Assured Guaranty Ltd. Q4 FY2024 earnings call

• Achievements in 2024: Earned adjusted operating income per share of $7.10, reached record year-end adjusted book value per share at $170.12, adjusted operating shareholders' equity per share at $114.75, and shareholders' equity per share at $108.80. Repurchased 11% of common shares and repurchased $500 million of shares. PVP across three financial guaranty businesses topped $400 million for the second year.
• New Business: US Public Finance originated $270 million in PVP; Non-US Public Finance and Global Structured Finance had strong production with solid pipelines for 2025. Opened offices in Australia and Singapore, expanded in Continental Europe.
• Legal and Strategic Moves: Consolidated two primary insurance subsidiaries, completed resolution of Lehman Brothers litigation with a pre-tax gain of ~$103 million in Q1 2025, and ongoing PREPA mediation in Puerto Rico with courts affirming secured creditor rights.

US Public Finance: Originated $270 million in PVP, its highest annual total in four years. Insured over $24 billion in 2024, achieving a 14-year high for annual new issue insured par sold, with 58% market share in 2024. Fourth quarter saw 61% share of par insured in the primary municipal bond market and a 37% year-over-year increase in insured par to $7.4 billion. Non-US Public Finance: Contributed $67 million in PVP in 2024, including secondary market guarantees of UK-regulated utilities and airport transactions, plus annual renewal of liquidity guarantees. Global Structured Finance: Generated $65 million in PVP in 2024, primarily in insurance securitizations, bank balance sheet relief, subscription finance, and guaranty of a diversified real estate portfolio.

• US municipal bond market expected to be strong in 2025, possibly rivaling or exceeding 2024's record volume.
• Anticipated recognition of $103 million pre-tax gain from Lehman Brothers litigation in Q1 2025.
• Board approved a 10% increase in quarterly dividend per share to $0.34, and continued share repurchase program.

• Puerto Rico PREPA: Title III Court ordered mediation to continue, but courts have affirmed secured creditor rights for PREPA.
• UK Water Sector: Uncertainties exist, but reserving accounts for various scenarios.
• Healthcare: Operating risks including high labor costs, though managed with expert consultation.

Q: Review the recent developments on Thames Water and near-term reserve provisioning, and developments on Southern Water.

A: Ben Rosenblum stated UK government not planning to nationalize water utilities, Thames Water's debt is at senior operating level, they made progress in regulatory determination and will appeal, reserving accounts for scenarios. Dominic Frederico emphasized operating company level, capital issue not operating, and appeal process success for water companies.

Q: Discuss ROE and capital mix.

A: Ben Rosenblum and Dominic Frederico discussed ROE by segment mix, with public finance in 8-10% range, structured finance 12-18%, and international infrastructure 15-20%, noting shift into more structured finance and international infrastructure changes the mix.

Q: Talk about exposure in the DC market and healthcare facilities.

A: Dominic Frederico said no significant exposure in DC market, and healthcare is an operating risk managed over years, with revenue recovering post-COVID but facing high labor costs.

Q: Discuss the political landscape impact on PREPA.

A: Dominic Frederico said new administration could help, courts have affirmed secured creditor rights, and they are willing to pursue litigation long-term as seen in Lehman Brothers case.