Assured Guaranty Ltd. (NYSE:AGO) (“AGL” and, together with its subsidiaries, “Assured Guaranty” or the “Company”) announced today its financial results for the three-month period ended September 30, 2012 (“third quarter 2012”). The Company reported operating income for third quarter 2012 of $166 million, or $0.85 per diluted share, bringing year-to-date operating income for the nine-month period ended September 30, 2012 ("nine months 2012") to $351 million, or $1.85 per diluted share. This compares with operating income of $38 million, or $0.21 per diluted share, for the three-month period ended September 30, 2011 ("third quarter 2011") and $429 million, or $2.30 per diluted share, for the nine-month period ended September 30, 2011 ("nine months 2011").
Third quarter 2012 net income of $142 million, or $0.73 per diluted share, includes non-economic net fair value losses of $28 million. Third quarter 2011 net income of $761 million, or $4.13 per diluted share, includes non-economic net fair value gains of $751 million. Nine months 2012 net income of $36 million, or $0.19 per diluted share, includes non-economic net fair value losses of $324 million. Nine months 2011 net income of $857 million, or $4.60 per diluted share, includes non-economic net fair value gains of $444 million.
The increase in operating income compared with third quarter 2011 was primarily due to higher refundings and accelerations of net earned premiums, lower loss expense, which was significantly higher in third quarter 2011 due mainly to changes in discount rates, and a lower effective tax rate.
“Our strong earnings and modest loss development during the third quarter attest to our consistent ability to create shareholder and policyholder value, even through extended periods of economic uncertainty,” said Dominic Frederico, President and CEO. “Our ability to add value to municipal bonds was evident in both the primary and secondary markets. In the primary market, we guaranteed 197 transactions sold in the quarter. In the secondary market, we insured more par than in any quarter since 2008.”