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Syncora Announces Execution of Reinsurance Framework Agreement with Assured Guaranty Corp.

02/05/18

HAMILTON, Bermuda, Feb. 05, 2018 (GLOBE NEWSWIRE) -- Syncora Holdings Ltd. ("SHL") today announced that its wholly owned, New York financial guarantee insurance subsidiary, Syncora Guarantee Inc. (“SGI”), has entered into an agreement, the closing of which is subject to regulatory and other approvals as further described below, with Assured Guaranty Corp. (“Assured Guaranty”) pursuant to which Assured Guaranty agreed to provide reinsurance, generally on a 100% quota share basis, to SGI of approximately $13.5 billion of net par outstanding of SGI-insured financial guaranty insurance policies, representing approximately 91% of SGI’s outstanding insured exposure.  As consideration for the transaction, which also involves a commutation of a small book of business ceded to SGI by an Assured Guaranty affiliate which is included in the par outstanding numbers above, SGI would pay approximately $360 million (which amount includes ceded reserves) and assign over future installment premium for the reinsured policies.  In addition, in connection with the reinsurance, SGI has also entered into an administrative services agreement with Assured Guaranty pursuant to which Assured Guaranty would provide certain administrative services with respect to the reinsured policies.

The financial effects of this agreement and other related disclosures are expected to be disclosed at a later date.

“We are extremely pleased to enter into this reinsurance agreement which effectively caps our insured exposure, leaving SGI in a more stable financial position and making it possible for us to return value to our stakeholders, subject to approval, including by the New York Department of Financial Services,” commented Frederick B. Hnat, the President and Chief Executive Officer of SGI.  “We look forward to working with Assured Guaranty in transitioning certain administrative functions associated with the ceded portfolio.”

SGI’s remaining insured portfolio of approximately $1.29 billion of net par outstanding would consist of the following credits or types of credits (with the current indicated internal ratings and expected maturities, which are weighted averages for those categories containing more than one exposure):

Description Net Par
Outstanding
($000s)
Current
Internal
Rating
Maturity
(yrs)
PFI/PPP Availability – Public Buildings, Hospitals, Schools 270,368   bb 15.7  
Puerto Rico exposures (including PREPA and GOs) 220,445   d 6.5  
Military Housing Bonds (pre-insured) 147,315   bbb- 21.1  
Sub Sovereign State, Region 136,848   bbb- 17.9  
Toll Roads (International Public) > = 5 years of operating history 119,532   bbb- 6.7  
Arkansas River Power Authority, CO—Electric Revenue Bonds 105,990   bb- 17.1  
Power & Gas - International 100,000   a+ 6.8  
City of Syracuse Industrial Development Agency 94,050   bbb- 6.3  
City of Houston, TX – Water/Sewer Bonds 38,379   aa- 15.9  
Port of Portland, OR – Airport Revenue Bonds 17,698   aa- 8.5  
Tulare Local Health Care District, CA 14,655   b 14.3  
JEA, FL Water and Sewer (Senior Lien) 9,025   aa 16.0  
RMBS exposure (12 separate credits) 7,609   b- 0.9  
Port of Tacoma, WA – Port Revenue Bonds (Subordinate Lien) 6,621   a+ 11.1  
Detroit (City of), MI 3,515   d 2.9  
Collateralized Debt Obligation 2,185   c 19.9  


In addition, SGI 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 the receipt of required 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 SGI’s surplus notes.  The parties would expect to close the transaction no later than the end of the second quarter of 2018.

There can be no assurance that SGI will receive the required approvals or consents for the reinsurance or that the reinsurance transaction will close on the expected timeline or at all; neither can assurance be given as to the timing or the amount, if any, of payment on SGI’s surplus notes that the New York Department of Financial Services may approve.

Moelis & Company LLC is acting as financial advisor to SGI on the transaction and Debevoise & Plimpton LLP is acting as legal advisor to SGI.

About Syncora Holdings Ltd.
Syncora Holdings Ltd. (OTC:SYCRF) is a Bermuda-domiciled holding company.  Syncora Guarantee Inc. is a wholly-owned subsidiary of Syncora Holdings Ltd.  For additional information, please visit www.syncora.com.

Contacts
Scott Beinhacker
Syncora Holdings Ltd.
(212)478-3400
investorrelations@scafg.com

Important Information and Forward Looking Statements
This press release contains statements about future results, plans and events that may constitute "forward-looking" statements.  We caution you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release.  In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek," "comfortable with," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology.  Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's control. These risks and uncertainties include, but are not limited to, the factors described in the Company's historical filings with the NYDFS, and in the Company's and Syncora Guarantee Inc.'s GAAP and statutory financial statements, as applicable, posted on its website at www.syncora.com.  Readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made.

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Source: Syncora Holdings Ltd.