Kroll Bond Rating Agency (KBRA) today affirmed its insurance financial
strength rating of AA+, with a Stable Outlook, for Municipal Assurance
Corp. (MAC), a financial guaranty subsidiary of Assured Guaranty Ltd.
(together with its subsidiaries, Assured Guaranty)(NYSE:AGO).
In the report, KBRA noted the following key strengths supporting MAC’s
AA+ rating:
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Strong claims-paying resources which can withstand KBRA stress losses
in a run-off scenario with an adequate balance remaining.
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Diverse, high quality insured portfolio; no exposure to Puerto Rico.
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Skilled and disciplined management and staff with deep expertise and
market experience.
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A mature and high-functioning operating platform supported by strong
governance and risk management systems.
KBRA noted that late in the second quarter of 2016, MAC received
permission from its New York regulator to repay the full amount of both
its series of outstanding surplus notes, ultimately resulting in an
asset transfer of an aggregate of $400 million plus accrued interest to
MAC affiliates Assured Guaranty Municipal Corp. (AGM, AA+/Stable) and
Assured Guaranty Corp. (AGC), which together own 100% of the parent
holding company of MAC. This transaction was factored into KBRA’s
assessment resulting in MAC’s AA+ stable rating, which is the highest
rating KBRA has said it is likely to assign in the current environment
to a financial guarantor. The level of stress losses that MAC was
actually able to satisfy under the KBRA Monte Carlo simulation model was
equivalent to a AAA stress scenario.
“We appreciate the thorough analysis KBRA has provided,” said Dominic
Frederico, President and CEO of Assured Guaranty. “Although the interest
rate environment has been consistently difficult since MAC was
capitalized in July 2013, MAC’s well established and successful business
model has since then produced over $227 million of statutory net income
in just the two-and-three-quarter years through March 2016, allowing MAC
to easily repay the surplus notes used for MAC’s initial capitalization,
while still retaining capital in excess of KBRA’s AAA requirement.”
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 MAC’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 8, 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.
MAC is a New York insurance company and a subsidiary of Assured Guaranty
Ltd., which is a publicly traded (NYSE: AGO) Bermuda-based holding
company. The operating subsidiaries of Assured Guaranty Ltd. 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, including MAC, can be
found at AssuredGuaranty.com.
