They have the ability to raise capital *today*. And what happens if we have a big leg down in the market and several important banks or corporations collapse? Will they have the ability to raise capital then?
I would like to see them take the pain *once*, and raise so much money in the process that all of these rating agencies and whiners who want to nit pick every possible loss they might have someday would just be forced to permanently shut up. :)
Starting from that floor we could get substantial re-ratings and multiple expansion, and upgrades from analysts and ratings agencies. It's the difference between trading at a forward P/E of 8 and and 20. The gain from expansion of their multiple would more than offset the one-time 25% dilution of the stock price.
No, it doesn't say it all. This is excellent news under the current circumstances. By year end, Fitch and Moodys will give AAA ratings due to the increase in capital. AGO trades off of three factors. It's non-GAAP operating income, it's tangible book value, and the ratings provided by Fitch and Moodys. All three of which look to be falling together to be a fifty dollar stock in no time. But don't take my word for it, ask Wilbur Ross. He'll no doubt be fronting most of that three hundred mil.
Chance of Moody's upgrading is near nil. The $300 mm raise is necessary to maintain Aa3 going forward, hence the continuing CreditWatch on AGC and AG Re.
I think recaptures from primary cedants to AG Re as contractually allowed and discussed in 10-Q may be near term events. Repercussions are not clear, but UPR (factored in ABV) would go down if unearned premiums are clawed back.
I am not sure how much and which cedants can take back exposure, as AGO does not reveal which counterparties have right to terminate treaties and at which IFS rating that right becomes effective.