This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Deal: Assured Guaranty to Insure Even More Municipals

Stocks in this article: AGO MBI RDN

The municipal bond insurance market looked very different several years ago. According to Palmer, in 2005, the market was divided between nine bond insurers who insured 40% of municipal bonds. Now, coverage has dropped to the low single digits and the only publicly traded players in the space are Assured and MBIA, which was unable to write new business from 2008 through the settlement of legal issues this year. Other contenders are Ambac Assurance , Syncora Guarantee, and newcomer Build America Mutual Assurance, which began doing business last summer.

Build America has insured 38% of new municipal debt issues in the first half of this year, Palmer said, adding, "But that's on very low volume in the market in general."

Palmer believes the recent spate of municipal distress will increase the demand for municipal bond insurance, as investors will want to protect their investment, but he said that demand has not materialized yet. If it does, Assured will be well-positioned to take advantage.

The launch of MAC is a long time coming. Assured acquired Municipal and Infrastructure Assurance from insurer Radian Group (RDN) on Jan. 24, 2012, for $91 million, and is just now opening that business up to write new policies. MAC is licensed and authorized to offer insurance in 30 states, and licensed with authorization pending in eight states.

MAC's muni-only focus is appealing to investors, Palmer said, because the muni portfolio will be separate from Assured's structured finance portfolio, which is a riskier segment held by a different subsidiary.

Assured's portfolio is 75% U.S. public finance, 14% U.S. structured finance, and 11% international, according to a May 23 investor presentation.

General obligation bonds account for 44% of Assured's U.S. public finance portfolio, or $166.3 billion.

Assured executives weren't available to comment.

Assured is listed on the New York Stock Exchange under the symbol AGO. Its shares closed at $22.82 on Monday, down 3.3% from a high of $23.61 on July 18, which is the day Detroit filed for bankruptcy. Assured has a market capitalization of $4.33 billion.

Written by Lisa Allen

3 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs