Assured Guaranty(AGO) - 2024 Q3 - Quarterly Report

Economic Indicators - The Company reported a real GDP increase of 2.8% in Q3 2024, compared to 3.0% in Q2 2024[361]. - The U.S. unemployment rate remained at 4.1% at the end of September 2024, unchanged from Q2 2024[361]. - The inflation rate in the U.S. was 2.4% for the 12-month period ending September 2024, down from 3.0% for the previous period[362]. - The Federal Open Market Committee (FOMC) lowered the federal funds rate by 0.50% to a range of 4.75% to 5.00% in September 2024[363]. - The average 30-year AAA Municipal Market Data (MMD) rate was 3.60% in Q3 2024, lower than 3.82% in Q2 2024[365]. - The credit spread between 30-year BBB-rated general obligation and 30-year AAA MMD averaged 90 basis points in Q3 2024, unchanged from Q2 2024[366]. Company Financial Performance - Net income attributable to AGL for Q3 2024 was $171 million, up from$157 million in Q3 2023, primarily due to a benefit in net loss and LAE of $51 million compared to a loss of$100 million in Q3 2023[401]. - Adjusted operating income for Q3 2024 was $130 million, down from$206 million in Q3 2023, mainly due to the absence of gains from the Sound Point and AHP Transactions[405]. - Total revenues for Q3 2024 were $269 million, compared to$403 million in Q3 2023, reflecting a decrease in net investment income and lower fair value gains[400]. - Gross written premiums (GWP) for Q3 2024 were $61 million, up from$40 million in Q3 2023, indicating growth in the insurance segment[397]. - Foreign exchange gains for Q3 2024 were $55 million, compared to losses of$39 million in Q3 2023, contributing positively to net income[401]. - Shareholders' equity attributable to AGL as of September 30, 2024, was $5.728 billion, an increase from$5.713 billion as of December 31, 2023[398]. - Adjusted book value as of September 30, 2024, was $8.582 billion, down from$8.765 billion as of December 31, 2023, primarily due to share repurchases and dividends[407]. - The effective tax rate for Q3 2024 was 19.9%, compared to 21.4% in Q3 2023, reflecting changes in income recognition across subsidiaries[400]. - Net investment income for Q3 2024 was $82 million, down from$100 million in Q3 2023, primarily due to lower income on Loss Mitigation Securities[400]. - The company reported a net income of $370 million for the nine-month period ended September 30, 2024, compared to$382 million for the same period in 2023[400]. Insurance Segment Performance - The Company's adjusted operating income for the insurance segment was $162 million in Q3 2024, compared to$59 million in Q3 2023[420]. - The total segment revenues for the insurance segment were $204 million in Q3 2024, slightly down from$208 million in Q3 2023[420]. - The Company reported a loss expense of $(53) million in Q3 2024, compared to a gain of$101 million in Q3 2023[420]. - The Company’s net investment income decreased to $82 million in Q3 2024 from$101 million in Q3 2023[420]. - The Company’s fair value gains on trading securities increased to $9 million in Q3 2024, up from$4 million in Q3 2023[420]. - U.S. public finance GWP in Q3 2024 was $35 million, up from$29 million in Q3 2023, representing a 20.7% increase[427]. - Total GWP for Q3 2024 reached $61 million, compared to$40 million in Q3 2023, marking a 52.5% growth[427]. - Non-U.S. public finance GWP in Q3 2024 was $7 million, an increase from a negative$5 million in Q3 2023[427]. - The company's direct par written accounted for 60% of the total U.S. municipal market insured issuance in Q3 2024, down from 61% in Q3 2023[428]. - Total PVP for Q3 2024 was $63 million, compared to$46 million in Q3 2023, reflecting a 37% increase[427]. Investment and Capital Management - The Company expects to invest an aggregate amount of $1.5 billion in alternative investments, including$1 billion in Sound Point managed investments[386]. - The fair value of Loss Mitigation Securities as of September 30, 2024, was $468 million, aimed at mitigating the economic effect of insured losses[383]. - The Company has repurchased 150 million common shares for approximately$5.3 billion since 2013, representing about 77% of the total shares outstanding at the beginning of the repurchase program[388]. - The Company issued $350 million in 6.125$330 million of 5% Senior Notes due in 2024[393]. - The Company has a liquidity target of maintaining liquid assets equal to 1.5 times its projected operating company cash flow needs over the next four quarters[547]. - AGL has committed to a revolving credit facility with AGUS for a principal amount not exceeding $225 million, which terminates on October 25, 2033[536]. - The Company plans to fund acquisitions and capital investments through liquidity derived from dividends and external financing[531]. - AGL's insurance subsidiaries are expected to meet liquidity needs through current cash, short-term investments, and operating cash flow[547]. Exposure and Risk Management - The Company has approximately$24.0 billion of net par outstanding for certain U.K. exposures as of September 30, 2024[362]. - The Company's direct insurance exposure to Eastern Europe is approximately $234 million, with$216 million in net par exposure to Poland and $18 million to Hungary, all rated investment grade[413]. - The Company's direct insurance exposure to the Middle East is approximately$68 million, which may increase to about $105 million if all unfunded commitments are ultimately funded, also rated investment grade[414]. - The total expected loss to be paid for FG VIEs primarily relates to trusts established as part of the 2022 Puerto Rico Resolutions[447]. - The economic loss development for U.S. public finance exposures in Q3 2024 was$23 million, mainly attributable to certain healthcare exposures[453]. - The economic loss development for non-U.S. public finance exposures in Q3 2024 was $46 million, primarily attributable to certain U.K. regulated utilities[453]. - The net expected loss to be paid (recovered) for structured finance as of September 30, 2024, is$36 million, with a significant decrease from previous periods[449]. - Defaulted Puerto Rico exposures total $377 million, with a resolved amount of$153 million and non-defaulting exposures of $77 million, leading to a total exposure of$607 million[523]. - The total par outstanding for resolved Puerto Rico exposures is $228 million, while the total exposure amounts to$851 million[523]. - The scheduled amortization for defaulted Puerto Rico exposures is projected to be $531 million, with significant amounts due in 2025[527]. Corporate Division Performance - The Corporate Division reported total revenues of$4 million in Q3 2024, down from $259 million in Q3 2023, primarily due to the gain on the sale of asset management subsidiaries being consistent at$255 million[467]. - Total expenses in the Corporate Division decreased from $57 million in Q3 2023 to$37 million in Q3 2024, driven by lower transaction-related expenses[469]. - The effect of consolidating Financial Guaranty Variable Interest Entities (FG VIEs) resulted in a net income loss attributable to AGL of $7 million in Q3 2024, compared to a loss of$8 million in Q3 2023[476]. - Fair value losses on FG VIEs amounted to $7 million in Q3 2024, while fair value gains on Consolidated Investment Vehicles (CIVs) were$21 million[476]. - The Corporate Division's adjusted operating income (loss) was $(29) million in Q3 2024, compared to$155 million in Q3 2023, indicating a significant decline[467]. Shareholder and Equity Information - Adjusted operating shareholders' equity attributable to AGL as of September 2024 is $5,728 million, with a per share value of$113.96, compared to $5,990 million and$106.54 per share as of December 2023[510]. - The adjusted book value is reported at $8,582 million, translating to$166.47 per share, an increase from $8,765 million and$155.92 per share in December 2023[510]. - The total deferred acquisition costs are $172 million, which will be expensed in future accounting periods[510]. - The company reported unrealized losses on the investment portfolio amounting to$(211) million, impacting the adjusted operating shareholders' equity negatively[510].