Assured Guaranty Ltd. , the largest municipal bond insurer, said its subsidiary Assured Guaranty Corp. completed its acquisition of MBIA UK Insurance Ltd., part of a diversification program.
Assured Guaranty, which had announced the acquisition in September, intends to maintain the European operating subsidiary of MBIA Insurance Corp. as a subsidiary of AGC. It will rebrand MBIA UK as part of the Assured Guaranty group within the next several months. Assured Guaranty is working to combine MBIA UK with its other affiliated European insurance companies, Assured said in a release last week. The insurer said that any such combination will be subject to regulatory and court approvals; as a result, and that Assured cannot predict when, or if, such a combination will be completed.
"We are pleased to have completed our fourth acquisition of a legacy bond insurer, which has further diversified Assured Guaranty's insured portfolio by adding approximately $13 billion (£10 billion) of predominantly European infrastructure transactions," Dominic Frederico, president and chief executive officer of Assured, said in the release. "We expect this acquisition to be accretive to Assured Guaranty's operating earnings per share, operating shareholders' equity and adjusted book value."
As of Sept. 30, using current currency exchange rates, MBIA UK had a guaranteed portfolio of approximately $13 billion of net par and approximately $470 million of book value under general accepted account principals. As consideration for the outstanding shares of MBIA UK plus $23 million in cash, AGC exchanged all its holdings of notes issued in the Zohar II 2005-1 transaction. AGC's Zohar II 2005-1 notes had a total outstanding principal of approximately $347 million as of Sept. 30. MBIA Insurance Corp. insures all of the notes issued in the Zohar II 2005-1 transaction.
"This acquisition significantly expands Assured Guaranty's presence in the European infrastructure market at a time when we are seeing increasing opportunities and a strong pipeline of transactions," said Nick Proud, CEO of Assured Guaranty Europe Ltd. "It signals our ongoing commitment to the European marketplace and gives MBIA UK bondholders the management resources and surveillance capabilities of an active financial guarantor with proven durability. It is our intention to combine MBIA UK with our European portfolio to create a single balance sheet and rating."
Assured has posted additional information regarding the MBIA UK guaranteed portfolio
