Moody’s Upgrades Assured Guaranty’s Ratings

Rhea-AI Summary

Assured Guaranty Ltd. (NYSE: AGO) announced that Moody’s upgraded Assured Guaranty Municipal Corp. (AGM) and Assured Guaranty UK Limited (AGUK) insurance financial strength ratings to A1 from A2, with a stable outlook. This upgrade reflects improved credit profiles post-resolution of exposure to Puerto Rican G.O. bonds and strong demand for financial guaranty insurance in the U.S. and Europe. AGM's growth is expected to bolster earnings, supported by a strong capital profile, conservative underwriting, and the lifting of legacy exposure burdens.

Positive

• Credit rating upgrade for AGM and AGUK from A2 to A1 by Moody's.
• Stable outlook reflecting improved credit profiles.
• Resolution of Puerto Rico G.O bond exposure enhances overall risk profile.
• Growing demand for financial guaranty insurance in the U.S. and Europe.
• Expected continued growth of AGM’s insured portfolio, positively impacting future earnings.
• Strong capital profile and conservative risk management strategies.

Negative

• None.

AGM Upgraded to A1 - Stable Outlook

Report Cites Improved Credit Profile Following Resolution of Puerto Rico G.O Exposure along with Favorable Trend in U.S. and European Demand for Financial Guaranty Insurance

HAMILTON, Bermuda--(BUSINESS WIRE)-- Assured Guaranty Ltd. (NYSE:AGO) (together with its subsidiaries, Assured Guaranty) announced that Moody’s Investors Service (Moody’s) upgraded to A1 from A2 the insurance financial strength ratings of Assured Guaranty Municipal Corp. (AGM) and its subsidiary Assured Guaranty UK Limited (AGUK). The outlooks are stable.

In its rating action report, Moody’s cited as part of its ratings upgrade rationale the following:

• “The upgrade of Assured Guaranty and its subsidiaries reflects their improved credit profiles following the resolution of the group’s exposure to the general obligation bonds issued by the Commonwealth of Puerto Rico and limited expected volatility among its remaining Puerto Rico exposures.”
• “Demand for financial guaranty insurance continues to trend favorably, both in the United States and Europe, which supports the continued alignment of interests between Assured Guaranty’s shareholders and its policyholders and creditors.”
• Resumed growth of AGM’s insured portfolio which is “expected to support the firm’s earnings profile going forward, particularly without the drag of loss and loss adjustment expenses incurred on defaulted Puerto Rico exposures over the past several years.”

Additionally, Moody’s cited AGM’s “strong capital profile, conservative underwriting of US municipal and international infrastructure finance risks and leading market position in the financial guaranty sector…. AGM’s ability to organically generate significant capital through premium and investment earnings make its credit profile resilient to a broad range of stress scenarios.”

In response to the upgrade, Dominic Frederico, President and CEO of Assured Guaranty, said: “We are pleased that Moody’s has upgraded AGM’s and AGUK’s ratings and recognized the expanding demand for bond insurance and AGM’s strong capital profile and resilient business model, as well as that we are at a turning point in terms of our growth after a long period of reducing legacy exposures. AGM performed well and remained well capitalized throughout the pandemic, as it had during the Great Recession and other economic shocks. Assured Guaranty continues to offer a uniquely beneficial value proposition to both issuers and fixed income investors. With the cloud of our Puerto Rico exposure largely lifted and the capital markets experiencing increased volatility and rising interest rates, AGM is poised to continue growing its insured portfolio to sustain and increase its store of unearned premiums, its future earnings power and its financial strength.”

Additionally, Moody’s upgraded the long-term issuer rating of Assured Guaranty Ltd. to Baa1 from Baa2 and also announced upgrades to the senior and junior subordinated debt ratings of Assured Guaranty US Holdings Inc. and Assured Guaranty Municipal Holdings Inc. The outlook for all the ratings is stable.

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 impact of the COVID-19 pandemic on Assured Guaranty’s insured portfolio and business as well as the future course of the pandemic; whether Assured Guaranty will be able to continue to increase the net par amount of its insured portfolio; the impact on Assured Guaranty of any actions by the Oversight Board in Puerto Rico and any future resolution of additional Puerto Rico credits under the Puerto Rico Oversight, Management and Economic Stability Act, any action Assured Guaranty may take in future related to its Puerto Rico exposure, any related litigation, the timing of any potential resolutions to such credits, and the future course of the Puerto Rico’s economy and its ability and willingness to pay its debt in the future; adverse credit developments in 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 March 21, 2022. 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/20220321005317/en/

Investor Relations:

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 was the recent credit rating change for Assured Guaranty Ltd. (AGO)?

Moody's upgraded Assured Guaranty Municipal Corp. (AGM) and Assured Guaranty UK Limited (AGUK) ratings from A2 to A1.

What does the stable outlook for AGM indicate?

The stable outlook indicates that AGM's credit profile is expected to remain strong and that financial performance is projected to stabilize.

How has the resolution of Puerto Rico G.O. bonds impacted AGM's ratings?

The resolution has improved AGM's credit profile, leading to the recent upgrade by Moody's.

What factors are contributing to the growth of AGM's insured portfolio?

The growth is supported by increasing demand for financial guaranty insurance and a strong capital profile.

When was the rating upgrade for Assured Guaranty announced?

The rating upgrade was announced on March 21, 2022.