Business Context and Reporting Period
Assured Guaranty Ltd. (AGL) filed this Form 8-K on October 18, 2011, to announce a restatement of financial results for its insurance subsidiary, Assured Guaranty Corp. (AGC). The restatement covers the years ended December 31, 2009 and 2010, as well as all previously issued quarters of 2010 and 2011.
Key Financial Metrics and Restatement Impact
The filing details adjustments to AGC's balance sheets and income statements. The estimated impact through the second quarter of 2011 is a decrease in shareholder's equity of less than 1%, from $913.1 million to $906.6 million. The restatement does not affect AGC's claims-paying resources or regulatory/rating agency capital.
| Period | Metric | Previously Filed | Restated | Change |
|---|---|---|---|---|
| Dec 31, 2010 | Total Shareholder's Equity | $1,074.1 million | $1,070.7 million | -$3.4 million |
| Dec 31, 2010 | Net Income (Loss) | ($47.9) million | ($50.2) million | -$2.3 million |
| June 30, 2011 | Total Shareholder's Equity | $913.1 million | $906.6 million | -$6.5 million |
| June 30, 2011 | Net Income (Loss) | ($185.9) million | ($188.3) million | -$2.4 million |
Specific line item adjustments include changes to fixed maturity securities, deferred tax assets, credit derivative liabilities, and financial guaranty variable interest entities (VIE) liabilities.
Material Changes Versus Prior Period
The material change is the correction of previously reported figures due to adjustments in Financial Guaranty VIE eliminations and other accounting adjustments. For the year ended December 31, 2010, total revenues were restated downward from $133.2 million to $127.9 million, and total expenses were restated downward from $226.5 million to $224.8 million. For the six months ended June 30, 2011, total revenues were restated from a loss of $248.8 million to a loss of $252.0 million.
Guidance, Outlook, and Risks
The filing does not provide new forward-looking guidance or management commentary regarding future performance. The primary risk disclosed is the historical inaccuracy of previously issued financial statements, though management explicitly states the restatement has no effect on the company's claims-paying resources or regulatory capital adequacy.
Investor Verification Checklist
- Verify the specific accounting methodology used for Financial Guaranty VIE eliminations.
- Confirm the impact of the restatement on the parent company (AGL) consolidated financial statements versus the subsidiary (AGC).
- Review the full press release referenced in Item 8.01 for details on the 2009 restatement not fully tabulated in this excerpt.
- Assess whether the restatement triggers any covenant violations or rating agency reviews, despite management's statement to the contrary.