`Who Wants To Be A Bond Insurer?', Asks Fitch.Business Editors NEW YORK--(BUSINESS WIRE)--May 3, 2001 In a newly released semiannual report on the bond insurance industry, Fitch discusses fundamental changes that have occurred in the bond insurance industry during the last year which have primarily involved new companies and changes in ownership. The most noteworthy of these were the acquisition of Financial Security Assurance Holdings Ltd. by The Dexia Group, which sparked a dramatic and sustained run-up in the stocks of MBIA MBIA Montana Building Industry Association MBIA Municipal Bond Insurance Association MBIA Michigan Boating Industries Association MBIA Municipal Bond Investors Assurance MBIA Massachusetts Brain Injury Association MBIA Maryland Business Incubation Association Inc. and Ambac Financial Group Ambac Financial Group (NYSE: ABK) is an American Insurer of bonds, including municipal bonds. Ambac Financial Group, Inc. (NYSE: ABK) is a holding company whose subsidiaries provide financial guarantee products and other financial services to clients in both , Inc., despite the overall bear market; the decision by GE Capital Corp. not to sell Financial Guaranty Insurance Corp. (FGIC FGIC See Financial Guaranty Insurance Corporation (FGIC). ) after more than a year in which FGIC's status was classified as `fix, sell, or harvest'; the near downgrade of ACA ACA - Application Control Architecture Financial Guaranty Corp. averted by a capital infusion from existing and new investors; the actual downgrade of Commercial Guaranty Assurance, Ltd. after an aborted attempt to be acquired and recapitalized; the sale of Enhance Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Co. and Asset Guaranty Insurance Co. to Radian Group, Inc.; the formation of two new monoline insurers -- XL Capital Assurance Inc. and Yasuda Kasai Financial Guarantee Insurance Co.; and the announcement by CDC See Control Data, century date change and Back Orifice. CDC - Control Data Corporation IXIS to start up a financial guaranty group of companies later this year. Other significant developments included the sharp growth in business outside the U.S. municipal market by MBIA Insurance Corp. (MBIA), Ambac Assurance Corp., and Financial Security Assurance Inc., and the large credit exposures of MBIA and ACE Guaranty Re Inc. to two financially distressed California utilities -- Pacific Gas & Electric Co. (PG&E), currently in Chapter 11 bankruptcy proceedings, and Southern California Edison Southern California Edison (or SCE Corp), the largest subsidiary of Edison International (NYSE: EIX), is the primary electricity supply company for much of Southern California. It provides 11 million people with electricity. Co. (SoCal Edison). Bond insurance premium rates increased markedly in 1999 after 15 years of erosion, and held up through 2000 given the expanded opportunities of bond insurers to deploy capital outside the municipal market. The highly visible problems of PG&E and SoCal Edison may provide further upside pressure on pricing because of the heightened perception of credit risk and the value of bond insurance to protect against it. However, it remains to be seen if the new companies entering the industry will lead to renewed premium rate competition. For a copy of `Who Wants To Be A Bond Insurer?' visit Fitch's Web site at `www.fitchratings.com' or contact Market Services at 800/853-4824. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion