Assured Guaranty Ltd expects business at its new Bermudian-based annuity reinsurance platform to develop faster than the company first anticipated and perhaps require the group to commit more capital sooner.

Dominic Frederico, president and chief executive of the holding company, said Assured Life Re had had a strong response since its launch.

“We’re very pleased with the reception of AL Re into the marketplace,” Mr Frederico told analysts during the company’s second-quarter earnings call.

“We actually now believe we’re going to accelerate the timing of bookings.”

The company launched Assured Life Re to reinsure fixed annuities written by life insurers. It is part of Assured Guaranty’s expansion beyond its core financial-guaranty business. The new annuity reinsurance operation recorded a $2 million quarterly profit, following Assured Guaranty’s acquisition of Warwick Re in January.

The operation reinsures a British pension risk-transfer block with reserves of $484 million, supported by an investment portfolio of $596 million.

It also reinsures a block of American multi-year guaranteed annuities with policyholder account values of $256 million. That portfolio is supported by $296 million of funds-withheld assets.

Mr Frederico said the faster start would mean the operation “will take more capital day one”. However, management thinks the platform will become self-funding once it scales.

The group also expects to start a “soft capital” facility this year. Mr Frederico said the arrangement would give Assured Guaranty more flexibility to finance growth while determining how much excess capital was still available for share repurchases.

The comments indicated a broader shift in the company’s capital priorities as it expands.

Benjamin Rosenblum, chief financial officer, said Assured Guaranty was finding more “high return-on-equity accretive opportunities” through new products, counterparties and jurisdictions.

Management also said it was confident in the group’s pipeline across United States public finance, global structured finance, Europe and Asia-Pacific.

Mr Frederico said international activity was producing a more geographically diverse portfolio.

“It’s really nice to see us booking transactions around the areas of the world where we believe there’s a market,” he said, adding that the company had produced “a diversified book of risk”.

Structured-finance transactions were also proving attractive, he said, because their shorter duration allowed capital to be returned and earnings recognised faster than in the company’s longer-term public-finance business.

Robert Bailenson, chief operating officer, said the “velocity” of capital in structured finance complemented the public-finance portfolio. He said he was “very confident” that Assured Guaranty could keep increasing premium production year over year.