Assured Guaranty Ltd. (AGO)

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Assured Guaranty, Ltd. (AGO)

Q2 2008 Earnings Call Transcript

August 8, 2008 7:30 am ET


Sabra Purtill – Managing Director, IR and Strategic Planning

Dominic Frederico – President and CEO

Robert Mills – CFO


Darin Arita – Deutsche Bank Securities

Joseph Timeran [ph] – Piper Jaffray

Brian Meridus [ph] – UBS



Good day, ladies and gentlemen, and welcome to the second quarter 2008 Assured Guaranty earnings conference call. My name is Akiya and I will be your operator for today. At this time all participants are in a listen-only mode. We will conduct a question-and-answer session toward the end of the conference. (Operator instructions)

I would now like to turn the presentation over to your host for today’s call Ms. Sabra Purtill, Managing Director of Investor Relations. Please proceed, ma’am.

Sabra Purtill

Thank you, Akiya, and thank you all for joining us today for Assured Guaranty’s second quarter 2008 earnings conference call. Our speakers today are Dominic Frederico, President and Chief Executive Officer of Assured Guaranty Limited and Bob Mills, Chief Financial Officer. After their prepared remarks, they will take questions from the audience. Please note that our call is not web-enabled for Q&A, so please dial in to the telephone connection of this call if you would like to ask a question.

I would like to draw your attention to a new disclosure that we have made this quarter that provides investors with much greater transparency on our structured finance disclosures and transactions. We stated in our press release that we have posted late night on our website a 21-page list that compiles all the U.S. and international structured finance transactions underwritten by our financial guaranty direct segment that are currently in force and which are not covered by confidentiality agreement. That’s about 680 transactions. There are only a few transactions that cannot be disclosed due to confidentiality agreements, but the par insured amount of those transactions is de minimis, less than 1% of the portfolio. The list includes transaction name and CUSIP, net par outstanding, internal rating, and asset class. We have also provided a note section, which provides additional information on credit enhancement on those transactions that may be outside of the original transaction.

We believe this disclosure will provide investors with the means to look up our exposures on Bloomberg or any other public data source thereby providing you with a very timely data source for your analysis and also as a basis for specific questions to our Investor Relations team on those exposures. Please note that we will update the ratings, par, and new transactions on a quarterly basis consistent with our financial reporting process, but we may update the notes section with explanatory information on an interim basis, particularly based on the questions we receive from investors about specific transactions.

The list itself will indicate that they are the most recent updates, so you will be able to see if there had been additions or clarifications. Also, we do have this list available in Excel form for those investors who would like to sort it by par outstanding or other sorts of criteria such as rating. Please contact the member of our Investor Relations team to get a copy of this spreadsheet, which we will be happy to share. We believe that this list will be a very useful tool for investors and it again demonstrates Assured’s very strong commitment to providing investors with the highest levels of transparency and financial disclosures.

I would also like to note that our 10-Q is accepted on the SEC’s public EDGAR database this morning and is available for your review. You can also get a copy of it in the Investor Information section of our website under Financial Information/SEC Filings.

Finally, I would like to remind you that management’s comments or responses to questions today may contain forward-looking statements such as statements relating to our business outlook, growth prospects, market conditions, credit spreads, ratings and other items where our outlook is subject to change. Listeners are cautioned not to place undue reliance on the forward-looking statements made on this conference call today as management does not undertake to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. You should refer to the Investor Information section of our website and to our most recent SEC filings for the most current information, and for more information on factors that could affect our future financial results and forward-looking statements.

With that I’d now like to turn the call over to Dominic for his commentary.

Dominic Frederico

Thank you, Sabra, and thanks to all of you on the call and webcast for your interest in Assured. I’d like to cover a few highlights of our quarterly results and the credit performance of our portfolio before further discussing the recent Moody’s announcement.

Our second quarter results were very strong especially considering the challenging in the credit markets. First of all, we generated an operating profit as contrasted with continued credit losses at many other companies. On a very positive note, we have record new business production in our financial guaranty direct segment for the second quarter in a row. We continue to build on our U.S. public finance franchise, achieving 35% market share in the quarter.

Our other two direct markets were more affected by the lack of new issuance, but the secondary market activity in these areas helped us grow our U.S. structured finance production by 4% over second quarter 2007, a good result considering market conditions. The strong business production we experienced in the quarter added more than $200 million to our store of future earnings. So we now have more than $2.7 billion of estimated net future premium income, up 66% over the last year, and now stands at roughly 1.16 times our GAAP equity, excluding unrealized losses on credit derivatives.

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