MBIA
From Wikipedia, the free encyclopedia
MBIA, Inc. (NYSE: MBI) is a financial services company, a member of the S&P 500 index. It was founded in 1973 and headquartered in Armonk, New York and has approximately 400 employees. MBIA is the largest bond insurer.[1]
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[edit] Functions of the company
MBIA is a monoline insurer primarily of municipal bonds and on asset-backed securities and mortgage-backed securities. Financial insurance or Financial Guarantees are a form of credit enhancement. Credit enhancementunderwriting is essential on the issuance of bonds and securities, as insurance to the purchasers in case of default on the debt by the issuer. It also provides a fixed-income asset management service with about seventy billion dollars under management.
[edit] Credit rating
MBIA has a rating of AAA from Moody's.
On April 4, 2008 Fitch Ratings cut MBIA's Insurance Corp rating to AA from AAA with a negative outlook [2]. Fitch issued the new, lower rating even though MBIA had asked the ratings company, the month before, to stop assessing its credit worthiness.
On June 4, 2008 Moody's Investors Service announced that it would review MBIA's rating for possible downgrade for the second time in the year. [3]. Four months before this announcement, on February 2008, Moody's had affirmed the AAA rating after MBIA raised $2.6 bn in capital and announced that would stop insuring structured finance securities for six months.
On June 6, 2008, despite having affirmed MBIA's AAA rating on February 2008, Standard and Poor's decided to downgrade MBIA's insurance financial strength rating from AAA to AA. [4].
[edit] History
A consortium of four insurance companies formed the Municipal Bond Insurance Association in 1973 to diversify their holdings in municipal bonds. The company went public in 1987.
[edit] References
Christine Richard. MBIA Loses AAA Insurer Rating From Fitch Over Capital. Bloomberg.com.</ref>
