When it comes to guarantying debt, the guarantor needs to have a better rating than that of the debt (if it were not insured). Otherwise, the debt won't get a better rating and there would be no point in paying a premium to have it insured. Investment grade ratings are necessary for AGO to write new business.
On the other hand, even if AGO lost its ratings, it would still have plenty of revenue. When muni's are guaranteed, the entire premium is paid up front, but the revenue is recognized "as earned". That is, it is spread out over the life of the bond. Since the struggle with keeping its ratings up is more a matter of Fitch and Moody's pessimism for the economy than it has to do with AGO's reserves, AGO would survive a downgrade quite easily. But the stock price would tumble irregardless. It did just that last year, but AGO's earnings reports kept brining the stock price back up again.
I am one to believe that the economy is in a recovery, and that through the course of the recovery Moody's and Fitch will reinstate AGO's AAA ratings. At which point, AGO will be a $50 stock.