Who really knows what S&P is going to do. Even if they do slap an AA- on them, AGO has lots of choices (besides dilution) to improve their capital position. I actually think that AGO will get an improved credit rating as a result of recent developments with put-backs.
MBIA is likely to receive tens of billions in their settlements with the banks. MBIA could emerge as a larger insurer than AGO. Since MBIA got ran out of business and AGO didn't, MBIA can claim and prove they have been severly "damaged" by the fraud. I like MBIA as a specualtive buy, AGO is much more conservative.