Market Overview

Assured Guaranty Files Lawsuit Challenging Constitutionality of Board Appointments to Puerto Rico's Financial Oversight and Management Board


Oversight Board believes it is accountable to no one with respect to
whether fiscal plans comply with the statutory requirements imposed by

Two bond insurance subsidiaries of Assured Guaranty Ltd. (NYSE: AGO)(together with its subsidiaries, Assured Guaranty) have filed an
adversary complaint challenging the constitutionality of appointments to
the Financial Oversight and Management Board for Puerto Rico (Oversight
Board). The lawsuit contends that appointments to the Oversight Board
violated the Appointments Clause of the United States Constitution, and
asks the Title III Court to dismiss the Puerto Rico Highways and
Transportation Authority's ("HTA") Title III petition based on the
Oversight Board's lack of lawful authority to initiate such Title III
proceeding. Given the Title III Court's recent dismissal of a similar
lawsuit filed by another party in the Commonwealth of Puerto Rico's
Title III case, Assured Guaranty expects to participate in the appellate
phase of the various Appointments Clause lawsuits. Assured Guaranty's
decision to file this lawsuit was necessitated by the manifest
constitutional defects in the Oversight Board's appointment process and
its consistent pattern of exceeding its legal authority and disregarding
the creditor protections and legal requirements built into the Puerto
Rico Oversight, Management and Economic Stability Act (PROMESA).

For over 30 years, Assured Guaranty has helped more than 10,000 local,
state and territorial governments more affordably fund public projects
such as the construction of hospitals, schools, roads and bridges.
Puerto Rico has utilized Assured Guaranty bond insurance to reduce its
cost of borrowing in the municipal bond market in order to finance a
wide range of projects, and the associated savings benefited Puerto Rico
as soon as the bonds were issued. Today, more than $5 billion of those
insured bonds are outstanding, and Assured Guaranty has already paid
more than $820 million to cover Puerto Rico's failure to honor its
commitment to pay the debt service on those bonds. Assured Guaranty has
not acquired its exposure through purchases of discounted bonds, but
rather through its role as a long-term partner of the island. Assured
Guaranty guarantees the full payment of the insured bonds' principal and
interest and is obligated to cover defaults for the life of the bonds.
It has a long-term commitment to the health of the Puerto Rico economy.

Puerto Rico's long-term economic sustainability depends on future
investment and access to capital markets. Investors will not be willing
to make those investments if previous agreements are not honored.
Assured Guaranty has in many instances come to the aid of other
distressed issuers to arrive at good faith consensual resolutions that
help municipalities regain their financial footing and promote the best
long term interests of all parties involved. However, since its
inception, the Oversight Board has failed to engage meaningfully with
Assured Guaranty and other creditors and stakeholders, as it was
mandated to do under PROMESA.

"By enacting PROMESA, Congress intended to encourage consensual
settlements between creditors and Puerto Rico, including its
instrumentalities, in order to restore the capital market access
necessary for Puerto Rico to achieve a sustainable economic recovery.
This mandate has been turned on its head by the Oversight Board," said
Assured Guaranty President and CEO Dominic Frederico. "Although we
originally believed the PROMESA framework, however imperfect, would
minimize political interference, accelerate the necessary negotiations,
and curtail litigation that would impede the island's recovery, the
board members' disregard for the rule of law has had the opposite
effect, leading us to reexamine the manner in which they were appointed."

The Oversight Board's decisions have harmed Puerto Rico's recovery
effort. The Commonwealth and HTA are in dire need of a speedy resolution
of their fiscal distress, and the Oversight Board, with its failure to
advance consensual settlements with Commonwealth and HTA creditors, has
been co-opted by a group of high-priced attorneys, consultants and
lobbyists who profit from a drawn-out process and continued litigation –
all while the people of Puerto Rico suffer.

As stated in the complaint, none of the Oversight Board members were
appointed in conformity with the Appointments Clause. Rather, under
PROMESA's appointments procedures, the Oversight Board members were
effectively chosen by individual members of Congress and were never
confirmed by the U.S. Senate. There is no historical precedent for this
unique structure, which dismantles significant constitutional safeguards
designed to prevent congressional encroachment upon the Executive Branch
and to ensure public accountability for the appointment process.
Further, in another Puerto Rico-related lawsuit, we note the U.S. Court
of Federal Claims recently found that the Oversight Board is a Federal
Government entity, a conclusion squarely at odds with a key part of the
Title III Court's decision to dismiss the Appointments Clause lawsuit in
the Commonwealth's Title III case.

Though the Oversight Board is bound by PROMESA (its founding statute),
it has failed:

(i) to comply with both the letter and spirit of PROMESA ;

(ii) to respect the rule of law and sanctity of property rights; and

(iii) to accept clear congressional intent that constitutional and
statutory debt payment priorities and liens established under Puerto
Rico law must be respected under PROMESA.

By asserting a level of discretion and legal authority that PROMESA does
not grant them, the unconstitutionally appointed Oversight Board members
have claimed an insulation from accountability and judicial review that
threatens not only Puerto Rico's economic recovery but also the
rules-based order on which our financial and legal systems depend.

Because the Oversight Board was unconstitutionally appointed, the
actions it has taken since its inception are therefore void, including
its approval of fiscal plans for the Commonwealth and HTA that violate
PROMESA and allocate $1.5 billion for litigation and related expenses
without providing for debt service.

Assured Guaranty believes Puerto Rico's recovery can succeed only with
fiscal plans that comply with PROMESA, pave the way to future capital
market access by assuring transparency and accountability, and most
importantly, lay the groundwork for a sustainable economic future for
the people of Puerto Rico.

Assured Guaranty remains committed to work constructively with the
Puerto Rico government, the U.S. Congress and the Administration to
restore stability and prosperity in Puerto Rico.

About Assured Guaranty

Assured Guaranty helps provide funding for public projects such as the
construction of hospitals, schools, roads and bridges in Puerto Rico and
in cities and communities across America with the goal of helping
municipal governments gain access to funding for essential public
projects at affordable interest rates.

Assured Guaranty Ltd. is a publicly traded (NYSE:AGO) Bermuda-based
holding company. Its operating subsidiaries provide credit enhancement
products to the U.S. and international public finance, infrastructure
and structured finance markets. More information on Assured Guaranty
Ltd. and its subsidiaries can be found at

Forward-Looking Statements

The information set out above contains forward-looking statements that
reflect Assured Guaranty's current views with respect to future events
and are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements involve risks
and uncertainties that may cause actual results to differ materially
from those set forth in these statements. These risks and uncertainties
include, but are not limited to, those resulting from Assured Guaranty's
inability to execute its strategies, including its loss mitigation and
risk remediation strategies, and negative developments that may impact
Assured Guaranty's liquidity and capital, and other risks and
uncertainties that have not been identified at this time, management's
response to these factors, and other risk factors identified in Assured
Guaranty's filings with the Securities and Exchange Commission. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which are made as of July 23, 2018. Assured Guaranty
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.

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