Assured's Acquisitions Fuel Profit Gain

Assured Guaranty Ltd., the biggest municipal bond insurer, reported gains in second-quarter profit, boosted by its acquisition strategy.

Net income rose to $479 million, or $3.60 a share, in the third quarter of this year, from $129 million, or $0.88 a share a year earlier, according to an Nov. 3 press release. Operating income climbed to $508 million or $3.83 a share, for the quarter, from $164 million, or $1.12 a share.

"By continuing to execute on our strategic objectives, Assured Guaranty delivered excellent results in the third quarter of 2016," said Dominic Frederico, president and CEO of Assured. "We further positioned the company for long-term success through acquisitions and new business originations, while also enhancing returns to shareholders through share repurchases and our quarterly dividends."

Assured said it set records for shareholders' equity per share at $50.70, operating shareholders' equity per share at $49.29 and adjusted book value per share at $66.34.

Also in the third quarter, Assured reported $55 million or 2.1 million shares in share repurchases. On Nov. 2, the board of directors authorized an additional $250 million of share repurchases.

The acquisition of CIFG Holding Inc., resulted in an after-tax net bargain purchase gain and settlement of pre-existing relationship of $293 million or $2.21 per share.

"One of our key strategies has been to identify and acquire legacy financial guaranty companies whose insured portfolios are consistent with our risk profile. On July 1st, we closed on our third acquisition," said Frederico on a conference call on Nov. 4. "In this near-zero interest rate environment, which impacts new business opportunities, we continue to prioritize our acquisition strategy," he said. "We recently announced another important pending acquisition: MBIA UK Insurance Limited, the European operating subsidiary of MBIA Insurance Corp."