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Assured Guaranty (AGO) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Aug 7, 2026

Source: earnings call transcript

Executive summary

Assured Guaranty Q2 FY26 — Record Valuation Metrics and Strong New Business Production

Assured Guaranty delivered a strong second quarter, marked by record valuation metrics and robust new business production, particularly in U.S. public finance and global structured finance. The company is actively pursuing growth in its annuity reinsurance platform and international financial guarantee markets, while strategically allocating capital to high-return opportunities, balancing share repurchases with new business investments.

Highlights

5

  • Key valuation metrics, including adjusted operating shareholders' equity ($129.94 per share) and adjusted book value ($189.72 per share), reached record highs at quarter end.

  • New business production (PVP) generated $152 million in H1 2026, marking a 48% increase over H1 2025.

  • Adjusted operating income increased to $55 million or $1.23 per share, representing a 22% increase over Q2 2025 per share.

  • Loss expense decreased significantly from $28 million in Q2 2025 to $4 million in Q2 2026.

  • S&P, KBRA, and Moody's affirmed financial strength ratings of financial guarantee insurance subsidiaries with stable outlooks, citing excellent capital and earnings.

Concerns

2

  • Alternative investments were down in Q2 2026 due to a $19 million mark-to-market loss on a CLO equity fund, reported on a one-quarter lag.

  • The Brightline transaction continues to experience liquidity pressure, though expected losses have not exceeded deferred premium revenue.

Guidance & targets

CategoryTargetConfidence
Demand for core products
continue
low materiality
High
Annuity reinsurance production and income milestones
on track to meet
medium materiality
High
PVP (Production Volume Potential) from Q3 commitments
$42 million
medium materiality
High
Fund finance transaction renewals
majority will renew at maturity
low materiality
High
PVP (Production Volume Potential) growth
grow year-over-year
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Asset Management
Alternative investments continue to support the strategic decision to allocate a portion of the investment portfolio to them, providing significantly higher returns than the fixed maturity portfolio.
Inception-to-date annualized internal rate of return for alternative investments: 12%
————

Risks & headwinds

Liquidity pressure for Brightline transaction Current

Brightline continues to experience liquidity pressure

Mitigation:Proactive work with Brightline and other creditors on a solution; long runway until 2042 for interest payments; senior position in capital stack.

Mark-to-market loss on CLO equity fund Q2 2026 (reported on 1-quarter lag)

$19 million

Mitigation:Diversification of alternative investment portfolio; long-term view; some losses already reversing in Q3.

Potential for accelerated capital needs for Assured Life Re Near-term

could put a little bit of strain in our original projection of capital

Mitigation:Capital allocation based on opportunistic basis, evaluating all alternatives, prioritizing high-ROE growth opportunities.

What to watch in Q3 FY26

Assured Life Re capital needs

Next quarter
Current could put a little bit of strain in our original projection of capital
Target Capital needs met without impacting buybacks or other growth initiatives.

Why it matters

The acceleration of Assured Life Re bookings could require more upfront capital, potentially affecting capital allocation decisions between growth and shareholder returns.

So that could put a little bit of strain in our original projection of capital. And as we said, we're living capital based on an opportunistic basis. We evaluate all alternatives.

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Q&A highlights

How does increased volatility in CLO returns affect the strategy for higher-yielding alternative investments, and what is the expected impact of Q2 CLO marks on Q3 results given the reporting lag?

Management views alternative investments as a diversified basket, not solely CLOs. They acknowledge market fluctuations but maintain a long-term view, noting that some Q2 CLO losses are already reversing in Q3. They remain comfortable with the strategy and the 12% inception-to-date IRR.

“Everything is going to happen is a good day and it's bad day. Most markets or at least some markets will have the ability to reverse and we've seen already activity in the large one that we took the loss in this quarter already reversing in next quarter because we booked it on a quarter lag or reversing some of it.”

asked by Unknown Analyst · answered by Dominic Frederico

2 min read 5 chapters

Detailed narrative

Record Valuation Metrics and Capital Strength

Assured Guaranty reported record per share valuation metrics at the end of Q2 2026, with adjusted operating shareholders' equity reaching $129.94 and adjusted book value at $189.72. These achievements reflect successful execution of strategic initiatives and were underscored by S&P, KBRA, and Moody's affirming the financial strength ratings of its financial guarantee insurance subsidiaries with stable outlooks, citing excellent capital and earnings, exceptional liquidity, and a strong competitive position.

Robust New Business Production

The company generated $152 million in PVP during the first half of 2026, marking a 48% increase over the first half of 2025. This growth was primarily driven by strong activity in U.S. public finance, which contributed $106 million in PVP, and global structured finance, which saw PVP increase to $35 million from $15 million in the prior year. The company remains the top provider of municipal bond insurance, insuring $9.6 billion of new issue par across 423 transactions, including 17 transactions of $100 million or more.

Strategic Capital Allocation and Shareholder Returns

Assured Guaranty continues to evaluate capital deployment opportunities, balancing growth investments in its financial guarantee and annuity reinsurance platforms with shareholder returns. In Q2 2026, the company repurchased 554,000 shares for $45 million at an average price of $80.68 per share and returned $17 million in dividends. Since 2013, total share repurchases amount to $6 billion, representing 81% of shares outstanding at the program's inception, alongside a quarterly dividend increase from $0.10 to $0.38 per share.

Annuity Reinsurance and International Expansion

The Assured Life Re platform is progressing well, with the company comfortable about meeting production and income milestones. Management noted potential for accelerated bookings, which could require more upfront capital. Concurrently, Assured Guaranty is focused on expanding its financial guarantee business in Europe and the Asia Pacific region, complementing its strong U.S. municipal business and aiming for greater revenue diversification, with a strong pipeline expected for the second half of 2026.

Investment Portfolio Performance and Credit Exposures

The alternative investment portfolio maintained an inception-to-date IRR of approximately 12%, significantly outperforming the 3-year average yield of 4.3% on the fixed maturity portfolio, despite a $19 million mark-to-market loss on a CLO equity fund in Q2. The company continues to proactively manage its Brightline transaction exposure, which experienced economic loss development but did not impact adjusted operating income due to sufficient deferred premium revenue. No significant developments were reported regarding Thames Water exposure.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.