S&P, Moody’s Give Assured Guaranty High Ratings

May 10, 2004

Both Standard & Poor’s Ratings Services and Moody’s Investors Service have assigned high ratings to Assured Guaranty and its subsidiaries, the international surety insurer, formed from the spin off of ACE Limited’s surety operations.

S&P assigned its “A+” rating to Assured Guaranty US Holdings Inc.’s (Holdings) $200 million senior notes due 2034, noting that they are guaranteed by Holding’s parent, Assured Guaranty Ltd. It also gave them a stable outlook.

Moody’s upgraded the insurance financial strength ratings (IFSR) on Assured Guaranty Corp. to Aa1, from Aa2, and upgraded to Aa2, from Aa3, the IFSRs of Assured Guaranty Re (previously ACE Capital Re) group of companies. Moody’s also assigned a provisional (P)A1 rating to the $200 million guaranteed senior notes to be issued by Assured Guaranty US Holdings Inc.

Moody’s noted: “These rating actions conclude a review for upgrade of the group’s IFSRs that started on April 9, 2004, and follow the successful sale by ACE Limited of approximately 65 percent of Assured Guaranty Ltd., the group’s holding company, through an initial public offering.” It also gave the ratings a stable outlook.

S&P said its rating on the notes “reflects the corporate credit rating of Assured Guaranty Ltd. Proceeds of the offering will be used repay outstanding debt owed by Holdings to a subsidiary of ACE Limited. This debt was incurred in one of the many formation transactions that were necessary to prepare the Assured Guaranty organization to be spun off from ACE in an initial public offering (IPO).

“The IPO was completed on April 29, 2004. ACE currently owns 35 percent of Assured Guaranty Ltd.’s common stock. This may drop to 25 percent if the underwriters’ option to purchase additional shares is exercised in full.”

Assured Guaranty is based in Bermuda, and is a leading provider of credit enhancement products to the municipal finance, structured finance and mortgage markets on a global basis. S&P has given the company and its subsidiaries “AA” financial strength ratings.

“The consolidated reinsurance operations establish Assured Guaranty Ltd. as a leading monoline financial guaranty reinsurer,” said S&P. “In addition, the company’s equity base of $1.3 billion ranks fifth among all monoline primary and reinsurance companies, trailing only the four long-established, ‘AAA’ rated primary bond insurers. Each of the operating companies is appropriately capitalized for its assigned rating.”

Moody’s said its rating actions “reflect the strong capital base and conservative financial profile and strategy of the recently formed Assured Guaranty group as well as the existing earnings stream coming from its established financial guaranty businesses.”

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