Assured Guaranty (NYSE:AGO) reported its second-quarter financial results before the opening bell on Friday.
Below are the transcripts from the Q2 earnings call, which took place Friday morning.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
Ezra (Operator)
Good morning and welcome to the Assured Guarantee Limited second quarter 2025 earnings conference call. My name is Ezra and I will be the operator for today’s call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing Star then zero on your telephone keypad. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on your telephone keypad. To withdraw your question, please press Star then two. Please note that this event is being recorded. I would now like to turn the conference over to our host, Robert Tucker, Senior Managing Director, Investor Relations and Corporate Communications. Please go ahead.
Robert Tucker (Senior Managing Director, Investor Relations And Corporate Communications)
Thank you operator and thank you all for joining Assured Guaranty for our second quarter 2025 financial results conference call. Today’s presentation is made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. The presentation may contain forward looking statements about our new business and credit outlooks, market conditions, credit spreads, financial ratings, loss reserves, financial results or other items that may affect our future results. These statements are subject to change due to new information or future events. Therefore, you should not place undue reliance on them as we do not undertake any obligation to publicly update or revise them except as required by law. If you are listening to a replay of this call, or if you’re reading the transcript of the call, please note that our statements made today may have been updated since this call. Please refer to the Investor Information section of our website for our most recent presentations and SEC filings, both current financial filings and for the risk factors. This presentation also includes references to non-GAAP financial measures. We present the GAAP financial measures most directly comparable to the non-GAAP financial measures referenced in this presentation, along with a reconciliation between such GAAP and non-GAAP financial measures and our current Financial Supplement and Equity Investor Presentation which are on our website@assuredguaranty.com. Turning to the presentation,, our speakers today are Dominic Federico, President and Chief Executive Officer of Assured Guaranty Ltd. Rob Valenson, our Chief Operating Officer and Ben Rosenboom, our Chief Financial Officer. After their remarks, we will open the call to your questions as the webcast is not enabled for Q&A, please dial into the call if you’d. Like to ask a question. I will now turn the call over to Dominic.
Dominic Federico (President And Chief Executive Officer)
Thank you Robert and welcome to everyone joining today’s call. We continue to build value for Assured Guaranty shareholders, and policyholders during the second quarter and first six months of 2025. Adjusted book value per share of $176.95 and adjusted operating shareholders equity per share of $120.11. Both reached record highs at the end of the second quarter. Adjusted operating income per share was $4.21 and $1.01 for the first half and second quarter respectively. Ben will provide more details later about our financial results. U.S. municipal issuance remained strong in the first half of 2025 through June 30, the par amount of U.S. municipal issuance was 17% ahead of last year’s record pace. We insured 64% of the insured par sold in the primary market during the first half of 2025. This indicates that the market recognizes the strength of our guarantee and value proposition. One of our strategic priorities in 2025 was to increase our production and ensuring U.S. municipal bonds in the secondary market. We wrote nearly $900 million of secondary market policies in the first half, including over $500 million in the second quarter. Our first half secondary par was 150% of the total amount of secondary par we insured in all of 2024 and as I’ve mentioned in the past, we received significantly higher premiums on our secondary market policies. Overall, our U.S. public finance originations in the first two quarters were of unusually high credit quality and produced $74 million of present value of premiums (PVP). Rob will provide more details on our high quality business mix in a few minutes. With the addition of non US public finance and global structured finance, six month present value of premiums (PVP) totaled $103 million in capital management. We remain committed to our share repurchase program with a target of this year of $500 million. So far this year, as of August 6, 2025, the company had repurchased $296 million of common shares, representing 6.8% of the shares that were outstanding on December 31, 2024 and in August, our board authorized the repurchasing of additional $300 million of its common shares. We are also pleased to announce that In July a $250 million stock redemption or special dividend by our US insurance subsidiary was approved by our Maryland regulator. Over the years, we have repeatedly proven the strength and resilience of our business model. Reflecting this, on June 30, S&P Global Ratings Global Ratings affirmed Assured Guarantees AA Financial Strength Rating with a stable Outlook, citing our very strong competitive position, excellent capital and earnings, well diversified global underwriting strategy, and exceptional liquidity. Additionally, last week KBRA affirmed the Assured Guaranty AA Financial Strength Rating with a stable outlook, citing substantial claim resources, strong risk management leadership position in the financial guarantee market, high quality insured portfolio and conservative investment approach, among other factors. We believe we are now on a growth trajectory in both US and non US markets. In 2022, after a long period of reducing our insurance exposure, the amount of our new business each year began to exceed what was amortizing in our insurance portfolio. That began the current trend of increasing the size of the insured portfolio. We intend to continue our leadership position in the U.S. municipal bond insurance while further expanding and diversifying our global infrastructure and structure finance reach. I will now turn the call over to Rob to discuss in detail our production results.
Rob Valenson (Chief Operating Officer)
Thank you. Dominic Assured Guaranty led the municipal bond insurance industry in par insured during the first half of 2025, capturing 64% of the insured parts sold. We insured $14.1 billion of new issued parts soldiers 30% more than during the same period last year. As Dominic discussed, in the secondary market, we insured an additional $900 million of par at much higher premium rates. In aggregate, during the first half of 2025, our primary and secondary insured municipal par totaled approximately $15 billion. We also significantly increased the number of primary market transactions we executed, counting 474 new issues during the first half, 44% more than in the period last year. For the second quarter 2025, our new issue insured par sold of $9.5 billion was up 32% year over year, while the total insured portion of the market was up by 21%. Our deal count for the quarter was up 41%. First half results reflected an unusual operating environment. The ratings of new issues in the first half of this year were more weighted toward higher quality and therefore lower average premium rates than has typically been the case. These higher quality credits also tend to moderate our overall risk profile and result in lower rating agency capital charges. Our guarantee adds value to the high quality bonds because it can further enhance credit quality, reduce borrowing costs, mitigate the impact of downgrade and headline risk, improve market liquidity, and potentially stabilize market value. During the first half of 2025, we issued over 100 policies totaling $5 billion of AA par, some of which were in the secondary market. These are issues with underlying ratings in the AA category by S and P or Moody’s for municipal transactions, we closed in the first half of 2025. Such AA credits represented 32% of our insured par. This represents a 50% increase over the percentage of AA business reinsured in each of the previous three years. During the second quarter, we issued 54 primary and secondary market policies totaling $3.3 billion of AA credits. The composition of our business mix in the second quarter of 2025 was more heavily weighted toward double A credits than last year’s second quarter, where we also had two large high premium transactions that significantly boosted that quarter’s present value of premiums (present value of premiums (PVP)). This year we have also insured a number of transactions with insured par amounts of $100 million or more. Institutional investors are large buyers of these transactions and they continue to value our guarantee on them. In the first half of 2025, the guarantee par of at least $100 million on 27 transactions for a total of $6.7 billion of insured par sold. Of that during the second quarter we guaranteed 19 transactions totaling $5.2 billion of insured par sold. The insured par amounts of some of these larger transactions included $1 billion for the dormitory Authority of the State of New York, $844 million in aggregate for two issues for the Downtown Revitalization Public Infrastructure district in Utah, $411 million for Allegheny County Airport in Pennsylvania, and $361 million for Meredith Health issued by the Maryland Health and Higher Education Facilities Authority. In our other markets, non U. S public finance contributed $14 million in present value of premiums (present value of premiums (PVP)) for the first half of 2025. …