December 19, 2007

Subprime bankparade VIII or insurance?

Posted in bank, credit risk, liquidity risk, risk tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , at 9:37 pm by peter@riskfriends.net

This week the ratings agencies did put some bonds insurers in the spotlight. A few weeks ago I reported some insurance companies experiencing difficulties as a direct result from adjusted ratings. The value at stake was very high and to prevent serious problems two European banks decided to provide backing and solved this way the emerging liquidity concerns. Yesterday Bloomberg reported here more adjusted ratings for bond insurers. Big numbers once more. $ 2.4 trillion at risk when these companies are not able to manage capitalization at Aaa level. It is clear the financial world will make sure these problems will get solved. It will be interesting to see who will lend a helping hand. Some of these companies have been equally hit as their banking counterparts in terms of market capitalization. Given the importance of these companies for the financial world it is likely these companies will recover. This time not a new list with banks, but a list with the most important bond insurers.

AMBAC Assurance Corporation
CIFG Assurance North America, Inc.
FGIC Financial Guaranty Insurance Company
FSA Financial Security Assurance Inc.
MBIA Insurance Corporation
XL Capital Assurance
Assured Guaranty Corp. (AGC)
Radian Asset Assurance
ACA Financial Guaranty Corporation

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