NEW YORK, Oct 12 (Reuters) - Fitch Ratings on Monday cut the ratings of bond insurers Assured Guaranty Corp and Financial Security Assurance Inc, citing expected losses from the merged entities' exposure to mortgage-related securities.
Assured Guaranty bought Financial Security Assurance in July.
Fitch cut the insurer financial strength rating on Assured Guaranty by one notch to 'AA-minus', its sixth highest rating. It cut Financial Security's financial strength rating by one notch to 'AA', the fifth highest rating.
The agency downgraded the debt of the holding companies for each insurer to 'A-minus', three notches above speculative, or 'junk,' status.
The ratings were also assigned a negative outlook because of a lack of clarity about the companies' plans to mitigate losses and build capital, Fitch said.
The actions 'reflect increased expectations of credit losses arising from the companies' residential mortgage securitization exposures,' the agency said in a statement.
Assured Guaranty's combined mortgage-related exposure was about $7.2 billion at the end of June, while FSA's net exposure was $4.1 billion, said Fitch.
((Reporting by Tom Ryan; Editing by Gary Crosse)) Keywords: ASSURED RATINGS/FITCH (thomas.j.ryan@thomsonreuters.com; +1-646-223-6826; Reuters Messaging: thomas.j.ryan.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Assured Guaranty bought Financial Security Assurance in July.
Fitch cut the insurer financial strength rating on Assured Guaranty by one notch to 'AA-minus', its sixth highest rating. It cut Financial Security's financial strength rating by one notch to 'AA', the fifth highest rating.
The agency downgraded the debt of the holding companies for each insurer to 'A-minus', three notches above speculative, or 'junk,' status.
The ratings were also assigned a negative outlook because of a lack of clarity about the companies' plans to mitigate losses and build capital, Fitch said.
The actions 'reflect increased expectations of credit losses arising from the companies' residential mortgage securitization exposures,' the agency said in a statement.
Assured Guaranty's combined mortgage-related exposure was about $7.2 billion at the end of June, while FSA's net exposure was $4.1 billion, said Fitch.
((Reporting by Tom Ryan; Editing by Gary Crosse)) Keywords: ASSURED RATINGS/FITCH (thomas.j.ryan@thomsonreuters.com; +1-646-223-6826; Reuters Messaging: thomas.j.ryan.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
