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 June 30, 2013 (“second quarter 2013”).
The Company reported operating income for second quarter 2013 of $98 million, or $0.52 per share, bringing operating income for the six-month period ended June 30, 2013 ("six months 2013") to $358 million, or $1.87 per share. This compares to the three-month period ended June 30, 2012 ("second quarter 2012") operating income of $114 million or $0.61 per share, and for the six-month period ended June 30, 2012 ("six months 2012") operating income of $185 million or $0.99 per share. This represents a decrease in operating income of 14% as compared to second quarter 2012, and an increase of 94% as compared to six months 2012. Six months 2013 operating income benefited from settlement agreements with providers of representations and warranties, premium accelerations and terminations, and lower loss expense than in the prior year. In second quarter 2013, the decline in operating income was primarily due to lower net earned premiums. Common share repurchases increased operating income per share by $0.02 for second quarter 2013 and by $0.04 for six months 2013.
Second quarter 2013 net income was $219 million, or $1.16 per share, compared with second quarter 2012 net income of $377 million, or $2.01 per share. The main drivers of the decrease in second quarter 2013 net income are lower non-economic net unrealized fair value gains and lower net earned premiums, which were partially offset by lower loss expense. Six months 2013 net income was $75 million, or $0.39 per share, compared with six months 2012 net loss of $106 million, or $0.58 per share. The increase in net income for six months 2013 is primarily due to lower loss expense.
“We continued to produce significant operating earnings in a challenging environment, once again demonstrating the effectiveness of our alternative strategies, as well as the strength of Assured Guaranty's well-established business model,” said Dominic Frederico, President and CEO. “We are optimistic about our prospects in a higher interest rate environment and as the market gets to know our new, 100% U.S. municipal insurance platform, Municipal Assurance Corp. We also look forward to growth in our international business, where we closed two important UK infrastructure transactions in July.”