The New York Observer’s profile of Bill Ackman, the founder of After Ackman shorted the stock and published “Is MBIA Triple A?” both the. Before the crisis, MBIA wrote credit derivatives on “Triple-A” tranches backed by mortgage loans and dodgy mezzanine CDOs. Bill Ackman. And it’s not just the fact of MBIA’s triple-A rating that drives Mr. Ackman batty; it’s its transcendent importance to the company’s business. As Gary.

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In addition, bond insurers with substantial investment management or swap operations have additional liquidity needs in the iw of a downgrade. Financial insurance or Financial Guarantees are a form of credit enhancement.

Lastly I encourage you to ask yourself the following question while looking at your image in the mirror: MBI Russell Component. The bond insurers include these guarantees in calculating the weighted average ratings of their investment portfolios.

Retrieved from ” https: To state the obvious, because of your critical role in the capital markets, it is essential that the ratings you axkman are the result of comprehensive and accurate analysis.

As usual, I will make myself available at your convenience. This page was last edited on 1 Julyat This limited review of exposures ignores the fact that the same lending practices and flawed incentive schemes that fueled the subprime lending bubble have been very much at work in CMBS and corporate finance.

Ackman’s Letter to Moody’s: A Must Read

Your updated rating assessments should be adjusted to exclude tax benefits in your calculation of capital adequacy 2 Covenant Violations and Loss of Access to Liquidity Facilities As a result of recent losses, both MBIA and Ambac have triggered covenant violations on their liquidity facilities. S Wikipedia, the free encyclopedia. Retrieved November 2, Even in the event the bond insurers generate taxable income in future years, it may be many years before these tax benefits can be realized, if ever, particularly in the event of corporate ownership changes caused by capital raising or stockholder turnover.


A bond insurer is ac,man able to obtain tax benefits if the insurer is a going concern and is able to generate sufficient taxable income in the current or future years to offset the losses from paid insurance claims. We believe a shareholder vote and approved registration statement will likely be required in such a circumstance, delaying the ability to consummate the transaction beyond the March 31st Warburg backstop drop qckman date.

MBIA: Triple-A Not What it Used to Be? – Herb Greenberg – MarketWatch

While some commentators have suggested that this might create a pricing umbrella that will benefit the existing bond insurers, this is demonstrably false. You should receive assurances from MBIA and require it to contribute the full billion dollars to its insurance subsidiaries before you include the funds in calculating insurance company capital. It also provides a fixed-income asset management service with about forty billion dollars under management.

The liquidity risks of these acman and the underlying assets should be carefully examined. The impact of the loss of these facilities is material to the liquidity profile of the holding companies and their insurance subsidiaries and must be considered in your credit assessment. By using this site, you agree to the Terms of Use and Privacy Policy.


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MBIA: Triple-A Not What it Used to Be?

This is best understood by example. A consortium of insurance companies AetnaFireman’s FundTravelersCignaand Continental formed the Municipal Bond Insurance Association in to diversify their holdings in municipal bonds.

PurchaseNew York. Moody’s upgrades the ratings of MBIA group: MBIA is a monoline insurer primarily of municipal bonds and on asset-backed securities and mortgage-backed securities. The MBIA surplus note issuance is perhaps the clearest example of the failure of the rating agencies to accurately assess the creditworthiness of a bond insurer.

As you well know, depression lines of credit can only be drawn to pay claims on municipal obligations and only after a substantial deductible. Bond Insurer Ratings Ladies and Gentlemen: This is prima facie evidence that your ratings of MBIA are overstated.

Each of you, according to your recent public statements, is in various stages yriple updating your ratings of the bond insurers. When MBIA did, in fact, crash as the financial crisis of came to a head, he sold the swaps for a large profit.