Assured Guaranty Ltd. AGO delivered operating net income of $1.83 per share in the second quarter of 2015 that breezed past the Zacks Consensus Estimate of 60 cents.
Earnings improved more than three-fold year over year
The record bottom-line growth was driven by bargain purchase gain plus settlement of pre-existing relationships due to the Radian Asset acquisition and massive top-line growth.
Including one-time items, net income of Assured Guaranty came in at $1.96 per share, significantly higher than 89 cents reported in the year-ago quarter.
Operational Update
Assured Guaranty generated total revenue of $695 million in the second quarter, which surged 96.9% year over year due to 61% higher net earned premiums and a nearly eight-fold year-over-year increase in other income.
Net investment income of Assured Guaranty increased about 2.1% year over year to $98 million.
Assured Guaranty’s credit derivative revenues were also up year over year to $161 million, primarily due to the Radian Asset acquisition.
However, total expenses of Assured Guaranty climbed to $286 million from $135 million a year ago. The rise stemmed from higher loss and loss adjustment expenses.
Financial Details
Assured Guaranty exited the quarter with $75 million in cash, in line with the 2014-end level.
Total shareholders’ equity at the end of the quarter was $5.80 billion, up from $5.76 billion at year-end 2014.
Long-term borrowings of Assured Guaranty remained almost unchanged from the 2014-end level of $1.30 billion as of Jun 30, 2015.
Book value was recorded at $58.69 per share as of Jun 30, 2015, up 9.4% from the end of 2014.
Share Repurchase
In the quarter under review, Assured Guaranty spent $133 million to buy back 4.7 million shares. Subsequent to the second quarter, through Aug 5, the company spent another $45 million to repurchase 1.8 million shares. With these, Assured Guaranty has shares worth $280 million remaining under its authorization.
Zacks Rank
Assured Guaranty carries a Zacks Rank #3 (Hold).
Performance of Other MultiLine Insurers
The Hartford Financial Services Group Inc. HIG reported second-quarter operating earnings per share of 91 cents, which surpassed the Zacks Consensus Estimate by 16.67%. The bottom line also surged a whopping 193.5% year over year.
Radian Group Inc. RDN reported second-quarter operating income of 40 cents per share beating the Zacks Consensus Estimate by 11.1%. Earnings surged 74% from 23 cents reported in the prior-year quarter.
Private mortgage insurer, MGIC Investment Corp. MTG reported second-quarter net income per share of 28 cents, which breezed past the Zacks Consensus Estimate of 23 cents. Earnings also more than doubled on a year-over-year basis due to higher new insurance written and a decline in loss.
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