Assured GuarantyLtd. unit Assured GuarantyCorp. has agreed to acquire CIFG Holding Inc., the parent of ,for an expected $450 million in cash.
Assured Guaranty hadbeen rumored to be considering a deal for CIFG. Ambac Financial Group Inc. had also been mentioned as a bidderfor the company, according to "people familiar with the matter" speakingto Reuters.
CIFG Assurance North America will merge into Assured GuarantyCorp., which will be the surviving entity. After the merger, the assets and obligationsof CIFG Assurance North America will become the assets and obligations of AssuredGuaranty Corp., and the bonds insured by CIFG Assurance North America will becomeinsured obligations of Assured Guaranty Corp. and receive the latter's financialstrength ratings. Policies associated with the 2009 reinsurance transaction betweenthe two entities that have not already been novated to Assured Guaranty Corp. willbecome its direct obligations.
The acquisition is expected to be accretive to Assured GuarantyLtd.'s EPS, operating shareholders equity and adjusted book value. As of Dec. 31,2015, CIFG Assurance North America had an insured portfolio of $5.6 billion of netpar and about $637 million of statutory capital. Assured Guaranty Ltd. estimatesthat the transaction will increase its statutory capital in 2016 by $300 millionto $325 million.
The deal is expected to be completed in mid-2016, subject toreceiving antitrust and insurance regulatory approvals and satisfying customaryclosing conditions. CIFG's stockholders have already approved the acquisition.
Moelis & Co. LLC is acting as Assured Guaranty's financialadviser, and Mayer Brown LLP is acting as legal adviser.