In response to Fitch Ratings’ ("Fitch”) downgrades of the Insurer
Financial Strength ratings of bond insurers Assured Guaranty Corp. to
AA- from AA and Financial Security Assurance Inc. ("FSA”) to AA from
AA+, Dominic Frederico, President and Chief Executive Officer of Assured
Guaranty Ltd. (NYSE:AGO) ("Assured”), today made the following statement:
"We are pleased that Assured Guaranty Corp. and FSA remain in the
double-A rating category, a designation indicative of significant
financial strength. We believe the one-notch rating downgrades primarily
incorporate Fitch’s stress loss estimates based on an extremely
pessimistic view of the future performance of residential mortgage
exposures and point out that Fitch noted our ability to mitigate
potential future losses and improve rating agency capital.
"Importantly, the removal of our ratings from Rating Watch Negative to
the longer-term designation Negative Outlook provides time for more
clarity on the direction of the economy and future performance of the
residential mortgage portfolio versus pure estimates. Additionally, the
capital bases of Assured Guaranty Corp. and FSA will further benefit
from the run-off of the existing residential mortgage and asset-backed
portfolios; loss mitigation initiatives, including recoveries through
representation and warranty claims; the use of external reinsurance; and
the emergence of capital through earnings.
"Despite the ratings uncertainty over the past few months, demand for
our guaranty products has remained strong in the municipal market.
Through the third quarter of 2009, Assured Guaranty Corp., which
provides guarantees for both municipal and structured financings, and
FSA, which exclusively serves the municipal market, guaranteed $29.6
billion of new issue municipal bonds, which represents 10.3% of total
municipal issuance. New premium revenue also adds to our claims-paying
resources and will further enhance our capital adequacy model results.
"Finally, as a financial institution providing credit protection for
more than $663 billion of exposure, of which $424 billion are U.S.
municipal bonds, we play an important role in the capital markets, which
would benefit significantly from uniform financial guaranty regulation.
Currently, we are subject to the sometimes conflicting and not readily
transparent requirements of three disparate rating entities. However,
under a single Federal regulator, such as the Federal Reserve, we could
achieve stress testing of capital strength with assumptions that are
disclosed and related to measurable economic variables, as well as
results that are transparent and consistently applied to all entities
and transactions, thereby providing investors with far greater ability
to judge our capital adequacy.
"We will continue to work with Fitch, both on projected and actual
results, and are committed to maintaining the highest ratings available.”
End of statement
Assured Guaranty Ltd. is a Bermuda-based holding company. Its operating
subsidiaries provide credit enhancement products to the U.S. and
international public finance, structured finance and mortgage markets.
Any forward-looking statements made in this press release reflect
Assured’s current views with respect to future events and financial
performance 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. For example,
Assured’s forward-looking statements, including its statements regarding
the amortization of its insured portfolio, losses expected to be
sustained, its loss mitigation initiatives, its access to reinsurance,
the demand for its insurance product and the enactment of future
legislation, could be affected by developments in the world's financial
and capital markets that adversely affect issuers’ ability to pay,
Assured’s loss experience, its ability to cede exposures to reinsurers,
its access to capital, the demand for its products, its unrealized
(losses) gains on derivative financial instruments or its investment
returns; rating agency action, such as a ratings downgrade of one or
more of Assured’s insurance subsidiaries and/or of transactions that
such subsidiaries have insured; difficulties with the execution of
Assured’s business strategy; more severe or frequent losses affecting
the adequacy of Assured’s loss reserve; the impact of market volatility
on the mark-to-market of its contracts written in credit default swap
form; Assured’s dependence on customers; decreased demand for Assured’s
insurance or reinsurance products or increased competition in its
markets; changes in regulation or tax laws; governmental actions;
reduction in the amount of reinsurance facultative cessions or portfolio
opportunities available to Assured; contract cancellations; natural or
man-made catastrophes; loss of key personnel; technological
developments; the effects of mergers, acquisitions and divestitures;
changes in accounting policies or practices; changes in the credit
markets, segments thereof or general economic conditions, including the
overall level of activity in the economy or particular sectors, interest
rates, credit spreads and other factors; 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’s filings
with the Securities and Exchange Commission. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak
only as of the dates on which they are made. Assured undertakes no
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
