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 – Assured Guaranty Municipal (AGM) and Assured Guaranty Inc. (AG) – 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/AG’s New York headquarters, we maintain a fully staffed western regional office in San Francisco.

On July 8, 2024, Assured Guaranty announced the expected merger of AGM into Assured Guaranty Inc. (AG). The effective date of the merger is expected to be August 1, 2024. Upon effectiveness of the merger, by operation of law, AGM-insured securities will become guaranteed obligations of AG, a larger combined company.

First Half and Second Quarter 2024 Results

In continuation of the increased demand for bond insurance that we have seen since 2020, bond insurance penetration remained high, at 8.2% for the first half and 8.9% for the second quarter of 2024. Bond insurance is increasingly being utilized across a variety of transactions ranging from very small to very large in size.  We believe that more investors have realized that, in addition to the security it provides, bond insurance can support price stability and market liquidity, on transactions of all sizes, and that issuers use it to provide greater certainty of execution in less predictable market environments, in addition to reducing financing costs. 
 
Assured Guaranty continued its market leadership position for the first half of 2024, insuring $10.8 billion of primary par, which represented 56% of the insured par sold in the primary market. Over the last five first halves, our average primary par insured has been approximately $10 billion. Year-over-year, for the first half of 2024, Assured Guaranty’s primary market insured par increased by 11%. 
 
In the second quarter, Assured Guaranty’s primary market share was 58%, a 13% increase year-over-year in insured primary-market par sold, for a total of $7.2 billion.
 
One driver of our production is the ongoing demand for our guaranty on larger transactions, which typically see interest from institutional investors. For the first half of 2024, Assured Guaranty insured 21 transactions that each utilized $100 million or more of Assured Guaranty insurance, 14 of which were in the second quarter. 
 
We saw significant opportunities in large, high-margin transactions during the first half. Of note, three of the largest transactions that were sold in the municipal market during the first half of 2024 carried insurance from Assured Guaranty: $1.1 billion of insurance for the Brightline Florida passenger rail project, where we insured a majority of the senior bonds; $800 million for the New Terminal One at John F. Kennedy Airport; and $831 million for a Dormitory Authority of the State of New York (DASNY) school district revenue bond issue. The Brightline project is the first private-sector passenger rail system built in the U.S. in over a century, the JFK project is the largest U.S. public-private partnership transportation project, and the DASNY issue helped 69 school districts finance capital improvements.
 
We were pleased to continue adding value on double-A credits during the first half of 2024, as we insured $2.5 billion of par on 53 deals. We believe that investors see the extra protection of our guaranty as a mitigant of downgrade and market value risks. (Double-A credits are defined as those with underlying ratings in the AA category by S&P and/or in the Aa category by Moody’s.) 
 
With the planned merger of Assured Guaranty Municipal Corp. into Assured Guaranty Inc. that was announced on July 8th and is expected to be effective on August 1st, we feel we are even better positioned for the second half of the year and beyond.

2023 Full-Year Results

Assured Guaranty specifically, and the bond insurance industry in general, saw increased demand in 2023. The insured market par penetration rose to 8.8% in 2023 from 8.0% in 2022, the highest annual level since 2008.  Assured Guaranty was the main driver of the growth in the bond insurance industry, accounting for over $2.5 billion of the $3.0 billion (or 84%) of the year-over-year new issue par increase. While demand remains strong across our target rating spectrum, the rising growth has been notably observed in the A rated space, where insurance was used on more than 30% of 2023 municipal par sold – up from around 20% in the years prior to 2020 .We believe the growth in recent years reflects both investors’ appreciation of the benefits that bond insurance provides, especially during volatile economic or uncertain market conditions, and issuers’ recognition of its cost-effectiveness and capacity to increase investor demand and market access.

In 2023, we insured 61% of the insured market, representing $19.5 billion of new issue par, the highest in the industry by $7 billion, and 15% higher than last year. We have exceeded $19 billion of primary par in three of the last four years. We believe this heightened demand has proven our product’s value across a wide range of transaction sectors, rating levels and deal sizes.  We wrapped 645 new issues in 2023 with sizes as small as $1.0 million and as large as over $1.0 billion.

Assured Guaranty ended the year with a terrific fourth quarter, insuring $5.4 billion of new issue par, 32% higher than in the same period last year. 

Two statistics help illustrate the value we believe the market assigns to our insurance.  The first is the number of AA transactions we insured, which reflects the positive market perception of our value proposition.  In 2023, we insured 81 AA transactions with a total par of $3.3 billion, 71 of which were insured in the primary market. (Double-A credits are defined as those with underlying ratings in the AA/Aa category by S&P and/or Moody’s.) 

The second is the number of transactions on which we insured $100 million or more, which we believe signals strong institutional demand for our product.  In 2023, we insured 37 such large transactions with a total par of $10.4 billion.  The four largest were $1.1 billion of insurance on Dormitory Authority of the State of New York bonds, $800 million on John F. Kennedy International Airport bonds, $756 million on Houston, Texas Airport System bonds, and $732 million on Power Authority of the State of New York green bonds.  Additionally, we participated in three other such large transactions in Texas, Florida and Pennsylvania that were the winners of The Bond Buyer Deals of the Year award in their respective categories.

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 July 25, 2024. 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.