Moody’s upgrades Assured Guaranty’s IFS with stable outlook

Moody’s Ratings (Moody’s) has upgraded Assured Guaranty Corp.’s (AGC) insurance financial strength (IFS) rating to A1 from A2, and assigned an stable outlook for the firm and its subsidiaries.

According to the announcement, the upgrade of AGC’s IFS rating reflects the company’s strong risk-adjusted capital adequacy, the significant improvement in the credit quality of its insured portfolio over the past several years.

This improvement also includes an increased strategic role within the Assured Guaranty group of companies as evidenced by higher new business production.

As a result of these factors, Moody’s aligned the IFS rating of AGC with the A1 IFS rating of AGM – a rating that has been affirmed by the agency.

Going forward, the IFS ratings of the two companies are expected to be closely linked, Moody’s stated.

“AGM’s A1 IFS rating reflects its strong capital profile, conservative underwriting of US municipal and international infrastructure finance risks and leading market position in the financial guaranty insurance sector. These strengths are tempered by the confidence-sensitive nature of the financial guaranty insurance business as well as a number of large single risk exposures relative to capital,” the agency explained.

Adding: “AGM is the flagship guarantor within the Assured Guaranty group of companies, producing the majority of group’s new business. AGM’s ability to organically generate significant capital through premium and investment earnings make its credit profile resilient to a broad range of stress scenarios.”

Moreover, AGC’s A1 IFS rating reflects the business very strong capital adequacy profile and the improved credit quality of its insured portfolio due to the amortisation of below investment grade exposures over the past several years, including the resolution of a large majority of the firm’s Puerto Rico exposures, according to Moody’s.

The A1 IFS ratings of Assured Guaranty UK Limited’s (AGUK) were also affirmed, a rating that reflects a combination of formal and implicit support from its parent, AGM, Moody’s analysts noted.

Additionally, Moody’s affirmed the debt ratings of Assured Guaranty US Holdings, Inc. (AGUS – backed senior unsecured debt at Baa1), the Baa2 (hyb) junior subordinated debt rating of Assured Guaranty Municipal Holdings Inc. (AGMH) and the Baa1 long-term issuer rating of Assured Guaranty Ltd. (Assured Guaranty).

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