Assured Guaranty Ltd. ("Assured” or "the Company”) (NYSE:AGO) today
released the following statement from Dominic Frederico, Assured’s
President and Chief Executive Officer, in response to the announcement
by Moody’s Investors Service ("Moody’s”) that it had placed the debt
ratings of Assured and the insurance financial strength ratings of
Assured Guaranty Corp., Assured Guaranty (UK) Ltd. and Assured Guaranty
Re under review for possible downgrade due to Moody’s worsening outlook
for potential losses on Assured’s residential mortgage-backed securities
("RMBS”) and pooled corporate exposures.
Statement by Dominic Frederico, President and Chief Executive
Officer, Assured Guaranty Ltd.:
Assured’s insured portfolio has withstood the economic and financial
market crisis of the last two years more favorably than many other bond
insurers and financial institutions. We have had operating profits in
each and every quarter because of our longstanding and widely-recognized
adherence to strict underwriting discipline and proactive risk
management. Assured’s balance sheet and statutory claims-paying
resources have remained very strong over the last two years. Our GAAP
equity has risen by 21.5% since December 31, 2007 to $2.0 billion at
March 31, 2009 and our consolidated claims-paying resources have risen
by 17.6% to $5.2 billion at March 31, 2009. Our average portfolio rating
was A+ as of March 31, 2009, down only slightly from the AA- average
that we have maintained since 2004.
In spite of this proven performance, Moody’s has placed us under review
for possible downgrade because they have changed, for the third time in
the last twelve months, their base and stress case assumptions of the
future performance of our residential mortgage-backed securities and
pooled corporate exposures, each time becoming markedly more
pessimistic. Assured has a well-known reputation for having been
conservative in our approach to the RMBS market since our 2004 initial
public offering and our RMBS exposures were carefully underwritten to be
able to withstand significant economic and housing market stresses. We
are concerned that Moody’s action may cause unnecessary market turmoil
and affect municipal issuers’ cost-effective access to the capital
markets.
It appears, based on our recent discussions with Moody’s, that they have
once again increased their economic and housing market assumptions — to
a level significantly more stressful than that used by the Treasury in
its recent stress testing of banks. It also seems that Moody’s
expectations do not reflect the potential benefit of the federal
government’s economic and mortgage assistance programs. As called for by
Securities and Exchange Commission and as discussed in recent
Congressional hearings, we request that Moody’s make their review
process fully transparent by disclosing completely all of their
assumptions and the impact of these assumptions on their stress loss
conclusions in the aggregate and on a transaction by transaction basis.
We also would like Moody’s assurance that these stress assumptions are
being consistently applied to all the entities and transactions rated by
Moody’s. We believe that full disclosure would provide more confidence
to investors in making comparisons of relative financial strength among
different issuers or transactions and would allow investors and issuers
to evaluate rating agencies’ conclusions versus actual future financial
performance, thereby providing the means to better evaluate and
establish accountability for rating agencies’ processes and conclusions.
Moody’s action, along with Fitch’s recent downgrade of our ratings,
strengthens our belief that the financial guaranty industry would be
better served by a single regulator for capital and financial strength
rating purposes. We believe that the financial markets cannot and should
not continue to be subjected to volatility and uncertainty due to the
rating agencies’ undisclosed changes in assumptions. Moody’s review of
our insurance financial strength ratings may lead to near-term
uncertainty and volatility in the markets that we serve — particularly
in the municipal market, where we are effectively the only major active
financial guarantor. Greater transparency of the factors and assumptions
driving Moody’s review would allow investors and issuers to draw their
own conclusions about Moody’s opinion of our financial strength.
We will continue to work with Moody’s as they conduct their evaluation
of our portfolio. We are pleased with their recent conclusion as to the
rating implications for Assured with respect to our acquisition of
Financial Security Assurance Holdings, Ltd. We are finalizing the
integration plans for the acquisition as well as the remaining closing
conditions. We look forward to completing the acquisition this quarter.
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.
More information can be found at www.assuredguaranty.com.
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 FSA closing, could be affected by a significant reduction in the
amount of reinsurance ceded by one or more of our principal ceding
companies, rating agency action such as a ratings downgrade,
difficulties with the execution of Assured’s business strategy, contract
cancellations, developments in the world's financial and capital
markets, more severe or frequent losses associated with products
affecting the adequacy of Assured’s loss reserve, changes in regulation
or tax laws, governmental actions, natural catastrophes, Assured’s
dependence on customers, decreased demand or increased competition, loss
of key personnel, technological developments, the effects of mergers,
acquisitions and divestitures, changes in accounting policies or
practices, changes in general economic conditions, 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.
