HAMILTON, Bermuda--(BUSINESS WIRE)--Assured Guaranty Ltd. (NYSE: AGO) (together with its subsidiaries, Assured Guaranty) released the following comments regarding the complaint filed yesterday requesting a judgment that the Financial Oversight and Management Board for Puerto Rico (Oversight Board) comply with its duties under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) and certify the Puerto Rico Electric Power Authority (PREPA) restructuring support agreement (RSA) for implementation under Title VI of PROMESA.
Two Assured Guaranty bond insurance subsidiaries, Assured Guaranty Municipal Corp. and Assured Guaranty Corp., filed a complaint in Federal District Court in Puerto Rico yesterday seeking (i) a declaratory judgment that the PREPA RSA is a “Preexisting Voluntary Agreement” under Section 104 of PROMESA and the Oversight Board’s failure to certify the PREPA RSA is an unlawful application of Section 601 of PROMESA; (ii) an injunction enjoining the Oversight Board from unlawfully applying Section 601 of PROMESA and ordering it to certify the PREPA RSA; and (iii) a writ of mandamus requiring the Oversight Board to comply with its duties under PROMESA and certify the PREPA RSA.
With this action, Assured Guaranty seeks to remedy the continuing failure of the Oversight Board to comply with its duties under PROMESA and act on the PREPA RSA. When Congress passed PROMESA on June 30, 2016, the PREPA RSA was the only preexisting consensual agreement between a Puerto Rico government entity and its creditors. Congress acknowledged that fact and grandfathered the PREPA RSA, singling it out for fast-track approval under the consensual resolution provisions of Title VI of PROMESA. PREPA submitted the PREPA RSA to the Oversight Board in late April 2017 for certification and implementation under Title VI of PROMESA. Because Congress granted the PREPA RSA special status as a “Preexisting Voluntary Agreement”, it provided for expedited certification of the PREPA RSA under PROMESA, without the need for substantive review and evaluation by the Oversight Board.
In fact, at Congress’ specific direction, PROMESA provides that the Oversight Board only has to make a ministerial determination that the proposed debt modifications included in the PREPA RSA submitted to the Oversight Board are consistent with the preexisting PREPA RSA. In spite of Congress’ clear intent to preserve the PREPA RSA, the Oversight Board has exceeded the scope of its authority by second-guessing a consensual restructuring ratified by Congress, PREPA, two Commonwealth administrations and the creditors and by arbitrarily failing to issue the ministerial certification required under Title VI of PROMESA. Finally, the Oversight Board’s failure to certify the PREPA RSA for implementation under Title VI of PROMESA and its continuing efforts to circumvent the requirements of PROMESA are likely to prevent the Commonwealth of Puerto Rico and its instrumentalities, including PREPA, from accomplishing a primary objective of PROMESA, which is the ability to regain access to the capital markets.
Irrespective of the Oversight Board’s continuing failure to comply with its duties under PROMESA and certify the PREPA RSA, payments to holders of PREPA Bonds insured by Assured Guaranty will continue to be paid without interruption for the life of the bonds. Assured Guaranty unconditionally and irrevocably guarantees full and timely payment of scheduled debt service, in accordance with the terms of Assured Guaranty’s insurance policies, and upon payment, takes over the rights of the insured bondholders. Assured Guaranty is determined to take reasonable and necessary actions to protect its rights as insurer of PREPA Bonds.
With $12 billion* in claims-paying resources across its group of companies, which includes an $11 billion investment portfolio that alone generates approximately $400 million of annual investment income each year, Assured Guaranty’s liquidity and capital positions are very strong.
*Aggregate data for operating subsidiaries within the Assured Guaranty Ltd. group. Claims on each subsidiary’s insurance policies / financial guarantees are paid from that subsidiary’s separate claims-paying resources. Details of the components of claims paying resources are set forth in the most recent Assured Guaranty Ltd. Financial Supplement, which may be found at Assuredguaranty.com/agldata.
Cautionary Statement Regarding Forward-Looking Statements
Any forward-looking statements made in this press release reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include, but are not limited to, those resulting from Assured Guaranty's inability to execute its strategies, including its loss mitigation and risk remediation strategies, and negative developments that may impact Assured Guaranty's liquidity and capital, and therefore its ability to make claim payments on time and in full, including less demand for Assured Guaranty's financial guaranty product, or adverse developments with respect to its insured or investment portfolio, and other risks and uncertainties that have not been identified at this time, management's response to these factors, and other risk factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of June 27, 2017. Assured Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Assured Guaranty Ltd. is a publicly traded Bermuda-based holding company. Its operating subsidiaries provide credit enhancement products to the U.S. and international public finance, infrastructure and structured finance markets. More information on Assured Guaranty Ltd. and its subsidiaries can be found at AssuredGuaranty.com.