Assured Guaranty Municipal Corp. (AGM), an Assured Guaranty Ltd. subsidiary that provides financial guarantees for municipal bonds, will merge with Assured Guaranty Inc. (AG), a company that offers financial guarantees and credit enhancement products, anticipated to take effect on August 1, 2024.
The merger of AGM and AG into a single insurance company will create a larger capital pool for supporting insurance policies, resulting in a more diversified insured portfolio.
The new AG will have a larger and more diversified insured portfolio, a bigger investment portfolio, and greater claims-paying resources, creating a more efficient capital structure.
Dominic Frederico, President and CEO, commented: “We see this merger as beneficial for all our stakeholders. It will result in more efficient utilisation of the combined capital of the two companies, and it will simplify the administration and eliminate duplicative expenses of Assured Guaranty’s US financial guaranty operations.”
“Over its nearly 40 years in the financial guaranty business, Assured Guaranty has continually evolved, constantly looking for ways to better serve our customers and grow our business. This merger further positions us to achieve those goals.”
Both companies hold identical ratings from S&P Global Ratings, Kroll Bond Rating Agency, and Moody’s Ratings, so the merger should not impact Assured Guaranty’s strong financial strength ratings.
AGM has been Assured Guaranty’s primary financial guaranty insurance provider, covering US and international public and infrastructure finance obligations.
AG has focused on risk and capital management for insurance, pension, and banking institutions, provided guarantees on structured financings, and acquired or reinsured portfolios from non-affiliated financial guaranty insurers in runoff. Both companies’ portfolios include public and infrastructure finance as well as structured finance exposures.
“Assured Guaranty has been growing and broadening the financial guaranty 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 bond insurance industry.”
AG will remain based in Maryland, US, 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, AGM-insured securities will, by law, become guaranteed 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.
In conjunction with the merger, the MIA has approved a $300 million stock redemption by the combined company, which is expected to take place shortly after the merger.
