MOODY'S ASSIGNS Aaa INSURANCE FINANCIAL STRENGTH RATING TO FINANCIAL SECURITY ASSURANCE INTERNATIONAL LTD.
New York, November 4, 1998 -- Moody's Investors Service has assigned a Aaa insurance financial strength rating to Financial Security Assurance International Ltd. (FSAI), which was recently licensed by the Bermuda Registrar of Companies to underwrite financial guaranty insurance outside of Bermuda.
FSAI is a majority-owned subsidiary of Financial Security Assurance Inc. (FSA), a financial guaranty insurer whose insurance financial strength is rated Aaa by Moody's. FSA is a New York-domiciled company, with statutory capital of $831million and total assets of $1,901 million, as of June 30, 1998. It is a wholly owned subsidiary of Financial Security Assurance Holdings Ltd. (FSA Holdings). FSAI plans to insure much of FSA Holdings' international financial guaranty business and to reinsure business assumed from its parent, FSA. FSAI's underwriting standards will be the same as those of FSA.
Moody's noted that the rating of FSAI is based on the company's initial capitalization of $100 million and net worth maintenance and stop-loss agreements with FSA. The parent company has contractually agreed to maintain the minimum shareholder's equity required under the laws of Bermuda for FSAI to retain its insurance license. In addition, FSA will provide FSAI with a stop-loss cover which would fund all cumulative losses in excess of $25 million.
Moody's noted that, despite being domiciled in Bermuda which has a country rating of Aa1, FSAI is rated Aaa. A number of considerations support the determination that FSAI's exposure to the sovereign risk of the host jurisdiction is limited. In particular, FSAI's business will be offshore. The company will not insure any Bermuda residents or businesses, and virtually all its assets will be maintained in the United States. Moreover, FSA can assume all of FSAI's policies and its related assets at its own discretion. As a result, in the unlikely event of an economic crisis in the host jurisdiction, FSAI's business could be immediately relocated to FSA.
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