Assured Guaranty Ltd. (AGO), the bond-insurer downgraded by Moody’s Investors Service in January, created a new unit to back the debt of U.S. states and cities.
Municipal Assurance Corp. was started with $800 million of cash and securities contributed by two other Assured units and an agreement with those subsidiaries to reinsure $103 billion of muni bonds that allowed it to set up reserves of $709 million of unearned premium, Hamilton, Bermuda-based Assured said in a statement today.
The new unit was graded AA+ by Kroll Bond Rating Agency, that firm’s second-highest ranking, and two steps lower at AA-by Standard & Poor’s, the ratings companies said in separate statements. Municipal Assurance will guarantee “lower-risk categories” in the U.S. public finance market, Kroll said in its statement.
Moody’s cut its ratings on Assured Guaranty Municipal Corp. two levels to A2, its sixth-highest rating, from Aa3 in January. Another unit, Assured Guaranty Corp., was lowered three steps to A3.
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