Assured Guaranty Ltd. (AGO) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance, including record highs in adjusted book value and operating income per share. Shareholder returns are robust, with significant share repurchases and dividend growth. The Q&A session showed positive sentiment, with optimism in public finance and strategic capital allocation. While there are risks in strategic execution and operational challenges, the overall financial health and shareholder return plans are strong, leading to a positive stock price prediction.
Key Financial Performance
Adjusted Book Value per Share $186.43, a new high for year-end 2025.
Adjusted Operating Shareholders' Equity per Share $126.78, a new high for year-end 2025.
Shareholders' Equity per Share $125.32, a new high for year-end 2025.
Adjusted Operating Income per Share $9.08, up from $7.10 in 2024, representing a 28% increase year-over-year. The increase was driven by a $103 million gain from the resolution of the LBIE litigation, $15 million in fees related to workout credits, and a $20 million increase in pretax contribution from the Asset Management segment.
Present Value of New Business Production (PVP) $286 million in 2025, with contributions from three financial guarantee underwriting groups. U.S. public finance contributed $206 million, non-U.S. public finance contributed $37 million, and global structured finance contributed $43 million.
Municipal Par Insured Over $27 billion in 2025, a 16% increase from 2024. This included more than 1,500 primary and secondary market policies.
U.S. Public Finance Secondary Insured Par Written Approximately $2 billion in 2025, a 240% increase year-over-year, generating $44 million of PVP.
Alternative Investments Fair value of over $1 billion as of December 31, 2025, up from $884 million in 2024. Generated $160 million in pretax adjusted operating income for 2025, a 33% year-over-year increase.
Share Repurchases $500 million in 2025, buying back 5.8 million shares (12% of shares outstanding at the end of 2024) at an average price of $85.92.
Dividends Distributed $69 million in 2025, with a 12% increase in the quarterly dividend per share announced in November 2025.
Fourth Quarter 2025 Adjusted Operating Income $109 million or $2.32 per share, an 83% increase on a per-share basis from $66 million or $1.27 per share in Q4 2024. The increase was driven by a $23 million pretax gain from a loss mitigation strategy, higher earnings from alternative investments, and lower loss expenses.
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Operating Highlights
Adjusted Operating Income Per Share: Increased to $9.08 in 2025 from $7.10 in 2024.
Present Value of New Business Production (PVP): Totaled $286 million in 2025, with contributions from three financial guarantee underwriting groups.
Acquisition of Warwick Re Limited: Completed in January 2026, renamed Assured Life Reinsurance Limited, focusing on reinsuring fixed-term annuities and pension risk transfer annuities.
U.S. Municipal Bond Insurance: Continued leadership in the market, with a 15-year high of over $25 billion in insured new issue municipal par, representing 58% of the market.
Secondary Market Expansion: Increased U.S. public finance secondary insured par written by over 240% year-over-year to approximately $2 billion.
Non-U.S. Public Finance and Global Structured Finance: Contributed $80 million in PVP, with notable transactions in the U.K., EU, and Australia.
Technological and Operational Enhancements: Improved underwriting speed and capabilities through new market analysis tools, real-time data integration, and enhanced workflows.
Alternative Investments: Generated $160 million in pretax adjusted operating income in 2025, with a fair value of over $1 billion and an inception-to-date IRR of 13%.
Capital Management: Repurchased 12% of outstanding shares in 2025, totaling $500 million, and increased quarterly dividend per share by 12%.
Litigation and Loss Mitigation: Resolved Lehman Brothers International litigation with a pretax gain of $103 million and reduced loss mitigation securities by over $400 million.
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Risk or Challenges
Market Conditions: PVP was limited by the mix of business that came to market, resulting in fewer large transactions in the BBB category compared to 2024. This led to a heavier weighting toward higher credit quality transactions with lower capital charges, producing less premium.
Regulatory and Legal Risks: The company successfully defended its legal rights in litigation with Lehman Brothers International, but such legal challenges could pose risks to financial results in the future.
Economic Uncertainties: The company highlighted its resilience during financial crises and other periods of economic uncertainty, but these conditions remain a potential risk to future operations.
Strategic Execution Risks: The acquisition of Warwick Re Limited to enter the life and annuity reinsurance business introduces execution risks, including the integration of operational infrastructure and achieving expected synergies.
Supply Chain and Operational Challenges: The modernization of platforms and operational process improvements required a multiyear investment period, indicating potential challenges in maintaining or upgrading operational efficiency.
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Guidance & Outlook
Growth in 2026 and beyond: The company believes it is well-positioned for growth in 2026 and beyond, leveraging its experience in financial crises, global pandemics, and other economic challenges.
Expansion into life and annuity reinsurance: In January 2026, the company acquired Warwick Re Limited, renamed Assured Life Reinsurance Limited, to diversify revenue sources and create synergies with financial guarantee and investment activities. The focus will be on reinsuring fixed-term annuities, specifically MYGAs and pension risk transfer annuities.
U.S. public finance market: The company expects strong results in 2026, continuing as the premier insurer of new issue municipal bonds and expanding capabilities in the secondary municipal market.
Structured finance opportunities: The company anticipates growth in structured finance, particularly in fund finance, which provides shorter-duration, repeatable transactions. Expanding opportunities are also expected in Europe and Australia.
Capital management: The company remains committed to prudent capital management, with $204 million remaining in share repurchase authorization as of early 2026.
Annuity reinsurance business: The company is actively progressing opportunities to assume new blocks of annuity business and plans to make investments in this area over the next few years.
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Shareholder Return Plan
Dividends distributed in 2025: $69 million
Increase in quarterly dividend per share: 12% compared to November 2025 amount
Consecutive years of dividend growth: 14 years
Share repurchase in 2025: 12% of common shares outstanding on December 31, 2024
Total share repurchase amount in 2025: $500 million
Average price per share repurchased: $85.92
Remaining share repurchase authorization as of early 2026: $204 million
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Key Q&A
Q:How did the issuance in BBB credits look in the fourth quarter, and what are the thoughts for the mix into 2026?
A:The issuance in BBB credits started to come back in the fourth quarter and has had a very good start in the first quarter. The company has closed several transactions in U.S. public finance and European infrastructure finance, and they are optimistic about 2026.
Q:What is the outlook across U.K. utilities and Brightline?
A:For U.K. utilities, the BIG exposure in U.K. water utilities decreased due to the upgrade of Southern Water, which raised debt and equity, making it investment-grade. Thames remains the only problem exposure, and the company is working with the U.K. government on a market-based solution. For Brightline, the company remains confident in its position, noting over $4 billion in subordination below them and increasing ridership, indicating recovery.
Q:What is the exposure in the alternative investment portfolio, particularly in private credit?
A:The company does not take direct exposure to private credit but invests in the CLO market. The portfolio is marked to market, and any market pain has likely already been experienced. The company remains confident in the portfolio's good shape.
Q:Would allocating capital into the annuity reinsurance market affect the $500 million annual buyback target?
A:The capital allocation for stock buybacks and annuity reinsurance is considered independently. The company has substantial excess capital for new business in life and annuity reinsurance and has received more inquiries than expected. This may influence the stock buyback range, but the company remains committed to capital management and stock repurchasing.
Q:Review of Unclear Management Responses
A:No questions were avoided or lacked clarity in the responses provided by the management.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AA credit
Airport
Assured Life
Authority
Deal
Development
Finance
Full
Instructions
International
JFK
Limited Assured
New
PVP production
Warwick
annuity
bond insurance
capability
credit quality
crisis
decade
detail guarantee
dollar
duration transaction
finance par
fund finance
guarantee production
insurance securitizations
issue par
life insurance
loan
minute
origination
par PVP
platform
project
reinsurance
reliability
source
transaction premium
underwriting
AGO Transcript
Assured Guaranty Ltd. (AGO) Q4 2025 Earnings Call Transcript
Positive2-27
The earnings call reveals strong financial performance, including record highs in adjusted book value and operating income per share. Shareholder returns are robust, with significant share repurchases and dividend growth. The Q&A session showed positive sentiment, with optimism in public finance and strategic capital allocation. While there are risks in strategic execution and operational challenges, the overall financial health and shareholder return plans are strong, leading to a positive stock price prediction.
Assured Guaranty Ltd. (AGO) Q3 2025 Earnings Call Transcript
Positive11-7
The earnings call highlights strong financial performance, record high metrics, and a robust share repurchase program, suggesting positive sentiment. The Q&A section reveals confidence in managing risks and exploring new opportunities, with analysts generally satisfied despite some unclear responses. Adjustments for potential risks are minor compared to the positive financial indicators. Given the market cap, the stock is likely to experience a positive reaction in the 2% to 8% range.
Assured Guaranty Ltd. (AGO) Q2 2025 Earnings Call Transcript
Positive8-8
The earnings call summary and Q&A session reveal a strong financial performance with record high book value and shareholder equity per share. Despite a decrease in operating income per share, the company has robust share repurchase plans and dividend returns. The Q&A provides reassurance on potential risks, such as the Thames Water exposure and Puerto Rico restructuring. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction.
Assured Guaranty Ltd. (AGO) Q1 2025 Earnings Call Transcript
Positive5-9
The earnings call summary shows strong financial performance with a 62% increase in adjusted operating income per share and a significant litigation gain. The company also demonstrated commitment to shareholder returns through share repurchases and dividend increases. Despite some regulatory and investment risks, the positive outlook on revenue and strategic geographic expansion suggests optimism. The Q&A section did not reveal critical negative insights. Given the market cap of approximately $4.2 billion, the stock is likely to experience a positive movement of 2% to 8% over the next two weeks.
AGO Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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Why do some answers appear as “Unclear” or “Inaudible”?
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
