Assured Guaranty Ltd. (AGO) delivered operating net income of 56 cents per share in the second quarter of 2014, surpassing the Zacks Consensus Estimate by 50%. Earnings improved 7.7% from the prior-year quarter on lower share count.
Share price gained 3.3% to close at $22.70 on Friday.
Including one-time items, net income of Assured Guaranty came in at 89 cents per share, declining 23.2% year over year.
Operational Update
Assured Guaranty generated total revenue of $239 million, down 15.8% year over year due to significantly lower net earned premiums.
Net investment income of Assured Guaranty increased 3.2% year over year to $97 million.
Present Value of New Business Production (PVP) improved 69% year over year to $27 million. The company continued to benefit from a diversified strategy, which includes targeting U.S. public finance, international infrastructure and structured finance opportunities.
Total expenses of Assured Guaranty fell nearly 27% year over year to $124 million. The decline was primarily attributed to lower loss expense in the reported quarter.
Loss expense at Assured Guaranty fell 50% year over year to $41 million, largely attributable to improvements in U.S. RMBS expected losses.
Financial Details
Assured Guaranty exited the quarter with $106 million in cash, decreasing from $184 million as of 2013 end.
Operating shareholders’ equity at quarter end stood at $6.15 billion, declining slightly from $6.16 billion as of 2013 end.
Long-term borrowings of Assured Guaranty were $1.3 billion as of Jun 30 against $0.8 billion as of 2013 end.
Share Repurchase Update
Assured Guaranty bought back 7.1 million of its shares for $177 million and another 5.7 million shares since Jun 30. The board of directors approved an additional $400 million share repurchase authorization. Total buyback authorization stands at $445 million.
Zacks Rank
Assured Guaranty presently carries a Zacks Rank #3 (Hold).
Performance of Other Multi Line Insurers
While Cigna Corp. (CI) and Assurant Inc. (AIZ) surpassed their respective Zacks Consensus Estimate, CNO Financial Group Inc. (CNO) missed the same in the second quarter.
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