Top muni bond insurers of 2018

While the municipal bond insurers suffered from the curtailment of issuance under newly effective U.S. tax laws, the insurance penetration rate ticked higher.

The total amount of insured volume stood at $18.53 billion in 1,246 transactions in 2018, down from $23.02 billion in 1,635 deals. The insurance penetration rate inched up to 5.90% at the end of 2018 from 5.29% at the end of 2017.

Assured atop insurer rankings
Assured Guaranty Corp., was the top municipal bond insurer in 2018. Assured insured a total of $10.53 billion in 596 deals for a 55.7% market share, That compares with $13.46 billion in 832 transactions or 58.4% market share the year before. The figures include Assured's subsidiary Municipal Assurance Corp.

Assured Guaranty Municipal Corp. and Municipal Assurance Corp. (together, Assured Guaranty) wrote 56% of insured new issue volume sold in 2018.

"This reflects Assured Guaranty’s ability to lead the market while adhering to our underwriting and pricing discipline," said Robert Tucker, senior managing director of communications and investor relations for Assured.

Assured also insured nearly 600 tax-exempt and taxable new issues sold in 2018, across a broad spectrum of bond sectors, transaction sizes and deal structures, including public-private partnerships.

"With our large capital base, the market liquidity of our insured bonds and our experience insuring complex transactions, in 2018 we were able to insure 16 transactions where we provided more than $100 million of bond insurance," he said.

Assured Guaranty had a successful year in the healthcare sector, including large, taxable, insured transactions to benefit the Oklahoma University Medical System ($135 million), Montefiore Medical Center in New York ($301 million) and ProMedica Toledo Hospital in Ohio ($500 million).

Assured Guaranty insured the Bond Buyer’s Far West Region’s Deal of the Year, the LAX People Mover Project (LINXS).
Build America Mutual gains market share
BAM accounted for $8.36 billion of insured volume spanning 653 transactions or 44.3% market share last year, compared with $8.95 billion in 732 deals and 38.9% market share.

“Investor demand for insured bonds strengthened in 2018," said Sean McCarthy, CEO of BAM. "New-issue penetration increased and BAM insured more than half of all insured new issues in the primary market, as we continued to execute on our mission to help issuers access the market efficiently and affordably. BAM also saw a 20% increase in secondary market business, which was driven primarily by larger institutional buyers. Combined, those results brought insured par outstanding above $50 billion for the first time."

McCarthy also noted BAM’s initiatives to improve transparency in the market support that demand.

"We now have more than 5,500 BAM Credit Profiles available on our web site, and the BAM GreenStar assessment program adds a tool for our issuer-members and investors to gain an independent third-party verification of their municipal green bond sales," he said. Nearly $300 million of BAM GreenStar bonds were sold by the end of the year, highlighted by a $140 million issue for the Stockton Public Financing Authority."

McCarthy added that 2018 was marked by a milestone for BAM’s financial strength, when the mutual municipal bond insurance company added $100 million of claims-paying resources through a unique reinsurance agreement with Fidus Re, in addition to continued organic growth in financial resources from its new business.