The "triple-A" financial strength and financial enhancement ratings for bond insurer Assured Guaranty Corp. were affirmed yesterday by Standard & Poor's Ratings Services.
S&P said the outlook for the company is stable.
"The affirmation reflects our view on the company's strong market position in the bond insurance industry as well as its solid capital position," said S&P's credit analyst Robert Green.
"Relative to a year ago when the company was at a trading value disadvantage compared with the major primary companies, Assured's successful negotiation of the nonprime RMBS [residential mortgage backed securities] situation has resulted in trading value improvement and affirmation of its rating," said Mr. Green.
Among bond insurers, S&P said only Assured, Financial Security Assurance Inc. and Berkshire Hathaway Assurance Corp. have "triple-A" ratings with stable outlooks.
The rating firm noted that Assured's management had tightened subprime mortgage criteria and withdrew from the collateralized debt obligation of asset-backed securities (CDOs of ABS) sector at the end of 2003.
S&P said these moves on the company's part resulted in no exposure to CDOs of ABS with problematic sectors and vintages, and nonprime RMBS exposure with mostly original "triple-A" underlying ratings.
"The stable outlook is based on what we view as strong capitalization at the rating level, a favorable market position and conservative investment policy," said Mr. Green.
Assured, S&P said, is well capitalized with a good margin of safety.
It was noted that in April, an investment fund managed by W.L. Ross had purchased $250 million of common equity of parent company Assured Guaranty Ltd. and has a remaining commitment to purchase up to $750 million of common equity at Assured Guaranty Ltd.'s option.
For this year, Assured should see further growth in adjusted gross premiums written in the U.S. public finance sector given the company's 35 percent share of the municipal market as of March, said S&P.
Overall gross par written in the first quarter was $16.7 billion, up 95 percent from the year-earlier quarter.
"While much of the structured market is disrupted, we believe Assured is well positioned to participate in those one-off transactions in the structured market which are still best executed with bond insurance," Mr. Green said.
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