The Basics
Who We Are
Monoline municipal bond insurers and reinsurers are members of AFGI.
Our Guarantee
A bond or other security insured by an AFGI member has the guarantee that
interest and principal will be paid on time and in full.
Who Benefits From Our Insurance?
Issuers, taxpayers and investors do. Because an insured issue receives
the higher rating of its insurer, municipal issuers benefit from lower
financing costs that result from insurance. AFGI estimates that since
the industry's inception in 1971 municipalities and their taxpayers have
saved more than $40 billion in interest costs as a result of bond
insurance. In the asset-backed markets, insurance reduces borrowing costs
for issuers, and offers better market access and greater ease of deal
execution. Investors are financially protected against issuer default
through the insurer's guarantee of payments.
How Old We Are
The first insured municipal bonds were issued in 1971. AFGI was formed in 1986.
Our Claims-Paying Ability
Our claims-paying resources (as measured by qualified statutory capital and unearned premiums) available to back members' guarantees has risen annually and now totals more than $48 billion. To test the adequacy of our companies' capital resources, the rating agencies apply a computer-simulated stress test which measures our ability to pay claims at a default level comparable to that of the Great Depression. Click here for more on claims-paying ability.
Our Record
No member company has ever failed to fulfill its payment
obligations to insured bond investors when due.
A Conservative Approach
To safeguard our individual ratings and to protect the interests of insured bond investors, AFGI firms focus on insuring securities with a low risk of default. More than 95% of securities insured by the Triple-A insurers are rated investment grade before insurance is provided. Further, we conduct our own thorough research on the insurability of an offering, and all Triple-A insurers subscribe to a zero-loss underwriting standard, meaning that only issues with the lowest probable risk of defaulting are insured. Click here for more on the industry's conservative underwritng practices.
The industry also follows conservative accounting principles. The premiums are held in reserve and recognized as income over the life of the insured obligation, contributing to predictable returns and safety for investors.
Back to the Top
