Assured Guaranty Corp. has agreed to reinsure Syncora Guarantee Inc.-insured financial guaranty insurance policies, representing approximately 91% of Syncora's outstanding insured exposure.
The reinsured portfolio consists mostly of public finance and infrastructure obligations, and the transaction does not include any Puerto Rico exposure. The transaction also involves a commutation of a small book of business ceded to Syncora by Assured Guaranty Municipal Corp. The transactions reinsured and commuted total about $14.5 billion in net par amount.
As consideration for the deal, Syncora will pay about $360 million and assign installment premiums estimated to total $55 million on a present value basis to Assured Guaranty. Included in those amounts are about $100 million of statutory loss reserves for residential mortgage-backed securities transactions.
Syncora has also agreed to provide administrative services with respect to the reinsured policies to Assured Guaranty. Syncora has the option to cede certain debt service reserve fund surety and interest rate swap policies for an immaterial additional premium payment.
Closing of the reinsurance transaction is subject to regulatory approvals, consents from certain third parties and other closing conditions, including New York Department of Financial Services approval of a payment of principal and accrued interest of at least $400 million on Syncora's surplus notes. The transaction is expected to close by the end of the second quarter.
Moelis & Co. LLC is acting as financial adviser to Syncora on the transaction, and Debevoise & Plimpton LLP is acting as legal adviser. Goldman Sachs & Co. LLC served as financial adviser to Assured Guaranty Ltd. and Willkie Farr & Gallagher LLP was its legal counsel.
Syncora Holdings Ltd. is the ultimate parent of Syncora Guarantee.
