Acquisition to boost Assured Guaranty’s portfolio by $13bn

Assured Guaranty has entered into an agreement to acquire MBIA UK Insurance. The deal is expected to close in January 2017.

The acquisition will add $13 billion to Assured Guaranty’s insured portfolio.

As part of the agreement Assured Guaranty will deliver to MBIA all of the notes issued in the Zohar II 2005-1, a collateralised loan obligation backed primarily by a portfolio of senior secured loans from small and medium enterprise issuers, most of which rely on credit estimates.

Furthermore, the seller MBIA UK will transfer to AGC all of the outstanding shares of MBIA UK plus $23 million (£18 million) in cash.

The Zohar notes to be transferred had, as of June 30, 2016, a total outstanding principal of approximately $347 million.

“This agreement furthers our strategy of acquiring legacy financial guaranty companies,” said Dominic Frederico, president and CEO of Assured Guaranty.

“In this case, we will be acquiring a seasoned insured portfolio of almost exclusively European transactions and the capital resources to support those exposures. We expect this transaction to be accretive to Assured Guaranty’s earnings per share, operating shareholders’ equity and adjusted book value.”

Nick Proud, CEO of Assured Guaranty (Europe), said: “This is a landmark transaction that will significantly increase the size of Assured Guaranty’s European insured portfolio, creating a total non-U.S. portfolio of approximately $45 billion (£34 billion).

“It also sends a strong message to the market that the monoline model − and Assured Guaranty specifically − is an active source of infrastructure funding solutions. AGE is currently mandated on a number of primary UK transactions, and we expect this acquisition to add further momentum to our expanding European opportunities.”

Assured Guaranty plans to maintain MBIA UK as a stand-alone entity but could combine it with other European affiliates in the future.