Moody’s Upgrades Assured Guaranty’s Ratings

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.”