NEW YORK (Bloomberg) — Billionaire Wilbur Ross has set up a $250 million partnership that will allow his backers to invest directly in Bermuda-based municipal bond insurer Assured Guaranty Ltd., according to a regulatory filing.

The new partnership, WLR AGO Co-Invest LP, may help Ross meet his commitment to invest as much as $1 billion in Hamilton, Bermuda-based Assured Guaranty. The money is coming from institutions such as the life insurance unit of TIAA-CREF that have already committed capital to the $4 billion WLR Recovery Fund IV LP and other Ross funds that invest in distressed companies.

"The participants were sufficiently excited about our commitment to AGO that they wanted to have some direct participation," Ross said in an e-mail yesterday, referring to Assured Guaranty's stock ticker symbol.

Assured Guaranty is using Ross's capital to win market share from MBIA Inc. and Ambac Financial Group Inc., rivals that recorded a combined $6.7 billion of first quarter charges for losses stemming from insurance written on bonds backed by sub-prime mortgages. Assured Guaranty has won about 34 percent of new insured municipal bond business written since the beginning of this year, compared with 2.4 percent for MBIA and 1.1 percent for Ambac, according to Thomson Financial.

WLR Recovery Fund IV purchased 10.7 million Assured shares for $250 million in a February 28 agreement. The New York-based fund also agreed to buy shares worth as much as $750 million in the ensuing year. Ross and his funds hold a 13.4 percent stake, or about 12.2 million shares, federal filings show.

WLR AGO Co-Invest, formed in March, will raise as much as $250 million, according to a private placement notice filed with the US Securities and Exchange Commission on May 7.

The fund has already taken in $72.1 million from six investors, including New York-based Teachers Insurance and Annuity Association, part of TIAA-CREF, which managed about $419 billion as of March 31. Other investors in the fund include SONJ Private Opportunities Fund II LP and the North Carolina state treasurer's department.

The investments are "in addition to their indirect participation via the WLR Recovery Funds," Ross, 70, said in his e-mail.

Christine Pastore, who manages private-equity investments for the New Jersey State Investment Council, which is backing the SONJ fund, didn't immediately return a telephone call seeking comment. Craig Demko, an official in North Carolina treasurer's department, declined to comment.

The New Jersey and North Carolina offices manage public pension funds in their respective states.

On May 6, Ross's recovery funds transferred 768,002 Assured Guaranty shares to WLR AGO Co-Invest, according to a document filed with the SEC the next day.

Assured Guaranty fell 24 cents to $23.69 in New York Stock Exchange trading.