Assured Guaranty(AGO) - 2025 Q2 - Quarterly Results

Selected Financial Highlights This section overviews Assured Guaranty's Q2 and H1 2025 financial performance, highlighting GAAP net income growth and key balance sheet metrics Q2 and H1 2025 vs 2024 GAAP Performance | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (attributable to AGL) | $103M | $78M | $279M | $187M | | Net Income per Diluted Share | $2.08 | $1.41 | $5.54 | $3.31 | | GAAP ROE (annualized for Qtr) | 7.4% | 5.6% | 10.0% | 6.6% | Q2 and H1 2025 vs 2024 Non-GAAP Performance | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Adjusted Operating Income | $50M | $80M | $212M | $193M | | Adjusted Operating Income per Diluted Share | $1.01 | $1.44 | $4.21 | $3.41 | | Adjusted Operating ROE (annualized for Qtr) | 3.5% | 5.4% | 7.3% | 6.5% | Key Balance Sheet and Exposure Metrics | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Shareholders' Equity per Share | $117.10 | $108.80 | | Adjusted Book Value (ABV) per Share | $176.95 | $170.12 | | Financial Guaranty Net Par Outstanding | $272.8B | $261.6B | | Claims-Paying Resources | $10.35B | $10.21B | - New business production in the Insurance Segment showed mixed results in Q2 2025 compared to Q2 2024, with Gross Written Premiums (GWP) decreasing to $85 million from $132 million, and the Present Value of New Business Production (PVP) falling to $64 million from $155 million, while Gross Par Written increased to $10.4 billion from $9.4 billion[6] Condensed Consolidated Statements of Operations (unaudited) This section presents the company's detailed income statement for Q2 and H1 2025, showing significant revenue and net income growth from foreign exchange and fair value gains Consolidated Statement of Operations Summary | Line Item | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $281M | $202M | $626M | $447M | | Total Expenses | $151M | $113M | $320M | $238M | | Net Income (loss) attributable to AGL | $103M | $78M | $279M | $187M | | Diluted Earnings Per Share | $2.08 | $1.41 | $5.54 | $3.31 | - A significant driver of the revenue increase in H1 2025 was a $116 million foreign exchange gain, compared to a $12 million loss in H1 2024, with fair value gains on credit derivatives also increasing to $105 million in H1 2025 versus $16 million in H1 2024[14] Condensed Consolidated Balance Sheets (unaudited) This section snapshots Assured Guaranty's financial position as of June 30, 2025, showing increased total assets and shareholders' equity from net income and reduced comprehensive loss Consolidated Balance Sheet Summary | Line Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Investments | $8,569M | $8,663M | | Total Assets | $12,095M | $11,901M | | Total Liabilities | $6,366M | $6,348M | | Total Shareholders' Equity attributable to AGL | $5,633M | $5,495M | - The company's book value improved, with retained earnings decreasing slightly but a significant reduction in accumulated other comprehensive loss from ($385) million to ($227) million, contributing to the overall increase in shareholders' equity[16] GAAP to Non-GAAP Reconciliations This chapter details reconciliations of GAAP measures to non-GAAP Adjusted Operating Income, Adjusted Operating Shareholders' Equity, and Adjusted Book Value, removing non-economic fluctuations - To reconcile Net Income to Adjusted Operating Income for Q2 2025, the largest adjustment was the removal of a $71 million pre-tax foreign exchange gain on remeasurement of premiums receivable and loss reserves[18] Reconciliation of Shareholders' Equity to Adjusted Book Value (ABV) | Line Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Shareholders' equity attributable to AGL | $5,633M | $5,495M | | Adjusted operating shareholders' equity | $5,778M | $5,795M | | Adjusted Book Value (ABV) | $8,513M | $8,592M | - The primary additions to calculate ABV from adjusted operating shareholders' equity are the net deferred premium revenue on financial guaranty contracts ($3,409 million) and adjustments for deferred acquisition costs and future revenue[24] Income Components This section breaks down income by segment and division for Q2 and H1 2025, highlighting the Insurance segment as the primary operating income contributor Income Breakdown by Segment (Q2 2025) | Segment/Division | Total (Net Income Contribution) | | :--- | :--- | | Insurance | $76M | | Asset Management | $4M | | Corporate | $(29)M | | Other | $(1)M | | Reconciling Items | $53M | | Consolidated Total | $103M | - For the six months ended June 30, 2025, the Insurance segment generated $244 million and the Asset Management segment generated $16 million towards the consolidated net income of $279 million, before corporate expenses and other items[30] Investment Portfolio This section details Assured Guaranty's investment portfolio composition, performance, and income, showing a conservatively managed portfolio primarily in investment-grade securities Fixed-Maturity Securities, Short-Term Investments and Cash This sub-chapter details the company's fixed-maturity securities, short-term investments, and cash, showing a portfolio primarily in investment-grade corporate and public securities Fixed-Maturity Securities (Available-for-Sale) by Rating | Rating | Fair Value | % of Portfolio | | :--- | :--- | :--- | | AAA/Aaa | $832M | 12.8% | | AA/Aa | $2,074M | 31.9% | | A/A | $1,591M | 24.5% | | BBB | $1,091M | 16.8% | | BIG | $544M | 8.4% | | Not rated | $328M | 5.0% | | Total | $6,498M | 100.0% | - The total portfolio of fixed-maturity securities, short-term investments, and cash had a fair value of $7.738 billion with an average after-tax book yield of 3.81% and a duration of 4.1 years[37][39] Investment Portfolio, Cash and CIVs This part shows the allocation of the investment portfolio, cash, and CIVs across subsidiaries, with most assets held within insurance-related entities - As of June 30, 2025, insurance-related subsidiaries held $8.07 billion of the total $8.87 billion investment portfolio and cash, while holding companies held $779 million[42] - The company's alternative investments (excluding its ownership interest in Sound Point) have demonstrated strong performance, with an inception-to-date annualized internal rate of return (IRR) of 13%[44] Income from Investment Portfolio and CIVs This sub-chapter details income from the investment portfolio by segment and type, with the Insurance segment being the primary generator of net investment income Income from Investments by Source (Q2 2025) | Source | Insurance Segment | Corporate | Total | | :--- | :--- | :--- | :--- | | Net Investment Income | $89M | $3M | $89M | | Equity in Earnings of Investees | $2M | $3M | $3M | - For the six months ended June 30, 2025, total net investment income was $176 million, and equity in earnings of investees was $56 million, a significant increase from $29 million in the prior year period, largely driven by the performance of Sound Point and other funds[51] Insurance Segment This core section comprehensively reviews the Insurance segment's performance, claims-paying resources, new business production, and detailed insured portfolio composition and credit quality Insurance Segment Results This sub-chapter presents the Insurance segment's operating results, showing a decrease in adjusted operating income for Q2 2025 due to higher expenses Insurance Segment Operating Results | Line Item | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Segment Revenues | $199M | $189M | $438M | $418M | | Total Segment Expenses | $105M | $70M | $169M | $155M | | Segment Adjusted Operating Income | $76M | $116M | $244M | $265M | Claims-Paying Resources This section details the components of the company's claims-paying resources, which increased slightly to $10.35 billion as of June 30, 2025, underscoring robust capital Components of Claims-Paying Resources (As of June 30, 2025) | Component | Amount | | :--- | :--- | | Qualified Statutory Capital | $5,758M | | Unearned Premium Reserve & Net Deferred Ceding Commission | $3,003M | | Present Value of Installment Premium | $1,137M | | CCS | $400M | | Other Reserves | $52M | | Total Claims-Paying Resources | $10,350M | New Business Production This part details new business activity, reconciling GWP to PVP and showing quarterly trends, with Q2 2025 PVP at $64 million on $10.4 billion gross par written New Business Production Summary | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total GWP | $85M | $132M | $120M | $193M | | Total PVP | $64M | $155M | $103M | $218M | | Gross Par Written | $10,396M | $9,423M | $15,398M | $13,166M | - Quarterly PVP has been volatile, with Q2 2025 ($64 million) showing a recovery from Q1 2025 ($39 million) but remaining significantly below the levels of Q2 2024 ($155 million)[68] Estimated Net Exposure Amortization and Future Revenues This page projects future amortization of insured net debt service and recognition of premium and credit derivative revenues from the in-force portfolio - The company has a total of $3.67 billion in deferred premium revenue from financial guaranty insurance and $104 million in future credit derivative revenues expected to be earned over the life of the in-force portfolio[74] Loss Measures and Reserves This section details the company's loss experience, including the roll-forward of expected losses and projected expensing schedule, noting an increase in net expected loss - The roll-forward of net expected loss to be paid shows an increase from $106 million at the end of 2024 to $186 million as of June 30, 2025, driven by $95 million in net economic loss development in Public Finance, partially offset by a $74 million benefit in Structured Finance[78] - The total present value of net expected loss to be expensed over future periods is $260 million[86] Financial Guaranty Profile This extensive section details the insured portfolio as of June 30, 2025, including breakdowns by asset type, credit rating, geography, and specific below-investment-grade exposures Net Par Outstanding by Asset Type | Asset Type | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total U.S. Public Finance | $208.7B | $201.2B | | Total Non-U.S. Public Finance | $53.1B | $49.2B | | Total Structured Finance | $10.9B | $11.2B | | Total Net Par Outstanding | $272.8B | $261.6B | - The insured portfolio remains predominantly investment grade, with 96.2% of net par outstanding rated BBB or higher based on internal ratings, and below-investment-grade (BIG) exposure representing 3.8% of the total[90] - Geographically, the portfolio is concentrated in the U.S. (79.5%), with the United Kingdom being the largest non-U.S. exposure at 16.3% of the total net par outstanding[94] Asset Management Segment This section covers the Asset Management segment's financial results, showing significant growth in adjusted operating income for H1 2025 driven by higher revenues and equity in earnings Asset Management Results This sub-chapter presents the Asset Management segment's operating results, showing significant adjusted operating income growth for H1 2025 due to strong investment performance Asset Management Segment Operating Results | Line Item | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Segment Revenues | $15M | $7M | $21M | $8M | | Equity in Earnings (losses) | $(1)M | $(3)M | $12M | $(2)M | | Segment Adjusted Operating Income | $4M | $0M | $16M | $1M | Corporate Division This section details the Corporate division's results, primarily holding company activities and expenses, consistently reporting an operating loss that improved in H1 2025 Corporate Division Results This sub-chapter shows the Corporate division's revenues and expenses, reporting an improved adjusted operating loss for Q2 and H1 2025 due to lower expenses Corporate Division Operating Results | Line Item | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Expenses | $39M | $44M | $79M | $91M | | Adjusted Operating Income (Loss) | $(29)M | $(35)M | $(49)M | $(72)M | Other This section details the financial impact of consolidating FG VIEs and CIVs, along with intersegment eliminations, which typically have a minor net impact on adjusted operating income Other Results This sub-chapter breaks down the 'Other' category, showing a minor adjusted operating loss for Q2 2025 and a positive contribution for H1 2025 - The "Other" category, which reflects the consolidation of FG VIEs, CIVs, and intersegment eliminations, resulted in an adjusted operating loss of ($1) million for the three months ended June 30, 2025[135] Summary This final section provides high-level summary tables of financial and statistical data and non-GAAP reconciliations from 2021 through H1 2025, offering historical context Summary of Financial and Statistical Data This sub-chapter presents a historical summary of key GAAP and statutory financial data from 2021 through H1 2025, enabling trend analysis of core metrics - The company's financial guaranty net par outstanding has steadily grown from $236.4 billion at year-end 2021 to $272.8 billion as of June 30, 2025[140] - Total claims-paying resources have remained relatively stable, standing at $10.35 billion at June 30, 2025, compared to $11.22 billion at year-end 2021[140] Summary of GAAP to Non-GAAP Reconciliations This sub-chapter provides historical reconciliations for key non-GAAP measures like PVP, Adjusted Operating Income, and ABV from 2021 through H1 2025 Historical Adjusted Book Value (ABV) per Share | Date | ABV per Share | | :--- | :--- | | June 30, 2025 | $176.95 | | Dec 31, 2024 | $170.12 | | Dec 31, 2023 | $155.92 | | Dec 31, 2022 | $141.98 | | Dec 31, 2021 | $130.67 | Glossary This section provides definitions for key terms and concepts used throughout the financial supplement, including financial guaranty insurance terminology and performance indicators Non-GAAP Financial Measures This section explains the non-GAAP financial measures used by the company, detailing their rationale and specific adjustments from comparable GAAP measures