NEW YORK - Assured Guaranty Ltd. [NYSE:AGO] recently announced that it had notified the New York Stock Exchange of its intention to withdraw voluntarily the debt securities of Financial Security Assurance Holdings Ltd. (FSA Holdings), (A3/review down) from listing on the exchange and that AGO (A2/review down) will guarantee the senior and junior subordinated debt of FSA Holdings in the same manner that it guarantees the debt obligations of Assured Guaranty US Holdings Inc. (AG US Holdings) (A2/review down). Moody's placed the issuer rating of AGO, the debt ratings of FSA Holdings and AG US Holdings, and the insurance financial strength ratings of the operating companies FSA, AGC, and AG Re on review for possible downgrade on May 20.
Moody's notes that Assured's announcement reflects its efforts to simplify its disclosure and is indicative of the ongoing integration of FSA Holdings and its operating companies into the Assured Group. FSA Holdings is a wholly owned subsidiary of AG US Holdings, an intermediate holding company, which also wholly owns Assured Guaranty Corp., a primary financial guarantor. In Moody's view, the AGO guarantee establishes the floor for the debt ratings of FSA Holdings. However, in consideration of the legal structure of the combined companies and the application of Moody's notching practice, the ratings of FSA Holdings debt securities may differ from the ratings of AGO at the conclusion of the ratings review.
Moody's review of the ratings will consider the weakened risk-adjusted capital position of AGO's operating companies resulting from the deterioration in performance of RMBS and pooled corporate risks, the effect of any capital remediation efforts, and the business strategy of the individual operating companies. The review of the debt ratings of FSA Holdings, AG US Holdings, and the issuer ratings of AGO will also consider the credit profile of the individual and combined operating companies and the impact of a centralized capital management plan for the Assured Group. Moody's expects to conclude its ratings review by mid August 2009.
