GAAP Highlights
- Net income attributable to Assured Guaranty Ltd. was $137 million, or $1.42 per share(1), for fourth quarter 2019, and $402 million, or $4.00 per share, for FY 2019.
- Shareholders’ equity attributable to Assured Guaranty Ltd. per share was $71.18.
Non-GAAP Highlights
- Adjusted operating income(2) was $87 million, or $0.90 per share, for fourth quarter 2019, and $391 million, or $3.91 per share, for FY 2019.
- Adjusted operating shareholders’ equity(2) per share and adjusted book value (ABV)(2) per share reached new records at $66.96 and $96.86.
Total Capital Returned to Shareholders
- Total capital returned to shareholders was $178 million, including share repurchases of $160 million, in fourth quarter 2019. Total capital returned to shareholders was $574 million, including share repurchases of $500 million, or 11.2 million shares, in FY 2019.
- On February 26, 2020, the Board of Directors authorized an additional $250 million in share repurchases and an increase in the dividend per share from $0.18 to $0.20.
Insurance Segment(3)
- Adjusted operating income was $133 million for fourth quarter 2019 and $512 million for FY 2019.
- Gross written premiums (GWP) were $518 million for fourth quarter 2019 and $677 million for FY 2019, the highest annual direct GWP in 10 years.
- PVP(4) was $286 million for fourth quarter 2019 and $463 million for FY 2019, the highest annual direct PVP in 10 years.
Asset Management Segment(3)
- Adjusted operating loss was $10 million for fourth quarter 2019 and FY 2019 including $8 million in after-tax restructuring charges and amortization of intangible assets.
- Collateralized loan obligations (CLOs) net inflows were $885 million in fourth quarter 2019.
- Wind-down funds net outflows were $1,297 million in fourth quarter 2019.
HAMILTON, Bermuda–(BUSINESS WIRE)–Assured Guaranty Ltd. (NYSE: AGO) (AGL and, together with its consolidated entities, Assured Guaranty or the Company) announced today its financial results for the three-month period ended December 31, 2019 (fourth quarter 2019) and the year ended December 31, 2019 (FY 2019).
“In 2019, Assured Guaranty’s diversified insurance strategy – across U.S. public finance, international infrastructure and global structured finance markets – produced by far our best direct PVP result since 2009. We maintained our capital management strategy, bringing our key measures of shareholder value – shareholders’ equity, adjusted operating shareholders’ equity and adjusted book value – to record levels on a per-share basis. And we transformed our corporate profile by acquiring the firm that forms the core of our new asset management platform, Assured Investment Management,” said Dominic Frederico, President and CEO.
|
(1) |
All per share information is based on diluted shares. |
|
|
(2) |
Adjusted operating income, adjusted operating shareholders’ equity and adjusted book value were formerly known as “Non-GAAP operating income”, “Non-GAAP operating shareholders’ equity” and “Non-GAAP adjusted book value”, respectively. Please see “Explanation of Non-GAAP Financial Measures.” |
|
|
(3) |
Beginning in fourth quarter 2019, with the acquisition of BlueMountain Capital Management, LLC and expansion into the asset management business, the Company now operates in two distinct operating segments: Insurance and Asset Management. The Company also has a Corporate division; please see “Summary Financial Results” table below. Adjusted operating income is the Company’s segment measure. |
|
|
(4) |
Please see “Explanation of Non-GAAP Financial Measures.” |
|
Summary Financial Results (in millions, except per share amounts) |
||||||||||||
|
|
Quarter Ended |
Year Ended |
||||||||||
|
|
December 31, |
December 31, |
||||||||||
|
|
2019 |
2018 |
2019 |
2018 |
||||||||
|
GAAP Highlights |
|
|
|
|
||||||||
|
Net income (loss) attributable to AGL |
$ |
137 |
|
$ |
88 |
|
$ |
402 |
|
$ |
521 |
|
|
Net income (loss) attributable to AGL per diluted share |
1.42 |
|
0.83 |
|
4.00 |
|
4.68 |
|
||||
|
Weighted average diluted shares |
96.1 |
|
106.4 |
|
100.2 |
|
111.3 |
|
||||
|
|
|
|
|
|
||||||||
|
Adjusted operating income (loss) |
|
|
|
|
||||||||
|
Insurance(1) |
$ |
133 |
|
$ |
129 |
|
$ |
512 |
|
$ |
582 |
|
|
Asset Management(1) |
(10 |
) |
— |
|
(10 |
) |
— |
|
||||
|
Corporate |
(32 |
) |
(34 |
) |
(111 |
) |
(96 |
) |
||||
|
Other |
(4 |
) |
(3 |
) |
— |
|
(4 |
) |
||||
|
Adjusted operating income (loss)(2) |
$ |
87 |
|
$ |
92 |
|
$ |
391 |
|
$ |
482 |
|
|
Adjusted operating income per diluted share(2) |
$ |
0.90 |
|
$ |
0.87 |
|
$ |
3.91 |
|
$ |
4.34 |
|
|
|
As of |
||||||||||||||
|
|
December 31, 2019 |
|
December 31, 2018 |
||||||||||||
|
|
Amount |
|
Per Share |
|
Amount |
|
Per Share |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Shareholders’ equity attributable to AGL |
$ |
6,639 |
|
|
$ |
71.18 |
|
|
$ |
6,555 |
|
|
$ |
63.23 |
|
|
Adjusted operating shareholders’ equity(2) |
6,246 |
|
|
66.96 |
|
|
6,342 |
|
|
61.17 |
|
||||
|
ABV(2) |
9,035 |
|
|
96.86 |
|
|
8,922 |
|
|
86.06 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Common Shares Outstanding |
93.3 |
|
|
|
|
103.7 |
|
|
|
||||||
________________________________________________
(1) Adjusted operating income (loss) represents the Company’s segment measure.
(2) Please see “Explanation of Non-GAAP Financial Measures” at the end of this press release.
Shareholders’ equity attributable to AGL increased in FY 2019 primarily due to net income and unrealized gains on available for sale investment securities, offset in part by share repurchases and dividends. Adjusted operating shareholders’ equity decreased in FY 2019 primarily due to share repurchases and dividends, partially offset by positive adjusted operating income. ABV increased in FY 2019 primarily due to new business development, partially offset by share repurchases and dividends.
Shareholders’ equity attributable to AGL per share, adjusted operating shareholders’ equity per share and ABV per share all increased in FY 2019, benefiting from the repurchase of an additional 11.2 million shares in FY 2019.
Insurance Segment
The Insurance segment primarily consists of the Company’s domestic and foreign insurance subsidiaries and their wholly owned subsidiaries that provide credit protection products to the United States (U.S.) and international public finance (including infrastructure) and structured finance markets. The Insurance segment also includes the income (loss) from its proportionate equity interest in Assured Investment Management funds. The Insurance segment is presented without giving effect to the consolidation of variable interest entities (VIEs).
|
Insurance Results (in millions) |
|||||||||||||||
|
|
Quarter Ended |
|
Year Ended |
||||||||||||
|
|
December 31, |
|
December 31, |
||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
Revenues |
|
|
|
|
|
|
|
||||||||
|
Net earned premiums and credit derivative revenues |
$ |
129 |
|
|
$ |
133 |
|
|
$ |
511 |
|
|
$ |
580 |
|
|
Net investment income |
85 |
|
|
99 |
|
|
383 |
|
|
396 |
|
||||
|
Commutation gains (losses) |
— |
|
|
— |
|
|
1 |
|
|
(16 |
) |
||||
|
Other income (loss) |
6 |
|
|
(1 |
) |
|
22 |
|
|
32 |
|
||||
|
Total revenues |
220 |
|
|
231 |
|
|
917 |
|
|
992 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Expenses |
|
|
|
|
|
|
|
||||||||
|
Loss expense |
20 |
|
|
24 |
|
|
86 |
|
|
70 |
|
||||
|
Amortization of deferred acquisition costs (DAC) |
5 |
|
|
4 |
|
|
18 |
|
|
16 |
|
||||
|
Employee compensation and benefit expenses |
32 |
|
|
35 |
|
|
137 |
|
|
134 |
|
||||
|
Other operating expenses |
23 |
|
|
21 |
|
|
83 |
|
|
82 |
|
||||
|
Total expenses |
80 |
|
|
84 |
|
|
324 |
|
|
302 |
|
||||
|
Equity in net earnings of investees |
(1 |
) |
|
1 |
|
|
2 |
|
|
1 |
|
||||
|
Adjusted operating income (loss) before income taxes |
139 |
|
|
148 |
|
|
595 |
|
|
691 |
|
||||
|
Provision (benefit) for income taxes |
6 |
|
|
19 |
|
|
83 |
|
|
109 |
|
||||
|
Adjusted operating income (loss) |
$ |
133 |
|
|
$ |
129 |
|
|
$ |
512 |
|
|
$ |
582 |
|
Fourth Quarter
Insurance adjusted operating income for fourth quarter 2019 was $133 million, compared with adjusted operating income of $129 million for the three-month period ended December 31, 2018 (fourth quarter 2018). The increase was mainly due to the following:
- Loss expense was $20 million in fourth quarter 2019, compared with $24 million in fourth quarter 2018. Loss expense was primarily due to Puerto Rico exposures in both periods.
- The effective tax rate was 4.5% in fourth quarter 2019, compared with 12.7% in fourth quarter 2018. The lower tax rate was primarily due to a favorable impact of a regulation issued in fourth quarter 2019 related to base erosion and anti-abuse tax.
This was partially offset by lower net investment income, primarily due to a decrease in the average asset balances in the investment portfolio.
Full Year
Insurance adjusted operating income for FY 2019 was $512 million, compared with $582 million for the year ended December 31, 2018 (FY 2018). The decrease was primarily due to the following:
- Net earned premiums and credit derivative revenues in FY 2019 were $511 million, compared with $580 million in FY 2018. The decline in net earned premiums was due to the scheduled decline in net par outstanding and lower accelerations from refundings and terminations.
- Loss expense was $86 million in FY 2019, compared with $70 million in FY 2018. The expense in FY 2019 and FY 2018 was mainly related to Puerto Rico exposures, offset in part by benefits in U.S. residential mortgage-backed securities (RMBS) transactions.
- Net investment income decreased in FY 2019 compared with FY 2018 primarily due to a decrease in the average asset balances in the investment portfolio, which was due, in part, to funds used in connection with the BlueMountain Acquisition and share repurchases.
Economic Loss Development
Fourth Quarter
Net economic loss development in fourth quarter 2019 was primarily due to increased losses for certain Puerto Rico exposures, and an increase in loss and loss adjustment expense (LAE) reserves. This was partially offset by a benefit of $11 million related to U.S. RMBS due to improved performance of the underlying collateral. The economic development attributable to changes in discount rates was a benefit of $7 million for fourth quarter 2019.
|
Roll Forward of Net Expected Loss to be Paid(1) (in millions) |
||||||||||||||||
|
|
|
Net Expected Loss to be Paid (Recovered) as of September 30, 2019 |
|
Economic Loss Development/ (Benefit) |
|
Losses (Paid)/ Recovered |
|
Net Expected Loss to be Paid (Recovered) as of December 31, 2019 |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Public finance |
|
$ |
548 |
|
|
$ |
15 |
|
|
$ |
(9 |
) |
|
$ |
554 |
|
|
U.S. RMBS |
|
135 |
|
|
(11 |
) |
|
22 |
|
|
146 |
|
||||
|
Other structured finance |
|
35 |
|
|
9 |
|
|
(7 |
) |
|
37 |
|
||||
|
Total |
|
$ |
718 |
|
|
$ |
13 |
|
|
$ |
6 |
|
|
$ |
737 |
|
________________________________________________
(1) Economic loss development represents the change in net expected loss to be paid attributable to the effects of changes in assumptions based on observed market trends, changes in discount rates, accretion of discount and the economic effects of loss mitigation efforts. Economic loss development is the principal measure that the Company uses to evaluate the loss experience in its insured portfolio. Expected loss to be paid includes all transactions insured by the Company, whether written in insurance or credit derivative form, regardless of the accounting model prescribed under accounting principles generally accepted in the United States of America (GAAP).
Full Year
The economic benefit for FY 2019 was $1 million. The economic benefit in U.S. RMBS of $234 million was mainly related to improvement in the performance of second lien U.S. RMBS transactions, and was partially offset by economic loss development in the U.S. public finance sector that related primarily to Puerto Rico exposures. The economic development attributable to changes in discount rates was a benefit of $11 million in FY 2019.
|
Roll Forward of Net Expected Loss to be Paid (in millions) |
||||||||||||||||
|
|
|
Net Expected Loss to be Paid (Recovered) as of December 31, 2018 |
|
Economic Loss Development/ (Benefit) |
|
Losses (Paid)/ Recovered |
|
Net Expected Loss to be Paid (Recovered) as of December 31, 2019 |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Public finance |
|
$ |
864 |
|
|
$ |
215 |
|
|
$ |
(525 |
) |
|
$ |
554 |
|
|
U.S. RMBS |
|
293 |
|
|
(234 |
) |
|
87 |
|
|
146 |
|
||||
|
Other structured finance |
|
26 |
|
|
18 |
|
|
(7 |
) |
|
37 |
|
||||
|
Total |
|
$ |
1,183 |
|
|
$ |
(1 |
) |
|
$ |
(445 |
) |
|
$ |
737 |
|
New Business Production
GWP relates to both financial guaranty insurance and specialty insurance and reinsurance contracts. Financial guaranty GWP includes amounts collected upfront on new business written, the present value of future premiums on new business written (discounted at risk free rates), as well as the effects of changes in the estimated lives of transactions in the inforce book of business. Specialty insurance and reinsurance GWP is recorded as premiums are due. Credit derivatives are accounted for at fair value and therefore not included in GWP. The non-GAAP measure, PVP, on the other hand, includes upfront premiums and estimated future installments on new business at the time of issuance, discounted at 6%, for all contracts whether in insurance or credit derivative form.
Fourth Quarter
|
New Business Production (in millions) |
|||||||||||||||||||||||
|
|
Quarter Ended December 31, |
||||||||||||||||||||||
|
|
2019 |
|
2018 |
||||||||||||||||||||
|
|
GWP |
|
PVP(1) |
|
Gross Par Written(1) |
|
GWP |
|
PVP(1) |
|
Gross Par Written(1) |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Public finance – U.S. |
$ |
79 |
|
|
$ |
79 |
|
|
$ |
6,452 |
|
|
$ |
93 |
|
|
$ |
89 |
|
|
$ |
4,555 |
|
|
Public finance – non-U.S. |
383 |
|
|
187 |
|
|
5,635 |
|
|
4 |
|
|
3 |
|
|
96 |
|
||||||
|
Structured finance – U.S. |
53 |
|
|
18 |
|
|
422 |
|
|
(1 |
) |
|
1 |
|
|
25 |
|
||||||
|
Structured finance – non-U.S. |
3 |
|
|
2 |
|
|
45 |
|
|
— |
|
|
3 |
|
|
174 |
|
||||||
|
Total |
$ |
518 |
|
|
$ |
286 |
|
|
$ |
12,554 |
|
|
$ |
96 |
|
|
$ |
96 |
|
|
$ |
4,850 |
|
________________________________________________
(1) PVP and Gross Par Written in the table above are based on “close date,” when the transaction settles. Please see “Explanation of Non-GAAP Financial Measures” at the end of this press release.
The increase in GWP and PVP was attributable to non-U.S. public finance and global structured finance new business. The Company has consistently written new non-U.S. public finance business every quarter since the end of 2015. Non-U.S. public finance gross par written of $5.6 billion represents investment grade par with an average rating of AA-. These results were driven primarily by privately executed, bilateral guarantees on a large number of European sub-sovereign credits, and also included additional premiums upon the conversion of several existing transactions from credit default swaps to financial guaranty insurance contracts, and from a U.K. university housing transaction and a restructuring of a previously insured regulated utility transaction.
Global structured finance GWP and PVP were $56 million and $20 million, respectively, in fourth quarter 2019, including: a refinancing and extension of an existing triple-X life reinsurance transaction resulting in no additional par written, a participation in a new insurance reserve financing transaction, as well as several whole business securitizations and residual value reinsurance policies.
Business activity in the international infrastructure and structured finance sectors is influenced by typically long lead times and therefore may vary from period to period.
In the U.S. public finance sector, Assured Guaranty once again guaranteed the majority of insured par issued.
Full Year
|
New Business Production (in millions) |
|||||||||||||||||||||||
|
|
Year Ended December 31, |
||||||||||||||||||||||
|
|
2019 |
|
2018 |
||||||||||||||||||||
|
|
GWP |
|
PVP(2) |
|
Gross Par Written(2) |
|
GWP(1) |
|
PVP(2) |
|
Gross Par Written(2) |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Public finance – U.S. |
$ |
198 |
|
|
$ |
201 |
|
|
$ |
16,337 |
|
|
$ |
320 |
|
|
$ |
391 |
|
|
$ |
19,572 |
|
|
Public finance – non – U.S. |
417 |
|
|
211 |
|
|
6,347 |
|
|
115 |
|
|
94 |
|
|
3,817 |
|
||||||
|
Structured finance – U.S. |
57 |
|
|
45 |
|
|
1,581 |
|
|
167 |
|
|
166 |
|
|
902 |
|
||||||
|
Structured finance – non-U.S. |
5 |
|
|
6 |
|
|
88 |
|
|
10 |
|
|
12 |
|
|
333 |
|
||||||
|
Total |
$ |
677 |
|
|
$ |
463 |
|
|
$ |
24,353 |
|
|
$ |
612 |
|
|
$ |
663 |
|
|
$ |
24,624 |
|
________________________________________________
(1) FY 2018 GWP includes amounts assumed from Syncora Guarantee Inc. (SGI), in a reinsurance transaction closed on June 1, 2019 (SGI Transaction), as follows: $123 million in U.S. public finance, $50 million in non-U.S. public finance, and $157 million in U.S. structured finance for a total of $330 million.
(2) Please see “Explanation of Non-GAAP Financial Measures” at the end of this press release. FY 2018 PVP includes amounts assumed in the SGI Transaction as follows: $185 million in U.S. public finance, $50 million in non-U.S. public finance, and $156 million in U.S. structured finance for a total of $391 million.
Excluding amounts assumed in the SGI Transaction in FY 2018, GWP and PVP increased in FY 2019 compared with FY 2018. GWP was $677 million in FY 2019, compared with $282 million in FY 2018 (excluding the SGI Transaction), and PVP was $463 million in FY 2019 compared with $272 million in FY 2018 (excluding the SGI Transaction). FY 2019 GWP and PVP were the highest reported direct new business production since 2009.
In FY 2019 the Company generated non-U.S. public finance GWP of $417 million, representing PVP of $211 million, on $6.3 billion of investment-grade par with an average rating of A+. Excluding the SGI Transaction in FY 2018, GWP and PVP for non-U.S. public finance transactions was $65 million and $44 million, respectively. GWP and PVP in FY 2019 were driven primarily by:
- privately executed, bilateral guarantees on a large number of European sub-sovereign credits,
- additional premiums upon the conversion of several existing transactions from credit default swaps to financial guaranty insurance contracts,
- several U.K financings for the construction of new student accommodations, and
- debt refinancings including a Spanish solar plant transaction, which was the first insured issuance in Spain since the 2008 financial crisis, and a previously insured regulated utility transaction.
Global structured finance GWP and PVP was also higher in FY 2019 compared with FY 2018 (excluding the SGI Transaction), as the Company wrote insurance on more transactions and par in the collateralized loan obligation, life insurance reserve, and residual value reinsurance asset classes.
In FY 2019, Assured Guaranty once again guaranteed the majority of U.S. public finance insured par issued. FY 2019 U.S. public finance GWP of $198 million was consistent with FY 2018 GWP of $197 million, excluding the SGI Transaction. Similarly, PVP of $201 million in FY 2019 was consistent with PVP of $206 million in FY 2018, excluding the SGI Transaction.
Asset Management Segment
The Asset Management segment, which consists of BlueMountain and its associated entities operating within the Assured Investment Management platform, provides asset management services to outside investors as well as to the Insurance segment.
|
Asset Management Results (in millions) |
|||||||
|
|
Quarter Ended |
|
Year Ended |
||||
|
|
December 31, |
|
December 31, |
||||
|
|
2019 |
|
2019 |
||||
|
Revenues |
|
|
|
||||
|
Management fees: |
|
|
|
||||
|
CLOs |
$ |
3 |
|
|
$ |
3 |
|
|
Opportunity funds |
2 |
|
|
2 |
|
||
|
Wind-down funds |
13 |
|
|
13 |
|
||
|
Total management fees |
18 |
|
|
18 |
|
||
|
Performance fees |
4 |
|
|
4 |
|
||
|
Total asset management fees |
22 |
|
|
22 |
|
||
|
Total revenues |
22 |
|
|
22 |
|
||
|
|
|
|
|
||||
|
Expenses |
|
|
|
||||
|
Restructuring expenses |
7 |
|
|
7 |
|
||
|
Amortization of intangible assets |
3 |
|
|
3 |
|
||
|
Employee compensation and benefit expenses |
17 |
|
|
17 |
|
||
|
Other operating expenses |
7 |
|
|
7 |
|
||
|
Total expenses |
34 |
|
|
34 |
|
||
|
Adjusted operating income (loss) before income taxes |
(12 |
) |
|
(12 |
) |
||
|
Provision (benefit) for income taxes |
(2 |
) |
|
(2 |
) |
||
|
Adjusted operating income (loss) |
$ |
(10 |
) |
|
$ |
(10 |
) |
Fourth Quarter/Full Year
Asset Management adjusted operating loss was $10 million for fourth quarter 2019 and FY 2019, including $7 million of pretax restructuring charges, as Assured Investment Management refocuses on its core strategies and began an orderly wind-down of certain hedge and opportunity funds. It also includes $3 million in pretax amortization related to intangible assets which primarily consist of the fair value of investment management and CLO contracts.
Management fees from CLOs represent the net management fees that Assured Investment Management retains after rebating the portion of such fees pertaining to the CLO equity that is held directly by Assured Investment Management funds. Gross management fees from CLOs, before such rebates, were $11 million for fourth quarter 2019.
Opportunity funds include two opportunity funds, one focused on asset-backed finance and the other on healthcare structured capital, launched in fourth quarter 2019 with capital from the Company’s Insurance segment, as well as two established funds in their harvest periods. Management fees from opportunity funds for the quarter are largely driven by fees earned from one of the established opportunity funds. The newly launched funds are expected to start earning management fees in 2020.
Performance fees are derived primarily from two funds currently in wind-down. Distributions to investors in the wind-down funds are expected to continue, at least throughout 2020. Funds that do not hit high-water marks or return hurdles are not eligible to receive performance fees for the year. Performance fees for opportunity funds are recorded when the contractual performance criteria have been met and when it is probable that a significant reversal of revenues will not occur in future reporting periods, which is typically close to the end of the opportunity fund’s life.
Assets Under Management
| Assets Under Management
(in millions) |
||||||||||||||||
|
|
CLOs |
|
Opportunity Funds |
|
Wind-Down Funds |
|
Total |
|||||||||
|
Rollforward: |
|
|
|
|
|
|
|
|||||||||
|
Assets under management (AUM), October 1, 2019 |
$ |
11,844 |
|
|
$ |
923 |
|
|
$ |
5,528 |
|
|
$ |
18,295 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Inflows |
977 |
|
|
165 |
|
|
— |
|
|
1,142 |
|
|||||
|
Outflows: |
|
|
|
|
|
|
|
|||||||||
|
Redemptions |
— |
|
|
— |
|
|
(171 |
) |
|
(171 |
) |
|||||
|
Distributions |
(92 |
) |
|
(43 |
) |
|
(1,126 |
) |
|
(1,261 |
) |
|||||
|
Total outflows |
(92 |
) |
|
(43 |
) |
|
(1,297 |
) |
|
(1,432 |
) |
|||||
|
Net flows |
885 |
|
|
122 |
|
|
(1,297 |
) |
|
(290 |
) |
|||||
|
Change in fund value |
29 |
|
|
(22 |
) |
|
(185 |
) |
|
(178 |
) |
|||||
|
AUM, end of period(1) |
$ |
12,758 |
|
|
$ |
1,023 |
|
|
$ |
4,046 |
|
|
$ |
17,827 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Funded AUM(2) |
$ |
12,721 |
|
|
$ |
796 |
|
|
$ |
3,980 |
|
|
$ |
17,497 |
|
|
|
Unfunded AUM(2) |
37 |
|
|
227 |
|
|
66 |
|
|
330 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Fee Earning AUM(2) |
$ |
3,438 |
|
|
$ |
695 |
|
|
$ |
3,838 |
|
|
$ |
7,971 |
|
|
|
Non-Fee Earning AUM(2) |
9,320 |
|
|
328 |
|
|
208 |
|
|
9,856 |
|
|||||
________________________________________________
(1) Includes $142 million and $49 million of AUM related to intercompany investments in Assured Investment Management opportunity funds and CLO fund, respectively.
(2) Please see “Definitions” at the end of this press release.
CLOs AUM includes $536 million of CLO equity that is held by various Assured Investment Management funds. This CLO equity corresponds to the majority of the non-fee earning CLO AUM, as Assured Investment Management typically rebates the CLO fees back to Assured Investment Management funds.
Net outflows were $290 million, primarily driven by the return of capital in wind-down funds, which includes funds that are now subject to orderly wind-down and certain funds in their harvest period, partially offset by the issuance of two new CLOs and a CLO fund, as well as the launch of opportunity funds focused on asset-backed finance and healthcare structured capital strategies. The funds launched in fourth quarter 2019 were primarily funded with capital from the Insurance segment.
Corporate Division
The Corporate division consists primarily of interest expense on the debt of Assured Guaranty US Holdings Inc. (AGUS) and Assured Guaranty Municipal Holdings Inc. (AGMH), as well as other operating expenses attributed to holding company activities such as Board of Directors’ expenses, and administrative services performed by operating subsidiaries for the holding companies.
|
Corporate Results (in millions) |
|||||||||||||||
|
|
Quarter Ended |
|
Year Ended |
||||||||||||
|
|
December 31, |
|
December 31, |
||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues |
|
|
|
|
|
|
|
||||||||
|
Net investment income |
$ |
1 |
|
|
$ |
1 |
|
|
$ |
4 |
|
|
$ |
6 |
|
|
Loss on extinguishment of debt |
— |
|
|
(8 |
) |
|
(1 |
) |
|
(34 |
) |
||||
|
Total revenues |
1 |
|
|
(7 |
) |
|
3 |
|
|
(28 |
) |
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Expenses |
|
|
|
|
|
|
|
||||||||
|
Interest expense |
25 |
|
|
24 |
|
|
94 |
|
|
97 |
|
||||
|
Employee compensation and benefit expenses |
4 |
|
|
5 |
|
|
17 |
|
|
18 |
|
||||
|
Other operating expenses |
11 |
|
|
4 |
|
|
22 |
|
|
14 |
|
||||
|
Total expenses |
40 |
|
|
33 |
|
|
133 |
|
|
129 |
|
||||
|
Adjusted operating income (loss) before income taxes |
(39 |
) |
|
(40 |
) |
|
(130 |
) |
|
(157 |
) |
||||
|
Provision (benefit) for income taxes |
(7 |
) |
|
(6 |
) |
|
(19 |
) |
|
(61 |
) |
||||
|
Adjusted operating income (loss) |
$ |
(32 |
) |
|
$ |
(34 |
) |
|
$ |
(111 |
) |
|
$ |
(96 |
) |
Adjusted operating loss for the Corporate division for all periods consisted primarily of (1) interest expense, (2) operating expenses of the holding companies, and (3) loss on extinguishment of debt recorded in other income. It also includes acquisition expenses related to the BlueMountain Acquisition in fourth quarter 2019, which are recorded in other operating expenses. The loss on extinguishment of debt is related to AGUS’ purchase of a portion of the principal amount of AGMH’s outstanding Junior Subordinated Debentures and represents the difference between the amount paid to purchase AGMH’s debt and the carrying value of the debt, which includes the unamortized fair value adjustments that were recorded upon the acquisition of AGMH in 2009.
Contacts
Robert Tucker
Senior Managing Director, Investor Relations and Corporate Communications
212-339-0861
[email protected]
Ashweeta Durani
Vice President, Corporate Communications
212-408-6042
[email protected]
