Assured Guaranty(US:AGO)2025-11-07 13:34Economic Indicators - The U.S. unemployment rate as of August 2025 was 4.3%, up from 4.1% at the beginning of the year[393]. - The annual GDP growth rate for Q2 2025 was 3.8%, following a decline of 0.6% in Q1 2025[393]. - The inflation rate in the U.S. for the 12-month period ending September 2025 was 3.0%, compared to 2.4% for the same period in 2024[394]. - The U.K. inflation rate for the 12 months through September 2025 was 4.1%, up from 2.6% in the previous year[394]. - The Federal Open Market Committee (FOMC) lowered the federal funds rate from a target range of 5.25%-5.50% to 3.75%-4.00% between September 2024 and October 2025[395]. - The Bank of England's base rate was lowered to 4.00% as of November 6, 2025, in response to easing inflationary pressures[397]. Company Performance - Net income attributable to AGL for Q3 2025 was $105 million, down from $171 million in Q3 2024, primarily due to foreign exchange losses of $23 million compared to gains of $55 million in the prior year[432][437]. - Adjusted operating income for Q3 2025 was $124 million, a decrease from $130 million in Q3 2024, mainly due to lower benefits in loss expense for the U.S. RMBS sector[443]. - For the nine months ended September 30, 2025, net income attributable to AGL was $384 million, compared to $358 million in the same period of 2024, driven by a fair value gain on credit derivatives of $103 million[438]. - As of September 30, 2025, shareholders' equity attributable to AGL was $5,658 million, up from $5,495 million at the end of 2024[433]. - Total revenues for Q3 2025 were $207 million, down from $269 million in Q3 2024, with net earned premiums at $94 million compared to $97 million[436]. Share Repurchase and Investments - The Company has repurchased 155 million common shares for $5.8 billion since 2013, representing 80% of the total shares outstanding at the beginning of the repurchase program[424]. - The Company has agreed to invest an aggregate amount of $1.5 billion in alternative investments, including $1 billion in Sound Point managed investments[422]. - Cumulative share repurchases since 2013 amounted to $5,782 million, with an estimated accretive effect of approximately $65.18 per share in shareholders' equity attributable to AGL[427][428]. - The company redeemed $250 million of its common stock in Q3 2025, receiving $213 million in cash and $37 million in alternative investments[428]. Market Activity - New municipal bonds issued totaled $430.0 billion in the nine months ended September 30, 2025, compared to $375.1 billion in the same period of 2024[407]. - The total insured amount for new municipal bonds was $34.2 billion in the nine months ended September 30, 2025, an increase from $28.9 billion in the same period of 2024[407]. - The bond insurance market penetration based on par was 7.9% for the nine months ended September 30, 2025, compared to 7.7% for the same period in 2024[407]. - U.S. public finance GWP in Q3 2025 increased to $77 million from $35 million in Q3 2024, representing a 120% growth[471]. - Total GWP for Q3 2025 was $75 million, up from $61 million in Q3 2024, marking a 23% increase[471]. Financial Metrics - The effective tax rate for Q3 2025 was 15.4%, compared to 19.9% in Q3 2024, reflecting the tax jurisdictions of the company's subsidiaries[436][439]. - The overall pre-tax book yield of available-for-sale fixed-maturity securities and short-term investments was 4.80% as of September 30, 2025, compared to 4.10% a year earlier[488]. - The total net par outstanding for the financial guaranty portfolio increased to $274,875 million as of September 30, 2025, up from $261,552 million as of December 31, 2024, representing a growth of 5.03%[577]. - The total U.S. public finance exposure reached $212,091 million as of September 30, 2025, compared to $201,175 million at the end of 2024, marking an increase of 5.93%[577]. Risk Factors - Assured Guaranty is exposed to risks from geopolitical tensions, including the conflict arising from Russia's invasion of Ukraine[381]. - The company anticipates that a recession may increase the likelihood of defaults among obligors whose obligations it guarantees[392]. - The company identified no material direct exposure to Ukraine or Russia, with direct insurance exposure to Eastern Europe limited to $210 million in net par outstanding[450]. Operational Changes - The company opened new offices in Australia and Singapore in 2024 to expand its financial guaranty business geographically[409]. - The company is actively monitoring market volatility, which may create new business opportunities despite potential risks[392]. - The company has ongoing strategic transactions with Sound Point Capital Management and Assured Healthcare Partners, which may impact future performance[381]. Loss and Expense Management - The insurance segment's adjusted operating income for nine months 2025 was $389 million, compared to $427 million in nine months 2024, reflecting a decrease in performance[460]. - The company reported a loss and LAE of $38 million in nine months 2025, compared to a benefit of $54 million in nine months 2024[446]. - The economic loss development for U.S. public finance exposures was $51 million for the nine months ended September 30, 2025, mainly attributable to PREPA and certain healthcare exposures[505]. - The total net expected loss to be paid (recovered) for public finance was $103 million as of September 30, 2025, compared to $319 million as of September 30, 2024[500].