What is Assured Guaranty Municipal Bond Insurance?
Assured Guaranty Municipal Bond Insurance, also known as AGM, is a company that provides insurance for municipal bonds. Municipal bonds, also called “munis,” are issued by state and local governments to fund public projects such as schools, highways and parks.
In the event of a default or other event that causes the bond issuer to be unable to pay interest or principal, AGM guarantees that bondholders will receive the full amount of principal and interest due on the bonds they hold. This is important because it provides an added level of security to investors who want to buy municipal bonds.
AGM is a subsidiary of Assured Guaranty Ltd., a publicly traded company that provides financial guaranties on various types of debt securities. AGM has been providing municipal bond insurance for over 30 years and has insured bonds for a wide range of issuers, from small towns to large cities and states.
Investing in municipal bonds can be an attractive option for investors seeking a low-risk investment with a stable return. However, investing always carries a level of risk. By providing insurance for municipal bonds, AGM helps mitigate some of that risk, making it an important player in the municipal bond market.
Frequently Asked Questions about assured guaranty municipal bond insurance
Assured Guaranty is the leading provider of financial guaranty insurance. We guarantee timely payment of scheduled principal and interest when due on municipal, public infrastructure and structured financings.
A guaranteed bond is a debt security that offers a secondary guarantee that interest and principal payments will be made by a third party, should the issuer default due to reasons such as insolvency or bankruptcy. A guaranteed bond can be of either the municipal or corporate variety.
Bonds are not insurance policies per se but are legal contracts between the three parties involved, promising restitution to the obligee in the event that the principal defaults on its contractual obligations.
Many of today's municipal bonds are insured by monoline insurers, or insurers that back debt securities only and are not exposed to risks from any other lines of business. They may, however, be exposed to other forms of risk (i.e., interest rate risk, market risk, etc.)
Assured Guaranty is the leading provider of financial guaranty insurance. We guarantee timely payment of scheduled principal and interest when due on municipal, public infrastructure and structured financings.
Insurance guaranty associations provide protection to insurance policyholders and beneficiaries of policies issued by an insurance company that has become insolvent and is no longer able to meet its obligations. All states, the District of Columbia, and Puerto Rico have insurance guaranty associations.
If the subsidiary cannot repay the borrowed funds, the parent company becomes responsible for doing so. For example, if Pampers issues a guaranteed bond, Proctor & Gamble will “guarantee” the bond by obligating themselves to pay off the bond if Pampers cannot.
A bond is a debt security, similar to an IOU. Borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time. When you buy a bond, you are lending to the issuer, which may be a government, municipality, or corporation.
Bonds are debt securities issued by corporations, governments, or other organizations and sold to investors. Backing for bonds is typically the payment ability of the issuer to generate revenue, although physical assets may also be used as collateral.
For example, if you invest $5,000 in a 10-year municipal bond paying 5% interest, you've loaned $5,000 for 10 years. In return, the municipality will pay you $250 annually in interest -- typically in biannual installments -- and then return your $5,000 at maturity in 10 years.
When an insurance company fails, a guaranty association is an entity which steps into the shoes of the failed insurer for the purpose of providing certain continued benefits and/or resolution of covered claims.
A guaranty clause can take many forms; a primary example is a loan agreement that is co-signed, which can signify a guaranty from the co-signer to a specific amount, even if the loan agreement does not use a specific "guarantor" title.
Guarantee is both a verb and a noun. Guaranty is a spelling variant for the noun, used in certain legal contexts. I can guarantee that Vicky will be back here within the week. What guarantee (or guaranty) can you offer to the other parties?
