Daily Insurance Industry News
 
 
Daily Insurance Industry News
Tuesday 11th of December 2018
November 6, 2008

Losses widen for bonds assurers

by Gill Montia

Story link: Losses widen for bonds assurers

Two US bond assurers have reported substantial third-quarter losses.

MBIA Inc and Ambac Financial Group have been hit by claims relating to the credit crisis and a decline in new business.

Concerns over bond assurers, which guarantee the interest and certain other payments on the securities that they underwrite, arose early last year when it became clear that they would be facing huge claims resulting from the US sub-prime mortgage crisis.

Since then both MBIA and Ambac have had their credit ratings downgraded and this has affected their ability to write new business.

MBIA’s third-quarter net loss increased to $806.5 million, from $36.6 million a year earlier.

In the case of Ambac, its third-quarter net loss widened to $2.4 billion from $360.6 million, in the same quarter of 2007.

Both companies have been involved in negotiations with the US Treasury after a consortium of banks and the New York Insurance Department joined forces to develop a rescue package that could restore confidence in the bond assurance market.

MBIA is also involved in law suits against the originators of securities which it claims have misrepresented the quality of the assets.

 

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