Municipal Bond Forum
Bond insurer ratings
Q
It seems that the insurers are constantly being downgraded. Can you publish a list of muni-bond insurers with their credit ratings and credit watch standings? Also, I am concerned that a major debtor could fail and bankrupt an associated insurance company. Are some insurers limited in the size of the issues that they are capable of supporting? Is it possible for you to add this information to the aforementioned list, if only with some simple description such as “small, medium or large”?
A
James A. Klotz responds:
If you visit the Official Statement page on our Web site, you will find a link to a list of bond insurer ratings. According to our information, all bond insurers have sufficient capital to meet expected claims on their municipal bond book of business. The lower ratings they now have are based on potential losses related to derivative securities and their ability to write new business.
You can visit a bond insurer’s Web site and review their most recent reports to determine their largest exposures in their municipal bond insured portfolios. I think you will find that no single muni bond insurance policy accounts for a significant portion of any bond insurer’s claims paying ability.
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