Assured Guaranty Ltd. (AGL and, together with its subsidiaries, Assured Guaranty) announced in a press release that it had completed the previously announced merger of Assured Guaranty Municipal Corp. (AGM) with and into Assured Guaranty Inc. (AG), which was named Assured Guaranty Corp. (AGC) until May 24, 2024. AG survived the merger and became a larger company with a more diversified insured portfolio. The effective date of the merger was August 1, 2024. AG is now responsible for all obligations under AGM’s insurance policies. Questions about the merger are answered below.
Select one of the following links to view the appropriate information:
General Q&A
Why are AGM and AG combining?
We believe the merger meets two primary objectives. First, it results in more efficient utilization of the combined capital of the two companies, and second, it simplifies the administration and eliminates duplicative expenses of Assured Guaranty’s U.S. operations.
We no longer have good reason to maintain two separate U.S. financial guaranty subsidiaries within the Assured Guaranty group. AGM and AG were each overcapitalized, and each experienced a substantial reduction in its insured exposure since 2010, while their policyholders’ surplus and contingency reserves (i.e., statutory capital) increased materially during the same period.
We believe the merger will eliminate duplicative expenses and give us greater ability to successfully execute and achieve the business objectives of our U.S. operations. By aggregating AGM and AG in a single insurance company, the merger enlarges the pool of capital available to support each insurance policy and results in a further diversification of the insured portfolio’s credit profile. The new AG, compared with either AG or AGM before the merger, has:
• a larger, more highly diversified insured portfolio
• a larger investment portfolio and a larger capital base, creating a more efficient capital structure, and
• greater claims-paying resources
What will be the ratings of the combined company?
Prior to the merger, AGM and AG had the same financial strength ratings: AA (stable) at S&P Global Ratings (S&P), AA+ (stable) at Kroll Bond Rating Agency (KBRA) and A1 (stable) at Moody’s Ratings (Moody’s).
Each rating agency has indicated the merger results in no rating changes for securities now insured by AG.
KBRA issued a press release on August 1, 2024 (post merger completion) in which it wrote: “The IFSRs of AG (AA+/Stable), AGUK (AA+/Stable), AGE (AA+/Stable), as well as the Issuer Rating (A+/Stable) and all outstanding Debt Ratings for Assured Guaranty US Holdings Inc., remain unchanged following the merger.” KBRA had previously written, on July 8, 2024, that “there will be no rating changes to any KBRA-rated insured obligations currently insured by AGM, AGUK or AGE as a result of the merger,” adding that it “views the merger and the resultant simplification of the overall organizational structure as creating capital, operational, and regulatory efficiencies, as well as enhancing Assured Guaranty Ltd.'s overall global platform and scale as management continues to position its business to optimize its market position and future growth opportunities.”
S&P released a report on August 1, 2024 (post merger completion) stating “there are no changes to the ratings of any of the S&P Global rated entities in the AGL group hierarchy.” Additionally, they wrote: “We expect no change in the company's business strategy or approach to risk management. When evaluating capital adequacy for the companies, we run a consolidated capital adequacy model and already considered the business being assumed by AG in our analysis”
Moody’s released a merger-related report on July 12, 2024 affirming the insurance financial strength ratings of Assured Guaranty Municipal Corp. (AGM), Assured Guaranty Inc. (AG) and Assured Guaranty UK Limited (AGUK) at A1 (Stable), adding that its affirmation reflects the Assured Guaranty group’s “strong capital profile, conservative underwriting of its US municipal, international infrastructure and structured finance risks and leading market position in the financial guaranty insurance sector.” Moody’s also stated that it believes the merger “results in a moderate strengthening of the combined entity’s credit profile relative to the current overall credit profiles of AGM and AG.”
Why merge the US subsidiaries now?
Each of AG and AGM was overcapitalized within the Assured Guaranty group. Both companies’ insured portfolios contained public and infrastructure finance exposures and structured finance exposures. We no longer considered it necessary to differentiate AG’s and AGM’s business scopes and purposes. This transaction will eliminate an unnecessary distinction between the companies, simplify our brand marketing, and allow us to lead the U.S. bond insurance industry more effectively and to continue prudent expansion of our non-U.S and.structured finance businesses. Within structured finance, we will continue to focus on providing risk and capital management solutions for insurance, pension and banking institutions and offering guarantees on structured financings.
For regulatory purposes, AGM and AG were domiciled in New York and Maryland, respectively. Where is the combined company domiciled?
Maryland. Interacting with one primary regulator rather than two is another way we will gain efficiency from the merger. We have long, effective relationships with the insurance regulators of both states, and we had to choose one. The merger was approved by the New York and Maryland regulators. Follow these links for the Agreement and Plan of Merger filed with the New York State Department of Financial Services and the Articles of Merger filed with the Maryland Insurance Administration. U.S. operations will continue to be primarily in New York City.
What is the status of AGM’s subsidiaries Assured Guaranty UK Limited (AGUK) and Assured Guaranty (Europe) SA (AGE)?
They are subsidiaries of AG and continue to operate as they did previously. Any obligations of AGM with respect to AGUK or AGE financial guarantees will become obligations of AG.
Q&A for Issuers, Paying Agents, and Trustees of Securities Insured by AGM
Do we need to do anything to make sure our AGM insurance policies are covered by AG?
No, because AGM merged with and into AG, and AG is the surviving company. Upon effectiveness of the merger, by operation of law, AGM-insured securities became guaranteed obligations of AG, a larger combined company.
Will the public insured rating(s) of our AGM-insured securities change?
See the answer to the question “What will be the ratings of the combined company?” in the General Q&A above.
We are required to make regular financial and other information disclosures to AGM. Where do we send them after the merger closes?
As an Assured Guaranty company, AGM shared surveillance resources with its affiliates, including AG, and the procedures for providing municipal obligor disclosure information were generally the same for AGM and AG. Issuers should refer to the contact information and other disclosure guidelines on the Assured Guaranty website at assuredguaranty.com/munidisclosure.
Whom do I contact to make a policy claim or request a waiver or consent?
Please contact the appropriate member of our Surveillance Department based on the type of security:
Tax-Backed and Lease
Linda Ebrahim, LEbrahim@agltd.com, 212.339.0882
Tax Allocation, Special Assessment, Sales Tax and income Tax
Karen Hofstein, khofstein@agltd.com, 212.339.3419
Water and Sewer, Public Power, Gas and Electric, Resource Recovery
Barbara Boulle, bboulle@agltd.com, 212.339.3504
Airport, Port, Mass Transit Fare Box, Parking Garage, Toll Road and Bridge
Valery Marfitsin, vmarfitsin@agltd.com, 212.339.3531
Healthcare, Higher Education and Not-For-Profit
Victor Chu, vchu@agltd.com, 212.339.3528
How were issuers of securities insured by AGM notified about AGM’s merger with and into AG?
A Notice Regarding Change of Insurer was sent via email to each issuer of securities insured by AGM. A generic copy of the Notice is available here. For specific questions about the Notice, please email AGMmerger@agltd.com.
Whom should I contact to apply AG municipal bond insurance to a new issue?
Reach out to one of our Co-Heads of Public Finance:
William J. Hogan, Senior Managing Director, bhogan@agltd.com, 212.408.6006
Christopher Chafizadeh, Senior Managing Director, cchafizadeh@agltd.com, 212.339.0832
Q&A for Investors in Securities Insured by AGM
Are my bonds or notes still insured?
Absolutely. Due to the merger of AGM with and into AG, AG has the responsibilities under AGM’s outstanding insurance policies that AGM had before the merger.
Will there be any changes to my insurance policy?
No. The insurance policies will remain in full force and effect and have the same terms as when they were issued. The only difference is that claims, if any, will be paid by AG. Assured Guaranty UK Limited and Assured Guaranty (Europe) SA are now subsidiaries of AG. Any obligations of AGM with respect to AGUK or AGE financial guarantees have become obligations of AG.
Will the public insured rating(s) of my AGM-insured securities change as result of the merger?
See the answer to the question “What will be the ratings of the combined company?” in the General Q&A above.
Where can I obtain more information about AG and AGM?
The Investor Information section of our website contains Financial Supplements and GAAP and statutory financial statements for:
AG
AGM
We have also posted a presentation of estimated pro forma information about the post-merger company.
I have specific questions about my securities. Where should I direct them?
Please email our Investor Relations department at ir@agltd.com.
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