AGO - Earnings call transcript Q2 2024

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Operator

Good morning, everyone, and welcome to the Assured Guaranty Limited Second Quarter 2024 Earnings Conference Call. My name is Bruno, and I'll be operating your call today. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference call 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, second 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

not statements about that The new credit future may spreads, update should undue or undertake ratings, affect required future them, business to credit them events. we reliance results financial except change These our loss due presentation new our conditions, forward-looking as you reserves, market are on or to any and information Therefore, obligation contain or as financial place do not may subject law. statements outlooks, other to results. items by publicly revise

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

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

the to presentation. Turning

Assured Guaranty Rosenblum, Bailenson, Our speakers Rob our of Officer. today are and Limited; Financial Officer Dominic Frederico, Chief Executive and Chief Operating President our Officer; Ben Chief

the to questions. we remarks, open After call will their your

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

Dominic Frederico

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

first second the second quarter operating of with compared had quarter last XXXX. for came the share XXXX year. quarter half Guaranty Adjusted Assured $X.XX second in at of $X.XX exceptional of an per in income and

per on share valuation XX%. value XX%, rose rose basis, June rose highs. adjusted again XX, new equity Shareholders' operating book a share reached Since Our adjusted key per shareholders' equity measures shareholder XXXX, and XX%

for years diversified business global U.S. infrastructure, half first strong, remained was international public and and with finance, recent New across production structured the consistent finance. results

half first half first since in assumed XXXX, with a where the half of and XXXX, more million, exception any of than sole The of another insurer. from large $XXX PVP first we bond portfolio

know X rationale insurance purchased XXXX Assured as a Rob I Corp. operating the But to in Guaranty want been is of have we principal you Assured see at Those companies we production our years discuss operating into for which you AGM. renaming Assured merger details stakeholders. few the of our many Guaranty will first, Guaranteed give Guaranty more Inc., to for later is completed last longer no minutes. The exists Municipal all and company same separately since when the merger them subsidiary beneficial FSA Assured week

is Inc. marketing benefits. simply Guaranteed its the simplification only surviving many is acronym Assured one the company our brand AG. is of of This and

insured diversification to enlarges single portfolio's and into support of merger and of a platforms the resources the having Two This the claims-paying are the to insurance of U.S. companies the the single further in pool efficient company, efficiencies. capital regulator, aggregating results X By more of profile. capital merger X the achieve of insurance credit includes policies utilization of available combined and principal objectives Maryland. operating companies' increase each the to company's primary one

are AGM's of are AG of exposures. now company now terms the they serve all were the finance all portfolios when obligations contained AG. and The and exposures obligations subsidiaries Both their U.K. public markets. to structured same issued. continue of as policy finance companies of and the same and clear, will European subsidiaries combined To insured respects have have infrastructure be AGM

a all of at that platform it the outlooks. wrote Assured AA+ and AG KBRA, at the AA change of Limited's capital, used simplification at the to creating Assured merger. At as structure operational Moody's, have well All regulatory overall and rating had scale. time S&P overall X as ratings, AX financial and organization AGM the strength the financial stable strength that see as no and KBRA with efficiencies Guaranty's as merger, result resultant identical merger Guaranty of indicated agencies they global the rating enhancing and

has based believes was credit adequacy relative account. guarantees the companies' already in results a the of both capital of and of strengthening to merger profile entire always S&P moderate Moody it taking on exposure AG's our the said, rated so AG AGM. into those pre-merger group,

each the merger, same reduction XXXX, AGM materially a each its since insured and statutory AG capital overcapitalized the in were substantial increased the while period. experienced and has Before during exposure

and is about combined and find also by And redemption $XXX where releases rating company press the this the the million in There In agency about can considering presentation quarter. special agency more $XXX Insurance followed transfers the full through the a with that when Q&A upstreamed a decisions during merger, ratings. connection you with stock our company's announcements. redemption website, took million a we the Maryland the both combined merger, the AGM second the the Rating rating more dividend, agencies detail the information on stock our account approved. merger these on Administration into technically

repurchase of of our well efficient first future half With a operational is very the $XXX committed and on the financial program positioned production excellent Guaranty's Assured million. year XXXX We AG with growth this the consolidation new and results. subsidiaries, for building to success, share target merged remain

were million company of to December authorized repurchased shares. August outstanding on and XXXX, XXXX, $XXX common had was X.X% the XX, the and an of its shares repurchase additional As X, that of

in past, net revenues the saw had perfected Power bondholders be The Puerto face to than of appeals of a agreement lower case set to has with but light the utility cap which billion last Electric PREPA, the is several well. appeals party ruling favorable Rico's about look June to resume The court a interest utilities reversed also In ruling, court bonds lien, plus the this Rico our the present reach not working by the PREPA $X.X also ordered The future court parties appeals remaining mediation $X.X billion, lower the year, all trust on resolution that in of the ruling Puerto lower claims of court we findings, restructuring. determined to of investors Authority, and and prior more just allowed as a we court restructuring on court. amount fair nonpaying forward the exposure. accounts

geopolitical reminded insurance. why protected investors to good volatility have about year investments that economic, and it's this are financial Uncertainty by our

and investors issuers has financing can issuing guarantee for Our their value bonds with extra the bond reduce be costs predicted unique guarantee. need what can't by from protection our protection bond of who

obligations reliability the earnings capital maintaining meeting proven base decades, financial of strength, returning level our and Guaranty Assured our X its to and shareholders market while leadership. predictable a past over consistently has excess a high of

our never have With efficient in worldwide shareholders. positioned potential growth organizational policyholders we've and value for our more to high create for serve our believe business. We that clients, protect our we financial better our structure, been guarantee new

I production will to discuss now results. to our the turn over Rob call

Robert Bailenson

Dominic. you, Thank

very particular, and results U.S. Guaranty half first had public finance for in Assured strong XXXX.

our it since production XXXX. half strongest In fact, of one was

first infrastructure, across public business continue As half to be international finance, new global structured production the diversified U.S. Dominic for and mentioned, finance.

PVP First total half XXXX. since was the million first largest of of half $XXX PVP amount

results. With from insurer portfolio the sharply exception our increased and another of of our PVP half assumption XXXX first a large

XXXX, our addition comparatively at remained very to being execution that seen large since security penetration and have across of in using quarter certainty stability bond increased a obtain of realized first in market it of insurance the Bond issuers in ranging price demand for addition liquidity, that, costs. support high less to X.X% size. insurance for predictable the and is X.X% utilized environments financing We variety half continuation XXXX. transactions potentially to insurance insurance for market we bond investors a and of the very Bond that believe in to from small are greater reducing second the increasingly that have can provides, more

the year-over-year Guaranty's In market par half XX%. was billion. of second XX% the Guaranty's for Assured in pars the total billion Assured $X.X primary insured of a market Guaranty for first the Year-over-year, continued in market. XX% first increased half of increase issuing primary market share Assured quarter, market XXXX, its XX% sold sold the by leadership par, represented primary insured on of $XX.X a primary based which of pars insured primary for position XXXX,

is of typically see for One which larger guarantee ongoing transactions, our demand driver investors. from institutional interest on our production the

Guaranty Assured half. the of largest We insured first opportunities high-margin in municipal utilized XX were more of the market in each half insurance, which insurance where $XXX Terminal million F. a revenue bonds; Authority issue. carried new project, the New million and John the we passenger Airport; insured of Kennedy of Guaranty; bond of insurance York for of during or significant X half the a Guaranty the For from sold second $XXX Brightline School XXXX Florida rail $X.X transactions XX first Dormitory the $XXX for the transactions the Assured million Assured X of during of transactions senior in that first saw billion quarter. majority large, State for the District at of XXXX,

over passenger finance we and sector a billion our investors built the school in risk. The is issue of extra We AA credits JFK protection the downgrade project as XX to U.S. the value XX project as helped market U.S. mitigant a the guarantee Brightline rail the DASNY largest believe of continue on century. We transportation pleased capital $X.X The first of par improvements. public/private were insured value the in private is see of XXXX system project half adding and partnership first on during that deals. districts

million first of finance the the during of XXXX. PVP of the half $XX in first public with $XX Non-U.S. produced consistent million XXXX, half

guarantees market Second transactions. quarter several secondary and primarily activity airport regulated U.K. of included utility

number to consider close transactions XXXX. pipeline includes of international likely public Our later in potential that we a significant finance

first-half Finance result. Global PVP, Structured produced solid million $XX of a

with production, across our We the quarter our million in quarter pension terms including second sectors, the quarter investor PVP performance strong of quarters in note our second XXXX. XXXX can the was build pooled quarter finance. second to $XXX XXXX. And additional PVP production, direct than continue $XX strength production to our second of was complete the clients best first insurance One of companies, that second banks, we with higher funds We of X asset-backed about believe quarter corporate and million year of fund see impressive since of on results. and opportunities the

call to I over results. financial will our more Ben about now the turn to talk

Benjamin Rosenblum

the per $X.XX and in quarter and morning. or which Dominic, insurance a in adjusted million million than XXXX second in quarter million few up adjusted I share, $XX from XXXX, XXXX. income income contributed pleased is per of quarter am Rob more XXXX, second which the $XXX $X.XX $XX second The you, $XXX segment, had of items. or second report of share Thank good double of the noteworthy quarter reported operating the to operating million of

we no second million of second the the expense with XXXX. in First, quarter quarter compared $XX in loss of had XXXX

in economic premium the While absorb certain second developments was loss development no we loss in quarter, deferred there related expense. revenue did sufficient to primarily of care for have quarter health XXXX, $XX resulting million transactions, of to the the

higher in operating $XX CLO we may of the value second alternative of compared in increase quarter-to-quarter. represents a on balances equity with underlying equity the volatility changes and investments, gains assets investment cause income from the adjusted second and returns Second, alternative earnings, which due primarily of in quarter the Fair tranches in XXXX. quarter XXXX had to invested million

gains However, the offset inception-to-date annualized of fair on XX% compared internal Rico XXXX. which they lower insurance an second on of $XX with was segment. Puerto increases an second of million value of by were instruments, quarter contingent in in the the value generated the in quarter million rate These XXXX, basis, have return partially $XX

the $XXX value XX, remaining the fair June of was CVIs of As million.

Insurance the the the new $X.X revenue that is result of in of Rob which business billion represents deferred at a direct future remained strong production Our discussed. segment storehouse earnings and

was net in For XXXX, the of Sound of still owned Point it as entity. consolidated the and the Since AHP consisted results second of Management a transactions Asset performance strategies. the segment of July pickup our continuing lag XXXX, investment Point assets closing wholly quarter Management includes on is the AssuredIM fees the asset-based results primarily reported care which a equity Asset of is on Sound intangible quarter segment amortization on and and of health and

with was towards is calendar seasonally GAAP Point year. their our in to income revenue in Sound close recognized Sound line performance rules The generally from Point's being second the end breakeven, quarter fees recognition which adjusted XXXX of expectations as result

management $XX.XX X.X million continue capital second Stock On be average $XXX of quarter an per shares the the repurchased at most front, buybacks share. our one for of XXXX, we million in to accretive price of strategies.

remaining approximately million. $XXX is Our authorization

holding repurchase the collectively of $XXX of operating and and new program, cash investments terms new adjusted of company share liquidity we to contributed In resides over income position, and share business which $XX adjusted value per per million of operating adjusted for have The of AGL. equity with production in million book along share records $XXX shareholders' $XXX. over approximately

term. shareholder initiatives metrics The how from operating period the period. to reflect over all the these key build of long strategic increases varies While adjusted quarterly execution book income consistent successful value value in our

stock merger, the of and initiatives. results execution our strategic Dominic mentioned, AGM-AG key the million with capital in $XXX continued efficiencies As of redemptions, along demonstrates

million the investments. $XXX in for are were cash, consisted stock use including of the remainder available stock initiatives These About redemptions redemptions of share in repurchases. while corporate alternative

the the period. Q&A call our to turn instructions you give now the operator over for to I'll

Operator

Instructions] [Operator

question comes from KBW. from Our first McJoynt Tommy

Thomas Mcjoynt-Griffith

off Starting PREPA. on

more in that we little what your mark process June, guys ruling in came appeals you we can loss through? that see you sort as guess ruling you or through impacts, book court quarter? walk specific of ultimately the, that surprised how once a that recovery I not of reserve just to guys information, around a and ruling credit sort court saw bit I guess, seeing were the mentioned favorable You the for

Dominic Frederico

Well, I'll top Ben let you give give I'll the you bottom. and the

we the very was as along judge So And expected top, that that the at the ruling or favorable. contract to law ruling all is had the it's avoid obviously, continued a signed. the

to going one. thought outcome, was that we the So number be

of hoe there's would relative still settlements place. Number in to your appeals. take actually lot does timing to when a at matter reserving Number how two, terms look of in road three, you the

open did in we the be. thought would So of of of adjust areas what be but decision ultimate scenarios, in an it would appeals and terms we terms prudent because mediation

to we've thing for probability on done, it further So right and analysis the thought got you continue consistent activity. to we keeping scenario further wait weightings I kind and in and while rely of the information

Robert Bailenson

I case. words it said going of say, pretty mouth, timing took lot much and scenarios had does as my we assumed couldn't mean, we we and a now out I said, have you we just Dominic the our it through scenarios a would matter. of have to knew I to that very have all And any better. strong were win. We see

Thomas Mcjoynt-Griffith

switching Got me with here Okay. to I And capital, where of over through switching then stick and topics it. numbers. some walk kind

it company is special releases of subs of capital Slide million combined. On $XXX the done you've year. the dividend million So dividend XX, the out to holding sort of limitation way $XXX looks this already regular like

$XXX the know I combined. million annually. $XXX expenses holding million nearly company cash together that's of So has about

million about plans couple liquidity? with you million $XXX you'll excess that million. of target. Did for annual to have So buyback still look That's leaves million any about in what do $XXX hundred that of dollars $XXX extra your

Dominic Frederico

us And we a another share case said, we've something acquisition, million target. as opportunity. see it always that comes for and remember, by opportunity target it some gives future looked per And in meet a in it we we'd due, we an it's just enough at there it's balances to the But as as to $XXX make Well, additional the cash large, we million accretive on sure foreseeable obviously, be an like plus business as $XXX hold be obligation year. have to flexibility it repurchase.

So pretty of XXXX ensures damn well. that looks good as this kind

Thomas Mcjoynt-Griffith

front, are On the now? opportunity you that there acquisition anything guys looking is actively at right

Dominic Frederico

but remaining we've always consumptive the opportunity, about monolines, at than which really capital this talked Other an as point. not they're

answer the would for at no point be this other So time in acquisitions.

Operator

Compass Point. Bologna next comes Our from from Giuliano question

Giuliano Anderes-Bologna

it like Difficulty] point sounds do looks term. reinvestment I'm It that strategy [Technical business? great like Is how think about for extend into the kind of to the Or that you of you'd great couple going like at it a million return how long of next in some pace? it good Obviously, another term? preference your you longer to $XXX few for the years. the -- that think buyback you're and for curious do it years to a more about evolve on 'XX. way runway capital And obviously, position very you're And in position run the think at next would Congratulations sounds like quarter. the like the forward? point, is then sounds you this

Dominic Frederico

Well, as the most it evaluate we'll to continue accretive still transaction.

consistent So runway indifferent. that and basis. $XXX the stuck a you And to It's continue and positive, to as go. support to continue going true where gives on quite a of us that's way apply runway runway as stock. evaluation expect think it to or near long period look million this for tremendous We We it. we this the the to like provided we most be continue the but the as for to think been still said, clear we execute to really it's does flexibility to best And the is wrong right, at It's we're we where expected We're the that allowed to to way get well. time. increase. with ultimately,

Giuliano Anderes-Bologna

of the be transactions curious the some like good then side, business institutional -- business the obviously is wins helpful. very if in see the on I'm very some accretive interesting That's term? had on side scale you on you and demand. new any larger international near there have that the front, if very And then some on structure or opportunities obviously

Dominic Frederico

let out is the ready question. answer jump Bailenson I'll him of chair, If his to Mr.

Robert Bailenson

Yes.

of We subscription finance transportation Australia. regulated are across seeing number in a and a utility international and corporates, Europe, the We business pooled whole North infrastructure finance seeing and lot transactions, opportunities America markets. securitizations, structured lending this We're of direct U.K., closed Continental sectors.

successes some resources, into you put and seeing as finance well early there know, as have we're We infrastructure. structured Australia, as in

So we're about opportunity. that excited really

Operator

from Our Partners. Geoffrey question Dunn from comes next Dowling

Geoffrey Dunn

care about basis. some you're an I what's those quarter modest importantly, economic talk pressure in facing? this what there? the your a more on deals? pressures are those saw of bit issues know And it's are we health you what protections the causing And deals? development But little Can on that the

Dominic Frederico

start me Let from the top.

we themselves through went essential Labor costs when at our through health remember, as care, and we've nursing been as and the a went COVID, Other in ourselves in to for hospitals spike So always the that look it's reimbursement And the the third-party pricing book business, marketplace look provide improve. at other position. of supplies. roof. through to Obviously, adjust, we major I services, our covenants think to we tremendous leaders costs caused but both a adjust coming continue while things roof. with the seen both in in as well protect to

covenants I protections. we've got and said, As tremendous

we're get very optimistic still health So only about the problems and we exist. of care, when paid value

typically happy properties. that sure make on the we the are realized. We see we're in opportunities have to So market the mortgages that

service We've got or We have reserve got liquidity debt service We've coverage debt covenant. service constraints. covenants. debt

that COVID the results inflation, see are has starting now and a but to improving. the been caused the by portfolio. So said, Obviously, mostly we hospitals and as stress I well-protected address it's all

the And said, problems We We in paid strong. when there's business. the the still as protections get are like I market. pretty

increase of the production individual opportunity it's return for overall great to as policies. So as those well us a

Geoffrey Dunn

obviously, you're I'm of a the then all answer like sure out give can is have, company's diluted on. And as it, if excess underlying looks running not I ROE but Okay. to ROE that you the the range sitting you you capital other what operating Can with the efficiency? question are

Dominic Frederico

of ride in finance. target every No, international double and to get a sets: each got business have the center the to that structured, relative we written we we domestic to public overall digit by business profit that

which killing to problems is pandemic, capital the The What's So the us the that's excess has Rico. great response past. obviously principally we in carry, goal. been the the in still recession, that Puerto

the excess down we're want how As that now to those the the and in much the take keep having on basically is capital and dissolve level. biggest dissipate, of to argument company then rest accretion capital we things of

the back the basically statutory have, which to that it's But that as confident to know, to it an capital we fast the we'd make a We're XXXX back through as problem, excess we problem in I capital. bad we'll said, take growth If bought affect ROE have excess down to still make working what as over the going plan good buyback. does spot years excess than down in capital the limitations both a in get into R, the of and things is some with same established term. to schedule the meaningful a the you that sure of be still like. we're business, asset we're near in management, on the of maybe you further the the there, able to like probably the it is we but can not dent we but it's get terms capital, a increase as and And coming achieve the in that having same as $X.X told when billion, I stock, think, diversification started we there I was, was based back E coming management,

Robert Bailenson

as or as ROEs Geoff, in structured those even international expand internationally And higher. and mid-teens said, Dominic infrastructure, we finance are

we as R sector, to does adds the it those, time. the over it return So the to to grow come numerator, but really that

Geoffrey Dunn

like the the XX% XX% to business ]? more is [ this So say [indiscernible] fair to that it is versus

Dominic Frederico

international... The

Robert Bailenson

even higher. be Could

Dominic Frederico

that. Higher Yes, exactly. than

Robert Bailenson

It mix. the on depends

Dominic Frederico

time take on little Remember, we very earn earning long we right? premium, premium. remember, Geoff, lead

Geoffrey Dunn

while to through? come Takes a

Robert Bailenson

Right.

Dominic Frederico

we X the help line. year's while premium the or meaningful business, the building, The the X years see will as bottom about you think to amortization But out. takes under each of It tremendously When get contributes it that to production X% change. reserve. a about

Geoffrey Dunn

follow-up. I guess a And just Okay.

the comment how the bit a -- Your same little much returned. being it's the 'XX, as excess same about -- capital the you've capital ironic with

stay to you to... still get earning strength your of here. sprinting that How ahead You're because do continues

Dominic Frederico

why of call It's Probably really we spring, I'll problem. bad opportunities problem and good remember, spot we're and the a unique what at it's the advantage of: large eliminations buying all to doing mergers, the restructuring refinancing companies. capital of some huge some deals, of up competitors at discounts the same other took that right, doing because a is reinsurance capital, then our base, or

So transactions we've that interest really accelerated X based the environment. had have unique on rate refunding these wave earnings, the

kind So dissipated bit. see now that we has of a

Now earnings solid, growth core it's thing, the type businesses. of in core

So capital as way, make the the Geoff, more dent able years few projections and now it well. a real that that we'll our be next on we're show to over confident

Operator

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

Robert Tucker

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

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

Operator

call. all Thank Ladies conference and this gentlemen, concludes attending. for you today's

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

Assured Guaranty (AGO) 8 Aug 242024 Q2 Earnings call transcript