Assured & Syncora Complete Transaction
Assured Guaranty Ltd. [together with its subsidiaries, Assured Guaranty], announced the completion of the previously disclosed reinsurance transaction with Syncora Guarantee Inc. [SGI], a wholly owned subsidiary of Syncora Holdings Ltd. [SHL].
Under the terms of the transaction, Assured Guaranty Corp. [AGC] is reinsuring, generally on a 100% quota share basis, SGI-insured financial guaranty insurance policies. The transaction also included the commutation of a book of business previously ceded to SGI by Assured Guaranty Municipal Corp. [AGM].
The transaction totaled approximately $13 billion in net par amount. As consideration for the transaction, AGC received approximately $360 million in cash plus assigned future installment premiums estimated to total $59 million on a present value basis. Included in those amounts are GAAP expected losses to be paid of approximately $130 million for RMBS transactions.
Additionally, on behalf of SGI, AGC is providing administrative services that include claims processing, surveillance, risk management services and certain other functions for the reinsured portfolio.
“We are pleased to have brought another legacy bond insurance portfolio onto the Assured Guaranty balance sheet to generate additional future premium revenue,” commented Dominic Frederico, President and Chief Executive Officer of Assured Guaranty.
“Like our previous acquisitions of financial guarantors or of their insured portfolios, this transaction helps to strengthen Assured Guaranty in terms of both financial strength and profitability.”
The reinsured portfolio consists predominantly of public finance and infrastructure obligations that meet AGC’s new business underwriting criteria, and it includes no Puerto Rico exposure. AGC is contractually obligated to administer transactions and pay claims on SGI’s behalf, but AGC has no direct obligation to bondholders. As a result, ratings of the reinsured transactions will continue to reflect only SGI’s financial strength.
