Assured Guaranty (AGO) executives said during an earnings call that there's no justification for a potential downgrade of the bond insurer by Moody's Investors Corp. (MCO).

The company is in the final stages of a major RMBS lawsuit filed against Flagstar Bancorp (FBC). Closing arguments are expected to begin Monday in that case, taking the insurer one step closer to a conclusion in a trial that could have a ripple effect on other RMBS cases.

The Flagstar case is in its final stages this week, with Assured seeking $108 million in a breach of contract complaint tied to $900 million in securities.

Closing arguments in the case are scheduled for today, Assured executives said in an earnings call last week.

"This case has already produced an important ruling by U.S. District Court Judge Rakoff, that a breach of reps and warranties does not have to cause the mortgage to default for us to obtain relief. Other courts have reached similar conclusions," said Frederico.

The company also is suing UBS (UBS) over RMBS insured by the bond insurer. A trial date in that case has been set for May 2013.

Despite all of the uncertainty, Frederico noted that the bond insurer added several staff, including three managing directors, to support new business growth on the U.S. municipal bond insurance side of the business.

While Moody's still has the firm under ratings review, the executive team said it's confident a downgrade is not necessary.

"[E]ven with the Moody's uncertainty and historically low interest rates, we continue to offer meaningful value to the market," said Assured CEO Dominic John Frederico. "This was evident in our strong third-quarter performance in the secondary market where we have increasingly been asked to ensure substantial portions of bonds that were previously issued without insurance."

kpanchuk@housingwire.com