Assured Guaranty Q3 Profit More Than Doubles, Beat View

(RTTNews) - Bond insurer Assured Guaranty Ltd. (AGO) on Monday reported a profit for the third quarter that more than doubled from last year, reflecting higher fair value gains on credit derivatives. Total revenue for the quarter more than doubled, while net earned premiums declined 28 percent. Operating income per share for the quarter beat analysts' expectations by a penny.

The company's net income for the third quarter was $384 million or $2.09 per share, up from $142 million or $0.73 per share in the year-ago quarter.

The increase in net income for the quarter reflects higher non-economic net unrealized fair value gains compared to the year-ago period. Non-credit impairment unrealized fair value gains on credit derivatives was $233 million for the quarter, compared to losses of $37 million in the prior-year period.

Operating income for the quarter was $117 million or $0.64 per share, compared to $166 million or $0.85 per in the prior-year quarter. On average, six analysts polled by Thomson Reuters expected the company to earn $0.63 per share for the third quarter. Analysts' estimates typically exclude special items.

The decline in operating income for the quarter was primarily due to lower scheduled net earned premiums, partially offset by lower loss expense.

Total revenue for the quarter almost doubled to $670 million from $338 million in the same period last year.

However, net earned premiums for the quarter declined 28 percent to $159 million from $222 million in the year-ago period. Analysts had a consensus revenue estimate of $190.30 million.

Meanwhile, net investment income for the quarter decreased 3 percent to $99 million.

The company's present value of new business production or PVP increased 14 percent from the prior-year period to $40 million, with international public finance contributing $13 million from two UK infrastructure bond transactions.

On November 11, Assured Guaranty's remaining share repurchase authorization was replaced by a new $400 million authorization. Through November 11, under the company's previous $315 million share repurchase authorization, the company had repurchased a total of 12.5 million common shares for about $264 million at an average price of $21.12 per share.

Assured Guaranty became tax resident in the United Kingdom in November 2013. The company will remain a Bermuda company and its administrative as well as head office functions will continue to be carried on in Bermuda.

AGO closed Monday's regular trading session at $21.72, up $0.29 or 1.35 percent on a volume of 3.64 million shares. In after-hours, the stock further added $0.28 or 1.29 percent to $22.00.