Assured Guaranty has reported a reasonable set of results for the three-month period ended June 30th, 2014 (second quarter 2014).
The company’s operating income in the second quarter increased to $101 million, or $0.56 per share, compared with the second quarter of 2013 when it was $98 million, or $0.52 per share. This represents an 8 percent increase in operating income per share, due primarily to share repurchases.
Second quarter 2014 net income was $159 million, or $0.89 per share, compared with second quarter 2013 net income of $219 million, or $1.16 per share. Six months 2014 net income was $201 million, or $1.11 per share, compared with six months 2013 net income of $75 million, or $0.39 per share.
Economic loss development in the second quarter of 2014 was $23 million, which included $137 million of economic loss development on various credits, mainly certain Puerto Rico exposures, offset in part by positive economic development of $114 million on other credits, which the firm said was due mainly to improvements in the underlying collateral performance of US residential mortgage-backed securities (RMBS) exposures, increases in the benefit for breaches of representations and warranties (R&W) and modest improvements in various public finance exposures. Second quarter 2013 economic loss development was $87 million, which was primarily driven by an increase in expected loss to be paid on Detroit exposures.
“We were pleased to see significant growth in PVP when comparing both the second quarter and first half of 2014 with last year’s comparable results, given the reduced issuance in the US municipal bond market and the current interest rate environment. We continue to benefit from our diversified strategy, which includes targeting US public finance, international infrastructure and structured finance opportunities,” says Dominic Frederico, president and chief executive officer of AG.
He adds: “With regard to capital management, we took further steps toward optimizing our capital mix by issuing $500 million of ten-year, 5 percent senior notes in June, and authorizing an additional $400 million of share repurchases at our August board meeting.”
Assured Guaranty, Q2 results, economic loss development, Dominic Frederico