Kroll Bond Rating Agency (KBRA) 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) on July 12, 2019.
In the report, KBRA noted the following key strengths supporting MAC’s AA+ rating:
- “Diverse, high quality insured portfolio; no exposure to Puerto Rico.”
- “Skilled and disciplined management and staff with deep expertise and market experience.”
- “A mature and high-functioning operating platform characterized by strong governance and risk management systems.”
- “Strong claims-paying resources that can withstand KBRA stress losses in a run-off scenario with a comfortable balance remaining.”
“MAC’s AA+ insurance financial strength rating, which KBRA has repeatedly affirmed since MAC’s inception, results from Assured Guaranty’s commitment to maintaining very strong stand-alone capital adequacy and disciplined underwriting and risk management practices. Under KBRA’s Stress Capital Balance metric, which incorporates KBRA’s projection of the stress-case losses in its Monte Carlo simulation at the AAA level, MAC’s assets exceed its liabilities, on a present value basis, by $300 million to $400 million,” said Dominic Frederico, President and CEO of Assured Guaranty. “For municipalities and local utilities that issue small and medium-sized bond issues, which tend to rely on a base of individual investors, MAC offers extremely high-quality credit enhancement that can significantly reduce interest costs over the term of an issue.”
MAC is licensed to insure municipal bonds in all 50 states and the District of Columbia. MAC was launched on July 22, 2013 to guarantee only U.S. municipal bonds in the most well understood bond sectors, such as general obligations and tax-backed issues for cities, counties and school districts, and revenue bonds for public electric, water and sewer utilities and transportation authorities. At March 31, 2019, MAC’s claims-paying resources were close to $900 million, including $183 million of statutory unearned premiums that generate predictable future revenue. Its geographically diversified, $26 billion insured portfolio consists exclusively of U.S. municipal bonds.
In addition to the KBRA rating, MAC’s financial strength is rated AA with a Stable Outlook by S&P Global Ratings.
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 15, 2019, 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.
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Contacts:
Senior Managing Director, Investor Relations and Corporate Communications
rtucker@assuredguaranty.com
