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"We are pleased that Assured Guaranty Corp. and FSA remain in the double-A rating category, a designation indicative of significant financial strength. We believe the one-notch rating downgrades primarily incorporate Fitch's stress loss estimates based on an extremely pessimistic view of the future performance of residential mortgage exposures and point out that Fitch noted our ability to mitigate potential future losses and improve rating agency capital.
"Importantly, the removal of our ratings from Rating Watch Negative to the longer-term designation Negative Outlook provides time for more clarity on the direction of the economy and future performance of the residential mortgage portfolio versus pure estimates. Additionally, the capital bases of Assured Guaranty Corp. and FSA will further benefit from the run-off of the existing residential mortgage and asset-backed portfolios; loss mitigation initiatives, including recoveries through representation and warranty claims; the use of external reinsurance; and the emergence of capital through earnings.
"Despite the ratings uncertainty over the past few months, demand for our guaranty products has remained strong in the municipal market. Through the third quarter of 2009, Assured Guaranty Corp., which provides guarantees for both municipal and structured financings, and FSA, which exclusively serves the municipal market, guaranteed $29.6 billion of new issue municipal bonds, which represents 10.3% of total municipal issuance. New premium revenue also adds to our claims-paying resources and will further enhance our capital adequacy model results.
"Finally, as a financial institution providing credit protection for more than $663 billion of exposure, of which $424 billion are U.S. municipal bonds, we play an important role in the capital markets, which would benefit significantly from uniform financial guaranty regulation. Currently, we are subject to the sometimes conflicting and not readily transparent requirements of three disparate rating entities. However, under a single Federal regulator, such as the Federal Reserve, we could achieve stress testing of capital strength with assumptions that are disclosed and related to measurable economic variables, as well as results that are transparent and consistently applied to all entities and transactions, thereby providing investors with far greater ability to judge our capital adequacy.
"We will continue to work with Fitch, both on projected and actual results, and are committed to maintaining the highest ratings available."
End of statement
Assured Guaranty Ltd. is a Bermuda-based holding company. Its operating subsidiaries provide credit enhancement products to the U.S. and international public finance, structured finance and mortgage markets.
Any forward-looking statements made in this press release reflect Assured's current views with respect to future events and financial performance 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. For example, Assured's forward-looking statements, including its statements regarding the amortization of its insured portfolio, losses expected to be sustained, its loss mitigation initiatives, its access to reinsurance, the demand for its insurance product and the enactment of future legislation, could be affected by developments in the world's financial and capital markets that adversely affect issuers' ability to pay, Assured's loss experience, its ability to cede exposures to reinsurers, its access to capital, the demand for its products, its unrealized (losses) gains on derivative financial instruments or its investment returns; rating agency action, such as a ratings downgrade of one or more of Assured's insurance subsidiaries and/or of transactions that such subsidiaries have insured; difficulties with the execution of Assured's business strategy; more severe or frequent losses affecting the adequacy of Assured's loss reserve; the impact of market volatility on the mark-to-market of its contracts written in credit default swap form; Assured's dependence on customers; decreased demand for Assured's insurance or reinsurance products or increased competition in its markets; changes in regulation or tax laws; governmental actions; reduction in the amount of reinsurance facultative cessions or portfolio opportunities available to Assured; contract cancellations; natural or man-made catastrophes; loss of key personnel; technological developments; the effects of mergers, acquisitions and divestitures; changes in accounting policies or practices; changes in the credit markets, segments thereof or general economic conditions, including the overall level of activity in the economy or particular sectors, interest rates, credit spreads and other factors; 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's filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. Assured undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE: Assured Guaranty Ltd.
Assured Guaranty Ltd. Media: Betsy Castenir, 212-339-3424, 917-940-2462 or 441-299-9375 Managing Director, Corporate Communications bcastenir@fsa.com or Ashweeta Durani, 212-408-6042 or 917-597-2065 Vice President, Corporate Communications adurani@assuredguaranty.com or Equity Investors: Sabra Purtill, CFA, 212-408-6044 or 441-299-9375 Managing Director, Investor Relations spurtill@assuredguaranty.com or Ross Aron, Associate, Investor Relations, 212-261-5509 raron@assuredguaranty.com or Fixed Income Investors: Robert Tucker, Managing Director, Fixed Income Investor Relations, 212-339-0861 rtucker@fsa.com or Michael Walker, Director, Fixed Income Investor Relations, 212-261-5575 mwalker@assuredguaranty.com
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