In a successful third quarter of 2021, Assured Guaranty's new business production generated $96 million of PVP.
At the nine months mark, our year-to-date PVP totaled $263 million, which puts us on pace with last year's outstanding production.
In terms of shareholder value as of September 30, 2021 on a per share basis, shareholders' equity, adjusted operating shareholder's equity and adjusted book value all reached record highs of $88.42, $82.89 and $122.50 respectively.
Year-to-date Assured Guaranty is earned $197 million of adjusted operating income, about the same as in last year's first three quarters notwithstanding a $138 million after-tax loss on debt extinguishment.
These redemptions and the issuance of lower coupon debt will reduce next year's debt service by $5.2 million.
During the third quarter total municipal bond issuance was strong with $121 billion of new par issued, the second highest third quarter volume in a dozen years.
For the first three quarters, new par issue of $343 billion exceeded that of the comparable period in 2020 which was a record year.
Insurance penetration continued its upward trend, reaching 8.5% for both the third quarter and nine months, the highest level for a third quarter in any nine month period in more than a decade.
In this environment, Assured Guaranty continue to lead the municipal bond insurance industry with the third quarter market share of almost two-thirds of the insured par sold in the primary market as we guarantee 270 transactions for a total of $6.7 billion in insured par.
At the nine month mark, we would guarantee more than 60% of insured new issue par sold this year.
The $17.9 billion we insured in the primary market was 90% higher than in the first nine months of 2020 and 88% more than in the first nine months of the most recent pre-pandemic year 2019.
During the third quarter, we insured 17 transactions with $100 million or more in insured par, which brings our total year-to-date transaction count in this category to 38 just one deal short of the number we insured in all of 2020.
Also in the third quarter, we continue to add value on AA credits ensuring $836 million of par on 27 deals, that each has at least one rating in AA category from either S&P or Moody's.
The 83 municipal issues we insured in this category through September of this year aggregated to more than $3 billion of insured par compared with $2 billion in the first nine months of last year.
It was public finance usually generates a large percentage of our PVP each quarter and it's $55 million of third quarter PVP is no exception.
It produced $17 million of PVP in the third quarter of 2021.
In the U.K. alone, the government has put out a paper anticipating as much as GBP650 billion of public and private infrastructure spending over the next 10 years.
In Global Structured Finance, third quarter PVP was very strong $24 million bringing the year-to-date total to $35 million.
Overall, the quality of our insured portfolio continue to improve as a below investment grade portion of our insured portfolio declined by $300 million during the quarter as within sight of falling below 3% of net par exposure.
Negotiated agreements with these restructurings apply to 95% of our par exposures to Puerto Rico entities with the balance of our exposures remaining current on debt service payments.
KBRA also noted AGC's decreased insurance leverage, the substantial de-risking of its insured portfolio and the positive movement toward resolution of Puerto Rico's Title 3 process.
These new CLOs were responsible for a $1.7 billion of the one -- of the $3.8 billion increase in fee earning CLO assets since the year began.
The remaining $2.1 billion of the increase resulted primarily from selling CLO equity previously held in AssuredIM Funds and converting AUM from non-fee earning to fee earnings during the year.
We have shared virtually all of the CLO equity held by AssuredIM legacy funds and 96% of our CLO AUM is fee earning now.
After issuing $500 million of 10-year senior notes at a rate of 3.15% in May, I'm pleased to report that AGUS Holdings issued another $400 million of 30-year senior notes in August at an attractive rate of 3.6%.
Most of the proceeds of these debt offerings were used to redeem $600 million of long-dated debt obligations, and the remaining proceeds were designated for general corporate purposes including share repurchases.
The redemptions included $430 million of debt we assumed in 2009 as part of the FSAH acquisition with coupons ranging from 5.6% to 6.9% and remaining terms of approximately eight years, as well as $170 million of AGUS 5% senior notes due in 2024.
First, we reduced the average coupon on redeemed debt from 5.89% to 3.35% which will result in a $5.2 million annual savings until the next debt maturity date.
Second, we reduced our 2024 debt refinancing need from $500 million to $330 million.
These debt redemptions resulted in a pre-tax loss on debt extinguishment of $175 million or $138 million on an after-tax basis, consisting of two components.
First, $176 million acceleration of unamortized fair value adjustments that were originally recorded in 2009 as part of the FSAH acquisition, and second, a $19 million make whole payment to debt holders of the redeemed AGUS 5% senior notes.
It is important to note that $156 million of the $175 million loss was a non-cash expense.
The amortization of these purchase adjustments had been slowly amortizing into interest expense since 2009 and we're scheduled to continue to amortize into interest expense for another eight years.
Despite this charge, our third quarter 2021 adjusted operating income was $34 million or $0.45 per share.
The loss on debt extinguishment reduced adjusted operating income by $1.87 per share.
In the Insurance segment however, adjusted operating income was significantly higher at $214 million for the third quarter 2021 up from $81 million in the third quarter of 2020.
The increase is primarily due to favorable loss development, which was a benefit of $94 million in the third quarter of 2021.
The largest component of the economic benefit was attributable to a $65 million benefit in U.S. RMBS exposures that was mainly related to a benefit from a higher recoveries and second lien charged-off loans in deferred first lien principal balances.
In addition, there was a $31 million benefit on public finance transactions due to mainly the refinement of the mechanics of certain terms of the Puerto Rico support agreements.
The investment portfolio generated total income of $102 million, an increase from $95 million in third quarter 2020.
The increase was mainly due to the performance of the alternative investment portfolio including AssuredIM funds which collectively generated $33 million in the third quarter of 2021 compared with $20 million in the third quarter of 2020.
Since the establishment of AssuredIM, the insurance subsidiaries have invested $380 million in AssuredIM Funds which now have a net asset value of $465 million and have produce inception to-date return of almost 20%.
Our fixed maturity and short-term investments account for the largest portion of the portfolio generating net investment income of $69 million in third quarter 2021 compared with $75 million in third quarter 2020.
However, over the long term, we are targeting enhanced returns on the alternative investment portfolio of over 10%, which exceeds the projected returns on the fixed maturity portfolio.
And accelerations due to refundings and terminations were $15 million in third quarter 2021 compared with $18 million in the third quarter of 2020.
This quarter, we increased fee earnings CLO AUM with the issuance of $598 million in new CLOs.
We continue to liquidate assets and wind down funds and now have less than $1 billion of legacy AUM in those funds.
In the Asset Management segment, adjusted operating loss was $7 million in the third quarter 2021 compared to an adjusted operating loss of $12 million in the third quarter of 2020.
However, asset management revenues increased 38% in third quarter 2021 compared with third quarter 2020 due mainly to the increase in CLO fee earning AUM and the recovery of previously deferred CLO fees in 2021.
Fees from opportunity funds were also up as AUM increased to $1.6 billion as of September 30, 2021 from $1 million as of September 30, 2020.
Fees from the wind-down funds decreased as distributions to investors continued, and as of September 30, 2021, the AUM of the wind-down funds was $809 million compared with $2.3 billion as of September 30, 2020.
This quarter, it also includes a debt extinguishment charge, which brought third quarter corporate results to a net loss of $169 million.
In third quarter 2021, the effective tax rate was a benefit of 57% and compared with the benefit of 33% in the third quarter of 2020.
We repurchased 2.9 million shares for $140 million in third quarter of 2021 at an average price of $47.76 per share.
This brings year-to-date repurchases to $305 million as of September 30, 2021.
Subsequent to the quarter close, we repurchased an additional 1.5 million shares for $77 million.
Since the beginning of our repurchase program in January 2013, we have returned $4 billion to shareholders under this program, resulting in a 67% reduction in total shares outstanding.
The cumulative effect of these repurchases was a benefit of over $33 in adjusted operating shareholders' equity per share and $58 in adjusted book value per share, which helped drive these metrics to new record highs of more than $82 in adjusted operating shareholders' equity per share and $122 in adjusted book value per share.
From a liquidity standpoint, the holding companies currently have cash and investments of approximately $272 million, of which $86 million resides in AGL.
As of today, we have $220 million of remaining share repurchase authorization.

Summary:
Despite this charge, our third quarter 2021 adjusted operating income was $34 million or $0.45 per share.