KBRA Affirms Assured Guaranty AA+ Insurance Financial Strength Ratings with Stable Outlook

Rhea-AI Summary

Assured Guaranty Ltd. (NYSE:AGO) announced that Kroll Bond Rating Agency has affirmed the AA+ insurance financial strength ratings of its subsidiaries. The ratings have Stable Outlooks. AGM's rating reflects its substantial claims paying resources, skilled management team, and ability to withstand losses. AGC's rating reflects its strong capital position and claims paying resources. Increased new business volumes in the U.S. municipal sector offset run-off in the insured portfolio. Municipal market insured penetration is at its highest levels since 2009. The environment for new business opportunities across Assured's underwriting platform is robust. The COVID-19 pandemic and other events have led to increased awareness for the financial guaranty product. Interest rate increases and volatile credit spreads may enhance the business environment for Assured. Tightening credit cycles may further enhance investor demand for the product. Assured Guaranty is well positioned for future growth.

Positive

• Kroll Bond Rating Agency affirms AA+ insurance financial strength ratings of Assured Guaranty subsidiaries
• Increased new business volumes in the U.S. municipal sector offset run-off in the insured portfolio
• Municipal market insured penetration is at its highest levels since 2009
• The environment for new business opportunities across Assured's underwriting platform is robust
• Interest rate increases and volatile credit spreads may enhance the business environment for Assured
• Assured Guaranty is well positioned for future growth

Negative

• None.

HAMILTON, Bermuda--(BUSINESS WIRE)-- Assured Guaranty Ltd. (NYSE:AGO) (together with its subsidiaries, Assured Guaranty) announced that Kroll Bond Rating Agency, LLC (KBRA) has affirmed the AA+ insurance financial strength ratings of Assured Guaranty Corp. (AGC), Assured Guaranty Municipal Corp. (AGM) and AGM’s U.K. and European subsidiaries Assured Guaranty UK Limited (AGUK) and Assured Guaranty (Europe) SA (AGE). All the ratings have Stable Outlooks.

In its October surveillance report affirming the AA+ ratings of AGM and its U.K. 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.”
• AGM has an “[e]xperienced management team which operates with a mature and high-functioning operating platform supported by strong governance and risk management systems.”
• “Assured’s surveillance/work-out expertise platform-wide continues to position the company well to mitigate risk and limit losses, while growing its insured portfolio.”
• “Increased new business volumes, primarily in the U.S. municipal sector, continue to offset run-off in the insured portfolio.”
• “Municipal market insured penetration has increased and is currently at its highest levels since 2009.”
• “KBRA views the environment for new business opportunities across Assured’s diversified underwriting platform as robust and notes that Assured’s market position has remained very strong.”

In its October surveillance report affirming the AA+ ratings of AGC, KBRA noted that:

• “AGC’s rating reflects its strong capital position and claims paying resources relative to conservative stress scenario losses, skilled management team and ability to withstand KBRA’s conservative stress scenario losses as applied across the company’s insured portfolio.”
• “[T]here are signs of increased activity in certain structured finance sectors as well as international infrastructure.”
• “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.”

KBRA also noted that the COVID-19 pandemic in addition to other events have “led to increased awareness for the financial guaranty product. An economic environment of increasing interest rates and volatile or widening credit spreads may enhance the business environment for Assured as issuers seek interest expense savings or investors consider different forms of regulatory capital relief. Further, a tightening credit cycle which may disproportionately impact economically sensitive taxes or issuers with weaker balance sheets may further enhance investor demand for the product.”

In response to the report, Dominic Frederico, President and CEO of Assured Guaranty, said: “As KBRA mentioned, demand for our product has been growing over the past several years, and the COVID-19 pandemic and other uncertainty has led to broader recognition of the protection and value our guaranty provides against unforeseen circumstances. We are pleased with the affirmation of our AA+ (Stable Outlook) rating for AGC, AGM and AGM’s U.K. and European subsidiaries and believe the economic conditions for increased new business remain intact. We are well positioned for future growth while maintaining our prudent credit and risk management processes.”

Any forward-looking statements made in this press release, including those regarding growth opportunities for Assured Guaranty, demand for its product, and sustained economic conditions for increased new business, 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; 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; the possibility that Assured Guaranty’s transactions with respect to its asset management business do not result in the benefits anticipated or subjects Assured Guaranty and/or its shareholders to negative consequences; 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 27, 2023. 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.

About Assured Guaranty Ltd.

Assured Guaranty Ltd. is a publicly traded, Bermuda-based holding company. Through its subsidiaries, Assured Guaranty provides credit enhancement products to the U.S. and non-U.S. public finance, infrastructure and structured finance markets. Assured Guaranty also participates in the asset management business through its ownership interest in Sound Point Capital Management, LP. More information on Assured Guaranty can be found at: AssuredGuaranty.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231027402534/en/

Robert Tucker, 212-339-0861

Senior Managing Director, Investor Relations and Corporate Communications

rtucker@agltd.com

Media:

Ashweeta Durani, 212-408-6042

Vice President, Corporate Communications

adurani@agltd.com

Source: Assured Guaranty Ltd.

FAQ

What are the ratings of Assured Guaranty's subsidiaries?

Kroll Bond Rating Agency has affirmed the AA+ insurance financial strength ratings of Assured Guaranty Corp., Assured Guaranty Municipal Corp., and their U.K. and European subsidiaries.

What factors contribute to AGM's rating?

AGM's rating reflects its substantial claims paying resources, skilled management team, and ability to withstand losses.

What factors contribute to AGC's rating?

AGC's rating reflects its strong capital position and claims paying resources.

What is the current state of the municipal market insured penetration?

Municipal market insured penetration is currently at its highest levels since 2009.

What is the outlook for new business opportunities for Assured Guaranty?

The environment for new business opportunities across Assured's underwriting platform is robust.

How may interest rate increases and volatile credit spreads impact Assured Guaranty?

Interest rate increases and volatile credit spreads may enhance the business environment for Assured.

Is Assured Guaranty well positioned for future growth?

Yes, Assured Guaranty is well positioned for future growth.