Insurance holding company Assured Guaranty (AGO) has inked a settlement agreement with Flagstar Bank, for violation of representations and warranties (R&W) in insured residential mortgage-backed securities (RMBS).

The insurer will receive $105m in cash and under the settlement plan, the bank will reimburse Assured Guaranty in full for all future claims on the Assured Guaranty insurance policies.

The settlement was inked, following the decision by judge Rakoff of the US District Court for the Southern District of New York in favor of Assured Guaranty.

Assured Guaranty operates as a Bermuda-based insurance holding company that trades on the New York Stock Exchange and also manages three subsidiaries.

Its subsidiaries provide credit enhancement products to the US and international public finance, infrastructure and structured finance markets.

Assured Guaranty reported net income $110m, or $0.57 per share for the year 2012, compared to $773m or $4.16 per share during the same period last fiscal.