Also on the Bond Front: MBIA Withdraws from Industry Association
The world's largest bond insurer, MBIA Inc, stated on Thursday that it's withdrawing from the Association of Financial Guaranty Insurers over differing views on the proper future direction of the bond insurance industry.
Armonk, NY-based MBIA has been fighting to keep its "triple-A" credit ratings it needs to keep winning new business, as losses have mounted from its coverage of debt tied to sub-prime mortgages.
Joseph "Jay" Brown, who this week replaced the ousted Gary Dunton as MBIA's chief executive, said the industry must split up its business of insuring municipal bonds from the often riskier business of guaranteeing other securities, including those linked to mortgages.
He also said MBIA disagrees with the trade group's positions on whether monoline insurance guarantors should cover credit default swaps and reinsure various U.S. financial guarantee insurance transactions with foreign affiliates without paying U.S. corporate tax rates.
"It has become clear that MBIA and the other members of AFGI no longer share a common vision for the industry," Brown said. MBIA said it has been affiliated with AFGI since the trade group was formed in 1986.
Published on February 22, 2008
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