Assured Guaranty Q1 Earnings Call Highlights

Key Points

• Assured Guaranty posted a strong first quarter in new business, with present value of new business production rising to $73 million, nearly double last year’s level, driven by higher demand in U.S. public finance, non-U.S. public finance and structured finance.
• Share repurchases will slow near term as the company plans to cut buybacks to about $30 million over the next three months in order to preserve capital for growth in financial guarantees and its new annuity reinsurance business.
• Investment and capital metrics remained solid, with alternative investments delivering a 12% inception-to-date IRR, net investment income rising to $82 million, and the company ending the quarter with record adjusted book value and adjusted operating shareholders’ equity per share.

Assured Guaranty NYSE: AGO reported a stronger start to 2026 in new business production, with management pointing to higher demand across U.S. public finance, non-U.S. public finance and global structured finance, while also signaling a near-term slowdown in share repurchases as it allocates capital toward growth opportunities.

President and Chief Executive Officer Dominic Frederico said the company generated first-quarter adjusted operating income of $2.50 per share and produced $73 million of present value of new business production, or PVP, “almost twice” the level from the first quarter of 2025. He also said the asset management segment produced $44 million of adjusted operating income, nearly four times the amount in the prior-year period.

Frederico said Assured Guaranty’s shift toward a higher proportion of alternative investments has improved the return profile of its investment portfolio. He said the inception-to-date annualized internal rate of return for the company’s alternative investments was 12% at the end of the first quarter.

Municipal insurance production nearly doubles

Chief Operating Officer Rob Bailenson said Assured Guaranty closed $73 million of PVP in the first quarter, compared with $39 million in the same period last year. U.S. public finance accounted for $48 million of PVP, up 92% year over year, while non-U.S. public finance contributed $8 million and global structured finance contributed $17 million.

Bailenson said the company guaranteed 53% of insured municipal par issued during the quarter and insured $4 billion of par in the primary and secondary markets on a close-date basis. He said market conditions and business mix allowed Assured Guaranty to produce significantly more PVP than in the first quarter of 2025 while taking on less nominal exposure.

In the secondary market, Assured Guaranty issued 227 policies in the quarter, compared with 144 policies a year earlier. Bailenson said institutional demand for the company’s guarantee reflects perceived benefits including “greater price stability and improved market liquidity.”

The quarter included nine large municipal transactions with insured par above $100 million. Bailenson cited several examples, including:

• $444 million of taxable military housing bonds for Fort Carson;
• $243 million of Hartford HealthCare revenue bonds issued by the Connecticut Health and Educational Facilities Authority;
• $201 million for the Western Maricopa Education Center District in Arizona;
• $102 million in taxable bonds for Brown University Health.

Among AA municipal credits, Bailenson said the company insured 20 primary and five secondary market transactions totaling nearly $900 million in insured par.

Structured finance and international activity expand

In non-U.S. public finance, Bailenson said first-quarter activity included a secondary local authority transaction in the United Kingdom, annual extensions of liquidity facilities and a primary social housing transaction in France. He described the French transaction as Assured Guaranty’s inaugural primary-market guarantee in the European Union social housing sector.

Global structured finance results were driven primarily by fund finance and financial guarantees for life insurance capital management purposes. Bailenson said fund finance remains a key focus because transactions are typically repeatable, shorter-lived and allow the company to earn premiums and recycle capital more quickly, often within one to two years.

He also said Assured Guaranty closed a significant capital relief transaction with a major financial institution in the Asia-Pacific region, guaranteeing a portfolio of fund finance exposures.

Bailenson said the company had begun the second quarter with a “good pipeline,” including insured or committed transactions for Houston’s Convention and Entertainment Facilities Department, Morgan State University student housing revenue bonds, the Burbank-Glendale-Pasadena Airport Authority and several large global structured finance deals.

Investment results and losses

The company reported first-quarter adjusted operating income of $115 million, or $2.50 per share. The quarter included a $21 million after-tax benefit from carried interest tied to a Sound Point fund that sold its single underlying asset, as well as a $33 million one-time tax benefit from changes in the U.K.’s Pillar Two global minimum tax legislation.

That compared with adjusted operating income of $162 million, or $3.18 per share, in the first quarter of 2025, which included an $82 million after-tax benefit related to the resolution of LBIE litigation.

Scheduled net earned premiums and credit derivative revenues were $90 million in the first quarter, compared with $89 million a year earlier. Deferred premium revenue was steady from the prior quarter at $3.8 billion.

The alternative investment portfolio had a fair value of $965 million as of March 31, 2026, and generated $35 million of pre-tax adjusted operating income in the quarter, down from $53 million in the prior-year period. The company said CLO investments declined in value quarter over quarter, while other alternative investments performed well and delivered relatively consistent results.

The available-for-sale and short-term investment portfolio generated $82 million of net investment income, up from $75 million a year earlier, as the company shifted toward higher-yielding corporate securities.

Economic loss development was $44 million in the quarter, primarily attributable to Brightline and PREPA. Management said loss expense included in adjusted operating income was primarily related to PREPA, because Brightline losses remain within the company’s unearned premium reserve and have not yet been recognized.

Capital management and buybacks

Assured Guaranty repurchased 882,000 shares for $75 million during the first quarter at an average price of $85.58 per share and paid $18 million in dividends. The company said it has repurchased 81% of the shares outstanding at the start of its buyback program and returned $6 billion to shareholders under the program over more than 13 years.

However, management said it plans to reduce share repurchases over the next three months to a target of $30 million. The company said the reduction is intended to preserve capital for growth opportunities in financial guarantee insurance and its new annuity reinsurance business, as well as other strategic considerations.

Frederico said the life and annuity reinsurance business could require roughly $50 million to $150 million of capital over the next 18 months, depending on its growth pattern. He said the company still views buybacks as a capital management tool, but also wants to maintain capital flexibility to grow the business and support its ratings.

Management discusses AI, Brightline and market uncertainty

During the question-and-answer session, Frederico said management expects a strong year in public finance if municipal issuance remains elevated, while emphasizing that the company remains selective on underwriting and pricing. Bailenson added that Assured Guaranty is seeing more BBB issuance, infrastructure transactions and health care activity, which are generating higher premiums.

Asked about artificial intelligence, Frederico said AI is being applied across the company, particularly in repetitive credit, surveillance and portfolio review processes. Bailenson said AI has helped increase the speed of secondary-market transactions and is being used in credit reports, though human analysts still review the work.

On Brightline, Frederico said there is “a lot of activity” around the credit but said Assured Guaranty does not currently view it as a loss situation. He said the company’s accounting model requires it to consider and probability-weight possible scenarios, including scenarios with loss content.

Frederico also said broader geopolitical instability has not led to a rush of demand tied specifically to the Middle East crisis. However, he said volatility and wider spreads can create additional business opportunities, while Bailenson said banks globally are using Assured Guaranty’s financial guarantees for capital management and capital efficiency.

The company ended the quarter with record per-share valuations of $128.61 for adjusted operating shareholders’ equity and $188.74 for adjusted book value.

About Assured Guaranty NYSE: AGO

Assured Guaranty Ltd is a Bermuda-domiciled provider of financial guaranty insurance and reinsurance products serving public finance, infrastructure and structured finance markets. The company's primary business activity is credit enhancement, whereby it guarantees the timely payment of principal and interest on debt obligations issued by municipal and infrastructure entities. By combining rigorous risk assessment with active portfolio management, Assured Guaranty helps issuers access capital at more attractive rates while protecting investors against credit events.

In its public finance segment, the company underwrites municipal bond insurance for state and local governments, public-private partnerships and essential infrastructure projects.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.