Hamilton, Bermuda based Assured Guaranty Ltd. (AGO) is the holding company for the Assured Guaranty family of companies. The company is a leader in bond insurance and enjoys strong financial strength ratings from S&P, Moody’s, KBRA and A.M.Best.
The company has three principal U.S. financial guaranty direct subsidiaries and one principal Bermuda financial guaranty reinsurance subsidiary. Through its operating subsidiaries, the company provides credit protection products to the U.S. and international public finance and structured finance markets.
Excellent Quarterly Results
The company reported its Q1 results on May 9. Operating income for the quarter increased to $140 million, from $132 million in the same quarter last year, thanks mainly to higher premium and credit derivative accelerations, lower loss expense and a lower effective tax rate. Operating net income of $0.89 per share handily beat the Zacks Consensus Estimate of $0.58 per share by 53.5%.
Net earned premiums increased to $171 million from $169 million a year ago. Adjusted book value per share increased to $54.66, surpassing the previous record of $54.59. The capital base remained strong with consolidated investment portfolio and cash of $11.4 billion and claims-paying resources of $12.0 billion as of March 31.
On April 1, Assured Guaranty Corp. (AGC) acquired Radian Asset Assurance, which will be accretive to earnings.
Returning Capital to Shareholders
The company bought back 5.9 million common shares in the quarter, and from January 2013 through the end of the Q1 2015, they have returned almost $1.2 billion of capital through share repurchases and dividends. They now have an authorization for an additional $400 million of share repurchases.
Rising Estimates
After a strong quarterly report, analysts have raised their estimates for the company. Zacks Consensus Estimates for the current and the next fiscal year now stand at $2.71 per share and $2.48 per share respectively, up from $2.33 per share each before the results. Rising estimates sent the stock back to a Zacks Rank #1 (Strong Buy) last month.
The company has beaten Zacks Consensus Estimate in three out of last four quarters, with an average quarterly positive surprise of 28%.
Strong Growth Story
With over three decades of experience in the financial guarantee market, excellent underwriting and pricing discipline and strong capital management, the company has been able to increase its penetration in the US public finance markets and maintain its strong financial strength ratings. They are probably the only long-standing financial guarantee company that continued to write new business throughout the financial crisis and recession.
Further, as the US economy continues to improve and the Fed appears to be on track to start raising short-term interest rates, the outlook for the company remains positive as they are well positioned to benefit from the rising rate scenario with their industry leading position.
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ASSURED GUARNTY (AGO): Free Stock Analysis Report
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