Bond insurer Assured Guaranty Ltd’s operating units have had their AA rating affirmed by Standard & Poor’s — even though the credit ratings agency expects to see some losses from bonds issued by debt-saddled Puerto Rico.

S&P Global Ratings cited the Bermuda-based firm’s very strong capital adequacy, market leadership in risk-based pricing, its diversified underwriting strategy and record of credit discipline.

S&P stated: “Although much of Assured’s business has been in the US public finance market, it has the most diverse underwriting strategy of any bond insurer, also conducting business in the global structured finance and international public finance markets.

“Although some segments of these other markets have been risky in the past, we believe management’s current approach to writing business in them is well thought-out and measured.”

S&P cautioned that Assured’s “exposure to issuers in Puerto Rico may pressure its capital position as losses begin to materialise”.

Dominic Frederico, Assured’s chief executive officer, said: “Once again, S&P reaffirmed Assured Guaranty’s AA stable rating. The affirmation validates not only our financial strength but also our proven business model, profitable financial results and the success of our strategic choices.

“Our size and experience allow us to lead the US municipal bond market by participating broadly, regularly insuring large municipal transactions, including public-private partnerships, as well as small and mid-size transactions, while achieving favourable average premium rates.

“Additionally, our international infrastructure and structured finance businesses further diversify our insured portfolio while providing a competitive advantage through the flexibility to capitalise on growth trends and pricing opportunities when they are better in one sector than in others.

“While low interest rates limited new business opportunities over recent years, we were able to produce good economic results through effective loss mitigation, reassumptions of ceded business, and acquisitions.

“Our insured portfolio has amortised significantly in recent years while our claims-paying resources have remained substantially the same at approximately $12 billion, significantly reducing our leverage ratios.

“As a result, based on our understanding of S&P’s capital adequacy model, we estimate that Assured Guaranty had $2.8 billion of capital in excess of S&P’s AAA requirement at year-end 2016.”