M&A

16 November, 2009

UPDATE 1-Assured Guaranty plans $300 mln capital relief program

* Plan in response to Moody's downgrade

* Plan involves about $300 mln in additional capital

* Says plan may be expensive, dilutive to shareholders

* Posts Q3 results in line with prior outlook

Nov 16 (Reuters) - Bond insurer Assured Guaranty Ltd (AGO.N) said it intends to implement a $300 million capital relief plan in a response to a recent rating cut by Moody's Investors Service.

In a regulatory filing, Assured Guaranty said it may not be able to implement the capital strengthening initiatives fully or at all, and could face further rating cuts.

It also said that the cost of the capital relief program may be high and could result in increased expenses or dilution to shareholders.

Last week, Moody's cut its investment rating on the company to Aa3 from Aa2, citing deterioration in the company's mortgage-backed securities portfolio. [ID:nN13471750]

The rating agency had placed the debt ratings under review for a possible downgrade on May 20 this year due to its worsening outlook for potential losses on Assured's residential mortgage-backed securities (RMBS) and pooled corporate exposures.

Assured Guaranty also posted quarterly results in line with its previously announced outlook. [ID:nWNAB6771]

Shares of the Hamilton, Bermuda-based company were flat in after-market trade. They closed at $21.21 Monday on the New York Stock Exchange. (Reporting by Jochelle Mendonca in Bangalore; Editing by Unnikrishnan Nair)

Source: http://www.reuters.com