In its continuing dialogue with market participants, Assured Guaranty heard that there is market demand for a new municipal bond insurance company like MAC. While Assured Guaranty’s existing municipal bond insurance platforms, AGM and AGC, proved their strength and resilience throughout the global financial crisis and Great Recession, some investors prefer, or even require, a guarantor whose insured portfolio is 100% U.S. municipal bonds in the most well-understood bond sectors, such as general obligations, tax-backed issues and public electric, water, sewer and transportation revenue bonds. Prior to MAC, there was no insurer with a proven business model addressing this need. MAC should therefore help to expand the market for municipal bond insurance.
AGM and AGC contributed a total of approximately $800 million of capital, in the form of equity and surplus notes. Additionally, they transferred $709 million of unearned premiums (which had been collected and invested but not yet earned) that were associated with the assumed portions of 18,651 insured transactions that MAC reinsured, with an aggregate net par amount of $111 billion on a GAAP basis. As a result, on its first day of operation in July 2013, MAC offered insurance backed by $1.5 billion in claims-paying resources, had a $1.5 billion investment portfolio generating income, and was earning premiums from a sizable book of 100% U.S. investment-grade municipal business that was well-diversified by state and qualifying bond sectors. This is an exceptionally strong position for a new bond insurance company.
Both MAC and AGM currently guarantee only public finance transactions. The general underwriting criteria and processes are the same, with investment grade credit quality (equivalent to triple- B ratings) a baseline requirement. However, most underlying transactions at both companies will continue to be of single-A or better quality, and even then transactions must meet specific requirements set by Assured Guaranty’s credit committee. The difference is that MAC guarantees primarily small and medium-size issues in select categories, such as G.O. and tax-backed bonds and public electric, water, sewer and transportation revenue bonds. Additionally, MAC generally targets transactions that are below $100 million in par amount.
MAC’s management believes that the more investors and issuers know about a bond insurer, the better they can make informed decisions about the value of its insurance. We are committed to providing all the material information needed to understand our company.
We are also required to do so by securities and insurance regulation.
MAC’s ultimate parent is Assured Guaranty Ltd., a publicly traded insurance holding company governed by the strictly enforced disclosure requirements of the U.S. Securities and Exchange Commission (SEC) and the New York Stock Exchange (NYSE), where it is listed under the ticker symbol AGO. All of Assured Guaranty’s SEC filings, including its Annual Report on Form 10-K and quarterly 10-Q filings must, by law, be made public within legally required time frames, and selective disclosure of material information to anyone before the general public is prohibited. All such SEC filings are available at assuredguaranty.com. Privately owned or mutual insurance companies do not have to meet such stringent standards. MAC also must meet the disclosure requirements of the insurance regulators of New York, where it is domiciled, and all other states where it is licensed to do business.
This website provides extensive MAC disclosures on the following pages:
Financial Transparency - thorough information about MAC’s claims-paying resources, balance sheet and earnings.
What We Insure - graphs and data describing MAC’s insured portfolio and a list of all direct and assumed transactions it contains.
Credit Summaries - concise summaries of key disclosures made by the obligors in transactions MAC directly insures.