Assured Guaranty In Deal With Radian
Bermuda-headquartered Assured Guaranty Ltd. announced yesterday [Jan. 24] that Assured Guaranty Municipal Corp. has entered into an agreement to reassume $12.9 billion of par it had previously ceded to Radian Asset Assurance Inc.
Also, through Assured Guaranty Corp., Assured Guaranty has agreed to reinsure approximately $1.8 billion of Radian Asset public finance par.
In addition, Assured Guaranty has agreed to acquire Municipal and Infrastructure Assurance Corporation [MIAC], which is licensed to provide financial guaranty insurance and reinsurance in 38 US jurisdictions including the District of Columbia.
The parties anticipate the reassumption and reinsurance will be completed this week; the purchase of MIAC is subject to regulatory approval and is expected to close in the first quarter of 2012.
“We are pleased to enter into this transaction with Radian Asset, as this shows our continued commitment to building a stronger franchise and repositioning the financial guaranty industry,” said Dominic Frederico, President and CEO of Assured Guaranty [pictured]. “This transaction helps us achieve success on several strategic fronts, including increasing our adjusted book value per share by approximately $0.37, based on expected intercompany reinsurance amounts, and increasing the size of our insured portfolio by approximately $15 billion. The acquisition of MIAC enhances our flexibility to respond to changes in the financial guaranty industry.”
Assured Guaranty will receive a payment of $86 million from Radian Asset for the re-assumption of the $12.9 billion of ceded risk, which consists 96% of public finance exposure and 4% of structured finance credits; additionally, Assured Guaranty projects it will receive an incremental $1.9 million present value from future installment premiums. In connection with the reinsurance of $1.8 billion of public finance par, Assured Guaranty will receive a payment of $22 million. Both the reassumed and reinsured portfolios are composed entirely of selected credits that meet Assured Guaranty’s underwriting standards. Assured Guaranty will pay $91 million in cash for MIAC; at closing, MIAC will have cash and cash equivalent assets of approximately $75 million. MIAC has not issued any guarantees since its formation.
“Assured Guaranty’s relationship with Radian Asset spans over 20 years and the current transactions represent the ongoing benefits of that long relationship,” Mr. Frederico added.
Assured Guaranty Ltd. is a Bermuda-based holding company that provides, through its subsidiaries, credit protection products to the United States and international public finance, infrastructure and structured finance markets. The company has two segments: financial guaranty direct and financial guaranty reinsurance. The Company’s financial guaranty direct and financial guaranty reinsurance businesses provide credit enhancement, or principal and interest payment default protection, on public finance/infrastructure and structured finance obligations.
The firm’s principal operating subsidiaries include Assured Guaranty Corp., Assured Guaranty Municipal Corp., and Assured Guaranty Re Ltd. The company primarily conducts its business through subsidiaries located in Bermuda, the United States and Europe.
