Moody's Investors Service late Friday confirmed the 'Aa3' insurance financial strength ratings of Assured Guaranty Corp. (AGC) and Assured Guaranty Municipal Corp. (AG Municipal).
AGC's outlook was changed to negative and taken off review for a possible downgrade while AG Municipal retained its negative outlook.
On Nov. 12 AGC was downgraded one notch by Moody's for its "weakened economic and regulatory capital position … stemming from mortgage-related losses."
At that time Moody's said the insurer could be further downgraded unless it implemented capital-strengthening measures.
In response, parent company Assured Guaranty (AG) raised $574 million in fresh capital through a common stock offering earlier this month.
"Moody's believes that these transactions have replenished AGC's capital to a level consistent with the 'Aa3' rating, while still leaving its affiliates with capital structures appropriate for their own ratings," the agency said. "The negative outlook for Assured's ratings considers the meaningful remaining uncertainty about the group's ultimate credit losses, including claims on mortgage exposures and Assured's success in putting back mortgage loans to lenders."
"It is unclear how demand for financial guaranty wraps and Assured's competitive position will evolve once the municipal finance market normalizes," Moody's said.
AGC and AG Municipal are owned by the same parent but operate independently with separate capital bases. The two subsidiaries are the only long-time bond insurers to have made it through the financial crisis with double-A ratings from Moody's.
Both companies also maintain 'AAA' ratings from Standard & Poor's.