Despite the relative ease with which Assured Guaranty Ltd. raised capital last week, layoffs at the company are expected to continue into the first quarter of 2010, cutting its total workforce by about 40% in a period of nine months.
Last week, Assured offered underwriter UBS Securities LLC 23.9 million shares with a 30-day option to purchase an additional 3.6 million. On Friday UBS chose not to wait the 30 days and simply acquired all 27.5 million shares at $20.90 each, thereby injecting Assured with a total of $574 million in fresh funds.
As the parent company of bond insurers Assured Guaranty Municipal Corp. — previously Financial Security Assurance — and Assured Guaranty Corp., Assured is the dominant force backing bonds in the primary muni market.
The company said its combined franchise currently “is on track for the second highest new business production year ever,” second only to 2008, according an investor presentation last Tuesday.
But despite weathering the economic storm far better than any of its competitors, the axe will continue to fall as the two subsidiaries work to consolidate resources.
At the time of closing the FSA acquisition in July the two companies’ headcount was around 500 people, according to Robert Mills, Assured’s chief financial officer. A first round of layoffs reduced the staff to 370 by the end of November, and a second round of cuts over the next four months is expected to trim the count by 15 to 20% to about 300.
Betsy Castenir, managing director of corporate communications, would not comment on the staff reductions other than to say: “The planned reduction in staff is part of the integration of the two companies to eliminate redundancies.”
Last week’s equity offering was made after Moody’s Investors Service stated on Nov. 12 that “capital-strengthening initiatives” were required for AGC to maintain its Aa3 rating.