Assured Guaranty closes Syncora deal
Assured Guaranty has unveiled an agreement with Syncora Guarantee Inc. (SGI), under which Assured Guaranty Corp. (AGC) will reinsure SGI-insured financial guaranty insurance policies.
According to the company the transaction also includes the commutation of a book of business previously ceded to SGI by Assured Guaranty Municipal (AGM). The transactions reinsured and commuted will total approximately $14.5 billion in net par amount.
Under the terms of the deal SGI will pay $360 million and assign installment premiums estimated to total $55 million on a present value basis to Assured Guaranty. This includes approximately $100 million of statutory loss reserves for RMBS transactions.
Additionally, on behalf of SGI, AGC will provide certain administrative services on the reinsured portfolio, including surveillance, risk management, and claims processing. The transaction is subject to regulatory approval and other closing conditions and is expected to close by the end of the second quarter of 2018.
“We are pleased to announce this transaction, which we expect to be accretive to Assured Guaranty’s future earnings and financial strength," said Dominic Frederico, president and chief executive officer of Assured Guaranty. “By reinsuring and administering substantially all of Syncora’s insured portfolio, the transaction continues our successful strategy of acquiring legacy financial guarantors or their insured portfolios.”
According to Assured Guaranty the reinsured portfolio consists predominantly of public finance and infrastructure obligations that meet AGC’s new business underwriting criteria. The consideration for the transaction includes proceeds that Assured Guaranty will use to establish loss reserves for certain RMBS transactions. Furthermore, the transaction does not include any Puerto Rico exposure.
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