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HenryTo
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 Posted: Thu Nov 15, 2007 10:18 am Post subject: Bond Insurers |
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This continues to bear watching going forward:
http://www.bloomberg.com/apps/news?pid=20601109&sid=aOjl_Hy9ibBI&refer=exclusive
| Quote: | Insurers could boost their padding by reinsuring the securities they guarantee, Fitch analyst Keith Buckley said on a conference call Nov. 8.
Banks may step in to back the companies because it would be cheaper than taking more writedowns, Michael Barry and Seth Levine, analysts at Charlotte, North Carolina-based Bank of America Corp., wrote in a report.
``The securities industry, no small force, has a keen interest in the financial guarantors remaining healthy and rated AAA,'' they wrote. ``Financial guarantors would not have to look far for help making sure the demand was met.'' |
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rffrydr
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rffrydr
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nodoodahs
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| Posted: Fri Feb 13, 2009 6:59 pm Post subject: |
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| Quote: | MarketWeek: The monolines are dead. Long live the monolines!
February 13, 2009 7:10 PM ET
By Tim Zawacki
The demise of the role of the monoline bond insurers in the structured finance market is either a great exaggeration or a virtual inevitability. It just depends on who you ask.
For some investors in asset-backed securities, the actions taken by rating agencies in 2008 to strip several of the insurers — most notably Ambac Financial Group Inc. unit Ambac Assurance Corp. and MBIA Inc. unit MBIA Insurance Corp. — of their coveted AAA financial strength grades essentially signaled the downfall of the monoline business model, if not their role in the market altogether.
A panel discussion at the American Securitization Forum's ASF 2009 in Las Vegas addressed the issue and, not surprisingly, elicited skepticism from investors and optimism from the insurers.
Joel Telpner of Mayer Brown LLP said that he believes the industry "will continue to play an important role going forward." Diana Adams, senior managing director at Ambac Assurance, defended her company's outlook.
"In a risk-averse environment, it's hard to believe there's not additional value in those products we provide," she said, pointing out that monolines have traditionally provided due diligence, monthly surveillance and other valuable services on transactions they wrap, in addition to the key selling point of their hallmark AAA ratings. |
| Quote: |
From the buy-side perspective, Frank Frezioso, partner and managing director at One William Street Capital, a fixed-income hedge fund launched in 2008 to target asset-based investments, believes monolines increased the depth of the investor base for asset-backed securities.
"An ABS market without the monolines may limit the scale of the securitization market and the depth of the investor base," he said. But, Frezioso added ominously, "Some securities are trading at a lower value in the secondary market with a monoline wrap than without." It's a counterintuitive phenomenon he attributes to a control premium being assigned by investors.
"Monoline-wrapped deals are controlled by the monoline," he said. "Control comes at a premium. It's worth something to me."
Both insurers and investors are unsure what the role of the monoline will be in either the short or long term. They agreed that the Feb. 10 announcements by U.S. Treasury Secretary Timothy Geithner offered nothing that would serve to clear up the situation. The Treasury plan also lacked any support, financial or otherwise, to the monoline industry, Telpner noted.
... |
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rffrydr
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rffrydr
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rffrydr
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| Posted: Wed Nov 05, 2008 8:17 am Post subject: |
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These have already recieved generous concessions from the Insurance Commissioner and stand to be profitable in runoff.
What, are they going to sue themselves back into business? The trust as been broken; they're very function questioned. Arthur Anderson is the template here.
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HenryTo
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| Posted: Wed Nov 05, 2008 8:03 am Post subject: |
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Bond insurers back in the spotlight:
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Bond insurers post big losses
Wednesday November 5, 8:13 am ET
NEW YORK (Reuters) - Bond insurers MBIA Inc (NYSE:MBI - News) and Ambac Financial Group (NYSE:ABK - News) reported large third-quarter losses on Wednesday, hurt by further writedowns and limited new business.
The companies have been hit hard by the credit crunch and have lost their AAA ratings after posting billions of dollars of losses from exposure to mortgages and complex debt instruments.
They have been seeking a way to tap into the government's $700 billion bailout plan for the financial sector as the downgrades and shaky global credit markets have limited their chances for writing new business. It is not yet clear if they will have access to government funds.
Ambac, in particular, the smaller of the two companies, has struggled to continue writing insurance as its credit rating has been downgraded.
Ambac posted a third-quarter operating loss of $7.81 per share, much wider than analysts' average loss forecast of 90 cents, according to Reuters Estimates.
The company said it had $2.7 billion of unrealized losses on credit derivatives contracts in the quarter.
It said a further rating downgrade warning in September had led it to postpone plans to capitalize a new company dedicated to insuring municipal bonds. It had hoped this business, an area that was its bread-and-butter before it strayed into covering more exotic debt, would help it revive its fortunes.
MBIA said it increased reserves in the third quarter by $961 million related to certain residential mortgage guarantees, reflecting an increase in delinquencies and a higher level of assumed future losses.
The company also said it had launched legal action against several loan servicers on past transactions that did not meet eligibility criteria for MBIA-insured transactions.
MBIA's third-quarter net loss widened to $806.5 million, or $3.48 a share, from $36.6 million, or 30 cents a share, a year earlier.
Ambac's net loss widened to $2.4 billion, or $8.45 a share, from $360.6 million, or $3.53 a share, a year earlier.
Ambac shares fell 25.5 percent to $2.53 in premarket trading after closing up 10.4 percent at $3.40 on Tuesday.
MBIA shares closed 15 percent higher at $10.46 on Tuesday and were unchanged in premarket trading. |
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rffrydr
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| Posted: Tue Sep 23, 2008 9:04 am Post subject: |
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Short interest still registering at over a third of float despite making the list. Oct 2 deadline?
Defaults spiking into next year according to Dresdner (courtesy Alphaville)
Insolvencies to peak in 2009
We expect corporate insolvencies to rise sharply, with the peak in 2009. UK plc has held up surprisingly well so far, with corporate bad debts lower in H1 2008 than we had expected. But insolvencies show strong historical relationships with both GDP growth and the corporate debt service burden, neither of which looks healthy. Insolvencies set to rise – the only question is by how much
Corporate insolvencies have shown a strong correlation with two macro indicators, namely GDP growth and the corporate debt service burden. Both of those are now looking decidedly worse than they have for a long time, suggesting that we could see around 20,000 insolvencies next year, which would be 60% up on last year’s number although still about 17% lower than the peak in 1991.
PM:
GDP growth correlation suggests a peak of nearly 19,000 insolvencies next year In terms of the relationship with GDP growth, the correlation over 25 years is best with GDP growth lagged by three quarters, giving an r-squared of 62%. Using our economists’ forecasts, we can use the historical correlation to show the likely path for insolvencies. The lowest quarterly year-on-year growth number forecast by our economists is negative 0.1% for Q1 2009 versus the low in Q2 1991 of negative 2.1%. That means that we would not expect to see such severe insolvencies as in the early 1990s, but excluding that period it is likely to be the worst that we have seen since records began (1975). The actual number for next year comes out at 18,900, which would be 50% higher than the 12,500 seen last year but about 20% below the 24,000 in 1992. Interestingly, this exercise also suggests that insolvencies should peak in the second quarter of 2010, following the forecast low point for GDP growth three quarters earlier. This, we think, means that 2009 would likely be the worst year for banks’ credit quality. That fits with the historical precedent (see table below).
PM:
Debt service burden relationship suggests a similar outcome
There is a much greater lag in the relationship between the debt service burden and insolvencies. The correlation is greatest (r-squared 65%) when subjecting the debt service burden to a lag of 18 months. Unlike the GDP growth correlation, this relationship suggests that insolvencies have been
much lower than would have been expected over the past few years. The chart shows not only the actual corporate insolvencies reported, but what this regression would have predicted for the past couple of years. This model again suggests that the annual peak in insolvencies will come in 2009, although the quarterly peak should appear in Q1 next year. The total predicted number for next year is 20,600, which is 64% higher than last year but 14% lower than in 1992. We have rolled forward the debt service burden by assuming 1.5% corporate debt growth per quarter and interest rates falling next year to 4% as per our economists’ forecasts. It is this fall in interest rates that drives the earlier quarterly peak than the GDP growth model.
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rffrydr
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| Posted: Fri Sep 19, 2008 7:56 am Post subject: |
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Despite that short interest MBI down today on (yes) Moody's downgrade. Echoes of the trauma? Can we look at this now as a "technicality"? Can we buy?
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rffrydr
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HenryTo
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HenryTo
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| Posted: Sun Aug 03, 2008 11:35 am Post subject: |
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Eric Dinallo - superintendent of the New York State Insurance Department - essentially saying to Bill Ackmann: "We will prosecute you unless you stop appearing on TV and claim the bond insurers are insolvent":
http://www.ft.com/cms/s/0/1b447e24-5f10-11dd-91c0-000077b07658.html
Folks like Ackmann either never learned from the 1930s experience or prefer publicity and his day under the spotlight as opposed to making money for his clients. The regulators are going to find scrape goats, and they are not going to be the folks running MBIA or Ambac. |
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rffrydr
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rffrydr
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| Posted: Tue Jun 24, 2008 11:17 pm Post subject: |
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I'm sympathetic but Mr. Brown protests too much. I like the monolines once their runoff status is acknowledged. These technicalities make a convenient refuge for the fiddle player; outside his world smolders.
The trust is gone; the very concept of insurance looses its meaning. Where is their business? The Madman spoke truth here.
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