Assured Guaranty (AGO) Q4 2025 Earnings Transcript

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DATE

Friday, February 27, 2026 at 8 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Dominic John Frederico
• Chief Operating Officer — Robert Adam Bailenson
• Chief Financial Officer — Benjamin G. Rosenblum
• Managing Director, Investor Relations and Communications — Robert S. Tucker

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TAKEAWAYS

• Adjusted Book Value per Share -- $186.43, reaching a new record at year-end and surpassing prior all-time highs.
• Adjusted Operating Shareholders’ Equity per Share -- $126.78 as reported at the close of the year.
• Adjusted Operating Income per Share -- $9.80, up from $7.10.
• Share Repurchases -- $500 million repurchased, retiring 12% of common shares outstanding as of December 31, 2024.
• Dividend Growth -- Quarterly dividend per share increased by 12%, now in its fourteenth consecutive year of growth, with $69 million returned to shareholders.
• Present Value of New Business Production (PVP) -- $286 million, with meaningful contributions from all three financial guarantee underwriting groups.
• U.S. Public Finance PVP -- $206 million total, with $132 million in the second half representing a 19% increase over the comparable prior period.
• Municipal Par Insured -- Over $27 billion guaranteed, a 16% increase, with a 15% growth in new-issue deal count to over 900 transactions.
• U.S. Public Finance Secondary Market Insured Par -- Written par rose over 240% to approximately $2 billion, generating $44 million of PVP.
• Market Share in New-Issue Insured Municipal Bonds -- Led the industry, wrapping more than $25 billion and taking 58% market share.
• AA-Rated Primary and Secondary Market Insurance Policies -- Over 160 policies, totaling roughly $7 billion in insured par, up about 60% in both count and volume.
• Non-U.S. Public Finance and Global Finance Originations -- Delivered $80 million in combined PVP, including $37 million from non-U.S. public finance and $43 million from global structured finance.
• Alternative Investments Fair Value -- Exceeded $1 billion as of December 31, 2025, up from $884 million the previous year.
• Alternative Investments Pretax Adjusted Operating Income -- $160 million for the year, a 33% year-over-year increase.
• Annualized Inception-to-Date IRR -- 13% across alternative investments through year-end, compared to a 4.16% average yield in the fixed-maturity portfolio for the last three years.
• Gain from Lehman Brothers Litigation -- Approximately $103 million pretax gain recognized in 2025.
• Loss Mitigation Securities Reduction -- Over $400 million reduction of below-investment-grade securities through paydown and asset sales.
• Announced Acquisition of Warwick Re Limited -- Completed in January 2026 and renamed Assured Life Reinsurance Limited, targeting MYGAs and pension risk transfer annuities as new reinsurance business lines.
• Remaining Share Repurchase Authorization -- $204 million as of the current date, with repurchase activity ongoing in 2026.
• Holding Company Liquidity -- Approximately $130 million in liquidity, including $48 million at AGL.

SUMMARY

Assured Guaranty Ltd. (NYSE:AGO) expanded its business mix by completing the acquisition of Assured Life Reinsurance Limited, marking entry into the life and annuity reinsurance market. The company resolved several previously troubled exposures, including a full recovery on its largest below-investment-grade security and a $103 million gain from Lehman Brothers International litigation. Management highlighted technological and workflow enhancements that contributed to a 240% growth in secondary market insured par for U.S. public finance. Significant capital deployment was achieved with $500 million in share repurchases and continued consistent dividend growth. Opportunities in both the fund finance business and the European and Australian markets were identified as growth drivers going into 2026.

• CEO Frederico said, "We significantly advanced Assured Guaranty Ltd.’s key business strategies in 2025, positioning us for sustainable long-term growth."
• Operational process modernization, including real-time data integration and new market analysis tools, was credited for enabling faster underwriting and deal execution in the secondary market.
• CFO Rosenblum noted all losses were fully recovered in troubled asset settlements finalized during the year, further supporting the company’s multifaceted loss mitigation approach.
• Management described the Assured Life Re launch as creating "the potential for significant synergies with our financial guarantee and investment activity."
• Robert Adam Bailenson said, regarding municipal BBB issuance, "We are off to a very good start in the first quarter, so we believe that is going to continue" and, specifically on U.K. water utility exposure, highlighted progress with the Southern Water upgrade and ongoing efforts regarding Thames Water as the only remaining problem exposure.

INDUSTRY GLOSSARY

• PVP (Present Value of New Business Production): A measure of the present value of expected future premiums from recently written financial guarantee insurance policies.
• MYGA (Multi-Year Guaranteed Annuity): A fixed-term annuity product offering a guaranteed interest rate for a specified period.
• Fund Finance: Structured finance lending segment focused on providing credit facilities to investment funds and managing related collateralized transactions.

Full Conference Call Transcript

Robert S. Tucker: Today's presentation is made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The presentation may contain forward-looking statements about our new business and credit market conditions, credit spreads, financial ratings, loss reserves, financial results, and other items that may affect our future results. These statements are subject to change due to new information or future events. Therefore, you should not place undue reliance on them as we do not undertake any obligation to publicly update or revise them except as required by law.

If you are listening to a replay of this call, or if you are reading the transcript of the call, please note that our statements made today may have been updated since this call. Please refer to the Investor Information section of our website for our most recent presentations and SEC filings, most current financial filings, and for the risk factors. The presentation also includes references to non-GAAP financial measures. We present the GAAP financial measures most directly comparable to the non-GAAP financial measures referenced in this presentation along with a reconciliation between such GAAP and non-GAAP financial measures in our current financial supplement and equity investor presentation, which are on our website at assuredguaranty.com.

Turning to the presentation, our speakers today are Dominic John Frederico, President and Chief Executive Officer of Assured Guaranty Ltd., Robert Adam Bailenson, our Chief Operating Officer, and Benjamin G. Rosenblum, our Chief Financial Officer. After their remarks, we will open the call to your questions. As the webcast is not enabled for Q&A, please dial into the call if you would like to ask a question. I will now turn the call over to Dominic.

Dominic John Frederico: Thank you, Robert, and welcome to everyone joining today's call. We significantly advanced Assured Guaranty Ltd.’s key business strategies in 2025, positioning us for sustainable long-term growth. Among this year's most important accomplishments, we again brought our key shareholder value metrics at year-end 2025 to new per-share highs of $186.43 for adjusted book value, $126.78 for adjusted operating shareholders' equity, and $125.32 for shareholders' equity. We earned adjusted operating income per share of $9.80 compared with $7.10 in 2024 and created significant future earnings from financial guarantee originations. Our present value of new business production, or PVP, totaled $286 million with meaningful contributions from each of our three financial guarantee underwriting groups.

We continue to be the leader in the new issue market for U.S. municipal bond insurance. In our strategic efforts to expand our U.S. municipal secondary market business, we saw great success as we more than tripled our secondary market par insured over last year's performance. Rob will provide details on our financial guarantee production in a few minutes. In our capital management program, we repurchased 12% of the common shares that were outstanding on 12/31/2024 while meeting our 2025 target of repurchasing $500 million of our shares.

We also distributed $69 million to shareholders through dividends, and last week, we announced that we have increased our current quarterly dividend per share by 12% compared to November 2025, representing fourteen years in a row of dividend growth. Our alternative investments continue to perform well, including funds managed by Sound Point Capital Management and Assured Healthcare Partners. Alternative investments have provided an annualized, inception-to-date internal rate of return of 13% through year-end 2025. As we mentioned on prior calls, we successfully defended our legal rights in litigation with Lehman Brothers International, resulting in a pretax gain of approximately $103 million in 2025.

We also reached successful resolutions of several other loss mitigation situations that were accretive to our financial results. Ben will discuss these further in a few minutes. Lastly, during 2025, we completed substantially all the work required to leverage our decades of experience in life insurance securitizations and investment management into a life and annuity reinsurance business. In January 2026, we acquired Warwick Re Limited, which we have renamed Assured Life Reinsurance Limited, or Assured Life Re for short. This acquisition further diversifies our revenue sources and has the potential for significant synergies with our financial guarantee and investment activity.

Assured Life Re’s primary business focus will be reinsuring fixed-term annuities, specifically multi-year guaranteed annuities known as MYGAs, and pension risk transfer annuities. The Assured Life Re platform combines Assured Guaranty Ltd.’s core strengths in credit and structured finance, management of our own multibillion-dollar investment portfolio, and our twenty-year track record of providing financial guarantee services to the life insurance sector with the operational infrastructure and experienced life reinsurance professionals of Warwick Re. We believe we are well positioned for growth in 2026 and beyond.

Since we commenced operations in 1985, the value and reliability of our guarantee and the resilience of our business model have been repeatedly demonstrated, especially during financial crises, a global pandemic, and during other periods when it was difficult to predict the direction of economic conditions. I will now turn the call over to Rob to provide more details about our financial guaranty production results.

Robert Adam Bailenson: Thank you, Dominic. In 2025, we generated $286 million of PVP from transactions that, in aggregate, were of higher credit quality than in recent years. Municipal bond insurance remained in strong demand during 2025, as the U.S. municipal market experienced the second consecutive year of record issuance. In U.S. public finance, we originated $206 million in PVP, finishing the second half of the year strongly with $132 million in PVP, a 19% increase over the second half of 2024. In looking at 2025, PVP was limited by the mix of business that came to market, which resulted in our insuring fewer large transactions in the BBB category than in 2024.

As a result, municipal par we insured was weighted more heavily toward higher credit-quality transactions with lower capital charges, and these higher-rated deals produce less premium. Overall, we guaranteed over $27 billion of municipal par, 16% more than in 2024, across more than 1,500 primary and secondary market policies. For insured new-issue municipal par sold in 2025, Assured Guaranty Ltd. achieved a fifteen-year high, wrapping more than $25 billion and leading the bond insurance industry with 58% of new-issue insured par sold. Our new-issue deal count grew 15% year-over-year to more than 900 transactions.

Perhaps most notably, we increased our U.S. public finance secondary insured par written more than 240% year-over-year to approximately $2 billion, which generated $44 million of PVP. With over $4 trillion of municipal bonds outstanding, we are excited about the opportunity available in bonds we can insure in the secondary market. We have made several technological and operational process improvements over a multiyear investment period to greatly enhance the secondary market team's ability to source, evaluate, and execute transactions.

Modernization of our platforms, including deployment of new market analysis tools and applications and real-time data integration, as well as improved workflows, drove a substantial increase in our underwriting speed and capabilities, enabling faster credit assessments, quote turnaround times, and deal executions. A strong new-issue market demand on larger transactions showed continuing institutional appetite for a guarantee on such transactions. In 2025, Assured Guaranty Ltd. wrapped 51 primary market issues with approximately $100 million or more in insured par, a total of approximately $12.6 billion of insured par sold. This is our highest annual number of $100 million-plus municipal transactions in over a decade. Two of our transactions were honored at the 2025 Bond Buyer’s Deal of the Year ceremony.

JFK International Airport's Terminal 6 redevelopment project, for which we insured $920 million of par in November 2024, was recognized as the Green Financing Deal of the Year, and Alaska Railroad Corporation's cruise port revenue bonds, where we insured $108 million in 2025, was named the Far West Region Deal of the Year. Other large deals in 2025 included $1 billion for the Authority of the State of New York, $844 million for the Downtown Revitalization Public Infrastructure District in Utah, $730 million for the Alabama Highway Authority, $650 million for the Massachusetts Development Finance Agency on behalf of Beth Israel Lahey Health, and $600 million for the New York Transportation Development Corporation’s new Terminal 1 at JFK Airport.

Also in 2025, we saw an increase in the use of our insurance among underlying AA-rated credits, which are credits rated in the AA category before insurance by S&P or Moody’s. For AA-rated credits, in both the primary and secondary markets, we issued over 160 insurance policies totaling approximately $7 billion of insured par, which year-over-year represents an increase of approximately 60% for both of those metrics.

While such step-away transactions produce less premium per dollar of insured par, they require us to hold less capital, generate attractive returns, enhance overall insured portfolio credit quality, and demonstrate market confidence in the strength, reliability, and durability of our guarantee as a backstop against potential issuer downgrades, headline risk, and market value declines. Turning to our other markets, non-U.S. public finance and global finance originations together contributed $80 million in PVP for 2025. We closed $37 million of non-U.S. public finance PVP in 2025, including $18 million in a strong fourth quarter.

The year's production results were mainly driven by several primary infrastructure finance transactions in the U.K. and the European Union, as well as secondary market transactions for U.K. sub-sovereign credits. Among the insured credits are a portfolio of general obligation loans to universities in the United Kingdom, a project finance loan for a road construction project in Spain, and a note issue to refinance debt in the French fiber optic sector, our first primary market execution in France since the global financial crisis.

In global structured finance, we guaranteed over 40 transactions in 2025, with a total PVP of $43 million, including strong fourth-quarter PVP production totaling $20 million primarily from fund finance facilities, insurance securitizations, the upsize of a transaction providing protection on a core lending portfolio for an Australian bank, and consumer receivable transactions. We have now built fund finance into a high-performance flow business that includes repeatable transactions whose renewals generate future PVP, and since these are shorter-duration transactions, we also benefit because we earn the premiums more rapidly and can recycle the capital more quickly.

For example, the transactions we insured this year had a stated maturity within one to four years, and we will earn all the premiums during that period. This fund finance earnings time frame is two to three times faster than a typical structured finance business we insure. Looking toward par and PVP production in 2026, we have a robust transaction pipeline and are expecting strong results from each of our three financial guarantee product lines. Thus far, in 2026, we have already closed several large transactions. We believe we have significant short-term and long-term opportunities for growth across our financial guaranty markets.

In the U.S. public finance market, we continue to be the premier insurer of new-issue municipal bonds and have developed more efficient and broader capabilities to serve the enormous secondary municipal market. In structured finance, our fund finance business provides us with a stream of shorter-duration transactions that are repeatable and complement the often larger and longer-duration transactions that have been typical in that sector. We have also seen expanding business opportunities in Europe and Australia across both public and structured finance. Most important of all, we have the financial strength, experienced staff, and improved business model to continue growing and leading the financial guaranty industry.

I will now turn the call over to Ben to discuss our detailed financial results.

Benjamin G. Rosenblum: I am pleased to report fourth quarter 2025 adjusted operating income of $109 million, or $2.32 per share, representing an increase of 83% on a per-share basis from adjusted operating income of $66 million, or $1.27 per share, in 2024. Our full-year 2025 adjusted operating income was $445 million, or $9.08 per share, representing an increase of 28% on a per-share basis from $389 million, or $7.10 per share, in 2024. The largest drivers of the quarter-over-quarter increase were a $23 million pretax gain associated with a loss mitigation strategy, higher earnings from alternative investments, and lower loss expense.

Full-year results in 2025 also benefited from a $103 million gain related to the resolution of the Lehman litigation, $15 million in fees related to workout credits, and a $20 million increase in the pretax contribution from the asset management segment. As you can see, 2025 was a big year for resolving several previously troubled exposures. In addition to the gain on the Lehman resolution, loss mitigation efforts resulted in the paydown of our largest below-investment-grade security, reducing the amount of loss mitigation securities in our investment portfolio by over $400 million. In addition, a commercially leased building that was part of a loss mitigation exposure was sold, removing another troubled asset from our balance sheet.

The company was able to fully recover its losses through the negotiated settlements that were finalized in 2025. This further demonstrates the strength of our underwriting, our persistence in defending our rights, and our multifaceted approach to working with issuers and developing innovative solutions. Enhancing our investment returns is another strategy that yielded results this past year. As of December 31, 2025, our alternative investments had a fair value of over $1 billion, up from $884 million as of 12/31/2024. In the fourth quarter of 2025, alternative investments generated $47 million in pretax adjusted operating income and $160 million of pretax adjusted operating income for the full year, representing a year-over-year increase of 33%.

Since we commenced the alternative investment strategy, we have consistently reported inception-to-date IRR of approximately 13%. As a point of comparison, our fixed-maturity portfolio average yield over the past three years has been 4.16%. In terms of capital management, we again reached $500 million in share repurchases, buying back 5.8 million shares, or almost 12% of the shares outstanding at the end of 2024, at an average price of $85.92. We are committed to prudent capital management and have continued to repurchase shares in 2026. Our remaining share repurchase authorization as of today is $204 million.

As always, we actively assess the various opportunities to deploy our capital effectively and aim to invest in those that we believe provide the most attractive returns. Our holding company liquidity as of today is approximately $130 million, of which $48 million is at AGL. Last week, our board of directors also approved a 12% increase in our quarterly dividend per share from $0.34 to $0.38. Finally, I want to highlight the acquisition of Warwick Re, which launched our annuity reinsurance platform and which we expect to add another source of earnings separate from our financial guaranty business.

We are actively progressing several promising opportunities in our pipeline to assume new blocks of annuity business and expect to make investments in this business over the next few years. We are excited to grow this business, which we have renamed Assured Life Reinsurance, and we will have an update for you on the first quarter earnings call. In the meantime, we have an annuity reinsurance presentation on our website. I will now turn the call over to our operator to give you instructions for the Q&A period.

Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. At this time, we will pause momentarily to assemble our roster. Our first question comes from Marissa Lobo from UBS. Your line is now open. Please go ahead.

Marissa Lobo: Good morning. Thanks for taking my question. Earlier in the quarter, you noted that issuance in BBB credits had come back from prior lower levels. How did this look in the fourth quarter, and what are your thoughts for the mix into 2026?

Robert Adam Bailenson: We are seeing that come back, and we saw it in the fourth quarter. We are off to a very good start in the first quarter, so we believe that is going to continue. We have closed a number of transactions already in U.S. public finance as well as infrastructure finance in Europe, and so we continue to see that. We are very excited about 2026.

Marissa Lobo: Okay. Thank you. And looking at the big exposures, could you give us an update on your outlook across the U.K. utilities and Brightline as well?

Benjamin G. Rosenblum: Sure. I will start with that unless Dominic and Rob want to chime in. We are looking across, obviously, the U.K. utilities. When you look at what happened during the quarter, our U.K. water utility BIG exposure went down as we upgraded Southern Water. We feel pretty good about that upgrade at Southern Water. It was out in the market and had new equity introduced to it, so they raised debt and equity, making it really, in our opinion, an investment-grade credit. So for U.K. water, we are 100% focused now really on just Thames being the only problem exposure there.

We are part of the creditors committee, as you know, on Thames, and we are actively looking to work with the U.K. government at a market-based solution, and we are hopeful to have an update on that relatively shortly. Do you want me to cover Brightline, or do you have any questions on that?

Marissa Lobo: No. That is helpful. Thank you. Brightline, please. Except for Brightline, we remain confident.

Benjamin G. Rosenblum: Our thesis when we went into Brightline was that there is a lot of subordination below us, over $4 billion below us, and that is a really good position to be in a capital stack of a troubled exposure. Their ridership is going up. I think they are on the way to recovery, and we are obviously happy to be part of any solution they have. But we remain committed to them as well as very confident in our position in that exposure.

Marissa Lobo: Got it. Thanks for taking my questions. Thank you.

Operator: Our next question comes from Thomas Patrick McJoynt-Griffith from KBW. Your line is now open. Please go ahead.

Thomas Patrick McJoynt-Griffith: Hey, good morning. A question on your alternative investment portfolio. I tend to remember that it is largely CLOs that are in there, but can you just talk about the exposure there? Is there anything with private credit that we should keep on the radar?

Benjamin G. Rosenblum: We do not really take direct, absolute direct exposure to private credit. Obviously, we are investing in the CLO market, and some of the names are in there as well. However, we do mark our portfolio to market, and we believe that any pain that probably has been experienced in the market today, for many of the names that have been in there, we have experienced. But we remain confident, and again, our exposure there is in good shape. We feel pretty good about it.

Thomas Patrick McJoynt-Griffith: Okay. Thanks. In switching gears, to the extent that you allocate some capital into the annuity reinsurance market, would that preclude you from sticking with your $500 million annual buyback target, or should we think of those as two independent opportunities?

Dominic John Frederico: You have to look at the entire capital stack as interdependent. We have a range of capital management opportunities this year in terms of stock buyback, but that range will be dictated by what other opportunities we see in the market, specifically the life and annuity reinsurance business. As we said when we made the acquisition, we have substantial excess capital there that allows us to write a substantial amount of new business. But as we have seen, we have gotten more inquiries than we were actually expecting, so we are pretty happy with the opportunities we see there. That might allocate some more capital that will dictate exactly where we will land in the range of our stock buyback.

We are committed to capital management. We are committed to stock buybacks and repurchasing. We will just manage that throughout the year.

Operator: Thank you. This concludes the question and answer session. I would now like to turn the conference back over to our host, Robert S. Tucker, for closing remarks.

Robert S. Tucker: Thank you, operator. I would like to thank everyone for joining us on today's call. If you have additional questions, please feel free to give us a call. Thank you very much.

Operator: This concludes today's conference call. Thank you all for attending. You may now disconnect your lines. Have a great day.

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