S&P Report Shows Strengths Underlying Assured Guaranty’s AA Stable Financial Strength Ratings

Highlights Very Strong Competitive Position, Excellent Capital and Earnings, Exceptional Liquidity, and Increased Opportunities for Underwriting

Category:

Friday, July 17, 2020 11:10 am EDT

Dateline:

HAMILTON, Bermuda

Public Company Information:

NYSE:
AGO
"indicated that the incremental increase in loss assumptions would still result in a capital adequacy assessment of excellent"

HAMILTON, Bermuda--(BUSINESS WIRE)--Assured Guaranty Ltd. (NYSE:AGO) announced today that S&P Global Ratings (S&P) has affirmed the AA financial strength ratings on U.S. bond insurers Assured Guaranty Municipal Corp. (AGM), Municipal Assurance Corp. (MAC) and Assured Guaranty Corp. (AGC); U.K. financial guarantor Assured Guaranty (Europe) plc (AGE UK) and European financial guarantor Assured Guaranty (Europe) SA (AGE SA); and Bermuda insurers Assured Guaranty Re Ltd. (AGRe) and Assured Guaranty Re Overseas Ltd. (AGRO). The outlooks of all the Assured Guaranty entities are stable.

In its July 16th research update, S&P noted Assured Guaranty’s:

  • “excellent capital and earnings with a meaningful capital adequacy buffer at the current rating”
  • “exceptional” liquidity
  • “very strong competitive position”
  • “well-defined, diverse underwriting strategy” with a “well thought-out and measured” approach to the global structured finance and international infrastructure markets
  • strength of capital adequacy that “should allow it to withstand the economic effect of the COVID-19 pandemic on underlying issuers within its portfolio and losses on its exposure to issuers in Puerto Rico”
  • S&P also ran a COVID-19 sensitivity stress test, which “indicated that the incremental increase in loss assumptions would still result in a capital adequacy assessment of excellent”
  • “Very Strong” Financial Risk Profile with underwriting and risk-management guidelines that “result in an insured exposure that, in periods of economic stress, outperforms relative to the market segments in which they underwrite”

Additionally, regarding the market impact of COVID-19, S&P wrote, “Wider credit spreads and investor uncertainty should continue to provide Assured with primary and secondary underwriting opportunities in the U.S. public finance market.” As a result of a “flight to quality and the associated spread widening, Assured has experienced strong demand in the secondary market as the economics of bond insurance are appealing to institutional investors as a tool for risk mitigation.” S&P further said, “In the latter part of the second quarter, total U.S. municipal volume began to rise, with total volume for the first six months rising approximately 15% over the first six months of 2019 and total insured new-issue volume rising approximately 41% over the same period.”

In response to the report, Dominic Frederico, President and CEO of Assured Guaranty said: “In addition to reiterating how our strong capital position, exceptional liquidity and proven business model support our AA financial strength ratings, S&P noted our increased opportunities in the current market environment. These opportunities resulted in increased municipal bond insurance penetration during the second quarter and significant increases in new business volume for Assured Guaranty in both primary and secondary public finance markets.”

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, difficulties executing Assured Guaranty’s business strategy; those risks and uncertainties resulting from changes in rating agency models or opinions; 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; 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 17, 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. 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.

Contact:

Investor Relations:
Robert Tucker, 212-339-0861
Senior Managing Director, Investor Relations and Corporate Communications
rtucker@assuredguaranty.com

Media:
Ashweeta Durani, 212-408-6042
Vice President, Corporate Communications
adurani@assuredguaranty.com

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