Kroll Bond Rating Agency said on Friday that it affirmed the Municipal Assurance Corp.'s insurance financial strength rating of AA-plus. MAC is a subsidiary of bond insurer Assured Guaranty Ltd.
Kroll said the rating, which has a stable outlook, incorporates a reduction in claims paying resources from MAC's repayment of $400 million of surplus notes to its affiliates effective June 30.
"Key aspects of KBRA's rating assessment are MAC's strong claims-paying resources and the company's diverse insured portfolio which consists of lower risk, predominantly investment-grade U.S. municipal exposures," Kroll said in a press release. "MAC has no exposure to Puerto Rico, which in light of the Commonwealth's severely stressed financial position, KBRA views as a credit positive."
KBRA said it used a Monte Carlo simulation analysis to determine a level of stress losses to be applied to MAC's insured portfolio.
"KBRA tested MAC's ability to pay this stress level of claims, and other expenses, in a run-off scenario," Kroll said. "Under KBRA's Bond Insurer Financial model, MAC satisfied all projected claims due with an adequate balance remaining."
Kroll said it also conducted a review of MAC's governance, credit and risk management protocols and found them "to be strong and reflecting best practices. MAC has a proven management team and a well-developed governance framework."
