HAMILTON, Bermuda--(BUSINESS WIRE)--May. 21, 2009-- Assured Guaranty Ltd. (“Assured” or “the Company”) (NYSE:AGO) today released the following statement from Dominic Frederico, Assured’s President and Chief Executive Officer, in response to the announcement by Moody’s Investors Service (“Moody’s”) that it had placed the debt ratings of Assured and the insurance financial strength ratings of Assured Guaranty Corp., Assured Guaranty (UK) Ltd. and Assured Guaranty Re under review for possible downgrade due to Moody’s worsening outlook for potential losses on Assured’s residential mortgage-backed securities (“RMBS”) and pooled corporate exposures.

Statement by Dominic Frederico, President and Chief Executive Officer, Assured Guaranty Ltd.:

Assured’s insured portfolio has withstood the economic and financial market crisis of the last two years more favorably than many other bond insurers and financial institutions. We have had operating profits in each and every quarter because of our longstanding and widely-recognized adherence to strict underwriting discipline and proactive risk management. Assured’s balance sheet and statutory claims-paying resources have remained very strong over the last two years. Our GAAP equity has risen by 21.5% since December 31, 2007 to $2.0 billion at March 31, 2009 and our consolidated claims-paying resources have risen by 17.6% to $5.2 billion at March 31, 2009. Our average portfolio rating was A+ as of March 31, 2009, down only slightly from the AA- average that we have maintained since 2004.

In spite of this proven performance, Moody’s has placed us under review for possible downgrade because they have changed, for the third time in the last twelve months, their base and stress case assumptions of the future performance of our residential mortgage-backed securities and pooled corporate exposures, each time becoming markedly more pessimistic. Assured has a well-known reputation for having been conservative in our approach to the RMBS market since our 2004 initial public offering and our RMBS exposures were carefully underwritten to be able to withstand significant economic and housing market stresses. We are concerned that Moody’s action may cause unnecessary market turmoil and affect municipal issuers’ cost-effective access to the capital markets.

It appears, based on our recent discussions with Moody’s, that they have once again increased their economic and housing market assumptions — to a level significantly more stressful than that used by the Treasury in its recent stress testing of banks. It also seems that Moody’s expectations do not reflect the potential benefit of the federal government’s economic and mortgage assistance programs. As called for by Securities and Exchange Commission and as discussed in recent Congressional hearings, we request that Moody’s make their review process fully transparent by disclosing completely all of their assumptions and the impact of these assumptions on their stress loss conclusions in the aggregate and on a transaction by transaction basis. We also would like Moody’s assurance that these stress assumptions are being consistently applied to all the entities and transactions rated by Moody’s. We believe that full disclosure would provide more confidence to investors in making comparisons of relative financial strength among different issuers or transactions and would allow investors and issuers to evaluate rating agencies’ conclusions versus actual future financial performance, thereby providing the means to better evaluate and establish accountability for rating agencies’ processes and conclusions.

Moody’s action, along with Fitch’s recent downgrade of our ratings, strengthens our belief that the financial guaranty industry would be better served by a single regulator for capital and financial strength rating purposes. We believe that the financial markets cannot and should not continue to be subjected to volatility and uncertainty due to the rating agencies’ undisclosed changes in assumptions. Moody’s review of our insurance financial strength ratings may lead to near-term uncertainty and volatility in the markets that we serve — particularly in the municipal market, where we are effectively the only major active financial guarantor. Greater transparency of the factors and assumptions driving Moody’s review would allow investors and issuers to draw their own conclusions about Moody’s opinion of our financial strength.

We will continue to work with Moody’s as they conduct their evaluation of our portfolio. We are pleased with their recent conclusion as to the rating implications for Assured with respect to our acquisition of Financial Security Assurance Holdings, Ltd. We are finalizing the integration plans for the acquisition as well as the remaining closing conditions. We look forward to completing the acquisition this quarter.

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. More information can be found at www.assuredguaranty.com.

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 FSA closing, could be affected by a significant reduction in the amount of reinsurance ceded by one or more of our principal ceding companies, rating agency action such as a ratings downgrade, difficulties with the execution of Assured’s business strategy, contract cancellations, developments in the world's financial and capital markets, more severe or frequent losses associated with products affecting the adequacy of Assured’s loss reserve, changes in regulation or tax laws, governmental actions, natural catastrophes, Assured’s dependence on customers, decreased demand or increased competition, loss of key personnel, technological developments, the effects of mergers, acquisitions and divestitures, changes in accounting policies or practices, changes in general economic conditions, 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., Hamilton
Investors:
Sabra Purtill, Managing Director, Global Communications and Investor Relations, 212-408-6044 or 441-299-9375
spurtill@assuredguaranty.com
or
Media:
Ashweeta Durani, Vice President, Global Communications, 212-408-6042 or 917-597-2065
adurani@assuredguaranty.com