Investment Thesis
Assured Guaranty demonstrates exceptional operational profitability with 33.7% net margin and 72.8% free cash flow conversion, supported by a conservative 0.31x Debt/Equity balance sheet. However, the critically low 1.6% ROE and anemic 0.8% net income growth reveal severely inadequate returns on a large $12.6B asset base, typical of undercapitalized or low-growth insurance operations requiring significant operational improvements.
Strengths
- Exceptional net profit margin of 33.7% reflects superior underwriting quality and operational discipline
- Outstanding free cash flow generation of $190M with 72.8% FCF margin demonstrates excellent cash conversion efficiency
- Conservative capital structure with 0.31x Debt/Equity ratio provides substantial financial flexibility and refinancing safety
Risks
- Critically low return on equity of 1.6% signals poor capital allocation efficiency relative to massive $12.6B asset base
- Minimal net income growth of 0.8% YoY indicates stagnant or mature business with limited organic expansion
- Interest coverage ratio of 2.8x leaves insufficient cushion against adverse underwriting results or economic deterioration
Key Metrics to Watch
- Return on Equity trend and component analysis (net income growth vs. capital base changes)
- Premium volume growth rates and loss ratio trends in core surety business segments
- Operating cash flow sustainability and working capital management to verify FCF quality
Financial Metrics
Revenue
261.0M
Net Income
88.0M
EPS (Diluted)
$1.91
Free Cash Flow
190.0M
Total Assets
12.6B
Cash
312.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
24.9%
Net Margin
33.7%
ROE
1.6%
ROA
0.7%
FCF Margin
72.8%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.31x
Debt/Assets
56.0%
Interest Coverage
2.83x
Long-term Debt
1.7B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T09:22:55.469751 |
Data as of: 2026-03-31 |
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