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Assured Guaranty to merge U.S. financial guarantee insurers
Assured Guaranty Municipal Corp. (AGM), a subsidiary of Assured Guaranty Ltd. that provides financial guarantees for municipal bonds, will merge with Assured Guaranty Inc. (AG), a company that offers financial guarantees and credit enhancement products, effective August 1, 2024.
The merger of AGM and AG into a single insurer will create a larger pool of capital to support insurance policies, resulting in a more diversified insured portfolio.
The new AG will have a larger and more diversified insured portfolio, a larger investment portfolio and greater claims paying capabilities, creating a more efficient capital structure.
Dominic Frederico, President and CEO, commented: “We view this merger as beneficial to all of our stakeholders. It will result in more efficient utilization of the combined capital of both companies, simplify administration and eliminate duplicative expenses from Assured Guaranty’s U.S. financial guarantee operations.”
“Throughout its nearly 40 years in the financial assurance business, Assured Guaranty has continually evolved, constantly seeking ways to better serve our customers and grow our business. This merger further positions us to achieve those goals.”
Both companies have identical ratings from S&P Global Ratings, Kroll Bond Rating Agency and Moody’s Ratings, so the merger is not expected to affect Assured Guaranty’s strong financial strength ratings.
AGM is Assured Guaranty’s premier provider of financial guarantee insurance, covering U.S. and international public and infrastructure financial obligations.
AG focused on risk and capital management for insurance, pension and banking institutions, provided guarantees in structured finance and acquired or reinsured portfolios of unaffiliated financial guarantee insurers in runoff. Both companies’ portfolios include public and infrastructure finance as well as structured finance exposures.
“Assured Guaranty has continued to grow and expand the financial assurance products it provides and the markets it serves, extending a long tradition of innovation,” added Robert Bailenson, Chief Operating Officer.
“This transaction will eliminate an unnecessary distinction between the companies and allow us to even more effectively lead the title insurance industry.”
AG will remain headquartered in Maryland, USA, with the Maryland Insurance Administration (MIA) continuing as its primary regulator, a role it has held since December 31, 1987.
Once the merger is effective, the securities held by AGM will become, by law, secured obligations of AG, creating a larger combined company. AGM’s subsidiaries, Assured Guaranty UK Limited and Assured Guaranty (Europe) SA, will become subsidiaries of AG and will continue their operations as before.
Along with the merger, MIA has approved a $300 million share buyback by the combined company, which is expected to occur shortly after the merger.
