate. X see which year, flat different It's to of you'll years is above the kind still the I think the you statistics as get to X answer year, a way still ago. very years prior complete for

really in We and that positioned quarter So quarter now to we in think we're give start statistics. uncertainty, with interest when making our progress of And penetration. is year-end substantially. fourth widening rates, economic increase you the hopefully see rising fourth to we'll demand think the spreads, credit the we the

Tommy McJoynt

questions. answering for those Thanks Great.

Dominic Frederico

problem. No

Operator

comes from of question The go the ahead. today you. Thank Putnam. from line Jackie Please Cavanaugh next

Your line is now open.

Jackie Cavanaugh

Hi, guys. Can you hear me, okay.

Dominic Frederico

Yeah, we Jackie. can, you? are How

Jackie Cavanaugh

taking through just about thanks sources. and for But a guess the or the just question. Thank all my way so or does magnitude that going regulator question, special or care you a marks? I marks? follow-up about Thank the different the the given agencies they And for impact the Hi. excess rating much prior the might capital analysis at to think capital their does AOCI of the the you.

Rob Bailenson

will rating it affect on agency and on doesn't go or we affect talk market rating with a an Obviously, about effect capital it doesn't have capital. be it it but The surplus doesn't - rating doesn't agencies, statutory discussion that agency capital.

Jackie Cavanaugh

Great. Okay.

So like just of looks to kind Street they're it? agnostic through sort of the it,

Dominic Frederico

not Look part of their model. is through it

So one both looks looks capital... doesn't capital at claims actions resources, the [indiscernible] paying is [ph] at one which street affects speciality

Rob Bailenson

As capital special talk at surplus mean getting And tests and comes - are we other rating and and regulators Dominic I about BD our agencies them obviously to when to regulatory there talks the it with that with dividends. our as look said need [ph] earlier, just them will then deal surplus. with

Jackie Cavanaugh

Got it.

before, Okay. told confirm, the I me of the magnitude that I mark. but wanted to know you've given just

you thank very So much.

Rob Bailenson

You welcome. are

Dominic Frederico

the are assets. will our certain to returns balance Obviously, - doesn't believe outlook sheet. parts marks think and over it and the the at will change affect marks reverse. basically normal, we the mark But adjustments end time, start some to economic should those of and the would of that Well, day, return we on things

Jackie Cavanaugh

Great. Thanks, guys.

Dominic Frederico

welcome. are You

Operator

you. next question Dowling the Please line The go from & Thank today from Partners. ahead. Geoffrey comes of Dunn

line open. Your is now

Geoffrey Dunn

rates to bond the where but don't the morning. Dominic, I the remember Thanks. in municipal the discussed great you could recession, ultimately this, speculated market recover of under I where you years being Good kind aftermath XX% at on AA, of a out. model and going that based part penetration, cetera. we're like recovery say the up new was et but of want of to going spreads

your goes or financial for sustained. and than spreads going happening else But for happen what what that's needs model the forward? what seeing could where a those vision guaranty on think market recovered reach rates you you fully muni FG been bond to think be we've do to in other sustainable [indiscernible] business the and even obviously, market goes, global that will So of now be spot

Dominic Frederico

One word, word, Geoff, one stability.

away rates rates particular it's tit I will insurance. municipal to balloon. for of it information analysis, over a the where some market we're And So getting further an balloon and going and go Fed it's if me. the really think rates constant, down conducive like growth are We If to bits time, for right? demand to increase from stay very we couple treasury right? a get these area do hold creates to So stay started and of comfortable, up cute absolutely But not us. the got like then for little a pop that can't

So, I it. see don't

is So PVP. is you interest on XX% in rise I'll tell the one X% rates the worth

So think interest X% rise a about on PVP. in XX% rates,

you, idea, constant. Thank service get To look an paid same on amount of service. on the par. give we keeping you that's debt everything just So at else times Robert. Remember, we debt rate based

debt XXX% interest in of resulted in debt debt the XXX% of par We because in get on change service. of the service based service paid So resulted rates. par. XXXX's XXXX

future premium, not rising about as that but refunding. So will over things And we will future only get to PVP, on interest you're periods. have happy calculate earn we environment, the not impact in rate a

that this going Rob's periods we're earnings. acceleration of So get to future not

Now year-over-year, interesting PVP the stable to according earnings the year growth and will be grow time, that will is over year-over-year.

a time, before very period rates in a hope So as panic there at the we its that least rating of they and only way stable that this for today the look again. we are the years optimistic stability, for stays streets start we few lowering rate, at market is at and

Rob Bailenson

- to the leading couple we and think, as primary - the second, and as well. over generally very was quarters Geoff, And the saw, secondary Geoff is the a last indicator strong you Just of

so in primary get the will stability less issuance and volatility, you And pick if market. the up

Dominic Frederico

Yeah.

market compared secondary in of the the $X is an million to market indicator PVP that's $XX little that's of idea in primary last year forerunner at a the And depict, secondary fact precursor, where and of current $X market typically secondary we an X months market And typically a a So versus give you going. activity the primary activity. million activity, written - $XX look to to million. that year we million market

Geoffrey Dunn

guarantee what then across might M&A, it's of business the be type you in buyback international. been look And on compelling muni I'm since versus probably growth? to weigh sort decades get you financial X.X be really gauge if capital an of return on it - retaining so hurdle about the companies at for hurdle some rates we as M&A rates enough share hurdle you across could on range and But - for of rates might opportunity just a return new can Okay. curious potential talked different structured

Dominic Frederico

to return be have say to Geoff, on the you to basis north at is depending on basis, got the When to XX% between, the that XX an XX% it M&A on transaction. because in capital return the look X% And depending writing anywhere the of business on stock XX% We're range. the new say, business. you on of buyback we of think service

public absorb also the look is a higher not have returns not regulated our transaction-by-transaction being would a quarter. that's great. than part capital capital, on basis major for that's When to on international business, that, obviously, we company. the U.S. at of But But finance. international remember, rate the plus So

excess So gone has the by capital calculation.

that, regulatory writing the and real for not I excess the in the enhanced and for capital the capital responsible profit call less but returns than they're company. business are returns, can So center

for So M&A, as of to north we it's be rate hurdle look the XX%. got at that

Geoffrey Dunn

Okay...

Dominic Frederico

credit wise organization. else everything the I'm developed for sense makes that If sorry, and Geoff.

Geoffrey Dunn

kind reinsurance just return then any is now financially, And like of versus Right. between there leverage acquisition? preference

Dominic Frederico

got of [indiscernible] which to lot then in day the in FSA need but we benefits, board right? don't discount a back was rerated us the got And investor get open the on. acquisition huge had in that That the base, really to portfolio transaction. us a the we the would capital discount substantial like report a capital and The anymore, the

the is value so be. Now be if the capital used basis lot going there to they us to are same any, it the a discount, that not smaller, to are

level at them agnostic that will of we're through us, the for rating the from provide the portfolio reinsurance premium we we So we want. want both acquisitions, risk want at

Geoffrey Dunn

last Okay. FFA? the the paid do question, capital for discount, recall statutory you that And my you

Dominic Frederico

you can the then was to - later the in the we Wow, and XX. through tell as we transaction the then capital a went XX book we paid into probably and value the represent statutory XX% And when XX. I got XX% - the transaction, XXs

got portfolios they the if volatile, less was capital get discounted. as we less there So smaller,

years this range. if XX% XXXX. bigger 'XX, and the I or the and was correctly. XXXX to then We're back in it they were I like they ones So were 'XX, remember XX% probably in which if XX% XXXX in the at was

Rob Bailenson

Yes.

was for make we like if was pay sure clear we're – asset discount to XX% XX% of... like that so So just

Geoffrey Dunn

Got it.

Okay, thanks, guys.

Dominic Frederico

welcome. are You

Operator

Giuliano Bologna today from you. Compass question The next Thank ahead. go from Point. comes Please line the of

now line is Your open.

Giuliano Bologna

your great question. go? going kind Another spreads return to of where would curious I'm a improvement from where performance. obviously, increases. customers new returning widened, But perspective before little be is the I spread I rates what and gone on environment? business quarter about operating generate the have much When savings pricing on how could is of environment, have on have the think perspective of actually for so prior curious is returns kind a on return following you're bit end there, up and it a capital Is I'm capital potential now versus in that - there better curious that from business was on where this where kind

Dominic Frederico

Yeah.

is improvement the reasonably think I lowered.

business, end obviously, transaction So it, look head. more by more most competitive trying if the uninsured the the book basis, to for we I'm finance at top my marketplace, Giuliano, you susceptible of the in from And it you the think of public And do the of competition is on so to insured. a largest transaction run it, right? versus business, about if

some dipped go of but X there with to X. lower some return. X quarters, probably say, were competitive, transactions even giving the value, I'm below that and think XX% the in might I trying And other we get years able year XX a ago, they you're were time, So we're then really average. And you most or minimum achieve X where added or might higher. have to ago go the to we that transactions most quarters, like

rate just book I'd XX%. said, if return public flow of at was like and spreads. and spreads and reasonable at number the always line that I - we're stages rates was of north say very This As is of the to recession. it be widening potentially that stress of even the we XX. over it as and the enhanced remember, the International But seeing lot at remember more really a correctly, domestic be. the a we're rolls We to finance, marketplace. business beginning that's and a think the in at experience could, I I this high premium have XX% what think forward business look of every today, to economy is And over seeing beginning wouldn't

Rob Bailenson

rate or Dominic capital same. more stays going Giuliano, paid you're service clients get spreads math, And denominator required if you on the the charge the financing and all the as it just think business, said, again to of that for paid interest but our of debt higher the dollars, basic the of

So your by up. returns go definition, must

Dominic Frederico

the referring if I else market, at financial was statements. to you published someone in look their

Giuliano Bologna

The consolidation kind running reinsurance of to there trends guess to entities capacity... are industry. the question off. discount But I at get as I'd thing. on rest higher the any the acquiring if benefit investment curious obviously, you capital preference expect going entities, do remaining opportunity legal I'm acquired are So to achieve there a curious, dividend another the say the you to desire large back can for and effectively the in same smaller. reinsurance of or out of boost of income industry was I that the be and capital for the smaller gets field, of also kind consolidate the

Dominic Frederico

No, we've risk fits missing hit of exposure that. pieces, to Yes. got the acquisition very credit on when What's reinsurance. right well entire exceed the head, the it company, accepted So right? a of already gets get standards. risk highly by two one, rated, model That's your you and customer, you premium breadth you reinsurance your into that underwriting

just XXXX, that in runoff, shrunk But capital the need bases the an was cetera. the don't pointed you marketplace. that we the out, So these discount acceptance important of refundings And have et back But obviously, as because in thing, us, substantially paper to capital. anymore. third on of, then

small So of capital I us the the discount say on even can a is discount value XX% give base. very

that return of the that So for underwriting premium level the us we standards. our us we gets that meets risk targeted. us, reinsurance to a gets level want, gives that pick It

good extent on certain because other the capital. get discounted than better a you the is as one So value really

Giuliano Bologna

helpful. very That's the I'll my taking you Thank jump in back questions. for queue.

Dominic Frederico

you, from hear to Good Giuliano.

Rob Bailenson

Giuliano. you, Thank Yeah.

Operator

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

Robert Tucker

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

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

Operator

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

disconnect lines. your may now You great Have day. a

Assured Guaranty (AGO) 8 Nov 222022 Q3 Earnings call transcript