Assured Guaranty has agreed to acquire MBIA UK Insurance (MBIA UK) to expand its insured portfolio in Europe.

MBIA UK is the European operating subsidiary of the US-based MBIA Insurance.

As of 30 June this year, MBIA UK had an insured portfolio of about £10bn of net par and £374m of GAAP book value.

Assured Guaranty intends to maintain MBIA UK as a stand-alone entity. The company expects to combine it with other European affiliates in the future.

Under the deal, Assured Guaranty's subsidiary Assured Guaranty Corp. (AGC) will deliver to MBIA all of the notes issued in the Zohar II 2005-1 transaction that it holds.

In return, MBIA UK (Holdings) Limited, will transfer to AGC all of its outstanding shares and £18m in cash.

Assured Guaranty president and CEO Dominic Frederico said that the agreement would further the company’s strategy of adding legacy financial guaranty companies.

Frederico added: “In this case, we will be acquiring a seasoned insured portfolio of almost exclusively European transactions and the capital resources to support those exposures. We expect this transaction to be accretive to Assured Guaranty’s earnings per share, operating shareholders’ equity and adjusted book value.”

The acquisition which is subject to regulatory approvals and other customary closing conditions is expected to close in early January 2017.

Assured Guaranty (Europe) CEO Nick Proud called it a landmark transaction which would expand its European unit’s insured portfolio while also creating a total non-US portfolio of around $45bn (£34bn).

Proud added: “AGE is currently mandated on a number of primary UK transactions, and we expect this acquisition to add further momentum to our expanding European opportunities.”

Image : Assured Guaranty agrees to acquire MBIA’s European subsidiary MBIA UK Insurance. Photo : courtesy of stockimages and