Well it happened. Personally, I say they should do what MBIA did. Stop insuring new policies, pay out a huge dividend of anything not statutorily required. Assuming they have the right political connections shareholders could see a $25-$30 a share distribution.
Obviously I'm joking about what AGO should do but I'm not joking about the fact that this is what MBIA did.
Add corruption/graft and you have what MBIA did. I don't think AGO will or should hose policy holders. I'm not sure that the MUNI market wants them with the lowered rating but now is the time to show some integrity with the long view. If that means no buy back I'm o.k. with that as a shareholder.
I am not joking. This is exactly what AGO should do. This company generates a mountain of excess cash flow, not just from earnings but from the fact that policies are being run off faster than they are generating new business which frees up the capital used to support those policies. The risk in AGO is that they use this cash to start new businesses.
AGO should immediately double or triple its dividend.