Assured Guaranty Ltd.
) delivered operating net income of 64 cents per share in the
third quarter of 2013, surpassing the Zacks Consensus Estimate of
61 cents by 4.9%. However, earnings slid 24.7% from the
prior-year quarter number.
The decline was largely attributable to lower net earned
premiums. However, share buybacks and lower loss expenses limited
the downside in bottom line.
Including realized loses on investments of $3 million, non-credit
impairment unrealized fair value gains on credit derivatives of
$233 million, fair value gains on committed capital securities of
$5 million, foreign exchange gains on re-measurement of premiums
receivable and loss and loss adjustment expense (LAE) reserves of
$10 million and favorable effect of consolidating financial
guaranty variable interest entities of $22 million, net income of
Assured Guaranty came in at $2.09 per share surging from 73 cents
in the year ago quarter.
Behind the Headlines
Assured Guaranty generated total revenues of $297 million, down
23.2% year over year. The result nevertheless, surpassed the
Zacks Consensus Estimate of $290 million by 2.4%.
Net earned premiums were $173 million, down 27.6% year over year,
attributable to the scheduled amortization of the insurance
portfolio and lower premium accelerations.
Net investment income of Assured Guaranty declined approximately
1% year over year to $97 million.
Credit derivative revenues also declined 24.2% year over year to
$25 million. The downside is attributable to decrease in
structured finance book of business' net par outstanding.
Total expenses of Assured Guaranty fell by nearly 22% year over
year to $135 million. The decrease was primarily due to lower
loss expense in the reported quarter.
Loss expense plunged 44% year over year to $56 million, largely
attributable to decline in U.S. residential mortgage-backed
securities (RMBS) losses. However, higher public finance losses
were a partial offset.
Total economic loss development was at a favorable level of $7
million during the quarter. The results reflected increased
R&W recoveries from U.S. RMBS transactions and better
delinquency experience through special servicing arrangements on
certain second lien U.S. RMBS transactions. However, the results
were partially offset by loss development on certain first lien
U.S. RMBS transactions and higher losses in U.S. public finance.
Assured Guaranty exited the quarter with $106 million in cash,
declining 23.2% from $138 million at 2012-end.
The company's total assets amounted to $16.35 billion as of Sep
30, decreasing 5.1% from the 2012 end-level.
Long term borrowings of Assured Guaranty trimmed 2% to $819
million at quarter-end from $836 million at 2012-end.
Share Repurchase Update
Till Nov 11, Assured Guaranty has bought back 12.5 million of its
shares for $264 million under the $315 million share repurchase
authorization. The remaining of the authorization was replaced by
a new $400 million of share repurchase authorization by Assured
Guaranty on Nov 11.
Performances of Other Multi-Line Insurers
American International Group Inc.
) reported third-quarter 2013 operating earnings per share of 96
cents, comfortably beating the Zacks Consensus Estimate of 93
cents. However, results missed the year-ago quarter figure of 99
cents per share.
) third quarter earnings came in at $1.71 per share,
significantly ahead of the Zacks Consensus Estimate of $1.45 per
share. Earnings also increased 10.3% year over year.
) reported third-quarter 2013 operating earnings per share of
$1.34, which missed the Zacks Consensus Estimate of $1.36.
However, results were slightly ahead of the year-ago quarter's
earnings of $1.32 per share.
Assured Guaranty presently carries a Zacks Rank #3 (Hold).
ASSURED GUARNTY (AGO): Free Stock Analysis
AMER INTL GRP (AIG): Free Stock Analysis
ASSURANT INC (AIZ): Free Stock Analysis
METLIFE INC (MET): Free Stock Analysis Report
To read this article on Zacks.com click here.