By Marc Shapiro
Build America Mutual Assurance Company (BAM), the nation's first mutual municipal bond insurer endorsed by the National League of Cities, recently reported that Standard & Poor's Ratings Services (S&P) has affirmed BAM's AA/Stable financial strength rating -- the industry's highest S&P rating.
In its Ratings Services report, S&P highlighted BAM's mutual form of insurance, sole focus on public purpose municipal bonds, capital adequacy strengths and competitive position profile, as demonstrated by its market acceptance and risk-adjusted pricing.
The S&P Ratings Report noted that "our view of BAM's competitive position profile is based on the company's ability to attain market acceptance by municipal market participants and garner market share in the formidable municipal-yield environment in the first and second quarters of 2013. Although BAM has limited operating history, its acceptance by issuers and investors was widely demonstrated by the volume of municipal issues and par-insured growth written for first- and second-quarter 2013. The company's attainment of 48 state and jurisdictional statutory licenses to date and its credit enhancement penetration in high-volume municipal-debt state issuers demonstrate its positive reception and insurance demand from key state debt issuers, insurance regulators, and municipal market underwriters."
Robert P. Cochran, Chairman of the Board, BAM said, "We're proud to have the industry's highest S&P rating and believe that S&P's affirmation of our AA/Stable rating attests to the strength of our mutual form of insurance and sole focus on public purpose municipal bonds for the benefit of our municipal owners."
"NLC is pleased to endorse BAM because BAM is uniquely situated to provide cities and towns not only access to municipal bond insurance that will facilitate their financing and reduce their costs, but also the unique benefits of membership in a mutual insurance company," said NLC Executive Director Clarence E. Anthony. " The S&P rating further affirms the value that BAM brings to the municipal bond issuers and bond holders," he added.
As of August 9, 2013, BAM has insured a total par amount of approximately $2.8 billion of municipal bonds, representing more than 350 insured transactions. BAM is licensed in 47 states and the District of Columbia and expects to be licensed nationwide shortly.
For more information about Building America Mutual, including the S&P Rating Report, visit the NLC website or the BAM website.