S&P Affirms Assured Guaranty’s AA Financial Strength Ratings with Stable Outlook
Report Highlights Very Strong Capital Adequacy, Leadership Position in the U.S. Public Finance Market and Flexibility Gained from Diverse Business Strategy
Public Company Information:
HAMILTON, Bermuda--(BUSINESS WIRE)--S&P Global Ratings reaffirmed the Assured Guaranty operating companies’ financial strength ratings of AA, which is the highest rating that S&P currently assigns to any active financial guarantor. The rating outlook is stable.
The report on Assured Guaranty Ltd. (NYSE:AGO) and its subsidiaries (collectively, Assured Guaranty) was released on July 27, 2016. The AA financial strength rating applies to U.S. bond insurers Assured Guaranty Municipal Corp. (AGM), Municipal Assurance Corp. (MAC) and Assured Guaranty Corp. (AGC); European financial guarantor Assured Guaranty (Europe) Ltd. (AGE); and reinsurer Assured Guaranty Re Ltd. (AG Re).
In the report, S&P noted Assured Guaranty’s:
- Very strong capital adequacy
- Strong competitive position, built on a well-diversified underwriting strategy and market leadership position
- Market leadership position in the U.S. public finance market in terms of par insured and premiums written
- Experienced management with well-defined strategy and a track record of success
- High quality, liquid investment portfolio
- Strong operating performance due to the long-term earnings power of the U.S public finance business
- Strong enterprise risk management
- Strong liquidity with conservative investment strategy
Additionally, S&P noted that Assured Guaranty has greater flexibility than other guarantors to capitalize on growth trends and pricing opportunities because it writes guarantees in a broader range of U.S. public finance sectors and has additional revenue sources provided by its global infrastructure and structured finance businesses, which also provide diversification of risk.
In response to the report, Dominic Frederico, President and CEO said:
“We are pleased that S&P continues to recognize Assured Guaranty’s very strong capital position, strong competitive position and market leadership in U.S. public finance, along with the benefits of our diversified strategy in the financial guaranty market.
“S&P stated that our ‘capital adequacy is very strong’ and found that our capital adequacy score remained the same under a number of different stress scenarios for our Puerto Rico exposures, confirming that we are well able to absorb the impact of Puerto Rico’s current and potential future defaults. Based on our understanding of S&P’s capital adequacy model, we estimate that Assured Guaranty had $2.6 billion of capital in excess of the AAA requirement at year-end 2015.”
In determining the AA Stable ratings, one of S&P’s scenario analyses assumed every one of Assured Guaranty’s insured Puerto Rico obligations would default, and that Assured Guaranty would pay claims totaling 100% of that debt service over the next four years. S&P also looked at other scenarios to see whether the capital adequacy score would change if claim payments totaled 15%, 25%, 35% or 45% of Assured Guaranty’s Puerto Rico debt service over the life of the transactions. The result, in all scenarios, was that these losses would not change Assured Guaranty’s S&P capital adequacy score.
The full report is available at http://assuredguaranty.com/uploads/PDFs/SP_-_Assured_final_article_-_7-27-2016.pdf
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 Puerto Rico or other portions of the 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 July 29, 2016. 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.