Future bleak for US bond insurers
US bond insurers are in dire straits if last week’s ratings downgrades are anything to go by.
CIFG Guaranty, Financial Guaranty Insurance and XL Capital Assurance all had their financial strength ratings cut by Standard & Poor’s and are now on negative watch.
An analyst report by CreditSights says the three companies are at risk of insolvency and could be taken over by regulators if capital levels fall below the required minimum.
Security Capital Assurance will also find it difficult to survive after its courtroom defeat to Merrill Lynch last Tuesday over its bid to cancel seven contracts it wrote for the investment bank worth $US3.1 billion ($3.3 billion).
Earlier this month, the two biggest US bond insurers MBIA and Ambac Financial Group also had their credit ratings cut, which, as a bond insurer’s credit rating represents the value they offer to clients, has also cost them business.
CIFG Guaranty, Financial Guaranty Insurance and XL Capital Assurance all had their financial strength ratings cut by Standard & Poor’s and are now on negative watch.
An analyst report by CreditSights says the three companies are at risk of insolvency and could be taken over by regulators if capital levels fall below the required minimum.
Security Capital Assurance will also find it difficult to survive after its courtroom defeat to Merrill Lynch last Tuesday over its bid to cancel seven contracts it wrote for the investment bank worth $US3.1 billion ($3.3 billion).
Earlier this month, the two biggest US bond insurers MBIA and Ambac Financial Group also had their credit ratings cut, which, as a bond insurer’s credit rating represents the value they offer to clients, has also cost them business.