AGO - Earnings call 3 2023 | Assured Guaranty Ltd.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Assured Currency Limited Third Quarter 2023 Earnings Conference Call. My name is Elliot, and I will be your operator for today's call. [Operator Instructions] Please note that this event is being recorded. And I would now like to turn the conference over to our host, Robert Tucker, Senior Managing Director, Investor Relations and Corporate Communications. Please go ahead.

Robert Tucker

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

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

Turning to the presentation.

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

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

Dominic Frederico

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

equity third build and first value per quarter We shareholders' XXXX. policyholders of adjusted value per share $XXX.XX the months at shareholders and X record the both $XX.XX, Guaranty quarter. book for reached and of during operating to highs Assured the share of of continue third Adjusted end

been has and contributions production structured public significant business this finance finance. infrastructure finance, strong with global year U.S. New from international

For in $XXX $XXX our furthering coming XXXX. of for we expenses. continue We asset with net reflected Sound earnings first earnings our for or million the our In gain our reporting, earnings. management at now which that completed million, will Management our a in for exceeded Partners, reached Sound consecutive from fourth of strategy fourth interest quarter XX% strategy pretax generating $XXX complement million our in and the July, X diversification Capital year, resulted time first Point our Assured Healthcare PVP financial in to be transaction fee-based stake ownership Point. The the guarantee risk-based quarters to

a due investment obligations In based investment in streamlining also efforts senior on on completed enhanced Rob portfolio on options year. the $XXX few We changes returns debt some will restructuring a we during our this Sound range financial expect our alternative quarter, third Point. More refinancing of with also generally, next a disclosures. million of result these minutes. of capital our broader by expand management, in current our will

our our million. We of $XXX quarter. by buying Directors up worth shares repurchases, authorization pace Board also repurchase in last million share our the $XX And picked the increased week, of of

assisting to He responsibility strategic and Officer year-to-date the business pleased as on January tell our and be I'm priorities. results, grow XXXX. as X will you and into I direction setting important Chief become of of worldwide our Operating Assured company's X, go well promotions. guarantee to want Rob about returns. about guarantee management to financial increase will corporate the assume me working underwriting greater origination as strategies Bailenson, also in announce Rob initiatives Guaranty's will CFO, and that with I Before executing financial other detail other and quarter

an of managed are Ben under accounting reporting. critical have financial financial outstanding Rob we person many role currently has fortunate fill Chief functions, Rob's our to as is including Ben Additionally, CFO, and Actuary, Ben Rosenblum.

tech by As CFO, was significant in Assured and contributions of and Point years investment to transaction. Rob recently, XXXX. are over skills objectives he these quantitative helped management will accomplish Ben portfolio management joined Ben's us at many in business and Sound Guaranty. the completing their making add Most responsibilities. numerous instrumental running treasury his promotions have many he us he since

guaranty will and financial to With their unique great extensive business, they understanding come. in of markets, of confident leadership years practices characteristics provide business the I'm strategies, our the

to public finance. U.S. Turning

par year-to-date total nearly or year-over-year. XX% X% amount increase insurance, at includes bonds transactions achieved We XX% down involved of $X.X market guaranteeing of par billion quarters large a $X.X bond billion of sold XX par par X from insured first the the Our with transactions nonetheless such municipal $XXX of from share. XX $XX.X in each from in our billion at insurance par, This up XXXX. least of million was insured

volume relatively of X-month issue penetration for sold the par months maintained of with highest third ensured overall almost we par rates first year-over-year, X in X.X% the issued for quarter than year. the quarter more first only XXXX is market And has X in steady of the the compared did XXXX. year X% decade. high X.X% of of third we new in sold last industry insured the with months par this Importantly, the XXXX, The up a XX% with XXXX rate penetration primary rate

totaled billion the the $X.X of quarter XXXX. primary the from third par in and $X.X insured in Our sold market guaranteed secondary up billion, in

We pleased billion or with which with period, X first from for from par months wrote of the we're bonds activity, Moody's. high-quality believe insured AA we guarantee our on the off value the of that strong activity looking approximately mitigant to a of were such first seeing on investors underlying a to the XXXX, quarter during billion U.S. issues. market of $XXX last insurance, XX the see green our months also ratings increased downgrade fourth on we year. We XX the credits $XXX X airport S&P up transactions as in of sector. of start. with X for million sold $X.X and and bond forward are between In X closed transaction the are during We are category, October, In power the par public risks. transactions $X.X policies And transactions finance new month to AA million X-month

public U.S. produced business of $XX year-to-date. of finance our finance, Outside PVP public international million

promising business. infrastructure We additional pipeline also a of have

in higher education and closing water are accommodation utility, quarter, In the airport, fourth sectors fact, process the during transactions $XXX we of par of student in with million. the X [indiscernible]

will In we production be PVP best Global direct million structured assuring finance that our year-to-date of Finance, XXXX. Structured XXXX year since for produced $XX

We finance markets, our public have another. and over one international financial of another volatility conditions to approach infrastructure U.S. production can time structured three-pronged in of the offset business. The more in weird structured reduce number finance, guarantee writing growth favorable business market expected further as future we we across by be environment global a By can validates mandates close this finance to year. take diversifying

because years claims efforts. authority our PREPA, last investment last in Puerto [ to ], in We is the of with Meanwhile, our PREPA mitigation classify NPAs continues After consensually outstanding X.X% reduce. Overall confirmation we plan possible, of insured $XXX the only Tier of as if our creditor which process legal PREPA for enforce insurance bond litigation compared plan the through of of X.X% now as X mediation our nonpaying below loss XXXX. plan exposure remain in remaining billion mitigation headed has proposed PREPA several appears to protect necessary. the Our largely exposure resolving a the reach hearing, in power adjustment our of committed continue confirmation we our efforts. loss but we'll Rico insured our portfolio and rights contested portfolio and significantly appeals strength portfolio grade improved towards

risk S&P on I with profile the of last financial quarter, financial rating business during insurance very its strong annual profile very strength and in both As companies, AA review outlooks setting us. stable our our risk its reaffirmed of our strong mentioned third call,

] and This capital AA [ buffer. meaningful have adequacy capital we report S&P's that strengths view a supporting many with excellent our including earnings describes rating,

our of and AGC. spreads and AGM may or in Additionally, insurance as investor rates, demand strength with outlook such commented finance stable economic on operating rating also credit for environment AA+ product volatile guarantee financial credit interest subsidiaries reports of reaffirmed our be enhanced its uncertainty. economic KBRA conditions It further October, by widening economic an surveillance cycle, higher annual tightening that its in

and and support against provide believe more appreciation recognition protection and uncertain. and designed the broader environments. matter pricing the of market market volatility stability our product value volatile the the issues related the for demand financial climate-related liquidity in the in insurance market unforeseen environment, concerns value pandemic natural during geopolitical resulted guarantee Our circumstance can when insurance the price and credit including disasters unpredictability for policies. We conditions guarantee to global it provides capital the is that a a market in greater disruptions and new increase our have supporting economies, for execution particularly the in because in incredibly cannot We believe certainty of and of are markets recently provide

of management production. focus of we and policyholders business our now on capital shareholders, well-executed optimized risk and outlook principles to call the benefit to Our will is over that management positive continue clear I as new the for is strategies our and turn for Rob. core disciplined prudent

Robert Bailenson

report with Sound XXXX increase $X.XX quarter adjusted taxes. The This everyone increase alternative our Point the and expenses primarily represents compared to were sources transactions to is driven was increased Dominic, share. AHP transactions transaction income. morning Point of XX% strategic towards the and the of milestones XX%, on $XXX and of million diversifying of am returns I the which you, to increasing $XXX quarter while investment deferred and good AHP on an operating earnings fee-based third third company per gain last respectively, The grow and of the Thank by net pleased income goal the call. million, year. of or order and of in Sound to

will $X X Sound $XXX of a commitment Sound Including quarter. alternative Point in funds array end With years, million Point X third transaction, by of the of investment own growth in billion In strong that managed others. committed with quarter and keeping we Sound with provides Sound an AHP since AUM the million $XXX and total our the we historically XX% interest funds within asset invest managed investments to Point the to in third an a options. alternative manager another Point,

had alternative annualized returns XX%. date XXXX, to our As we all million of September $XXX across inception is alternative investments, XX, in investments

few a highlight into discussion reporting from Before a and financial transactions. quarter, third get I to AHP the Point I Sound changes of resulting wanted the

while any quarter earnings segment, asset a of our XX% Point are Sound because share still lag. with consists net of investment is one reporting Sound associated an Point primarily amortization we intangible all of the assets First, reporting management it Sound Point's on now of

results the the Sound first be triggered Our the reported of as AHP Point and and share warehouses will of Assured in transactions CLOs second, Point IM quarter. And well the AHP all funds. Sound fourth CLO as deconsolidation

million, a are to million. The of higher Sound was However, a third RMBS quarter by segment, a available-for-sale $XX with and increase attributable million rates maturity recoveries fund certain primarily funds a of managed income asset-based short-term and of of The in AHP investment Assured Higher on XXXX, quarter the $XX compared on funds. a due $XX due investments securities compared benefit loans. other PREPA $XXX alternative reserves income portfolio transactions XXXX ownership loss million the gain by two exposures quarter and by adjusted balances. Equity charged-off rights third securities the of CLOs was total interest million earnings decline to In losses net was acceleration investment in loss on in $XX a for generated primarily lower increased that that million CLO $XXX of benefit XXXX. Economic in increases average CIBs and of was a on $XX of earnings of the mitigation million in Point, to with development value of continue we primarily now quarter with accretion operating to million to of loss of fixed due third quarter impact $XX the and we consolidate compared was Insurance funds, operating to significant higher control and consists on in in adjusted of XXXX. with three net which third the the the third loss loss transactions, partially expense. asset funds quarter Net offset maintain on the RMBS and the income interest IM for third deconsolidation XXXX. of of being XXXX the investment

across million Accelerations addition, premiums compared fair were to on million in were earned and Rico third $X third gains premium in of third of billion $XX of $X expenses premium with million of Total remained $XX the from the losses period. third year third in third as value XXXX segments of $XX the in the XXXX the quarter In compared revenues at the year. the $XX from derivative of in prior the and business of with replenished deferred $XX increased of operating last year. Deferred quarter new value production all quarter instruments compensation quarter Puerto million $XX million of quarter XXXX credit last million $X.X approximately year. Net down million quarter million quarter were in contingent in XXXX, in third revenue. the revenue last steady amortization

transaction includes this million in third million quarter of Sound and management asset segment no AHP longer year expenses, which year. includes last in and $XX $XX third expenses The of were quarter the in Point

period for On our XX.X% with income know, a period tax based was tax rate from XXXX to effective rate basis, jurisdictions. effective the the of for you proportion As year-to-date in X.X% fluctuates compared XXXX. tax on different

and production, Board repurchases business we increased continue quarter, share million X.X million million. share investments pace we objectives in increased management, capital on third In of of alternative addition the $XX asset authorization management. key In focus to by new the our Directors advancing to the the shares. Last $XXX repurchase or week, to

that great mature a debt on of achieved was execution in million refinancing scheduled mid-XXXX. the to of also We $XXX

holding of The of currently Our AGL. and million debt next we for initiatives. provides investments repurchases. At as September including as are have million in cash XXXX. corporate flexibility share $XXX approximately debt to the equity company our Asset and activities other available maturity and which repurchases the strategic adjusted drive of strategies, resides business of $XX adjusted growth operating segment, efficiency to share refinancing book is funds management other These the transformation management now our The Management pursue in us origination new focus capital operating expenses of well service shareholders' and on capital and and earnings continue turn give over Thank to you to share per value $XX of over the Q&A call new to records for the to our now you. $XXX, instructions operator respectively. I'll the level, period.

Operator

Instructions] comes [Operator with question First from McJoynt KBW. Tommy

Thomas Mcjoynt-Griffith

you business this gave gross a decline. and quarter, the while simply can? a much or underwriting write you can market in I of your the tightening Or we a PVP is there credit anything and pullback side should as as be understand really structured a lumpy, the new the to what at premium trying of from this sizable standpoint? Looking you're function the read as And was into such written finance

Dominic Frederico

a obviously the There of rapid in our start the mix a in quarter. where of of we function the issuance really is -- quarter, BBB in. put business in is was decline which most It's

what So to that we were write. affected able

we the lot road, middle So what flow wrote rated. of highly call, business, a down I'll of the

marketplace. are available rates that the us the to in Now

Robert Bailenson

fourth the quarter, we're Dominic strong And finance. in Tom, flow said said, we as a in public as seeing

Thomas Mcjoynt-Griffith

Got it.

that point? the your at your you and leverage And constraining that capital, perhaps buybacks you gears inhibit switching your Okay. doing is Do could includes your the other regulators And given for more ratios. could at on factor debt-to-capital from income, opportunity when look then to capital excludes a debt capital and or we've comprehensive what the position, standpoint, there? the a for swings at some you seen that mean buybacks that number look

Robert Bailenson

year agency to to we're at you look refinancing have on Well, -- we that generally would with at your basis. capital the it's maturity of we what to ratios capital did years, our regulator our forward the that that of comprehensive looking X And and in push as respect look -- a management. this flexibility in debt-to-capital shrink able also somehow rating other yes, can you true income if, we that excluding we going with delever. And look we fact, you constraints. have do But statutory

Dominic Frederico

it's a point this At Yes. time, not constraint.

Robert Bailenson

But it's at. we always something that look

Thomas Mcjoynt-Griffith

Got Okay. And in extent business? could maintain impact it. your What's regime that through the last Bermuda how increases effective order tax and the changes to returns? potential your those you the that And question. there, understanding then business in rate that just initial do do think of could increase your to pass rates tax

Robert Bailenson

the day, tax know, you XXXX. the to going as the And Yes. global in end is effective at of minimum be

no U.K. makes, to Bermuda So because we because tax the income had that tax pay Bermuda have to whatever XX% had would U.K. jurisdiction, go would a we're resident.

whatever pay we tax profitable. initiates and believe constantly lower So it it's than yes, at in lower tax be would lower Bermuda and we and Bermuda was would that that, tax, to pay And And -- capital rate, a And here U.S. evaluate significantly on have do amount if there's obviously, not that the a that based remember, Bermuda. that. tax to the we just planning just tax U.K., of significantly just we tax to significant still earns also, would

Operator

now We Point. Giuliano to Compass turn Bologna with

Giuliano Anderes-Bologna

to you think how also that ability this at kind go-forward basis about of think and request this or asking dividend successful performance. any the topping special dividends prepared may then do another missed of during company on there's do curious was to and It's I I'm or about point commentary way. about I quarter. stronger One on remark, see capital off great thing to continued special holding a your Congratulations how you have -- curious if

Dominic Frederico

Giuliano, to pleased for regulators Well, special filed dividend a both we applications report I'm approval. with that

just mode, we're be we're now waiting which to So in of approved. this optimistic

of the that's buyback part capital capital of strategy, management the So part strategy.

So we're would do. we doing we what exactly said

Giuliano Anderes-Bologna

market That's drives way business lot rate of years, muni a about, great. new And then you higher demand it's and next curious the front. that rates ] at be thing flows The not on the obviously stay one of go would it through. spread the on over I'm couple environment we the but I linear side. when environment. could [ think curious obviously, higher-for-longer assuming about where penetration

Dominic Frederico

Well, transaction as have then say and on insurance in the BBB a said quarter to That's all-time on And there XX lot later to give the basis, But a the the let's are of insurance. terms statistic we startling was wait-and-see I lot at there's think finance rates my some quarter, last, statistics, that are the some side you comments, XX.X%. as to means the That years. I interest to life a going statistics high penetration XX.X% tremendous the the relative insurance, said rates a in BBB take you look not of in to did marketplace really a not of in for issuance BBB XX% issuance lower. rate industry. because only the opportunity give issuance took all third of and

rate of think I reflective the it's marketplace. higher

more really we growth, can we problem Our need see which the to volume future. is just market more in the drive premium in

As quarter we're start. having Rob great mentioned, a fourth

spectacular other as our as finance expect well the side quarter ] proper on the as marketplaces to be fourth [ We well.

Giuliano Anderes-Bologna

next process a quarter. positive Sound you the in you helpful. Point I'm if expect do that from curious the be full to we first I get contribution referenced it's start transaction. level, you starting very because early quarter the realize with just high very even That's

Dominic Frederico

Tom, are a we sorry, manager, I'm said Giuliano. XX% and $XX billion on -- you of Absolutely, asset

positive to the it So We have done expect otherwise. it wouldn't through. be way we all

Operator

to Partners. Now Instructions] Dunn [Operator with Geoffrey & Dowling turn

Geoffrey Dunn

how Dominic, rates but for a you the Obviously, can I about X how on you spreads, business or it has could market if in had conditions? movement lot I should give what we and was last the like the stuff. we've respect mix wondering has but new quantitatively talk penetration it it just years qualitatively gets all either market over of evolved all years? and seems the that from terms, changed obviously, to mean, with with distorted past see net-net, pricing X change positive, be rates,

So wondering little could dig a that. if bit into more you just

Dominic Frederico

say is which it's except Well, Geoff, thing, one all would I issuance. positive for

So let's talk about it.

higher real seek board, what the try in can So to charge some that's save many we people business across one, to benefit addition premium a number to would are interest costs. rates both for how financing now to our insurance

they Issuance has the the municipalities has awashed that been been is, release pandemic. through got with a, the

checkbooks, so marketplace of time, of So a people has should back And which will a need environment, in are then quite finance. prediction get didn't that have their out or a rates to in the going we a months because that volatility are interest little down, the taken whether X we finance two, they have to run the any long to concerned always rate come better wait X so there's months because and rate.

of support So I business they the growth the got support shape think I need and coming. but borrow, of to the we're had said, make in the of conditions world, higher think if, that we rates, of process. in gains the the it's rate interest and across know a when we industry through the matter a is great municipality Like insurance to the board. significant haven't And we've it's only because when a not production matter

little little which production. of tight course, as widen expect now, volatile a be to well, in will Spreads, benefit but to a volatile. a them bit market, They're we tend out further

well as So the lower of for the two environment I came people looking rates market issuance that helps, tell may stories; interest relief because cash are finance. it the for the is washed out as better fact but think pandemic of that the rate

Geoffrey Dunn

rate now years remember, changed said I year-to-date? X.X and you and I think X ago you X if -- And like we penetration were

Dominic Frederico

and actually we're I in the like And break Right. if BBB. the the said, strong you marketplace between A in the down where it

transaction told grabbed I transaction the you XX.X% A you, statistic, insurance, another insurance. grabbed XX.X% of So of to BBB give

well XX% rates predicted think based on the ago BBB space and it what's the based AA is had which both expect years what of rating So rates, I available and market. A being in I that X,XXX penetration us over on in penetration

and and stability in a two that of bit structured And the also, we're other us international the really the in little infrastructure can see the public and the of you domestic production -- even than finance know, make. are on significantly we that markets can fact provides And course, we earnings support business. those businesses that returns as further higher the finance higher

Geoffrey Dunn

And said follow-up, you you given then and you're A that last in one traction what indicated just also about penetration, BBB gaining AA.

view X% an about penetration... Or talking your XX% you penetration XX%. your think ago, is to So of it's I that still when at on were maybe it years view ultimate -- What's type the is recovering rate?

Dominic Frederico

to just than my penetration, there, can the which BBB view, of and A we get and I the to think XX% I at XX%. XX%, stick participation to look That's we're if still it. more AA. we I the need I still as is And get said,

Now I the to get think we'll numbers.

So a and normalized now, penetration grow well. I we think continue in easily to high marketplace. If that interest as spreads rates wide rate over will see XX%

Operator

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

Robert Tucker

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

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

Operator

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

You have lines, great may now disconnect day. your and a

Assured Guaranty (AGO) 8 Nov 232023 Q3 Earnings call transcript