U.S. Public Finance

Assured Guaranty is the leading provider of municipal bond insurance in the United States.

Our municipal credit enhancement products include:

• Municipal bond insurance policies covering principal and interest, for both new issues and those already trading in the secondary market
• Surety policies that take the place of cash-funded reserves in municipal bond transactions

We guarantee a wide range of municipal bond types supported either by tax revenues or revenues from essential public projects or services. We insure both tax-exempt and taxable municipal bonds.

While we have two platforms – AGM, insuring only public finance transactions; and AGC, a diversified provider – we are one team, applying a uniform underwriting standard and dedicated to the highest level of customer service. In addition to the large municipal bond insurance department in AGM/AGC’s New York headquarters, we maintain a fully staffed western regional office in San Francisco.

Q3 2023 Results

Assured Guaranty was the main driver of another strong municipal bond insurance market this year by capturing 62% of the insured market.  During the first nine months of 2023, Assured Guaranty insured $14.1 billion of new issue par, 10% higher than in the same time period last year. In aggregate, our primary and secondary insured par totaled approximately $14.3 billion for the first nine months of the year.

We are having a very strong year, and third quarter, even in the face of constrained overall par volume.  For third quarter 2023, overall par volume was only up 1.5% versus third quarter 2022, whereas Assured Guaranty was up 49% during the third quarter of 2023 compared to the third quarter of 2022.  Assured Guaranty’s new issue insured par for third quarter 2023 was $4.3 billion.  

We continue to be active across our usual bond sectors. We think an interesting trend has been the use of insurance by certain single-A rated issuers and in the double-A rating categories. (Double-A credits are defined as those with underlying ratings in the AA/Aa category by S&P and/or Moody’s.)  So far this year, we have insured a few A rated credits that have not used insurance in nearly a decade.  For example, we insured $564 million of Philadelphia Water & Sewer bonds and $756 million of Houston Airport bonds. We also guaranteed two issues totaling $837 million of insured par for Lower Colorado River Authority, which has rarely used insurance in recent years.

In the double-A category, during the first nine months of 2023, we insured approximately $2.8 billion of par and issued 64 policies in this category, 55 of which were for primary market deals with double-A underlying ratings. We believe investors see our guaranty on high-quality credits as a mitigant of downgrade and market value risks.

During the first nine months of 2023, we guaranteed 27 large transactions that each utilized over $100 million of Assured Guaranty insurance for a total of $7.3 billion.

Importantly, the industry maintained relatively steady, high penetration rates throughout the first nine months of 2023 at 8.5%, and we believe that penetration rates are a good indicator of demand for bond insurance.  Looking quarter-to-quarter within 2023, the second quarter was actually the strongest in terms of both par insured and industry market penetration.

Q2 2023 Results

For the first half of 2023, Assured Guaranty insured 290 transactions totaling $9.8 billion of primary insured par sold, relatively flat compared to the first half of 2022, despite total market par being down by approximately 16% in first half 2023 compared to first half 2022. This strong result led to Assured Guaranty increasing its market share of the insured primary market to 63%, up from 57% in the first half of 2022. Our secondary market par written for the first half of the year was $280 million, bringing our total insured par to $10.1 billion in the primary and secondary markets. Also, compared to the first quarter of this year, Assured Guaranty widened its lead in the insured market during the second quarter of 2023, with a market share of 64%. 

We continued to add value on double-A credits (defined as those with underlying ratings in the AA/Aa category by S&P and/or Moody’s) during the second quarter, as we insured almost $1.5 billion of par, and issued 24 policies covering 17 primary deals and 7 secondary market transactions. In aggregate, during the first half of 2023, we insured approximately $2.2 billion of par and issued 40 policies, 32 of which were for primary market deals with *double-A underlying ratings. We believe investors see our guaranty on high-quality credits as a mitigant of downgrade and market value risks.

Market demand for bond insurance increased significantly in the second quarter 2023, up 72% from the first quarter of 2023.  Total insured penetration for the second quarter was 10.1%, the highest penetration rate since 2009.  Assured Guaranty also saw an 86% increase in insured par compared to the first quarter of 2023, insuring $6.4 billion in the second quarter of 2023. The $6.4 billion in par that we guaranteed during the second quarter was 26% higher than the same period last year.

During the second quarter, we guaranteed 13 transactions totaling $4 billion that each utilized over $100 million of Assured Guaranty insurance. These included four different series of bonds for the Dormitory Authority of the State of New York, which totaled $1.1 billion and a $756 million Houston, Texas Airport System transaction.  This brought the total number of transactions that utilized over $100 of our insurance during the first half of 2023 to 21 transactions for a total of $5.6 billion.

Q1 2023 Results

Assured Guaranty continued to lead the municipal bond insurance market by a wide margin in the first quarter of 2023, while the industry’s total insured par declined along with the decline in the total new-issue volume. Industry bond insurance penetration for first quarter 2023 of 7.7% was reasonably consistent with the full-year penetration rate in 2022 of 8.0% and remained well above the levels we saw before the pandemic. We believe recent years’ higher penetration rates reflect both investors’ increased awareness of the benefits that bond insurance provides, especially during volatile economic conditions, and issuers’ recognition of its cost-effectiveness.

Assured Guaranty insured 60% of insured new issue par sold in the first quarter based on $3.4 billion of new issue insured par from 124 transactions. We continued to benefit from institutional investor demand for Assured Guaranty’s insurance on larger transactions. During the quarter, we insured eight transactions with $100 million or more in insured par, which totaled approximately $1.6 billion. These included a $365 million transaction for the Lower Colorado River Authority in Texas, a $325 million transaction for the H. Lee Moffitt Cancer Center Project in Florida, $320 million for Georgia Municipal Electric Authority (MEAG) consisting of two transactions, and a $135 million transaction for the Board of Education of the City of St. Louis in Missouri; all five deals were entirely wrapped by Assured Guaranty.

Among AA credits (defined as those credits rated in the double-A category by S&P or Moody’s on an uninsured basis), Assured Guaranty insured 15 primary transactions for a total of $788 million of insured par during the quarter, indicating the breadth of our value proposition.

2022 Full-Year Results

In a market where yields surged higher by hundreds of basis points, causing issuance to contract by more than 20%, bond insurance and, more specifically, Assured Guaranty rose to the occasion to deliver value to a wide range of market participants. In no area was this displayed more prominently than new secondary market insurance on previously issued bonds. While always an important part of our business, this segment grew in significance this year as traders, investors and portfolio managers engaged with Assured Guaranty to produce record volume not seen in over a decade.

Assured Guaranty wrapped $3.3 billion of par across 364 secondary market transactions with over 30 firms. The surge in demand for our wrap on the secondary market is best illustrated when compared with the previous year’s volume of $437 million, demonstrating 650% annual growth. The product was particularly useful in giving investors market liquidity and portfolio management flexibility on lower coupon bonds as rates surged higher and bond prices fell.

While secondary market activity led the headlines for the year, primary market activity remains the cornerstone of our efforts to deliver savings to municipal issuers. The shift towards greater demand for insurance, which first occurred during the pandemic, was well‐maintained in 2022 as insured penetration remained at the 8% level for the third year in a row.  In the fourth quarter of 2022, the penetration rate reached 8.7% - the industry’s highest fourth quarter penetration rate since 2008.  

Assured Guaranty continued to lead the bond insurance market in 2022. Finishing the year with a 70% share of primary market insured par sold in the fourth quarter, Assured Guaranty’s 2022 market share was close to 60%, based on $17.1 billion of new issue insured par from nearly 650 tax-exempt and taxable new issues, including $4.1 billion in the fourth quarter. The transactions represented a broad spectrum of bond sectors, transaction sizes and deal structures, including public-private partnerships. Also, during the year, we guaranteed 31 transactions that each utilized over $100 million of Assured Guaranty insurance, including four where we insured more than $500 million.  

In aggregate for 2022, Assured Guaranty insured $20.4 billion of primary and secondary market insured par, including $2.7 billion from 121 transactions with underlying ratings of AA by S&P and/or Aa by Moody’s. With higher rates and widening spreads, Assured Guaranty’s value proposition and our ability to provide spread savings to issuers came into focus. 

Forward-Looking Statements
Any forward-looking statements made on this page 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. Assured Guaranty’s forward-looking statements, including but not limited to those related to the market for its credit protection products and to the financial health and resilience of the obligors underlying its insured portfolio, could be affected by the development, course and duration of the COVID-19 pandemic and the governmental and private actions taken in response (including governmental responses that could reduce demand for the Company’s credit protection products), and the global consequences of the pandemic and such actions, and other factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission, which are available on its website, and other risks and uncertainties that have not been identified at this time. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of October 16, 2023. Assured Guaranty does not undertake 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.