- Adjusted Operating Income Per Share Growth: Rose to $9.80 in 2025 from $7.10 in 2024, reflecting improved profitability.
- Market Leadership in Municipal Insurance: Captured 58% of U.S. new-issue insured par, insuring $27 billion in municipal par and $2 billion in secondary market policies (240% YoY growth).
- Capital Management Actions: Repurchased 12% of shares ($500 million) and increased quarterly dividend by 12% to $0.38, distributing $69 million to shareholders.
- Resolution of Troubled Exposures: Generated $103 million gain from Lehman litigation and $23 million from loss mitigation strategies, boosting financial stability.
- Annunity Reinsurance Expansion: Acquired Warwick Re Limited to launch a new earnings stream, with $160 million in annual pretax income from alternative investments in 2025.
Capital Management and Shareholder Returns
The company continued to return capital to shareholders through share repurchases and dividends. It repurchased 12% of its common shares outstanding, or 5.8 million shares, at an average price of $85.92, for a total of $500 million. The company also distributed $69 million to shareholders through dividends and increased its quarterly dividend per share by 12% to $0.38. As of today, the company's holding company liquidity is approximately $130 million, and its remaining share repurchase authorization is $204 million. According to Dominic John Frederico, the company has a $500 million annual stock buyback target, but the actual buyback amount may be influenced by other market opportunities, particularly in life and annuity reinsurance.
Valuation and Growth Prospects
With a Price-to-Book Ratio (P/B) of 0.77, the company's stock appears to be undervalued relative to its book value. The Dividend Yield is 1.58%, providing a relatively stable source of return for investors. Analysts estimate next year's revenue growth at -1.0%, indicating a potential slowdown in the company's top-line growth. However, the company's efforts to expand into new areas, such as annuity reinsurance, may provide a new source of earnings growth.
Risk Management and Exposures
The company continues to manage its risk exposure effectively, with a significant cushion in the capital stack for its troubled exposures, such as Brightline. According to Benjamin G. Rosenblum, $4 billion of subordination below their position provides a good cushion, and the company remains confident in its ability to recover. The company's alternative investment portfolio, largely composed of CLOs, is also well-managed, with no direct exposure to private credit.