More AAA bond insurer drama
"The Aaa insurance ratings of MBIA Inc. and Ambac Financial Corp., are again under threat by Moody's Investors Service after the two largest bond insurers reported deepening losses from the mortgage-market slump.
"MBIA Insurance Corp.'s insurance financial strength rating may fall to the Aa range, although a drop to the A category is possible, Moody's said in a statement today. Ambac Assurance Corp.'s ranking would probably be lowered to Aa, Moody's said in a separate statement.
"Moody's analyst Jack Dorer placed the ratings on review last month after losses on home-equity loans and collateralized debt obligations in the first quarter increased concerns that the companies didn't have enough supporting capital to justify a Aaa ranking. The prospect of downgrades earlier this year for Armonk, New York-based MBIA and Ambac roiled world capital markets on concern that their guarantees for more than $1 trillion of debt may be worthless.
"The companies' credit profile may not be worthy of Aaa because of their diminished ``new business prospects and financial flexibility,'' Moody's said. The companies also have the potential for higher losses within their insurance portfolio, Dorer said. "