Assured Guaranty Protects Insured Bondholders from Puerto Rico Defaults
No Action Required of Assured Guaranty Policyholders
July 5, 2018
Two bond insurance subsidiaries of Assured Guaranty Ltd. (NYSE: AGO) (together with its subsidiaries, Assured Guaranty) made claim payments to holders of insured general obligation and other bonds on which Puerto Rico and certain of its instrumentalities defaulted on July 1, 2018. The table below lists the defaulting issuers, the total payments due July 1, 2018 from such issuers on bonds insured by Assured Guaranty Municipal Corp. (AGM) and Assured Guaranty Corp. (AGC), and the total gross and net claim payments made by Assured Guaranty. Assured Guaranty’s subsidiary Municipal Assurance Corp. (MAC) has no insured exposure to Puerto Rico.
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.
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 issuer. 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.
The following table shows the amounts due on July 1, 2018 and related claims paid, as well as cumulative claims paid or expected to be paid since January 2016 for Puerto Rico-related bonds insured by Assured Guaranty.
Data is as of July 5, 2018 and is subject to adjustment
As of July 5, 2018, Assured Guaranty received $244 million of claim notices for interest payments due on July 1, 2018, all of which have been processed in full. 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.
With $11.5 billion in claims-paying resources* and approximately $400 million generated each year from its $11 billion investment portfolio alone, Assured Guaranty’s liquidity and capital position are very strong. This is further evidenced by looking at S&P Global Ratings’ capital model, where the company estimates that its excess capital was more than $2.8 billion above S&P’s AAA requirement as of year-end 2017.
* Aggregate data for operating subsidiaries within the Assured Guaranty Ltd. group. Claims on each subsidiary’s insurance policies/guarantees are paid from that subsidiary’s separate claims-paying resources. Details of the components of claims-paying resources are set forth in the most recent Assured Guaranty Ltd. Financial Supplement.
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 Assured Guaranty's inability to execute its strategies, including its loss mitigation and risk remediation strategies, and negative developments that may impact Assured Guaranty's liquidity and capital, and therefore its ability to make claim payments on time and in full, including less demand for Assured Guaranty's financial guaranty product, or adverse developments with respect to its insured or investment portfolio, 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 July 5, 2018. 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.