Assured Guaranty(US:AGO)2025-08-08 12:43PART I Financial Information This section presents the company's unaudited condensed consolidated financial statements, management's analysis, market risk disclosures, and internal controls Financial Statements This section presents Assured Guaranty Ltd.'s unaudited condensed consolidated financial statements and detailed notes for Q2 2025 Condensed Consolidated Balance Sheets This section provides the company's condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (Unaudited) | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Total Investments | $8,569 | $8,663 | | Total Assets | $12,095 | $11,901 | | Total Liabilities | $6,366 | $6,348 | | Total Shareholders' Equity | $5,729 | $5,553 | Condensed Consolidated Statements of Operations This section presents the condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $281M | $202M | $626M | $447M | | Total Expenses | $151M | $113M | $320M | $238M | | Net Income (Loss) | $106M | $81M | $291M | $194M | | Net Income (Loss) Attributable to AGL | $103M | $78M | $279M | $187M | | Diluted EPS | $2.08 | $1.41 | $5.54 | $3.31 | Condensed Consolidated Statements of Comprehensive Income (Loss) This section details the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2025 and 2024 Comprehensive Income (Loss) Highlights (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $106M | $81M | $291M | $194M | | Other Comprehensive Income (Loss) | $87M | $(5)M | $158M | $(33)M | | Comprehensive Income (Loss) Attributable to AGL | $190M | $73M | $437M | $154M | Condensed Consolidated Statements of Shareholders' Equity This section outlines the changes in condensed consolidated shareholders' equity for the periods presented - For the six months ended June 30, 2025, total shareholders' equity attributable to Assured Guaranty Ltd. increased from $5,495 million to $5,633 million. The increase was primarily driven by net income of $279 million and other comprehensive income of $158 million, partially offset by common share repurchases of $252 million and dividends of $37 million25 Condensed Consolidated Statements of Cash Flows This section presents the condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 Condensed Consolidated Cash Flow Summary (Unaudited) | Metric | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $165 | $(16) | | Net cash provided by (used in) investing activities | $351 | $340 | | Net cash provided by (used in) financing activities | $(327) | $(500) | | Increase (decrease) in cash | $197 | $(177) | Notes to Condensed Consolidated Financial Statements (Unaudited) This section provides detailed notes explaining the accounting policies and significant financial information presented in the statements - The company operates in two main segments: Insurance, which provides credit protection products for public finance and structured finance markets, and Asset Management, primarily through an ownership interest in Sound Point Capital Management, LP363738 - Total financial guaranty net par outstanding increased to $272.8 billion as of June 30, 2025, from $261.6 billion at year-end 2024. Below-investment-grade (BIG) exposure constituted 3.8% of the total net par outstanding8990 - Net expected loss to be paid increased to $186 million as of June 30, 2025, from $106 million at year-end 2024. The increase in the first six months of 2025 was driven by higher expected losses in public finance, particularly U.K. regulated utilities, PREPA, and healthcare, partially offset by a significant recovery from the LBIE litigation118127130 - The company repurchased 2.9 million common shares for $252 million in the first six months of 2025. As of August 6, 2025, an additional $300 million was authorized for repurchases, leaving a total authorization of approximately $356 million25366 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, economic environment, business strategies, and non-GAAP reconciliations Overview This section provides a high-level summary of the company's business segments and the prevailing economic environment - The company operates through two primary segments: Insurance (credit protection for public and structured finance) and Asset Management (via an ownership interest in Sound Point)381382 - Management highlights key economic factors impacting the business, including global tariff uncertainty, inflation rates in the U.S. (2.7%) and U.K. (4.1%), and the Federal Reserve holding the federal funds rate at 4.25%-4.50%. These factors can influence obligor default rates, new business opportunities, and investment portfolio values384386387 Key Business Strategies This section outlines the company's strategic priorities across its insurance, asset management, alternative investments, and capital management activities - The company is pursuing four key business strategies: Insurance (grow portfolio, mitigate losses), Asset Management (fee-based earnings via Sound Point), Alternative Investments (diversify, enhance returns, $1.5 billion commitment including $1 billion in Sound Point funds), and Capital Management (share repurchases, 154 million shares for $5.7 billion from 2013 through August 6, 2025)393394412413415 Executive Summary This section provides a concise overview of the company's financial performance and key metrics for the reporting period Financial Performance Summary | Metric | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | GAAP | | | | Net Income Attributable to AGL | $279M | $187M | | Diluted EPS | $5.54 | $3.31 | | Non-GAAP | | | | Adjusted Operating Income | $212M | $193M | | Adjusted Operating Income per Diluted Share | $4.21 | $3.41 | Shareholders' Equity Per Share Summary | Metric (per share) | As of June 30, 2025 | As of Dec 31, 2024 | | :--- | :--- | :--- | | Shareholders' Equity Attributable to AGL | $117.10 | $108.80 | | Adjusted Operating Shareholders' Equity (Non-GAAP) | $120.11 | $114.75 | | Adjusted Book Value (ABV) (Non-GAAP) | $176.95 | $170.12 | - The increase in net income for the first six months of 2025 compared to 2024 was primarily driven by foreign exchange gains of $116 million and a $103 million gain from the resolution of the LBIE litigation. This was partially offset by higher loss expenses and lower fair value gains on trading securities428436 Results of Operations by Segment This section analyzes the financial performance and key operational metrics for the company's Insurance, Asset Management, and Corporate segments Insurance Segment: New Business Production (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Gross Written Premiums (GWP) | $120M | $193M | | Present Value of New Business Production (PVP) | $103M | $218M | | Gross Par Written | $15,398M | $13,166M | - The Insurance segment's adjusted operating income decreased to $244 million in the first six months of 2025 from $265 million in the same period of 2024. The decrease was driven by higher loss expenses in public finance and lower earned premiums from refundings434448 - The Asset Management segment's adjusted operating income increased to $16 million in the first six months of 2025 from $1 million in 2024, primarily reflecting the performance of the company's investment in Sound Point508509 - The Corporate division's adjusted operating loss narrowed to $(49) million in the first six months of 2025 from $(72) million in 2024, mainly due to lower allocated operating expenses and positive equity earnings from alternative investments transferred to the holding company509510511 Non-GAAP Financial Measures This section defines and reconciles the company's non-GAAP financial measures, including Adjusted Operating Income and Adjusted Book Value - The company uses several non-GAAP measures, including Adjusted Operating Income, Adjusted Operating Shareholders' Equity, and Adjusted Book Value (ABV), to evaluate performance. These measures exclude items like unrealized gains/losses on investments and derivatives, which management believes are not indicative of core operating results534535542543 Reconciliation of Net Income to Adjusted Operating Income (Six Months Ended June 30) | Metric (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net income attributable to AGL | $279 | $187 | | Total pre-tax adjustments | $80 | $(6) | | Tax effect on adjustments | $(13) | $0 | | Adjusted operating income | $212 | $193 | Reconciliation of Shareholders' Equity to ABV (as of June 30, 2025) | Metric (in millions) | Amount | | :--- | :--- | | Shareholders' equity attributable to AGL | $5,633 | | Adjustments for unrealized gains/losses, etc. | $145 | | Adjusted operating shareholders' equity | $5,778 | | Adjustments for DAC, future revenue, etc. | $2,735 | | Adjusted Book Value (ABV) | $8,513 | Insured Portfolio This section provides an overview of the company's insured portfolio, detailing net par outstanding by sector and key exposures Financial Guaranty Net Par Outstanding by Sector | Sector | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | Total U.S. Public Finance | $208,716 | $201,175 | | Total Non-U.S. Public Finance | $53,132 | $49,200 | | Total Structured Finance | $10,930 | $11,177 | | Total Net Par Outstanding | $272,778 | $261,552 | - As of June 30, 2025, the company's only remaining unresolved insured Puerto Rico exposure in payment default was PREPA, with $532 million in net par outstanding566 Liquidity and Capital Resources This section discusses the company's liquidity sources, capital management strategies, and investment portfolio characteristics - The liquidity of the holding companies (AGL and U.S. Holding Companies) is primarily dependent on dividends and distributions from operating subsidiaries. Key uses of funds include debt service, shareholder dividends, and share repurchases571 - In July 2025, the Maryland Insurance Administration (MIA) approved AG's redemption of $250 million of its common stock from its parent, AGMH, expected to be completed in Q3 2025604 - The company's investment portfolio is managed to support high ratings, manage risk, and maintain liquidity. As of June 30, 2025, the available-for-sale fixed-maturity securities portfolio had a duration of 4.7 years, with 86.6% rated BBB or higher606611613 Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its market risk exposures since the end of the previous fiscal year, December 31, 2024 - There were no material changes to the market risks to which the Company is exposed since December 31, 2024639 Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025. No material changes were identified in the company's internal control over financial reporting during the second quarter of 2025 - The President and Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025641 - No changes in internal control over financial reporting occurred during the second quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the company's internal controls642 PART II Other Information This section provides additional information on legal proceedings, risk factors, and equity security transactions Legal Proceedings This section refers to the detailed disclosures on legal proceedings provided in Notes 4 and 11 of the financial statements, particularly highlighting ongoing litigation related to the company's insured exposure to PREPA (Puerto Rico Electric Power Authority) - The company is subject to various legal proceedings, with specific details provided in Note 4 and Note 11 of the financial statements, including ongoing litigation concerning PREPA643 Risk Factors The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024644 Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's repurchases of its own common shares during the second quarter of 2025. A total of 1,537,505 shares were repurchased under the publicly announced program at an average price of approximately $85.22 per share. It also notes a new $300 million repurchase authorization by the Board on August 6, 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 489,406 | $83.27 | | May 2025 | 510,316 | $87.14 | | June 2025 | 599,579 | $85.17 | | Total Q2 | 1,599,301 | $85.22 | - On August 6, 2025, the Board authorized an additional $300 million for share repurchases. As of that date, the total remaining authorization was approximately $356 million648