Assured Guaranty Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Assured Guaranty (NYSE: AGO  ) shared were down 10% Monday after the company lost its AAA rating.

So what: S&P downgraded Assured Guaranty from AAA to AA on higher potential losses because of mortgage-backed securities. Later in the day, the company announced it would beat analysts' estimates of earnings in the quarter.

Now what: This is a double-edged sword for investors as the higher guidance is great in the short-term but a lower rating hurts the company's prospects going forward. Ambac Financial (NYSE: ABK  ) and MBIA (NYSE: MBI  ) have been hurt by ratings downgrades, and Assured Guaranty was one of the last standing AAA-rated insurers. The market didn't seem to be too excited about the guidance news later in the day, so I think this will be a long-term worry for shareholders going forward.

Interested in more info on Assured Guaranty? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.

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