ASSURED GUARANTY LTD [AGO] Filings

10-Q 1 ago-20240630.htm 10-Q ago-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________________________

FORM 10-Q


☒						QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2024


						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition Period from to

Commission File No. 001-32141

ASSURED GUARANTY LTD.

(Exact name of registrant as specified in its charter)


Bermuda						98-0429991
(State or other jurisdiction of incorporation)						(I.R.S. employer identification no.)

30 Woodbourne Avenue

Hamilton HM 08, Bermuda

(Address of principal executive offices)

(441) 279-5700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:		Trading Symbol(s)	Name of exchange on which registered
Common Shares	$0.01 par value per share	AGO	New York Stock Exchange
Assured Guaranty US Holdings Inc. 6.125% Senior Notes due 2028 (and the related guarantee of Registrant)		AGO/28	New York Stock Exchange
Assured Guaranty US Holdings Inc. 3.150% Senior Notes due 2031 (and the related guarantee of Registrant)		AGO/31	New York Stock Exchange
Assured Guaranty US Holdings Inc. 3.600% Senior Notes due 2051 (and the related guarantee of Registrant)		AGO/51	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of registrant’s Common Shares ($0.01 par value) outstanding as of August 6, 2024 was 52,635,580 (includes 21,413 unvested restricted shares).

Table of Contents

ASSURED GUARANTY LTD.

INDEX TO FORM 10-Q


		Page
PART I	Financial Information	1
Item 1.	Financial Statements:	1
	Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2024 and 2023	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Six Months Ended June 30, 2024 and 2023	3
	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the Three and Six Months Ended June 30, 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2024 and 2023	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
	1. Business and Basis of Presentation	8
	2. Segment Information	10
	3. Outstanding Exposure	15
	4. Expected Loss to be Paid (Recovered)	24
	5. Contracts Accounted for as Insurance	32
	6. Contracts Accounted for as Credit Derivatives	38
	7. Investments	40
	8. Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles	45
	9. Fair Value Measurement	49
	10. Income Taxes	62
	11. Contingencies	65
	12. Shareholders’ Equity	66
	13. Earnings Per Share	69
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	70
	Forward Looking Statements	70
	Available Information	71
	Overview	71
	Business	71
	Economic Environment	72
	Key Business Strategies	73
	Executive Summary	76
	Financial Performance of Assured Guaranty	77
	Other Matters	80
	Results of Operations	80
	Critical Accounting Estimates	80
	Results of Operations by Segment	81
	Insurance Segment	81
	Asset Management Segment	90
	Corporate	90
	Other	90
	Reconciliation to GAAP	93
	Non-GAAP Financial Measures	95
	Insured Portfolio	99
	Liquidity and Capital Resources	102
	AGL and its U.S. Holding Companies	102
	Insurance Subsidiaries	106
	Investment Portfolio	109
	Lease Obligations	112
	Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles	112
	Condensed Consolidated Cash Flows	113
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	114
Item 4.	Controls and Procedures	114
PART II	Other Information	115
Item 1.	Legal Proceedings	115
Item 1A.	Risk Factors	115
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	115
Item 5.	Other Matters	115
Item 6.	Exhibits	116
Signatures		117

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Assured Guaranty Ltd.

Condensed Consolidated Balance Sheets (Unaudited)

(dollars in millions except share data)


	As of
	June 30, 2024		December 31, 2023
Assets
Investments:
Fixed-maturity securities, available-for-sale, at fair value, net of allowance for credit loss of $69 and $77 (amortized cost of $6,478 and $6,746)	$	6,006	$	6,307
Fixed-maturity securities, trading, at fair value	221		318
Short-term investments, at fair value	1,717		1,661
Other invested assets (includes $4 and $3, at fair value)	882		829
Total investments	8,826		9,115
Cash	92		97
Premiums receivable, net of commissions payable	1,472		1,468
Deferred acquisition costs	169		161
Salvage and subrogation recoverable	293		298
Financial guaranty variable interest entities’ assets (includes $160 and $174, at fair value)	160		328
Assets of consolidated investment vehicles (includes $357 and $331, at fair value)	378		366
Other assets (includes $125 and $123, at fair value)	698		706
Total assets	$	12,088	$	12,539
Liabilities
Unearned premium reserve	$	3,662	$	3,658
Loss and loss adjustment expense reserve	294		376
Long-term debt	1,696		1,694
Credit derivative liabilities, at fair value	38		53
Financial guaranty variable interest entities’ liabilities, at fair value (with recourse $383 and $543, without recourse $10 and $11)	393		554
Other liabilities	410		439
Total liabilities	6,493		6,774
Commitments and contingencies (Notes 3, 7 and 11)
Shareholders’ equity
Common shares ($0.01 par value, 500,000,000 shares authorized; 53,185,707 and 56,217,305 shares issued and outstanding)	1		1
Retained earnings	5,929		6,070
Accumulated other comprehensive income (loss), net of tax of $(75) and $(67)	(392)		(359)
Deferred equity compensation	1		1
Total shareholders’ equity attributable to Assured Guaranty Ltd.	5,539		5,713
Nonredeemable noncontrolling interests (Note 8)	56		52
Total shareholders’ equity	5,595		5,765
Total liabilities and shareholders’ equity	$	12,088	$	12,539

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Assured Guaranty Ltd.

Condensed Consolidated Statements of Operations (Unaudited)

(dollars in millions except share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues
Net earned premiums	$	84	$	85	$	203	$	166
Net investment income	81		89		165		170
Asset management fees	—		27		—		53
Net realized investment gains (losses)	(6)		(9)		2		(11)
Fair value gains (losses) on credit derivatives	6		91		16		106
Fair value gains (losses) on committed capital securities	1		1		(9)		(15)
Fair value gains (losses) on financial guaranty variable interest entities	(1)		(3)		(4)		(8)
Fair value gains (losses) on consolidated investment vehicles	11		6		33		64
Foreign exchange gains (losses) on remeasurement	—		28		(12)		48
Fair value gains (losses) on trading securities	17		40		43		38
Other income (loss)	9		5		10		32
Total revenues	202		360		447		643
Expenses
Loss and loss adjustment expenses (benefit)	(2)		55		(3)		59
Interest expense	23		22		46		43
Amortization of deferred acquisition costs	3		3		9		6
Employee compensation and benefit expenses	48		70		106		152
Other operating expenses	41		71		80		126
Total expenses	113		221		238		386
Income (loss) before income taxes and equity in earnings (losses) of investees	89		139		209		257
Equity in earnings (losses) of investees	5		5		29		7
Income (loss) before income taxes	94		144		238		264
Less: Provision (benefit) for income taxes	13		18		44		41
Net income (loss)	81		126		194		223
Less: Noncontrolling interests	3		1		7		17
Net income (loss) attributable to Assured Guaranty Ltd.	$	78	$	125	$	187	$	206

Earnings per share:
Basic	$	1.43	$	2.09	$	3.38	$	3.46
Diluted	$	1.41	$	2.06	$	3.31	$	3.40

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Assured Guaranty Ltd.

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(in millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income (loss)	$	81	$	126	$	194	$	223
Change in net unrealized gains (losses) on:
Investments with no credit impairment, net of tax provision (benefit) of $(4), $(6), $(9), and $8	(12)		(30)		(41)		59
Investments with credit impairment, net of tax provision (benefit) of $1, $(3), $1 and $(2)	7		(10)		8		(5)
Change in net unrealized gains (losses) on investments	(5)		(40)		(33)		54
Change in instrument-specific credit risk on financial guaranty variable interest entities’ liabilities with recourse, net of tax provision (benefit)	1		2		—		1
Other, net of tax provision (benefit)	(1)		—		—		2
Other comprehensive income (loss)	(5)		(38)		(33)		57
Comprehensive income (loss)	76		88		161		280
Less: Comprehensive income (loss) attributable to noncontrolling interests	3		1		7		17
Comprehensive income (loss) attributable to Assured Guaranty Ltd.	$	73	$	87	$	154	$	263

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Assured Guaranty Ltd.

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

(dollars in millions, except share data)

For the Three Months Ended June 30, 2024


		Shareholders’ Equity Attributable to Assured Guaranty Ltd.
	Common Shares Outstanding	Common Shares Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Deferred Equity Compensation		Total		Nonredeemable Noncontrolling Interests		Shareholders’ Equity
As of March 31, 2024	55,081,584	$	1	$	6,014	$	(387)	$	1	$	5,629	$	53	$	5,682
Net income	—	—		78		—		—		78		3		81
Dividends ($0.31 per share)	—	—		(17)		—		—		(17)		—		(17)
Common shares repurchases	(1,928,328)	—		(154)		—		—		(154)		—		(154)
Share-based compensation	32,451	—		8		—		—		8		—		8
Distributions	—	—		—		—		—		—		—		—
Other comprehensive loss	—	—		—		(5)		—		(5)		—		(5)
As of June 30, 2024	53,185,707	$	1	$	5,929	$	(392)	$	1	$	5,539	$	56	$	5,595

For the Three Months Ended June 30, 2023


		Shareholders’ Equity Attributable to Assured Guaranty Ltd.
	Common Shares Outstanding	Common Shares Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Deferred Equity Compensation		Total		Nonredeemable Noncontrolling Interests		Shareholders’ Equity
As of March 31, 2023	59,274,112	$	1	$	5,638	$	(420)	$	1	$	5,220	$	195	$	5,415
Net income	—	—		125		—		—		125		1		126
Dividends ($0.28 per share)	—	—		(17)		—		—		(17)		—		(17)

ASSURED GUARANTY LTD [AGO] Filings
10-Q	[2024-08-08]
10-Q	[2024-05-08]
10-K	[2024-02-28]
10-Q	[2023-11-08]
10-Q	[2023-08-09]
10-Q	[2023-05-10]
10-K	[2023-03-01]
10-Q	[2022-11-08]
10-Q	[2022-08-04]
10-Q	[2022-05-06]
10-K	[2022-02-25]
10-Q	[2021-11-05]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-02-26]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-08]
10-K	[2020-02-28]
10-Q	[2019-11-08]
10-Q	[2019-08-08]
10-Q	[2019-05-10]
10-K	[2019-03-01]
10-Q	[2018-11-09]
10-Q	[2018-08-02]
10-Q	[2018-05-04]
10-K	[2018-02-23]
10-Q	[2017-11-03]
10-Q	[2017-08-03]
10-Q	[2017-05-05]
10-K	[2017-02-24]
10-Q	[2016-11-04]
10-Q	[2016-08-04]
10-Q	[2016-05-05]
10-K	[2016-02-26]
10-Q	[2015-11-06]
10-Q	[2015-08-06]
10-Q	[2015-05-08]
10-K	[2015-02-26]
10-Q	[2014-11-07]
10-Q	[2014-08-08]
10-Q	[2014-05-09]
10-K	[2014-02-28]
10-Q	[2013-11-12]
10-Q	[2013-08-09]
10-Q	[2013-05-10]
10-K	[2013-03-01]
10-Q	[2012-11-09]
10-Q	[2012-08-09]
10-Q	[2012-05-10]
10-K	[2012-02-29]