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Assured Guaranty Ltd: A Strong Buy


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On Mar 9, Zacks Investment Research upgraded Assured Guaranty Ltd. to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

With the fourth-quarter earnings beat, Assured Guaranty delivered three straight quarters of positive earnings surprise with an average of 16.3%.

Additionally, On Jan 18, 2013, the board of directors of Assured Guaranty approved a $200 million share repurchase program. Further, on Feb 7, the board also approved an 11% hike in its quarterly dividend.

Assured Guaranty reported its fourth-quarter results on Feb 27. Non-GAAP earnings per share came in at 94 cents, surpassing the Zacks Consensus Estimate by 32.4%.

Results benefited largely due to higher terminations of structured finance exposures as well as refunding of public finance exposures.

Top line improved 19.2% year over year to $447 million, driven by strong improvement in net premiums earned (up 32.1% year over year).

Expenses in the fourth quarter witnessed a sharp decline of 41% attributable to a 57% decline in loss and loss adjustment expense.

The Zacks Consensus Estimate for 2013 is $2.55 per share, down 9% year over year. For 2014, the Zacks Consensus Estimate is currently pegged at $2.64 per share, up 3.7% year over year.

Other Stocks to Consider

Multiline insurers such as CNO Financial Group (CNO - Analyst Report) with a Zacks Rank #1 (Strong Buy) and Assurant Inc. (AIZ - Analyst Report) and Cigna Corp. (CI - Analyst Report) with a Zacks Rank #2 (Buy), among others, are worth noting.