Assured Guaranty Protects Insured Bondholders from Puerto Rico Defaults: No Actions Required of Assured Guaranty Bondholders
January 8, 2025
Assured Guaranty Inc. (AG), a bond insurance subsidiary of Assured Guaranty Ltd. (NYSE: AGO) (together with its subsidiaries, Assured Guaranty), made claim payments to holders of certain Puerto Rico Electric Power Authority (PREPA) bonds which defaulted on January 1, 2025.
As always, investors owning Puerto Rico-related bonds insured by Assured Guaranty continue to receive uninterrupted full and timely payment of scheduled principal and interest in accordance with the terms of Assured Guaranty’s insurance policies.
In addition, on December 18, 2024, AG made claim payments representing all outstanding par plus accrued interest on remaining custodial trust units related to AG-insured Puerto Rico Highways and Transportation Authority (HTA) policies. Assured Guaranty’s remaining HTA exposure totals $13 million of reinsurance assumed from another monoline insurer.
No action is required on the part of investors in bonds insured by Assured Guaranty to receive their scheduled debt service payments, as the relevant bond trustee, paying agent or, in the case of secondary market policies, custodian files the claim with Assured Guaranty on behalf of the bondholders. Upon receipt of a claim from a bond trustee, paying agent or custodian, Assured Guaranty makes the claim payment directly to that party, which then distributes the funds to investor accounts in the same manner as when paid by the obligor. Under its standard municipal bond insurance policy, Assured Guaranty makes the claim payment no later than one business day after a claim is received, but not before the payment due date.
As of the date of this statement, Assured Guaranty had been notified of $9 million of payment defaults on January 1, 2025 relating to Puerto Rico exposures it insures. All claim notices received have been processed in full and payment made. For any obligors where the obligor owed a payment and Assured Guaranty paid no claims or paid only partial claims, the payments or balance of payments were made by the obligor, or from the obligor’s available reserves, or by the primary insurer.
Assured Guaranty is continuing its efforts to resolve its last Puerto Rico insured exposure that is in payment default, PREPA.
The following table shows the amounts due on January 1, 2025 and related claims paid, as well as cumulative claims paid or expected to be paid since January 2016, for Puerto Rico-related bonds currently insured by Assured Guaranty.
1. Includes amounts that may not yet been paid as of the date of this Company Statement but are expected to be paid for assumed exposure for January 1, 2025 debt service payments.
2. Net claim payments represent net of reinsurance and reimbursements.
The information set out above contains forward-looking statements that reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include, but are not limited to, those resulting from difficulties with the execution of Assured Guaranty's business strategy; insured losses, including losses with respect to related legal proceedings, in excess of those expected by Assured Guaranty or the failure of Assured Guaranty to realize loss recoveries that are assumed in its expected loss estimates for insurance exposures, including as a result of the final resolution of Assured Guaranty’s Puerto Rico Electric Power Authority exposure or the amounts recovered on securities received in connection with the resolution of Puerto Rico exposures already resolved; the impact of Assured Guaranty satisfying its obligations under insurance policies with respect to legacy insured Puerto Rico bonds and other risks and uncertainties that have not been identified at this time, management's response to these factors, and other risk factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of January 7, 2025. Assured Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.