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HAMILTON, Bermuda - Assured Guaranty Ltd. (NYSE: NYSE:AGO) has announced the upcoming merger of its subsidiaries, Assured Guaranty Municipal Corp. (AGM) with Assured Guaranty Inc. (formerly Assured Guaranty Corp.), effective August 1, 2024. This consolidation aims to enhance capital efficiency and simplify the structure of the company's U.S. financial guaranty operations.
Dominic Frederico, President and CEO of Assured Guaranty, stated that the merger is expected to be advantageous for stakeholders, leading to a more streamlined utilization of combined capital and reducing administrative costs. Assured Guaranty has been a fixture in the financial guaranty business for nearly four decades and views this merger as a strategic move to better serve customers and expand its business.
The merged entity will boast a larger and more diversified insured portfolio, an expanded investment portfolio, an enhanced capital structure, and increased claims-paying resources. Both AGM and AG currently hold identical ratings from S&P Global Ratings, Kroll Bond Rating Agency, and Moody’s Ratings, and the merger is not anticipated to affect these strong and stable financial strength ratings.
AGM has been known for guaranteeing U.S. and non-U.S. public and infrastructure finance obligations, while AG has focused on risk and capital management solutions and acquiring or reinsuring insured portfolios of other financial guaranty insurers.
The merger will eliminate the distinction between the two entities, allowing for a more integrated approach to leading the bond insurance industry, as per Robert Bailenson, Chief Operating Officer.
Following the merger, AGM-insured securities will become guaranteed by AG, which will continue to be based in Maryland under the regulation of the Maryland Insurance Administration (MIA). AGM’s subsidiaries, Assured Guaranty UK Limited and Assured Guaranty (Europe) SA, will become subsidiaries of AG, operating as before.
The MIA has also approved a $300 million stock redemption by the combined company, which is slated to occur shortly after the merger. Further details on the merger are available in a presentation and a Q&A document on Assured Guaranty’s website.
This announcement is based on a press release statement from Assured Guaranty Ltd., and it contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ from those projected. The company cautions readers not to place undue reliance on these forward-looking statements, which reflect current views as of today.
In other recent news, Assured Guaranty Ltd. reported robust financial results for the first quarter of 2024, marking a significant increase in its adjusted operating income per share and new business production.
The company's strategic initiatives, including a vigorous share repurchase program, and favorable ratings from Moody's (NYSE:MCO), point to a strong position for future growth. Despite a decrease in net investment income, Assured Guaranty's overall performance and market position indicate positive recent developments.
The company's adjusted operating income per share hit a record $1.96, up 75% from the previous year. Assured Guaranty insured 53% of all primary market insured par sold in the quarter and repurchased $129 million of common shares in Q1, with a total authorization of $414 million for future repurchases. Moody's upgraded the insurance financial strength rating of AGC and affirmed AGM's rating, reflecting strong capital adequacy and market position.
Analysts have inquired about the decline in net investment income and the status of the special dividend request, to which the company responded with expectations of soon receiving approval. Despite concerns over the decrease in net investment income, Assured Guaranty remains confident in its consistent performance and the anticipated approval of its special dividend request.
InvestingPro Insights
As Assured Guaranty Ltd. (NYSE: AGO) prepares to merge its subsidiaries, the company's financial metrics and strategic moves are under the spotlight. With a market capitalization of $4.17 billion, Assured Guaranty stands out in its sector.
The company has been actively managing its capital, as evidenced by a significant $300 million stock redemption approved by the Maryland Insurance Administration (MIA). This aligns with an InvestingPro Tip highlighting that management has been aggressively buying back shares, signaling confidence in the company's value and a commitment to returning capital to shareholders.
Investors may also find comfort in the company's consistent dividend history. Assured Guaranty has raised its dividend for 12 consecutive years, and has maintained dividend payments for 21 consecutive years, which is a testament to its financial stability and shareholder-friendly approach. This is particularly relevant given the current merger, as it indicates a stable foundation from which the company can continue to grow.
On the valuation front, Assured Guaranty's P/E ratio stands at an attractive 5.82, suggesting that the company is trading at a low earnings multiple compared to some of its peers. This could indicate a potential undervaluation, especially when considering the company's robust revenue growth of 45.56% over the last twelve months as of Q1 2024. Moreover, the company's dividend yield is currently at 1.63%, with a notable dividend growth of 10.71% over the same period, further enhancing its appeal to income-focused investors.
For those interested in gaining deeper insights and additional tips on Assured Guaranty Ltd., InvestingPro offers a comprehensive analysis, including a total of 11 InvestingPro Tips that can guide investment decisions. To explore these tips and more detailed metrics, visit https://www.investing.com/pro/AGO. Take advantage of the exclusive offer with coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, enriching your investment strategy with premium data and insights.
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