Assured Guaranty(AGO) - 2025 Q1 - Quarterly Results

Selected Financial Highlights Q1 2025 financial and operating performance, including GAAP and non-GAAP profitability and balance sheet highlights, are presented Financial and Operating Performance For the first quarter of 2025, Assured Guaranty reported significant year-over-year growth in profitability, with GAAP net income rising to $176 million ($3.44 per diluted share) from $109 million ($1.89 per diluted share). Non-GAAP adjusted operating income also increased to $162 million from $113 million. Key balance sheet metrics like shareholders' equity per share and adjusted book value (ABV) per share saw modest growth from year-end 2024. However, new business production, measured by Gross Written Premiums (GWP) and Present Value of New Business Production (PVP), declined compared to the prior-year quarter Q1 2025 vs Q1 2024 GAAP Highlights | GAAP Highlight | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income attributable to AGL | $176 million | $109 million | | Net income per diluted share | $3.44 | $1.89 | | GAAP return on equity (ROE) | 12.7% | 7.7% | Q1 2025 vs Q1 2024 Non-GAAP Highlights | Non-GAAP Highlight | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Adjusted operating income | $162 million | $113 million | | Adjusted operating income per diluted share | $3.18 | $1.96 | | Adjusted operating ROE | 11.2% | 7.6% | Key Balance Sheet and Exposure Metrics | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Shareholders' equity per share | $112.80 | $108.80 | | Adjusted book value (ABV) per share | $172.79 | $170.12 | | Financial guaranty net par outstanding | $263.6 billion | $261.6 billion | | Claims-paying resources | $10.3 billion | $10.2 billion | - Gross written premiums (GWP) decreased to $35 million in Q1 2025 from $61 million in Q1 2024, and the Present Value of New Business Production (PVP) also declined to $39 million from $63 million over the same period[6] Condensed Consolidated Financial Statements The company's condensed consolidated statements of operations and balance sheets for Q1 2025 and year-end 2024 are provided Condensed Consolidated Statements of Operations Total revenues for Q1 2025 increased to $345 million from $245 million year-over-year, primarily driven by a significant increase in fair value gains on credit derivatives ($104 million vs. $10 million) and a positive swing in foreign exchange gains. This revenue growth, despite a decrease in net earned premiums, led to a higher net income attributable to AGL of $176 million, up from $109 million in Q1 2024 Condensed Consolidated Statements of Operations (unaudited) | (in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net earned premiums | $91 | $119 | | Net investment income | $87 | $84 | | Fair value gains on credit derivatives | $104 | $10 | | Total revenues | $345 | $245 | | Loss and LAE (benefit) | $40 | $(1) | | Total expenses | $169 | $125 | | Net income attributable to AGL | $176 | $109 | | Diluted EPS | $3.44 | $1.89 | Condensed Consolidated Balance Sheets As of March 31, 2025, Assured Guaranty's balance sheet remained stable compared to year-end 2024. Total assets were $11.94 billion, with total investments at $8.67 billion. Total shareholders' equity attributable to AGL increased slightly to $5.59 billion from $5.50 billion at the end of 2024, primarily due to retained earnings growth Condensed Consolidated Balance Sheets (unaudited) | (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total investments | $8,670 | $8,663 | | Total assets | $11,938 | $11,901 | | Unearned premium reserve | $3,671 | $3,719 | | Long-term debt | $1,700 | $1,699 | | Total liabilities | $6,281 | $6,348 | | Total shareholders' equity attributable to AGL | $5,590 | $5,495 | GAAP to Non-GAAP Reconciliations Reconciliations of GAAP financial measures to non-GAAP adjusted operating income and adjusted book value (ABV) are detailed Adjusted Operating Income Reconciliation Adjusted operating income for Q1 2025 was $162 million, derived from a GAAP net income of $176 million. The primary adjustments included adding back $16 million in realized investment losses and subtracting $33 million in foreign exchange gains on remeasurement of reserves Reconciliation of Net Income to Adjusted Operating Income (Q1 2025) | (in millions) | Amount | | :--- | :--- | | Net income attributable to AGL | $176 | | Less: Realized gains on investments | $(16) | | Less: Non-credit unrealized fair value gains on credit derivatives | $(2) | | Less: Fair value gains on CCS | $2 | | Less: Foreign exchange gains on remeasurement | $33 | | Less: Tax effect on adjustments | $(3) | | Adjusted operating income | $162 | Adjusted Book Value (ABV) Reconciliation As of March 31, 2025, Adjusted Book Value (ABV) was $8.56 billion, or $172.79 per share. This is reconciled from GAAP shareholders' equity of $5.59 billion by adjusting for unrealized gains/losses on investments and derivatives, and adding back the value of the in-force book of business, specifically the net deferred premium revenue in excess of expected losses ($3.42 billion) Reconciliation of Shareholders' Equity to ABV (March 31, 2025) | (in millions) | Amount | | :--- | :--- | | Shareholders' equity attributable to AGL | $5,590 | | Adjustments for unrealized gains/losses (net of tax) | $228 | | Adjusted operating shareholders' equity | $5,818 | | Less: Deferred acquisition costs | $181 | | Plus: Net present value of estimated net future revenue | $199 | | Plus: Net deferred premium revenue in excess of expected loss | $3,415 | | Plus: Taxes on adjustments | $(689) | | Adjusted Book Value (ABV) | $8,562 | Income Components Income is broken down by segment, highlighting contributions from Insurance, Asset Management, and Corporate divisions Income Components by Segment The breakdown of income for Q1 2025 shows the Insurance segment as the primary profit driver, contributing $168 million to adjusted operating income. The Asset Management segment generated $12 million, while the Corporate division recorded a loss of $20 million. The Insurance segment's revenue of $239 million was primarily from net earned premiums and net investment income Components of Income for Q1 2025 (in millions) | Segment | Total Revenues | Total Expenses | Equity in Earnings | Adjusted Operating Income (pre-tax) | | :--- | :--- | :--- | :--- | :--- | | Insurance | $239 | $64 | $30 | $205 | | Asset Management | $6 | $4 | $13 | $15 | | Corporate | $4 | $40 | $16 | $(20) | Investment Portfolio The investment portfolio, including fixed-maturity securities, cash, and alternative investments by asset type and rating, is presented Fixed-Maturity Securities, Short-Term Investments and Cash As of March 31, 2025, the company's available-for-sale fixed-maturity securities portfolio had a fair value of $6.42 billion. The portfolio is predominantly high-quality, with 86.0% rated A or higher (including U.S. government securities). The largest allocations are to corporate securities (38.6%) and obligations of states and political subdivisions (29.9%). The portfolio's duration was 3.8 years Fixed-Maturity AFS Portfolio Composition (March 31, 2025) | Asset Type | Fair Value (millions) | % of Portfolio | | :--- | :--- | :--- | | Corporate securities | $2,477 | 38.6% | | Obligations of states and political subdivisions | $1,924 | 29.9% | | RMBS | $569 | 8.9% | | CLOs | $542 | 8.4% | | Other | $903 | 14.2% | | Total | $6,415 | 100.0% | Fixed-Maturity AFS Portfolio by Rating (March 31, 2025) | Rating | Fair Value (millions) | % of Portfolio | | :--- | :--- | :--- | | U.S. government and agencies | $72 | 1.1% | | AAA/Aaa | $801 | 12.5% | | AA/Aa | $2,181 | 34.0% | | A/A | $1,501 | 23.4% | | BBB | $1,071 | 16.7% | | BIG | $538 | 8.4% | | Not rated | $251 | 3.9% | | Total | $6,415 | 100.0% | Investment Portfolio, Cash and CIVs The total investment portfolio and cash stood at $8.85 billion as of March 31, 2025. The vast majority of these assets ($7.94 billion) are held by insurance-related subsidiaries, with holding companies holding $907 million. Alternative investments, excluding the interest in Sound Point, have generated an inception-to-date annualized IRR of 13% - Alternative investments (excluding Sound Point) had an inception-to-date annualized internal rate of return (IRR) of 13%[40] Investment Portfolio by Entity Type (March 31, 2025) | (in millions) | Insurance Subsidiaries | Holding Companies | Other | AGL Consolidated | | :--- | :--- | :--- | :--- | :--- | | Fixed-maturity securities | $6,534 | $18 | $— | $6,552 | | Short-term investments and cash | $952 | $339 | $44 | $1,335 | | Other invested assets | $449 | $550 | $(39) | $960 | | Total | $7,935 | $907 | $5 | $8,847 | Insurance Segment The Insurance segment's results, claims-paying resources, new business production, and financial guaranty profile are detailed here Insurance Segment Results The Insurance segment's adjusted operating income increased to $168 million in Q1 2025 from $149 million in Q1 2024. This improvement was driven by a combination of higher net earned premiums and credit derivative revenues (up to $134 million from $122 million) and a loss benefit of $23 million compared to a $4 million loss expense in the prior year Insurance Segment Results (in millions) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net earned premiums and credit derivative revenues | $134 | $122 | | Net investment income | $86 | $83 | | Total segment revenues | $239 | $229 | | Loss expense (benefit) | $(23) | $4 | | Total segment expenses | $64 | $85 | | Equity in earnings of investees | $30 | $40 | | Segment adjusted operating income | $168 | $149 | Claims-Paying Resources As of March 31, 2025, the company's total claims-paying resources were robust at $10.27 billion, a slight increase from year-end 2024. Key components include $5.78 billion in qualified statutory capital and $2.96 billion in unearned premium reserves. Leverage ratios remained stable, with the net exposure to qualified statutory capital ratio at 46:1 Claims-Paying Resources (March 31, 2025) | (in millions) | Amount | | :--- | :--- | | Qualified statutory capital | $5,779 | | Unearned premium reserve | $2,961 | | Loss and LAE reserves | $46 | | Present value of installment premium | $1,080 | | Committed capital securities (CCS) | $400 | | Total claims-paying resources | $10,266 | New Business Production New business production declined in Q1 2025 compared to the prior-year quarter. Gross Written Premiums (GWP) fell to $35 million from $61 million, and the non-GAAP measure Present Value of New Business Production (PVP) decreased to $39 million from $63 million. Despite the lower premium volume, Gross Par Written increased to $5.0 billion from $3.7 billion, driven by U.S. public finance New Business Production (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Gross Written Premiums (GWP) | $35 | $61 | | Present Value of New Business Production (PVP) | $39 | $63 | | Gross par written | $5,002 | $3,743 | - The decline in PVP was seen across all categories, with U.S. Public Finance PVP falling to $25 million from $43 million year-over-year[62] Financial Guaranty Profile As of March 31, 2025, the total financial guaranty net par outstanding was $263.6 billion. The portfolio is heavily weighted towards public finance ($252.5 billion, or 95.8% of total) and is geographically concentrated in the United States (80.0%). The credit quality remains high, with 96.4% of the portfolio rated investment grade - Total net par outstanding was $263.6 billion, with U.S. public finance accounting for $202.4 billion[80] - The portfolio is predominantly investment grade, with 96.4% rated BBB or higher. Below-investment-grade (BIG) exposures represent 3.6% of the total[81] - Geographically, 80.0% of the exposure is in the U.S., followed by the U.K. at 15.9%[84] Puerto Rico Profile As of March 31, 2025, the company's primary remaining defaulted exposure in Puerto Rico is to PREPA, with a total net par outstanding of $532 million. The company also has $92 million in non-defaulting exposure to other Puerto Rico entities Puerto Rico Net Par Outstanding (March 31, 2025) | Issuer | Net Par Outstanding (millions) | | :--- | :--- | | PREPA (Defaulted) | $532 | | Resolved Exposure | $13 | | Non-Defaulting Exposure | $92 | Below Investment Grade Exposures Total below-investment-grade (BIG) net par outstanding decreased to $9.54 billion as of March 31, 2025, from $10.18 billion at year-end 2024. The largest concentration of BIG exposure is in non-U.S. public finance regulated utilities ($4.9 billion), primarily related to Southern Water and Thames Water in the U.K - Total BIG net par outstanding was $9,542 million, down from $10,182 million at the end of 2024[98] - The largest BIG exposures by revenue source are Southern Water Services Limited ($2.7 billion net par) and Thames Water Utilities Finance Plc ($2.2 billion net par)[105] Asset Management Segment The Asset Management segment's financial performance, focusing on adjusted operating income and revenue drivers, is outlined Asset Management Results The Asset Management segment reported a significant increase in profitability, with adjusted operating income rising to $12 million in Q1 2025 from just $1 million in Q1 2024. The growth was primarily driven by a $12 million increase in equity in earnings of investees Asset Management Segment Results (in millions) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Segment revenues | $6 | $1 | | Segment expenses | $4 | $— | | Equity in earnings of investees | $13 | $1 | | Segment adjusted operating income | $12 | $1 | Corporate Division The Corporate division's financial results, detailing revenues, expenses, and adjusted operating income (loss), are presented Corporate Division Results The Corporate division's adjusted operating loss narrowed to $20 million in Q1 2025 from a loss of $37 million in Q1 2024. The improvement was mainly due to the recognition of $16 million in equity in earnings of investees, which was not present in the prior-year period, while interest and operating expenses remained relatively stable Corporate Division Results (in millions) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $4 | $5 | | Total expenses | $40 | $47 | | Equity in earnings of investees | $16 | $— | | Adjusted operating income (loss) | $(20) | $(37) | Summary A multi-year summary of key financial and statistical data, including historical GAAP and non-GAAP reconciliations, is offered Summary of Financial and Statistical Data This section provides a multi-year summary of key financial and statistical data. As of March 31, 2025, total assets were $11.9 billion and shareholders' equity was $5.6 billion. Financial guaranty net par outstanding has grown steadily from $236 billion in 2021 to $264 billion. Total claims-paying resources have remained robust, standing at $10.3 billion Historical Key Metrics (End of Period) | (in billions) | Mar 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $11.9 | $11.9 | $12.5 | $16.8 | | Shareholders' Equity (AGL) | $5.6 | $5.5 | $5.7 | $5.1 | | Net Par Outstanding | $263.6 | $261.6 | $249.2 | $233.3 | | Total Claims-Paying Resources | $10.3 | $10.2 | $10.7 | $10.8 | Summary of GAAP to Non-GAAP Reconciliations This summary presents historical reconciliations of key non-GAAP metrics. Adjusted operating income has consistently been a significant contributor to earnings, totaling $389 million in 2024 and $648 million in 2023. Adjusted Book Value (ABV) per share has shown consistent growth, increasing from $130.67 at year-end 2021 to $172.79 as of March 31, 2025, highlighting the value of the company's in-force business Historical Adjusted Operating Income (in millions) | | Q1 2025 | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) attributable to AGL | $176 | $376 | $739 | $124 | | Adjusted operating income (loss) | $162 | $389 | $648 | $267 | Historical Adjusted Book Value (ABV) Per Share | | Mar 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Shareholders' equity per share | $112.80 | $108.80 | $101.63 | $85.80 | | ABV per share | $172.79 | $170.12 | $155.92 | $141.98 |