Elmrock Inc. yesterday announced an agreement in principle to buy Capital Markets Assurance Corp. in conjunction with a group of investors led by members of Cap-MAC's management.

The deal, which still must be approved by the New York State Insurance Department, prompted Standard & Poor's Corp. yesterday to affirm the insurance company's AAA rating.

Standard & Poor's said the rating affirmation reflects the fact that the closing of the transaction is contingent on maintaining the triple-A rating.

The existing triple-A is based on "extremely strong, well above-average capital position," the firm's "capable management team, and its solid underwriting capabilities," the rating agency said.

Elmrock is a New York-based private investment firm whose principals also own Stillrock Management Inc., a registered investment adviser.

The company owns a number of private companies engaged in structured finance transactions.

Elmrock and Stillrock manage investment portfolios totaling $1.3 billion, including listed securities, private placements, and closely held companies, according to Elmrock.

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