Standard & Poor's Affirms BAM's AA/Stable Financial Strength Rating
NEW YORK, June 30, 2015
Standard & Poor’s today affirmed Build America Mutual’s financial strength rating at AA, with a stable outlook. The rating recognizes BAM’s extremely strong capital, strong operating performance and prudent underwriting strategy, in which the company only insures investment-grade municipal bonds from U.S. public-sector issuers and limits its exposure to any single risks. Standard & Poor’s also noted that BAM does not have any exposure to Puerto Rico. The complete analysis can be viewed on BAM’s web site here.
In its report, Standard & Poor’s emphasized the inherent strength of BAM’s unique mutual structure, in which the company’s members – the public-sector issuers who utilize BAM’s guaranty to save money on their municipal-bond transactions – “are focused on a stable, low-cost source of financial guarantee support rather than a high return on investment.”
“BAM’s mutual structure aligns the interests of our members and the investors who hold their bonds behind the mission of maintaining strong, durable ratings,” said Chief Executive Officer Seán W. McCarthy. “That is a key credit strength that allows us to focus on expanding our claims-paying resources and insuring only low-risk U.S. municipal credits.”
More than 85% of BAM’s insured portfolio is rated A-minus or above, and the entire portfolio carries investment-grade ratings. BAM is the only bond insurer with no exposure to Puerto Rico, European or other international credits, and it sets the industry standard for transparency by publishing an Obligor Disclosure Brief credit summary on every transaction it insures. The ODBs are available for free download via BAM’s website.
Other factors cited by S&P in support of the rating are: BAM’s “high-quality and liquid” investment portfolio; strong enterprise risk-management controls; and veteran management team. S&P has rated BAM AA, which is the highest rating S&P currently assigns to financial guarantors, since it was founded in 2012.
Domiciled in New York, BAM is a mutual bond insurance company operated for the benefit of its members –cities, states and other municipal entities – that use BAM’s financial guaranty to lower their cost of borrowing. BAM is sponsored by the National League of Cities. Through June 26, BAM has written more than 2,100 policies, insuring more than $18.4 billion of municipal securities and delivering more than $220 million in present-value savings to members.
For more information, please contact:
Michael Stanton, Head of Corporate Strategy and Communications 212-235-2575; firstname.lastname@example.org