Assured Guaranty Corp. (AGC) has closed its previously announced acquisition of the European operating subsidiary of MBIA Insurance Corporation, MBIA UK Insurance (MBIA UK).
Assured Guaranty currently intends to maintain MBIA UK as a subsidiary of AGC. It will rebrand MBIA UK as part of the Assured Guaranty group within the next several months. Assured Guaranty is also actively working to combine MBIA UK with its other affiliated European insurance companies.
Any such combination will be subject to regulatory and court approvals; as a result, Assured Guaranty cannot predict when, or if, such a combination will be completed.
Assured Guaranty president and CEO Dominic Frederico said: “We are pleased to have completed our fourth acquisition of a legacy bond insurer, which has further diversified Assured Guaranty’s insured portfolio by adding approximately $13bn (£10bn) of predominantly European infrastructure transactions.
“We expect this acquisition to be accretive to Assured Guaranty’s operating earnings per share, operating shareholders’ equity and adjusted book value.”
Assured Guaranty (Europe) (AGE) CEO Nick Proud said: “This acquisition significantly expands Assured Guaranty’s presence in the European infrastructure market at a time when we are seeing increasing opportunities and a strong pipeline of transactions.
“It signals our ongoing commitment to the European marketplace and gives MBIA UK bondholders the management resources and surveillance capabilities of an active financial guarantor with proven durability. It is our intention to combine MBIA UK with our European portfolio to create a single balance sheet and rating.”
As of September 30, 2016, using current currency exchange rates, MBIA UK had a guaranteed portfolio of approximately $13bn (£10bn) of net par and approximately $470m (£382m) of GAAP book value.
As consideration for the outstanding shares of MBIA UK plus $23m in cash, AGC exchanged all its holdings of notes issued in the Zohar II 2005-1 transaction. AGC’s Zohar II 2005-1 notes had a total outstanding principal of approximately $347m as of September 30, 2016.
MBIA Insurance Corporation insures all of the notes issued in the Zohar II 2005-1 transaction.
BofA Merrill Lynch acted as financial advisor to Assured Guaranty, and Mayer Brown acted as its legal advisor.