Assured Guaranty said it increased its capital adequacy in excess of Standard & Poor's Triple-A requirement by about $400 million in the past year.
The bond insurer based its estimate on Standard & Poor's June rating report in which it affirmed its double-A rating on Assured Guaranty and its operating subsidiaries with a stable outlook. The double-A rating is the highest S&P currently assigns to any financial guarantor.
"The S&P report highlights our capital strength, disciplined risk management, strategic flexibility and market leadership," Dominic Frederico, president and chief executive officer of Assured, said in a press release on Monday. "Specifically, based on our understanding of S&P's capital adequacy model, we estimate that Assured Guaranty had $1.9 billion of capital in excess of the AAA requirement at year-end 2014. This is $400 million higher than the approximately $1.5 billion at year-end 2013 that S&P reported in its July 2, 2014 ratings report. Additionally, we continue to demonstrate our market leadership - we guaranteed approximately 64% of the insured U.S. municipal par that came to market in the second quarter of 2015."
With regard to Assured's Puerto Rico exposure, S&P considered the effect of "a default by multiple issuers in Puerto Rico over a one, two, or three year time period" and concluded there would be no change in Assured Guaranty's capital adequacy score based solely on such defaults. S&P said if Assured Guaranty pays any claims, the payments would be made over time based on each insured issue's payment schedule.
"S&P has taken a hard look at all of our exposures, including those in Puerto Rico, and reiterated that the outlook for our AA ratings is stable," Frederico said.
Frederico said that Assured has a proven and trusted business model and provides market liquidity for investors in the company's insured municipal bonds, which have $400 million of daily trading volume.
"Our multiple underwriting platforms support strong operating performance by allowing us to serve a range of markets and investor segments. And with our $12 billion in claims-paying resources, and approximately $400 million in annual income from investments alone, we are well positioned to support small, medium and large transactions," said Frederico.
