Since March 2025, Assured Guaranty has been in a holding pattern, posting a small loss of 4.8% while floating around $83.57. The stock also fell short of the S&P 500’s 16.2% gain during that period.
Is there a buying opportunity in Assured Guaranty, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is Assured Guaranty Not Exciting?
We don't have much confidence in Assured Guaranty. Here are three reasons why AGO doesn't excite us and a stock we'd rather own.
1. Declining Net Premiums Earned Reflect Weakness
When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are therefore net of what’s ceded to reinsurers as a risk mitigation and transfer strategy.
Assured Guaranty’s net premiums earned has declined by 4.3% annually over the last five years, much worse than the broader insurance industry. This shows that policy underwriting underperformed its other business lines.
2. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Assured Guaranty’s revenue to drop by 29.8%, a decrease from its 8.5% annualized declines for the past two years. This projection is underwhelming and suggests its products and services will face some demand challenges.
3. Previous Growth Initiatives Haven’t Impressed
Return on equity (ROE) serves as a comprehensive measure of an insurer's performance, showing how efficiently it converts shareholder capital into profits. Strong ROE performance typically translates to better returns for investors through a combination of earnings retention, share repurchases, and dividend distributions.
Over the last five years, Assured Guaranty has averaged an ROE of 7.7%, uninspiring for a company operating in a sector where the average shakes out around 12.5%.
Final Judgment
Assured Guaranty’s business quality ultimately falls short of our standards. With its shares underperforming the market lately, the stock trades at 0.7× forward P/B (or $83.57 per share). While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're pretty confident there are more exciting stocks to buy at the moment. We’d suggest looking at our favorite semiconductor picks and shovels play.
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