Assured Guaranty Ltd. late Thursday posted second-quarter earnings that were the insurer’s best since its initial public offering in 2004. The company recorded net income earnings of $203.5 million versus a net loss of $170 million for the same period one year ago.

The principal reason for the growth is Assured’s June 2009 acquisition of Financial Security Assurance, the company said in its earning statement.

Assured Guaranty is the only bond insurer to have maintained double-A or higher ratings throughout the financial turmoil of recent years. Its competitors were downgraded in 2008 and forced to stop writing new business after structured mortgage bonds they insured defaulted, causing billions of dollars of cumulative losses.

Assured’s adjusted book-value, or ABV — a measure of accounting that does not adhere to generally accepted accounting principles but which attempts to capture future income earnings minus future liabilities — was $48.41 per share, or one cent above the year-end 2009 price.

The ABV figure is about three times its current stock price, which closed Thursday at $16.10. In after-hours trading, share value shot up almost 9% in light of the company filing.

Shareholders’ equity at mid-year was $3.87 billion, reflecting a 10% increase in the first six months of the year. The company attributed much of that gain to the $525.5 million of net income earned from January to June.

Assured’s operating income, another non-GAAP measure, was $172 million in the second quarter, reflecting a 530% increase from the $27.3 million recorded in the same period a year ago.

“Our operating earnings this quarter are the highest we have achieved since our initial public offering, reflecting the embedded earnings power of the combined” companies, said Dominic Frederico, president and chief executive officer.

Frederico noted the company’s insured share of the tax-exempt bond market increased in the quarter and reached as high 10.8% in June.

“This demonstrates our continued market acceptance,” he said.

However, as a percentage of total issuance, the company insured 9.2% in June, according to Thomson Reuters. Also, total public finance business production  in the quarter was $81.4 million, a 36% decline from the same period in 2009, according to the company statement.

Frederico said the decline reflects the impact of taxable Build America Bonds, which generally come to market uninsured. BABs have limited the supply of tax-exempt bonds eligible for insurance.

Assured’s total revenue in the second quarter was $428.1 million, compared to a loss of $169.6 million in the same quarter a year ago. The gain includes $292.1 million of net earned premiums.

The company also benefited from its derivatives portfolio, which produced $40.6 million of net quarterly income.

“We made progress in building our U.S. municipal market franchise and benefited from an accelerated rate of defective mortgage loan repurchases by originators, having reached agreement on or received $71 million for loan put-backs,” Frederico said. “Early-stage mortgage delinquencies on our portfolio also continued to improve, resulting in our decision not to extend the conditional default rate loss curve on our insured residential mortgage exposures.”

Assured has two platforms: Assured Guaranty Municipal Corp., and Assured Guaranty Corp. AGM is a muni-only insurer previously named Financial Security Assurance and acquired last year. AGC is a diversified insurer that writes policies for municipal bonds and structured finance products.

Together the two insurers wrapped about $14 billion, or 7%, of the $204 billion municipal bonds issued in the first six months of 2010.

In addition to the earnings statement, Assured announced Wednesday that its board of directors authorized another two million share repurchase program. A previous program for the same amount, authorized in November 2007, was completed in May.

At mid-year, Assured had 183.7 million shares outstanding.

Frederico said Wednesday the buyback program would help to manage capital efficiently.

“We will continue to evaluate our capital options while adhering to our priorities of ratings improvement, portfolio acquisition, reinsurance recapture, purchasing insured securities and share repurchases,” he said in another company statement.

The company Wednesday also declared a quarterly dividend of $0.045 per common share, payable on Sept. 2.

Standard & Poor’s in mid-May affirmed its AAA rating with a negative outlook on both insurer platforms. Moody’s Investors Service gives each insurer Aa3 ratings, three notches lower.

A conference call for investors will be held Friday morning at 7:30 a.m. Eastern Time.

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