Assured Guaranty Ltd (AGO) Q4 2024 Earnings Call Highlights: Record Share Repurchase and ...

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Sat, Mar 1, 2025, 12:04 AM 4 min read

Adjusted Operating Income Per Share: $7.10 for the full year 2024.
Adjusted Book Value Per Share: $170.12 at year-end 2024.
Adjusted Operating Shareholders' Equity Per Share: $114.75 at year-end 2024.
Shareholders' Equity Per Share: $108.80 at year-end 2024.
Common Stock Share Price: Increased 20% to $90.01 by year-end 2024.
Share Repurchase: 11% of common shares repurchased, totaling $500 million in 2024.
Present Value of New Business Production (PVP): Over $400 million across financial guarantee businesses in 2024.
US Public Finance PVP: $270 million in 2024.
Non-US Public Finance PVP: $67 million in 2024.
Global Structured Finance PVP: $65 million in 2024.
Fourth Quarter 2024 Adjusted Operating Income: $66 million or $1.27 per share.
Net Earned Premiums and Credit Derivative Revenues: $107 million in Q4 2024.
Deferred Premium Revenue: $3.9 billion at year-end 2024.
Net Investment Income: $93 million in Q4 2024.
Full Year 2024 Adjusted Operating Income: $389 million or $7.10 per share.
Dividends Paid: $68 million in 2024.
Quarterly Dividend Increase: 10% increase to $0.34 per share.
Shares Outstanding: 50.5 million at year-end 2024.
Remaining Share Repurchase Authorization: Approximately $276 million.
Holding Company Cash and Investments: Approximately $352 million.

Warning! GuruFocus has detected 11 Warning Sign with AGO.

Release Date: February 28, 2025

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

Positive Points

Assured Guaranty Ltd (NYSE:AGO) achieved record highs in adjusted book value per share, adjusted operating shareholders' equity per share, and shareholders' equity per share.
The company repurchased 11% of its common shares, meeting its 2024 target of repurchasing $500 million worth of shares.
PVP across its three financial guarantee businesses exceeded $400 million for the second consecutive year, with US public finance reaching its highest annual total in four years.
Assured Guaranty Ltd (NYSE:AGO) expanded its geographic reach by opening offices in Australia and Singapore, and made further inroads in Continental Europe.
The company successfully concluded litigation with Lehman Brothers International Europe, resulting in a pre-tax gain of approximately $103 million in the first quarter of 2025.

Negative Points

Fourth quarter 2024 adjusted operating income decreased significantly compared to the same period in 2023, primarily due to non-recurring benefits in the previous year.
Loss expense increased from $7 million in the fourth quarter of 2023 to $31 million in the fourth quarter of 2024, mainly due to lower expected recoveries and increased losses on certain transactions.
The insurance segment's adjusted operating income dropped from $339 million in the fourth quarter of 2023 to $98 million in the fourth quarter of 2024.
Net investment income from loss mitigation securities decreased from $24 million in the fourth quarter of 2023 to $11 million in the fourth quarter of 2024.
The company faces ongoing challenges with its remaining unresolved Puerto Rico exposure, PREPA, as mediation continues without a resolution.

Q & A Highlights

Q: Can you provide an update on the recent developments with Thames Water and Southern Water, and how these might affect your reserve provisioning? A: Benjamin Rosenblum, CFO, explained that the UK water sector is essential and monopolistic, with the government unlikely to nationalize utilities due to budget constraints. Thames Water's debt is at the senior operating level, and recent regulatory determinations have improved their financials. They plan to appeal for better rates, historically successful, and Assured Guaranty feels optimistic about the outcome. Dominic Frederico, CEO, emphasized that the situation is more about capital issues than operational ones, and they expect no loss.

Q: Have the California wildfires impacted your exposure? A: Dominic Frederico, CEO, stated that after reviewing their portfolio, they found no significant exposure to the California wildfires. The municipal bonds they hold are in good standing regarding debt service payments, so the wildfires have not affected their municipal performance.

Q: The non-US structured finance par written this quarter was higher than expected. Can you elaborate on the geographies driving this and the expected returns? A: Dominic Frederico, CEO, noted that the UK remains a dominant geography, but they are also seeing opportunities in Continental Europe and Australia. Robert Bailenson, COO, added that Australia is a significant growth area, with a large transaction completed for a core loan portfolio. The structured finance business is shifting to shorter-dated, more repeatable transactions, providing a steady flow of business.

Q: With interest rates falling, could the gap between adjusted book and stated book value narrow this quarter? A: Benjamin Rosenblum, CFO, explained that interest rates cause fluctuations in unrealized gains and losses, which are not tangible. However, the $103 million gain from the Lehman Brothers settlement will add approximately $2 per share, potentially narrowing the gap.

Q: How has the political landscape affected the resolution of the PREPA situation in Puerto Rico? A: Dominic Frederico, CEO, mentioned that while political changes could help, Puerto Rico is not a high priority for the US government. Assured Guaranty is prepared to continue litigation, confident in their legal rights, as affirmed by the courts. They are optimistic about the new administration's potential involvement in making PREPA a viable credit in the market.

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

This article first appeared on GuruFocus.

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