Assured Guaranty Ltd. AGO reported fourth-quarter 2018 operating income per share of 87 cents, up nearly 13% year over year.
The company benefited from higher net investment income, reduction in expenses and lower tax rate in the quarter.
Including net realized losses on investments of 17 cents, non-credit impairment unrealized fair value gains on credit derivatives of 9 cents, fair value gains on committed capital securities of 16 cents, foreign exchange losses on remeasurement of premiums receivable and loss and loss adjustment expense reserves of 11 cents, the company reported net income of 83 cents per share, up 88.6% year over year.
Behind the Headlines
Gross written premium was $96 million, up 33.3% year over year driven by new business production in U.S. public finance including two large transactions, and higher levels of secondary market guarantees.
Operating revenues of $225 million declined 17.9 year over year. The downside was attributed to about 30% lower net earned premiums of $125 million, partially offset by 4.2% higher net investment income.
Net earned premiums declined attributable to lower refunding activity.
Total expense of $113 million decreased 9.6% year over year, attributable to lower losses and loss adjustment expenses, interest expense ad amortization of deferred acquisition costs.
Operating income per share of $4.34 declined 19.8%. Operating revenues of $946 million declined14.6% from 2017.
Net earned premiums declined 44.4% to $159 million attributable to lower premium accelerations.
Assured Guaranty exited 2018 with total investments of $10.9 billion, down 4.6% year over year. Cash totaled $104 million, down 27.8% from the 2017 end level.
Total assets of $13.6 billion down 5.7% year over year.
Long-term debt totaled $1.2 billion, down 4.6% from 2017 end level.
Total shareholders’ equity declined 4.2% to $6.6 million as on Dec 31, 2018.
As of Dec 31, 2018, book value per share was a record $86.06, up 10.7% year over year.
Dividend and Repurchase Update
The company bought back 13.24 million shares for $500 million in 2018. Year to date, the company has bought back 1.2 million shares for $48 million. Concurrently, on Feb 27, the board of directors approved a $300 million buyback program.
The company paid $71 million in dividends in 2018. Last week, the board approved a 12.5% increase in its quarterly dividend to 18 cents per share.
Performance of Other Multi-line Insurers
Among other players from the insurance industry, MGIC Investment Corporation MTG, Assurant Inc. AIZ, Cigna Corp. CI and Radian Group Inc. RDN outpaced the respective Zacks Consensus Estimate. While MGIC Investment carries a Zacks Rank #2 (Buy), the other three carry Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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