Wilbur Ross: Assured Guaranty Biz “Very Good”

NEW YORK (Reuters) – Assured Guaranty Ltd (AGO.N) shares have been hammered amid the credit crunch, but underwriting business at the bond insurer was “very good” at the end of last year, billionaire investor and Assured director Wilbur Ross told Reuters on Friday.

Despite Moody’s Investors Service cutting Assured’s credit rating to double-A last month, Assured’s primary business of underwriting municipal bonds was proceeding “at a very good clip,” Ross said. “The business had a very good December and fourth quarter now that the ratings picture has stabilized.”

The market for bond insurance has remained weak, putting pressure on the credit ratings of companies that provide assurance to muni bond investors.

Assured Guaranty remains triple-A at Standard & Poor’s and Fitch Ratings, Ross noted, which is critical since a broad downgrade could shut Assured out of the muni business.

“Now that the credit ratings are stable, Assured is able to function very well in the marketplace,” Ross said in an interview. “I’m very happy with the business that Assured has been making. The stock, obviously, has been a disappointment.”

Over the years, Ross made his fortune by snapping up companies in out-of-favor industries and then building them up through acquisitions.

Ross’ investment firm, WL Ross & Co, in February announced plans to invest as much as $1 billion in Bermuda-based Assured. At the time, investors were fleeing bond insurers as frozen debt markets triggered massive losses, particularly those that underwrite mortgage-related issues.

Compared with larger rivals MBIA (MBI.N) and Ambac Financial Group (ABK.N), though, Assured had little exposure to subprime-backed securities.

Still, since paying $23.47 a share for a minority stake and a seat on Assured’s board, Ross has watched the insurer’s stock fall about 60 percent. In late trading Friday, the stock was down up 1 cent at $9.96 a share.

In September, Ross increased his bet, snapping up 5 million more shares in the open market. He now owns about 19 percent.

Assured said in November it would acquire a troubled rival, Financial Security Assurance Inc, from Belgian lender Dexia SA (DEXI.BR) for $722 million in stock and cash. Ross provided a back-up commitment to fund the $361 million cash portion of the deal.

Ross said he expects U.S. antitrust regulators to make a decision on the deal by the end of this month or February.

(Reporting by Joseph A. Giannone; editing by John Wallace and Matthew Lewis)