Assured Guaranty Ltd. Responds to Moody’s Announcement of Review for Possible Downgrade

HAMILTON, Bermuda--(BUSINESS WIRE)-- Assured Guaranty Ltd. (“Assured Guaranty” or “the Company”) (NYSE:AGO) today released the following statement in response to the announcement by Moody’s Investors Service (“Moody’s”) that it has placed the debt ratings of Assured Guaranty and its subsidiaries and the insurance financial strength ratings of Assured Guaranty’s insurance subsidiaries under review for possible downgrade. In its announcement, Moody’s cites constrained business opportunities for financial guaranty insurance and continued economic stress for U.S. municipal, mortgage, and European exposures. In response to the announcement, Dominic Frederico, President and CEO of Assured Guaranty, said:

We have been working with Moody’s for some time, emphasizing the improvements in our credit profile since their last review in 2009. As the current rating process is not yet complete, we are surprised that Moody’s decided it had enough information to place Assured Guaranty on review for a possible downgrade. In light of our improved financial strength over the last two years, Moody’s action was unjustified and unwarranted. Assured Guaranty has not just, as Moody’s writes, "survived" the financial crisis but has demonstrated its resiliency, resourcefulness and financial strength. While we have paid nearly $4 billion in claims since the onset of the mortgage crisis to protect investors from losses related to our insured residential mortgage-backed securities (“RMBS”), our claims-paying resources to protect policyholders have grown from $11.2 billion in 2007 to over $12.8 billion today.

Since our last rating assignment, we have achieved record operating income of $664 million and $604 million, with operating ROEs of 14.9% and 12.1%, in 2010 and 2011, respectively. Further, since the second quarter of 2009 - the period Moody’s last analyzed - we have reduced our insured portfolio’s exposure by approximately $105 billion overall, including $62 billion in structured finance, of which $11 billion was in the RMBS portfolio. Additionally, to further strengthen our capital position, in January 2012 we entered into a $435 million excess-of-loss transaction for our U.S. public finance portfolio.

Our business production continues to demonstrate a fundamental demand for our product. Since the second quarter of 2009, we have insured over $58 billion of U.S. municipal bonds. In 2011 alone, we guaranteed 1,228 new issues; this is over 12%, or one out of every eight, of the transactions sold during the year and represents a total insured par of over $15 billion. For single-A underlying credit quality transactions, our principal targets in the municipal market, we guaranteed 38% of all transactions and 16% of the par sold in 2011. And we have achieved these results while adhering to our strict credit underwriting and pricing approach even during a period when new issuance was down 34% from the prior year and interest rates were exceptionally low.

In the RMBS area, Moody’s states that as part of its upcoming review it will focus on downside risk sensitivities. We believe that our successful activities in the RMBS area, which include representation and warranty (“R&W”) collections and servicing interventions, along with the run-off of the portfolio and possible litigation awards, should offset potential concerns. Specifically, our proactive risk management and loss mitigation approach has produced a cumulative total of $2.4 billion in settlement and putback receipts and commitments from R&W providers in our RMBS transactions. We were among the first companies to substantiate and receive payments for the pervasive misbehavior in this market. Because of our confidence in our R&W rights, we anticipate that the bulk of our RMBS losses will ultimately be paid by third parties. We have continued to move aggressively to reduce delinquencies and losses through servicing intervention and have seen declines in delinquencies, improvements in loss severities and lower losses on transactions where we have replaced the servicer or imposed special servicing.

Moody’s cites its detailed, published methodology for how they rate the financial guaranty insurance industry. In applying that published methodology to Assured Guaranty’s operating subsidiaries, we believe we are firmly in the Aa rating category.

We will continue to work with Moody’s as they conduct their evaluation of our ratings. We look forward to serving our clients and resolving this process as expeditiously as possible. Later this week, we will provide additional information responding to Moody’s announcement at www.assuredguaranty.com.

Assured Guaranty Ltd. is a publicly traded (NYSE: AGO) Bermuda-based holding company. Its operating subsidiaries provide credit enhancement products to the U.S. and international public finance, infrastructure and structured finance markets. More information on Assured Guaranty Ltd. and its subsidiaries can be found at www.assuredguaranty.com.

Cautionary Statement Regarding Forward-Looking Statements:

Any forward-looking statements made in this press release reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include, but are not limited to, those resulting from Assured Guaranty’s inability to maintain our current financial ratings; further actions that the rating agencies may take with respect to the financial strength ratings of Assured Guaranty; adverse developments in Assured Guaranty’s insured portfolio; and other risks and uncertainties that have not been identified at this time, management’s response to these factors, and other risk factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of March 20, 2012. Assured Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Assured Guaranty Ltd.Robert Tucker, 212-339-0861
Managing Director, Investor Relations and Corporate Communications
[email protected]
orRoss Aron, 212-261-5509
Vice President, Equity Investor Relations
[email protected]
orAshweeta Durani, 212-408-6042
Vice President, Corporate Communications
[email protected]

Source: Assured Guaranty Ltd.