U.S. Markets close in 56 mins

Assured Guaranty Scales 52-week High

Zacks Equity Research

On Jun 17, 2014, shares of Assured Guaranty Ltd. (AGO) scaled a new 52-week high of $26.78. With about 4.1 million shares exchanging hands in the last trading session, shares gained 3.62% to close at $26.33. The momentum was driven by the first-quarter outperformance and continued efforts to enhance performance. The one-year return from the stock came in at 11.6%, which was ahead of the S&P’s return of 5.1%.

With respect to earnings performance, this multiline insurer delivered positive surprise in the last three of four quarters, with an average beat of 4.49% and the highest surprise of 14.3% in the last quarter. Reported income also showed a turn around from loss incurred in the year-ago quarter.

Assured Guaranty’s residential mortgage-backed securities’ (RMBS) claims declined 80% since their peak in the second quarter of 2012.

With loss mitigation efforts and de-leveraging of insured portfolio on track, Assured Guaranty’s is improving its risk profile. Moreover, it is also writing new businesses. These prompted credit rating agency Standard & Poor's Ratings Services (S&P) to upgrade the financial strength rating of all insurance operating subsidiaries to AA from AA- with a stable outlook, the highest rating that it presently assignes to any active bond insurer.

Operating shareholders' equity per share at quarter end reached a new high of $34.45 with book value per share also improving to $49.79.

With respect to enhancing value of shareholders, Assured Guaranty’s resumed its share repurchases in March and spent $35 million to buy back 1.4 million shares in the first quarter. It spent another $40 million to buy back 1.6 million shares in the ongoing second quarter.

Assured Guaranty’s is also strengthening its balance sheet. While cash balance improved 18% at first quarter end over the 2013 level, debt level declined 0.5%. Debt-to-capital improved 30 basis points at quarter end.

Assured Guaranty presently carries a Zacks Rank #4 (Sell).

Other Stocks to Consider

Some better-ranked multi line insurers include Horace Mann Educators Corp.(HMN), Radian Group Inc. (RDN) and Old Republic International Corporation (ORI). All these stocks sport a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on RDN
Read the Full Research Report on AGO
Read the Full Research Report on HMN
Read the Full Research Report on ORI

Zacks Investment Research