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Assured Guaranty Ltd. Message Board

bbarberayr 11 posts  |  Last Activity: Mar 26, 2014 10:12 AM Member since: Feb 26, 2007
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  • Reply to

    Annual Report - Yield on new Investments

    by bbarberayr Mar 18, 2014 8:36 AM
    bbarberayr bbarberayr Mar 26, 2014 10:12 AM Flag

    Sent this message over to David Merkel and he replied on seekingalpha. David is an ex-actuary and now fund manager who is the smartest insurance investor I know and he likes NWLI still.

    DOsn't seem like you can post links here, but go take a look.

  • bbarberayr by bbarberayr Mar 20, 2014 2:01 PM Flag

    Well, the conference call didn't say much.

    The last earnings release showed that it's equity was around $0, so hopefully not too much capital will be required and he did say that he expects to make this capital back over time. SO, doesn't sound like the dividend will be hit.

    So, not sure why they did this, but hopefully as the housing market continues to improve, RMIC can become a viable business again.

  • Reply to

    If Book Value was recorded at Fair Value....

    by bengrahamman Mar 18, 2014 3:27 PM
    bbarberayr bbarberayr Mar 19, 2014 2:09 PM Flag

    You are correct. I just used the regular Class A share count, but I should include the B shares too.

  • Reply to

    If Book Value was recorded at Fair Value....

    by bengrahamman Mar 18, 2014 3:27 PM
    bbarberayr bbarberayr Mar 19, 2014 12:56 PM Flag

    On the balance sheet on page 84, you'll see the assets that are held for sale are carried in the balance sheet (and therefore book value) at fair value. The securities held to maturity are at amortized cost. SO, in this case, the increase in book value would = 6,656,144 - 6,510,320 = $145,824, so a book value of $440.82.

    Similarly on page 149, you can subtract the Balance Sheet Amount from the Fair Value of their portfolio and get the same amount.

  • Reply to

    Annual Report - Yield on new Investments

    by bbarberayr Mar 18, 2014 8:36 AM
    bbarberayr bbarberayr Mar 18, 2014 12:18 PM Flag

    None. All I did was look at investment income for the year and pro-rate it to annuity payout. It is a very gross approximation, but I would expect that the income from the call options should basically offset payouts due to increasing markets.

    I could be way off on this, but it does show the leverage they have to higher rates.

  • From the Annual Report:

    "The yield on debt security purchases to fund insurance operations rebounded somewhat to 3.53% in 2013 from 3.37% in 2012 but was still below the 4.18% yield attained in 2011."

    So, investment yields improved, but are still down. Their unrealized gains in securities dropped from $541 million to $146 because of this, so this part of the "hidden value" in the shares went down.

    But if rates can get back up to that 4.18%, a quick calc says that would cause annual earnings on their $9 billion investment portfolio to increase $58 million. If 2/3's of this is creditted to annuity holders, it leaves $19.5 million before tax for shareholders. 32% tax from 2013 gives after tax earnings increase of $13 million or $3.57 increase in earnings per share.

    If we could get yields back up to 5.5% like they were a few years ago, using the same calc would give an incerase in EPS of $9.38, or a 1/3 increase in earnings.

  • Reply to

    is NWLI book value its intrinsic value?

    by denniscloeser Mar 17, 2014 7:11 AM
    bbarberayr bbarberayr Mar 17, 2014 11:11 AM Flag

    The statutory reports listing all investments in full detail are on their web site. I don't see anything unusual that would account for that (but it is 50 pages, so perhaps I missed something). It really just looks like standard bonds and mortgages.

    I suspect Bear Sterns was talking about the way they used amortized cost instead of market value for their investments resulting in assets and book value being understated.

  • bbarberayr by bbarberayr Mar 8, 2014 8:49 AM Flag

    Nice writeup in Barron's on Met Life and the life insurance industry this weekend. Hopefully will drive more interest for NWLI as well.

  • bbarberayr bbarberayr Feb 23, 2014 8:00 PM Flag

    Thanks for posting - good summary of NWLI.

    Let's hope it starts increasing interest in the stock!

  • Reply to

    Stock should get revalued

    by bbarberayr Jan 23, 2014 10:12 AM
    bbarberayr bbarberayr Jan 24, 2014 1:43 PM Flag

    Could be.

    Still #9 highest yield on the list of dividend champions and dividend easily covered, growing book value. Most of the other yield-type insurance companies have moved back to higher valuations, so ORI will get there. Maybe it's still a bit messy for some investors to get into.

  • bbarberayr by bbarberayr Jan 23, 2014 10:12 AM Flag

    Now that the mortgage business has stabilized and is in fact adding to profits now, I think you see ORI get rerated higher. It is about 25% cheaper than peers based on many metrics and historical valuations, so it should move to in-line, I think this year.

    Plus, it will have no problem increasing it's dividend again maintaining its dividend aristocrat status and people are still hunting for income with the low bond yields available.

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