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FGIC, AMBAC, MBIA RANK AS TOP BOND INSURERS, FITCH SAYS -- FITCH FINANCIAL WIRE --

 FGIC, AMBAC, MBIA RANK AS TOP BOND INSURERS, FITCH SAYS
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Sept. 4 /PRNewswire/ -- The risk in bond insurers' portfolios varies widely, according to a report being published next week by Fitch called "Bond Insurers' Crystal Ball." Fitch ranks bond insurers using a five-part test. FGIC edges out AMBAC for the gold medal in the overall ranking, AMBAC takes the silver, and MBIA squeezes by Capital Guaranty for the bronze. Fitch rates only FGIC-insured bonds 'AAA'.
 Borrowing from the Olympic Games, Fitch has developed the Bond Insurer Pentathlon -- a methodology for ranking portfolio risk by five recognized measures: capital charge, single risk, credit quality, bond sector, and geographic diversification. The overall score was determined by aggregating the results of each event. The key event is capital charge, which takes into account bond type, credit quality, and first loss protection. Capital Guaranty wins this event, followed by FGIC and AMBAC. In the single risk event, CapMAC and AMBAC place first and second.
 Insured losses over the last five years totaled just 12 percent of premiums earned. CapMAC, Capital Guaranty, and Connie Lee never had a loss, while among the larger insurers, MBIA has the lowest average loss ratios. With policies in force for up to 40 years and more than $15 billion of municipal defaults since 1983, bond insurers would need a crystal ball to avoid losses completely. Furthermore, the industry operates at a relatively high net exposure to capital ratio -- 138:1 -- leaving little room for error.
 In the nonmunicipal arena, underwriting of corporate and asset- backed debt increased to $11 billion gross par written in 1991 from $6 billion in 1988. For the first six months of 1992, it was $5 billion. The guarantors insuring the most non-municipal volume are FSA and FGIC, followed by CapMAC and MBIA. Even AMBAC may enter the non-municipal market.
 Certain asset-backed transactions pose special risks because they lack the time-tested structures and essential purpose of municipal bonds. Newer securitized assets, such as commercial real estate, boat loans, and time-share revenues, lack the historical payment experience associated with assets like residential mortgages.
 -0- 9/4/92
 /CONTACT: John Forde, 212-908-0549, or Mark H.S. Cohen, 212-908-0512, or David Litvack, 212-908-0593, all of Fitch/ CO: ST: IN: INS SU:


PS -- NY046 -- 6994 09/04/92 14:34 EDT
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Publication:PR Newswire
Date:Sep 4, 1992
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