Assured Guaranty Ltd. (NYSE:AGO)

Provides insurance for the scheduled payments of debt instruments, generally those issued by government agencies in the US and the UK, but also corporate and mortgage-backed securities. Was caught up in the insured credit default swap fiasco nine years ago, but came out a little better than some of their peers. Ended up acquiring some of the assets of Radian and MBIA. Today faces severe challenges with a multitude of Puerto Rican debt instruments that have missed scheduled payments. The devastation caused by Hurricane Maria has put a hold on any resolutions to those debt issues, as the infrastructure of Puerto Rico needs to be rebuilt before there can be any source of revenue to make debt payments. They have about $7 billion in shareholder equity and about $5 billion total exposure to Puerto Rican debt guarantees, so it's fairly substantial. The various Puerto Rican debt instruments run out as far as 2047, so while it may be an issue for quite some time, there is also a lot of time to deal with it. Their balance sheet currently has about $1.3 billion listed under liabilities that is allocated for likely future debt defaults. Insurance companies are always paying out claims; that's why they exist. A well-managed insurance company plans for the occasional significant loss, and AGO appears to still be financially healthy, as seven of their subsidiaries are rated AA by S&P's Financial Services and one is rated BB. With 117.5 million outstanding common shares, the current market cap is $4 billion, so it seems a worst case scenario is already reflected in the stock price, although the price does continue to drift lower. Current p/e is about 4.6 and last dividend was $0.145 (1.7% annualized).

Puerto Rico debt problems cast a negative light on the company, however the business is just fine even if PR would default on all the debt that is insured by AGO. Management is super smart and has a long track record of doing a good job, especially looking at how well they've done coming out of the GFC compared with competitors.