On Dec 21, 2015, we issued an updated research report on Assured Guaranty Ltd. AGO.
Assured Guaranty, a proven leader in bond insurance, is poised for long-term growth supported by the increased new business production.
Assured Guaranty is undertaking loss mitigation and other loss recovery strategies which should drive bottom-line growth, going ahead. Its inorganic growth track remains impressive with strategic buyouts.
Driven by operational strength, Assured Guaranty has been generating more capital than it can put to work at acceptable returns. The company, therefore, is deploying the same on shareholder-friendly moves that are likely to deliver solid results over the long term.
However, low volume of issuance in the U.S. public finance market and a not-so-favorable interest rate environment weighing on the demand for bond insurance remain the headwinds.
Assured Guaranty expects the volume of issuance to remain low in 2015, as the municipalities have been implementing austerity measures to address budget shortfalls, including those resulting from increased pension and health care costs.
Assured Guaranty posted better-than-expected earnings in third-quarter 2015 owing to better top-line growth and lower share count attributable to continued buybacks. With respect to the surprise trend, the insurer posted positive surprises thrice in the trailing four quarters, with an average beat of 75.15%.
The Zacks Consensus Estimate for 2015 and 2016 are currently pegged at $3.34 and $2.94, respectively. These translate into a year-over-year increase of 18.02% for 2015 but a decline of 11.98% for 2016.
Zacks Rank
Assured Guaranty currently carries a Zacks Rank #2 (Buy). Investors interested in the multiline insurers may consider stocks like Old Republic International Corporation ORI, FBL Financial Group Inc. FFG and James River Group Holdings, Ltd JRVR. While Old Republic International sports a Zacks Rank #1 (Strong Buy), FBL Financial and James River Group have the same Zacks Rank as Assured Guaranty.
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