Kroll Bond Rating Agency Affirms Assured Guaranty Municipal’s AA+ Financial Strength Rating with Stable Outlook
Public Company Information:
HAMILTON, Bermuda--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) today affirmed its insurance financial strength rating of AA+, with a Stable Outlook, for Assured Guaranty Municipal Corp. (AGM), a financial guaranty subsidiary of Assured Guaranty Ltd. (together with its subsidiaries, Assured Guaranty)(NYSE:AGO).
In the report, KBRA noted the following key strengths supporting AGM’s AA+ rating:
- AGM demonstrates the ability to withstand KBRA’s conservative stress case loss assumptions across the breadth of its insured portfolio.
- AGM’s substantial and continuing runoff in structured finance exposures should continue to moderate risk. Structured finance exposure is down nearly 80% since 2009.
- AGM’s mature and high-functioning operating platform is supported by strong governance and risk management systems.
- AGM’s tested management team, given their experience through the credit crises, is well positioned to address future portfolio risk issues, should they develop.
In response to the report, Dominic Frederico, President and CEO said:
“KBRA subjected our insured portfolio to rigorous statistical modeling with elevated levels of assumed economic stress, including case by case stress analysis of our Puerto Rico, residential mortgage-backed and other distressed credits. They found that, even in this highly unlikely scenario, AGM was able to pay all claims and expenses in full and on time with a comfortable balance remaining.
“Significantly, KBRA assigned more severe stress assumptions to our insured Puerto Rico transactions than when they originally rated AGM AA+ in November 2014. In the new analysis, loss severities ranged from 10% to 55% on different Commonwealth issuers, with higher severities in the first three years. KBRA further assumed that two of AGM’s unaffiliated reinsurers would not perform, requiring AGM to shoulder those reinsured losses.
“The economic assumptions in KBRA’s capital model are far worse than what would be expected in normal circumstances, and AGM’s strong AA+ performance shows the high level of protection available to investors in AGM-insured bonds.”
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 these statements. These risks and uncertainties include, but are not limited to, those resulting from changes in rating agency models or opinions, adverse credit developments in AGM’s insured portfolio and the impact of those developments on rating agency models and opinions, 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 December 10, 2015. 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. Its operating subsidiaries provide credit enhancement products to the U.S. and international public finance, infrastructure and structured finance markets. More information on Assured Guaranty Ltd. and its subsidiaries can be found at AssuredGuaranty.com.