Assured Guaranty, LTD 2026 Q2 Earnings Call

Please go ahead. Thank you, operator, and thank you all for joining Assured Guaranty for our second quarter 2026 financial results conference call.

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 outlooks, market conditions, credit spreads, financial ratings, loss reserves, financial results, or 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. This 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 financial supplement and equity investor presentation, which are on our website at assuredguaranty.com. Turning to the presentation, our speakers today are Dominic Frederico, President and Chief Executive Officer of Assured Guaranty Ltd.; Rob Bailenson, our Chief Operating Officer; and Ben 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.

Thank you, Robert, and welcome to everyone joining today's call. Assured Guaranty had a strong first half of 2026. Additionally, our key valuation metrics of shareholders' equity, adjusted operating shareholders' equity, and adjusted book value per share reached record highs at quarter end. Our new business production continued to deliver solid results, generating $152 million of PVP in the first half, nearly 50% higher than in the first half of 2025, led by our activity in U.S. public finance and global structured finance. Rob will discuss the production details shortly. Briefly, it is worth noting that U.S. public finance and global structured finance produced $32 million and $20 million more, respectively, in PVP than in last year's first half.

In our asset management segment, our 12% inception to date annualized internal rate of return for all of our alternative investments continues to support our strategic decision to allocate a portion of our investment portfolio to alternative investments. As for our annuity reinsurance platform, we are pleased with the progress we have made and the market reception of Assured Life Re. We are comfortable that we are on track to meet the production and income milestones we set when we launched our annuity reinsurance platform in January. In addition to our new annuity reinsurance business, we remain focused on further growing our financial guarantee business abroad, including Europe and the Asia Pacific region, while also sustaining our leadership position in U.S. bond insurance. As we stated previously, we're also looking at opportunities that would further optimize our capital structure to reward shareholders, support business growth, and protect policyholders.

Over the last few weeks, S&P, KBRA, and Moody's have all affirmed the financial strength ratings of our financial guarantee insurance subsidiaries with stable outlooks. While I won't go into all that was positively highlighted in these reports, it is worth noting that they again discussed our excellent capital and earnings, exceptional liquidity, strong competitive position, and our diversified approach to underwriting, offering us flexibility to pivot toward favorable markets as conditions shift. As we move into the second half of 2026, we expect demand to continue for our core products, and we see attractive prospects for our annuity reinsurance business. We have significant opportunities for substantial future growth and greater revenue diversification.

As always, we will maintain disciplined underwriting and risk management to protect our policyholders and prudent competitive pricing for our obligors and for our clients looking to optimize their capital while focusing on increasing value creation for our shareholders. I will now turn the call over to Rob to provide more details about our production results.

Thank you, Dominic, and good morning to everyone on the call. Assured Guaranty closed $152 million of PVP in the first half of 2026.

Compared with $103 million of PVP in the first half of last year, a 48% increase. U.S. Public Finance alone produced more first half PVP than the whole company did during the first half of 2025, with $106 million of PVP. During the first half of 2026, Assured Guaranty remained the top provider of municipal bond insurance. We insured $9.6 billion of new issue par sold, covering 423 transactions in total, including both primary and secondary market par for U.S. Public Finance, Assured Guaranty insured over $10.1 billion. Assured Guaranty's insurance supported a wide range of municipal bond transactions, both large and small, throughout the first half of the year, with the larger transactions reflecting sustained institutional demand for our guarantee.

In the first half, we insured a total of 17 transactions that were $100 million of par or more, including $870 million for the Dormitory Authority of the State of New York, $330 million in student housing revenue bonds for the Kentucky Bond Development Corporation, $297 million in airport senior revenue bonds for the Burbank-Glendale-Pasadena Airport Authority, and $102 million in taxable bonds for Brown University Health, to name a few. Within the AA category in the first half of 2026, we insured $2.8 billion of par across our primary and secondary transactions. We believe investors continue to value our insurance as an important layer of protection against issuer headline or downgrade risk, and as a means to help preserve market value. We continue to prioritize risk-based competitive pricing and appropriate returns while maintaining a disciplined underwriting approach.

This approach reinforces the value that an Assured Guaranty policy provides to both issuers and investors. Turning to our other financial guarantee businesses, we continue to see positive developments in global structured finance, where PVP was $35 million compared to $15 million in the first half of last year. Our structured finance results were attributable primarily to fund finance and financial guarantees for life insurance capital management purposes. We continue to further develop our fund finance business. It is a highly rated product area that has transactions that are typically repeatable flow business with relatively short lives, resulting in our earning the premiums considerably faster than in most of our other markets. Fund finance maturities typically range from a few months to a little over two years, which means we can recycle our capital more quickly.

As we have mentioned in the past, we expect that the majority of these transactions will renew at maturity. Non-U.S. public finance PVP results for the first half of 2026 included a secondary local authority transaction in the U.K., annual extensions of liquidity facilities, a regulated utility in Spain, and a primary social housing transaction in France. Further, we are off to a great start in the third quarter of 2026 with a promising pipeline ahead. At this point during the third quarter, we have issued policies or commitments on a number of large U.S. public finance transactions, a primary market European toll road, and several structured finance transactions, including two transactions with a new counterparty. In total, these transactions are expected to generate $42 million of PVP.