The first quarter of 2024 has seen a significant uptick in the bond insurance sector, with the top two municipal bond insurers experiencing an expansion in their operations. According to data from LSEG, municipal bond insurance witnessed a substantial growth of 24.4% year-over-year, amounting to a total of $7.132 billion in the first quarter of 2024. This marked a significant increase from the $5.735 billion worth of deals recorded in the same period in 2023. Notably, the industry par amount saw a rise, with 318 deals closed in Q1 2024, compared to 260 deals in Q1 2023.
Assured Guaranty emerged as a dominant player in the municipal bond insurance landscape, accounting for a total of $3.782 billion in 152 deals during the first quarter of 2024. This translated to a 53% market share, showcasing the firm’s stronghold in the sector. However, it is worth noting that Assured’s market share slightly declined from 59.5% in Q1 2023, despite witnessing a 10.7% year-over-year increase in new-issue par insured. The firm’s success can be attributed to the growing demand from institutional investors for its insurance on larger transactions. Notably, Assured insured seven transactions with $100 million or more in insured par, totaling approximately $1.4 billion in Q1 2024.
Build America Mutual (BAM) also demonstrated robust growth in the first quarter of 2024, insuring $3.350 billion in 166 deals, capturing a 47% market share. This marked a significant increase from the $2.320 billion in 136 deals recorded in the first quarter of the previous year, showcasing a 44.4% year-over-year surge in par amount. BAM’s success can be attributed to its strategic positioning in the market, with the firm witnessing strong demand from institutional investors for large transactions. Moreover, BAM’s flexibility and engagement with the market allowed it to unlock opportunities for partial insurance on larger deals, catering to specific buyer requirements.
Expansion Strategies: Assured and BAM
The impressive growth of both Assured Guaranty and Build America Mutual has necessitated expansion strategies to meet the rising demands in the market. Assured recently promoted two employees, Marc Livolsi and Evan Boulukos, in addition to hiring Paige Litten, a former Citi employee, to bolster its new-issue and secondary market business. Both Livolsi and Boulukos bring in over 20 years of experience in the muni market, contributing significantly to Assured’s growth. On the other hand, BAM appointed John Miller, a veteran banker and advisor, as a senior advisor to enhance the firm’s bond insurance offerings in the primary market for large infrastructure and public power projects.
As the bond insurance sector continues to witness strong growth and expansion, players like Assured Guaranty and Build America Mutual are gearing up to capitalize on emerging opportunities. With a strategic focus on catering to institutional investors’ demands, offering innovative insurance solutions, and expanding market reach, these firms are poised to maintain their leadership positions in the bond insurance landscape. As the year progresses, it will be interesting to see how these industry players navigate challenges, capitalize on growth prospects, and drive innovation in the ever-evolving bond insurance sector.