Standard & Poor’s rating services (S&P) updated the financial strength rating (:FSR) of all the major operating subsidiaries of Assured Guaranty Ltd. (AGO) to AA from AA-.
The major subsidiaries of which the rating was upgraded are Municipal Assurance Corp. (MAC) and Assured Guaranty Corp. (AGC), Assured Guaranty Municipal Corp. (AGM), Assured Guaranty (:UK) Ltd., European financial guarantors Assured Guaranty (Europe) Ltd. (:AGE) and reinsurer Assured Guaranty Re Ltd. The outlook on this rating remains stable.
Assured Guaranty is a leading firm in the bond insurance space and has been providing services to U.S. and other selected financial markets for the last 30 years. The recent rating upgrade by S&P is validated by the company’s strong market position along with its solid capital base and pricing discipline. In the last four years, the statutory capital of Assured Guaranty increased 27% to $6.1 billion as of 2013-end.
Additionally, in order to consolidate its market position, Assured Guaranty established a municipal-only bond insurance company which meets the market demand for muni-only insurer. The formation of this new company provides Assured Guaranty a strategic flexibility which in turn, helps to adopt various growth measures.
The company has a flexible business model which allows it to equally value its insurance in small, medium and large transactions. Also, the company has a disciplined approach toward underwriting, pricing and enterprise risk management.
With S&P’s rating upgrade of AGM, MAC, AGE and AGC, no other existing guarantor has higher S&P ratings as of date.
Rating affirmations or upgrades from credit rating agencies play an important part in retaining investor confidence in the stock besides maintaining credit worthiness in the market. We believe that strong ratings will help the company and its leading operating entities to retain investor faith and help it write more businesses going forward.
Assured Guaranty presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the multi line insurance industry that are worth mentioning are Old Republic International Corp. (ORI), Ageas SA/NV (AGESY) and FBL Financial Group Inc. (FFG). While Old Republic International sports a Zacks Rank #1 (Strong Buy), ageas and FBL Financial carry a Zacks Rank #2 (Buy).