Kroll Bond Rating Agency (KBRA) published detailed reports supporting its affirmations of the insurance financial strength ratings of Assured Guaranty Municipal Corp. (AGM) and its wholly owned subsidiaries Assured Guaranty (Europe) plc (AGE UK) and Assured Guaranty (Europe) SA (AGE SA) along with rating affirmations for Assured Guaranty Corp. (AGC) and Municipal Assurance Corp. (MAC). In the reports, KBRA affirmed the AA+ ratings for AGM, MAC, AGE UK, AGE SA and the AA rating for AGC, all with Stable Outlooks. AGM, AGC and MAC are all U.S. financial guaranty subsidiaries of Assured Guaranty Ltd. (together with all its subsidiaries, Assured Guaranty) (NYSE:AGO).
KBRA noted the following key strengths supporting its ratings affirmations:
- “Experienced management team which operates with a mature and high-functioning operating platform supported by strong governance and risk management systems” for the financial guaranty subsidiaries.
- “Ability to withstand KBRA’s conservative stress case loss assumptions across the insured portfolio” for the financial guaranty subsidiaries.
- A “corporate governance framework, credit and risk management processes” that KBRA considers “strong and reflective of industry best practices.”
- “The substantial and continuing run-off in higher risk components of the portfolio” for AGM and AGC; and for MAC, its “diverse, high quality insured portfolio.”
Regarding the two international subsidiaries of AGM, KBRA highlighted the “extensive intra-group financial support agreements” that benefit AGE UK and AGE SA.
KBRA views the COVID-19 pandemic as primarily a “liquidity event” for Assured Guaranty, writing:
- “With respect to COVID-19, KBRA continues to view this as primarily a liquidity event in the near term as financial guaranty policies only cover scheduled debt service.”
- AGM, AGC and MAC have each “maintained strong liquidity,” and for each company, “Assured’s surveillance/work-out expertise positions the company to mitigate risk and limit losses.”
“We are pleased that KBRA affirmed the AA+ stable financial strength ratings of AGM, MAC, AGE UK and AGE SA and the AA stable financial strength rating for AGC,” said Dominic Frederico, President and CEO of Assured Guaranty. “KBRA’s view that the COVID-19 pandemic is primarily a potential liquidity event for Assured Guaranty implies that related claims, if any, will be reimbursed by the obligors. As of November 6, we have paid no first-time claims that we believe are due to credit stress arising specifically from COVID-19, and we maintain significant liquid investments to meet potential needs. KBRA’s rating also recognizes the strong performance in its portfolio stress analysis of each of our U.S. and European insurance companies, and our proven management team and risk management framework. We will continue to provide guarantees and invest in our business diversification in a prudent manner that is oriented for the long term and maintains the capital strength of our insurance subsidiaries.”
Assured Guaranty is the leading provider of financial guaranty insurance. The group has approximately $11 billion of claims-paying resources as of 9/30/20*. On average, $2 billion of municipal bonds insured by Assured Guaranty companies trades each week during typical market conditions.
* Aggregate data for operating subsidiaries within the Assured Guaranty Ltd. group. Claims on each subsidiary’s insurance policies/financial guarantees are paid from that subsidiary’s separate claims-paying resources. See the most recent Financial Supplement of Assured Guaranty Ltd. at AssuredGuaranty.com/agldata for the components of claims-paying resources.
Any forward-looking statements made in this press release reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in this press release. These risks and uncertainties include, but are not limited to, difficulties executing Assured Guaranty’s business strategy; those risks and uncertainties resulting from changes in rating agency models or opinions; changes in the world’s credit markets, segments thereof, interest rates, credit spreads or general economic conditions; the development, course and duration of the COVID-19 pandemic and the governmental and private actions taken in response, and the global consequences of the pandemic and such actions; adverse credit developments in Puerto Rico or other portions of Assured Guaranty’s insured portfolio and the impact of those developments on rating agency models and opinions; adverse developments in Assured Guaranty’s asset management business; other risks and uncertainties that have not been identified at this time, management’s response to these factors, and other risk factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of November 11, 2020. Assured Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Assured Guaranty Ltd., is a publicly traded (NYSE: AGO) Bermuda-based holding company. Through its insurance subsidiaries, Assured Guaranty provides credit enhancement products to the U.S. and international public finance, infrastructure and structured finance markets. It also provides asset management services. More information on Assured Guaranty Ltd. and its subsidiaries can be found at AssuredGuaranty.com.
Robert Tucker, 212-339-0861
Senior Managing Director, Investor Relations and Corporate Communications