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please click your print icon! Moody's comments on Assured's first quarter 2008 earnings announcement New York, May 13, 2008 -- Moody's said that Assured Guaranty Ltd.'s first quarter earnings release held no rating implications for its main financial guaranty insurance operating companies. The insurance financial strength ratings of Assured Guaranty Corp. (AGC) and Assured Guaranty Re Ltd. (AG Re) remain at Aaa and Aa2, respectively. The rating outlooks are stable. Assured realized a first quarter 2008 net loss of $169.2 million, primarily due to a $181.4 million after-tax mark-to-market loss on credit derivatives stemming mostly from pooled corporate exposures and CMBS transactions. More notably, Assured reported $52.9 million in loss reserve charges on US RMBS exposures during the quarter, primarily relating to two Countrywide HELOC transactions. Moody's noted that Assured's total loss reserves and credit impairment charges for US RMBS securities, which stood at $92.1 million as of 3/31/08, are below the rating agency's prior expected-case loss estimate and the stress-case losses used to evaluate the company's capital adequacy. Assured's exposure to ABS CDOs remains modest relative to most other financial guarantors. In addition to its mortgage-related exposures, Assured added to its closely monitored credit list two structured life insurance transactions with investment exposure to subprime mortgages. Assured also has $540 million in exposure to bonds issued by Jefferson County Alabama Sewer System, which is currently experiencing financial stress. Assured does not currently expect to experience ultimate losses on any of these transactions. The competitive position of Assured's direct financial guaranty company, AGC has improved in recent quarters given the downturn in business volume experienced by those guarantors with large mortgage and mortgage-related ABS CDO exposures. The present value of insurance and credit derivative gross premiums written (PVP) by AGC during the quarter totaled $255 million, representing an increase of 205% from a year ago. This increase was reflective of both significantly greater transaction volume and higher premium rates. Assured's investment income rose by 16% as invested assets grew as a result of the company's raising $304 million through a common stock issuance in December, 2007 coupled with sizable upfront premiums received on new public finance business. PVP for the reinsurance segment was down 7% from the prior year's first quarter, reflecting lower facultative business coming from third-party primary guarantors. Subsequent to the end of 1Q08, Assured issued $250 million in common stock to investment funds managed by WL Ross & Co., LLC (WL Ross). $150 million of issuance proceeds were downstreamed to AG Re in anticipation of increased demand for reinsurance from primary financial guarantors seeking to improve their capital adequacy. Subject to certain terms and conditions, Assured has the option to issue up to an additional $750 million of common stock to funds managed by WL Ross, providing Assured with a committed source of capital to finance business growth and/or expansion. New York Arlene Isaacs-Lowe Senior Vice President Financial Institutions Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 New York Jack Dorer Managing Director Financial Institutions Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Return to today's INSURANCE NEWSCAST
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