Assured Guaranty Subsidiary AGC Upgraded to AA+ by KBRA

Rhea-AI Summary

Assured Guaranty Ltd. (NYSE: AGO) has received an upgrade from Kroll Bond Rating Agency (KBRA), raising the financial strength rating of its subsidiary Assured Guaranty Corp. (AGC) from AA to AA+. The upgrade, announced on October 20, reflects AGC's strong capital position and effective management practices. Additionally, ratings for Assured Guaranty Municipal Corp. and its U.K. and European subsidiaries were affirmed at AA+, with stable outlooks. The ratings reflect robust claims-paying resources and a high penetration in the municipal bond market.

Positive

• AGC rating upgraded to AA+ from AA, indicating improved financial strength.
• Stable outlook affirmed for AGM and subsidiaries, suggesting reliability.
• High penetration in the municipal market, the best since 2009.
• Strong governance and risk management processes noted by KBRA.
• Effective management team contributing to stability and growth.

Negative

• Puerto Rico credits still pose a risk, with unresolved claims in AGC and AGM portfolios.

KBRA Also Affirms AA+ Financial Strength Ratings of AGM and International Subsidiaries

Outlooks Are Stable

HAMILTON, Bermuda--(BUSINESS WIRE)-- Assured Guaranty Ltd. (NYSE:AGO)(together with its subsidiaries, Assured Guaranty) announced that on October 20, Kroll Bond Rating Agency LLC (KBRA) upgraded to AA+ the insurance financial strength rating of Assured Guaranty Corp. (AGC) from the financial guarantor’s previous AA rating. Additionally, KBRA affirmed its AA+ financial strength ratings for U.S. bond insurer Assured Guaranty Municipal Corp. (AGM); U.K. financial guarantor Assured Guaranty UK Limited (AGUK) and European financial guarantor Assured Guaranty (Europe) SA (AGE). All the ratings have stable outlooks.

In its October 20 surveillance report upgrading AGC to AA+, KBRA noted that:

• “AGC’s upgrade reflects its stronger capital position relative to conservative stress scenario losses at a high confidence level as applied across its portfolio.”
• “All but two insured Puerto Rico credits within AGC’s portfolio are now covered by executed plan support agreements representing over 97% of net exposure. AGC has not paid claims on the remaining credits. While still subject to court certification, the agreements pave the way for an orderly exit from their respective Title III proceedings.”
• “KBRA also reviewed AGC’s corporate governance framework, credit and risk management processes and consider them strong and reflective of industry best practices. AGC has a proven management team and a well-developed governance framework.”

In its October 20 surveillance report affirming the AA+ ratings of AGM and its UK and European subsidiaries, KBRA wrote:

• “AGM’s rating reflects its substantial claims paying resources, skilled management team and ability to withstand KBRA’s conservative stress scenario losses as applied across the company’s insured portfolio.”
• “Experienced management team which operates with a mature and high-functioning operating platform supported by strong governance and risk management systems.”
• “Municipal market insured penetration is at its highest levels since 2009.”
• “All but one insured Puerto Rico credit within AGM’s portfolio is now covered by executed plan support agreements representing nearly 92% of net exposure. AGM has still not paid any claims on the remaining credits.”
• “AGUK and AGE benefit from extensive intra-group financial support agreements.”

In commenting on the COVID-19 pandemic, KBRA wrote: “Platform-wide, Assured has only paid relatively small first-time insurance claims it believes are due at least in part to credit stress arising specifically from COVID-19 and expects nearly full reimbursement.”

In response to the report, Dominic Frederico, President and CEO of Assured Guaranty said: “We are pleased that KBRA has recognized AGC’s strong claims-paying ability and decreased insured leverage, along with other reasons for its upgrade of AGC to AA+, the same rating KBRA has affirmed for Assured Guaranty’s other financial guarantors. Our company has performed well and remained well capitalized during the pandemic, and we are strongly positioned for the future. As always, we are committed to maintaining a well thought-out and measured approach to underwriting a diverse insurance portfolio, and to continue offering a uniquely beneficial value proposition for both issuers and investors. As KBRA noted in its report, bond insurance penetration of the municipal market has risen to its highest level since 2009, and we are proud to have led our industry throughout this period of growth.”

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; insured losses in excess of those expected by Assured Guaranty or the failure of Assured Guaranty to realize loss recoveries that are assumed in its expected loss estimates for insurance exposures, including as a result of the failure to resolve Assured Guaranty's Puerto Rico exposure in a manner substantially consistent with the support agreements signed to date; 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 October 21, 2021. 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 subsidiaries, Assured Guaranty provides credit enhancement products to the U.S. and international public finance, infrastructure and structured finance markets, and also provides asset management services. More information on Assured Guaranty Ltd. and its subsidiaries can be found at AssuredGuaranty.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211021006057/en/

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

Source: Assured Guaranty Ltd.

FAQ

What did KBRA announce on October 20 regarding Assured Guaranty (AGO)?

KBRA upgraded Assured Guaranty Corp.'s rating from AA to AA+ and affirmed AA+ ratings for its other subsidiaries.

What factors contributed to the upgrade of AGC's rating to AA+?

The upgrade reflects AGC's stronger capital position and effective risk management practices.

How does the rating upgrade affect Assured Guaranty's (AGO) outlook?

The stable outlook reinforces investor confidence in the company's creditworthiness.

What is the significance of the municipal market penetration for AGM?

Municipal market insured penetration is at its highest since 2009, indicating robust demand for AGMs services.