Assured reports profit despite $13m write-off
Bermudian-based holding company Assured Guaranty Ltd has reported net income of $11 million, or 14 cents per share, for the first quarter of 2021.
The bond insurer said the result includes a $13 million after-tax write-off of an intangible asset attributable to the insurance licences of Municipal Assurance Corp as a result of an internal organisational restructuring.
Shareholders’ equity attributable to Assured Guaranty per share was $84.67 as of March 31, the second highest ever reported.
Adjusted operating income was $43 million, or 55 cents per share, for first quarter 2021. This also includes a $13 million after-tax write-off of the MAC insurance licenses.
Adjusted operating shareholders’ equity per share and adjusted book value per share reached record highs of $79.44 and $116.56, respectively, as of March 31, the company said.
First quarter 2021 capital returned to shareholders was $95 million, including share repurchases of $77 million, or two million shares, and dividends of $18 million.
In the company’s insurance segment, adjusted operating income was $79 million.
Gross written premiums were $87 million, the highest first-quarter result in four years.
Present value of new business production was $86 million.
In Assured Guaranty’s asset management segment, the company reported an adjusted operating loss of $7 million in the first quarter. Gross inflows were $1 billion.
In first quarter, the company received the last regulatory approval required to execute a multi-step transaction to merge MAC with and into Assured Guaranty Municipal Corp, with AGM as the surviving company.
As a result, the company wrote-off the $16 million carrying value ($13 million after-tax) of MAC's insurance licenses in first quarter 2021. MAC was merged with and into AGM on April 1.
This restructuring of the company's US insurance subsidiaries will simplify the organisational and capital structure, reduce costs, and increases the future dividend capacity of the US insurance subsidiaries, the company said.
Dominic Frederico, president and CEO said: “Assured Guaranty has now reached important new consensual settlement agreements relating to Puerto Rico that, combined with a previous agreement, will resolve over 93 per cent of our net par outstanding of Puerto Rico exposures, once court-approved and implemented. Of our additional $241 million of net par, almost all relates to credits that have not missed any principal or interest payments.
“Additionally, in a quarter when our important shareholder value measures of adjusted operating shareholders' equity per share and adjusted book value per share again achieved new highs, our new business production generated $86 million of PVP, more than in all but one first quarter since 2009, driven by very strong US public finance production.
“The $5.5 billion of municipal new issue par sold with our insurance was the most we insured in any first quarter since 2010, and our 65 per cent share of insured municipal par sold was better than our market share in any quarter since 2014.
“The first quarter also saw a resurgence in the global CLO market that benefited our asset management business, which issued two new CLOs during the quarter and continued to sell legacy CLO equity to third parties. CLO management fees for the quarter were more than double those of last year’s first quarter.”
Through its subsidiaries, Assured Guaranty Ltd provides credit enhancement products to the US and international public finance, infrastructure and structured finance markets, and also provides asset management services.