ACE spin-off, Assured Guaranty Ltd., on Friday priced its shares at the lower end of the market, at $18, raising $882 million.

ACE had originally said that the pricing would range from $18 to $20, and was yesterday trading up to $18.40 on the New York Stock Exchange where it trades under the ticker AGO.

Dominic Frederico, Assured's new chief executive officer and a former ACE top executive, rang the bell at the opening of the NYSE to celebrate the IPO on Friday.

The new company, which will be Bermuda-based, had the IPO of 49,000,000 and all the shares were sold by subsidiaries of ACE Ltd.

ACE Ltd., through its subsidiaries, is retaining a beneficial interest of between 25 percent and 35 percent depending upon the exercise of the underwriters' 7,350,000 share over-allotment option.

Mr. Frederico said: "Being a publicly-traded company marks the beginning of a new chapter in our 16-year history."

Banc of America Securities LLC and Goldman, Sachs & Co. are the joint-book running managers for the offering. Banc of America Securities LLC, Goldman, Sachs & Co. and Citigroup Global Markets Inc. are joint lead underwriters for the offering.

The co-managers for the offering are Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, UBS Securities LLC, Wachovia Capital Markets, LLC, William Blair & Company, L.L.C. and Keefe, Bruyette & Woods, Inc.

The company, which was known as ACE Guaranty then AGC Holdings, insures against the default of municipal bonds and other financial instruments.

Bermuda-based Assured Guaranty is expected to register as one of the largest companies to float on the New York Stock Exchange this year in terms of dollar proceeds.

The IPO would come in third behind the $1.8 billion IPO from Semiconductor Manufacturing International on March 11, and the $1.76 billion raised by Assurant (the insurance spin-off of Fortis, in its debut on February 4).

Ace announced in December it was to going to spin off the company to improve its balance sheet and free up funds to expand its core business as a property and casualty insurer and said the launch would take place in the first half of 2004.

Moody's said it would look at improving Assured Guaranty's rating after the floatation and said that it had placed two of Assured Guaranty's subsidiaries, Assured Guaranty Corp. (previously ACE Guaranty Corp.) and Assured Guaranty Re (previously ACE Capital Re), under review for a possible upgrade.

"Moody's noted that the review for possible upgrade reflects the strong capital base and conservative financial profile and underwriting targets of the Assured Guaranty group as well as the existing earnings stream coming from its established financial guaranty businesses," it said in a release.

Assured Guaranty is currently the largest monoline financial guaranty reinsurer but has been increasingly pursuing primary financial guaranty activities over the last five years.

Under the ongoing strategic shift, new reinsurance activities will be increasingly underwritten by Assured Guaranty Re, while Assured Guarantee Corp. focuses essentially on primary business.

Assured Guarantee is getting rid of most of its non-financial guaranty exposures and businesses, other than mortgage default reinsurance, which it considers to be financial guaranty-like, to subsidiaries of ACE Ltd.

Assured Guaranty itself is not to receive any proceeds from the sale of 65 percent of the company to the public.

After the offering, there will be 75 million shares outstanding in the company, giving it an initial market capitalisation of about $1.5 billion. Last year, AGC posted gross premiums of $349.2 million and total revenue of $512.3 million, the offering document shows.

That compared with $417.2 million in gross premiums and revenues of $302 million in 2002.