Assured Guaranty(AGO) - 2024 Q2 - Quarterly Report

Economic Indicators - The Company reported a real GDP increase of 2.8% for Q2 2024, up from 1.4% in Q1 2024, indicating a more robust economic environment [420]. - The U.S. unemployment rate rose to 4.1% by the end of June 2024, compared to 3.8% at the end of Q1 2024, which may affect the default risk of insured obligations [420]. - The inflation rate in the U.S. was 3.0% for the 12 months ending June 2024, down from 3.5% for the previous period, suggesting a potential easing of inflationary pressures [421]. - The Federal Open Market Committee maintained the federal funds rate at 5.25% to 5.50% since July 2023, indicating a cautious approach to monetary policy amid inflation concerns [422]. Market Trends - The average 30-year AAA Municipal Market Data rate was 3.82% for Q2 2024, higher than 3.57% in Q1 2024 and 3.41% in Q2 2023, reflecting rising interest rates in the municipal bond market [424]. - The credit spread between 30-year BBB-rated general obligation bonds and 30-year AAA MMD averaged 90 basis points in Q2 2024, slightly narrower than the previous quarter [424]. - Existing-home sales decreased by 5.4% year-over-year from June 2023 to June 2024, while the median existing-home sales price increased by 4.1% during the same period [425]. Business Strategies - The Company is pursuing key business strategies in insurance, asset management, and capital management to enhance its market position [426]. - The Company aims to grow its financial guaranty insurance portfolio through new business production in public finance and structured finance markets, driven by increased demand for bond insurance due to high-profile defaults and the COVID-19 pandemic [428]. - The Company considers opportunities to acquire financial guaranty portfolios to improve future earnings and deploy excess capital [435]. Financial Performance - Net income attributable to Assured Guaranty Ltd. (AGL) for Q2 2024 was $78 million, down from$125 million in Q2 2023, reflecting a decrease of 37.6% [461]. - Adjusted operating income for Q2 2024 increased to $80 million from$36 million in Q2 2023, representing a growth of 122.2% [464]. - Gross written premiums (GWP) in the insurance segment rose to $132 million in Q2 2024, compared to$95 million in Q2 2023, an increase of 39.5% [461]. - Total revenues for the six months ended June 30, 2024, were $447 million, down from$643 million in the same period of 2023, a decline of 30.5% [461]. - Shareholders' equity attributable to AGL as of June 30, 2024, was $5,539 million, a decrease from$5,713 million as of December 31, 2023, reflecting a reduction of 3.0% [466]. - Adjusted book value per share increased to $161.65 as of June 30, 2024, compared to$155.92 as of December 31, 2023, an increase of 3.7% [467]. Investment and Capital Management - The Company has repurchased 148 million common shares for approximately $5.2 billion since 2013, representing about 76$1.5 billion in alternative investments, including $1 billion in Sound Point managed investments, enhancing its alternative investment opportunities [447]. - The Company has developed strategies to efficiently manage capital, including the issuance of$350 million in Senior Notes due in 2028 [454]. Insurance Segment Performance - Insurance segment total revenues for Q2 2024 were $189 million, a decrease of 15.6$224 million in Q2 2023 [478]. - Net earned premiums and credit derivative revenues for the first six months of 2024 increased to $209 million, up 21.5$172 million in the same period of 2023 [478]. - The company's adjusted operating income for the insurance segment was $116 million in Q2 2024, compared to$106 million in Q2 2023, reflecting a 9.4% increase [478]. - Gross written premiums (GWP) for U.S. public finance in Q2 2024 were $103 million, a 32.1$78 million in Q2 2023 [489]. - The company's penetration of the total U.S. municipal market insured issuance was 58% in Q2 2024, down from 64% in Q2 2023 [491]. Loss Mitigation and Economic Impact - The fair value of Loss Mitigation Securities as of June 30, 2024, was $465 million, aimed at mitigating the economic effect of insured losses [444]. - The company reported a loss and LAE benefit of$(2) million in Q2 2024, compared to a loss of $55 million in Q2 2023 [461]. - The total insurance segment loss expense for Q2 2024 was$0 million, compared to $44 million in Q2 2023 [533]. Liquidity and Debt Management - AGL and its U.S. Holding Companies maintain a liquid asset balance of 1.5 times stressed operating company net cash flows [604]. - Management believes AGL will have sufficient liquidity to meet its needs over the next twelve months [604]. - The company has outstanding long-term debt obligations, including principal and interest on debt issued by AGUS and AGMH [605]. - AGL plans to fund acquisitions of new businesses and make capital investments in operating subsidiaries [605]. Other Financial Metrics - The effective tax rate for Q2 2024 was 14.5$81 million, down from $89 million in Q2 2023, a decrease of 9.0$6 million in Q2 2024, compared to losses of $9 million in Q2 2023 [555]. - The total long-term debt obligations include dividends on AGL's common shares and payment of operating expenses [605].