ACE's Assured Guaranty Spin-Off Nets $882M
NU Online News Service, April 26, 12:28 p.m. EDT?The Bermuda-based insurer ACE has spun off its Assured Guaranty unit with an initial public offering that raised $882 million with the sale of 49 million shares on the New York Stock Exchange.[@@]
The plan to take the Assured Guaranty unit public was first announced by ACE last December. In the announcement, ACE said the move would improve the parent company ACE's balance sheet and free up funds to expand its core business as a property-casualty insurer.
Assured Guaranty, also operating out of Bermuda, insures against the default of municipal bonds and other financial instruments. In 2003, the unit posted gross premiums of $349.2 million with total revenue of $512.3 million. It is also currently the largest mono-line financial guaranty reinsurer.
The 49 million common shares offered for Assured Guaranty were priced at $18 per share. Dominic Frederico, a former ACE executive and Assured Guaranty's new chief executive, celebrated the public offering Friday by ringing the bell at the NYSE opening.
ACE said that it is retaining a beneficial interest of up to 35 percent in the Assured Guaranty unit, depending on the exercise of the underwriters' 7.35 million share over-allotment option.
ACE Limited sells p-c insurance and reinsurance in the United States and about 50 other countries through its subsidiaries. Its ACE International group offers p-c lines to personal and commercial clients around the world, while the ACE Global Reinsurance group offers catastrophe reinsurance. ACE also owns four Lloyd's of London managing agencies, while its ACE USA provides U.S. commercial and casualty insurance. For full-year 2003, the corporation reported $1.4 billion in net income.
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