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 event of a downgrade.

In a runoff scenario, we do not believe that the bond insurers will generate sufficient taxable income to offset the net operating losses generated by paid losses. The San Francisco Chronicle.

While the rating agencies have not updated their credit ratings of Ram Re, the market appears to have already done so. A bond insurer is only 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. Lastly I encourage you to ask yourself the following question while looking at your image in the mirror: Your analysis makes the aggressive assumption that the bond insurers will remain going concerns and will therefore be able to continue to write new premiums and generate income in the future.

MBIA is a monoline insurer primarily of municipal bonds and on asset-backed securities and mortgage-backed securities. As usual, I will make myself available at your convenience. Retrieved November 2, Can this possibly make sense?

Marty Whitman can call him what he wants, but the guy knows his stuff. Most bond insurer holding companies have limited cash, have lost or will lose access to liquidity facilities, and have substantial cash needs for interest payments, operating expenses, and dividends for so long as they continue to be paid.


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

Webarchive template wayback links. You should adjust your estimate of CPR for each insurer to reflect aclman above factors in order to accurately establish the capital available to pay claims. Call to divide not viable”. Views Read Edit View history.

He was charged copying fees mbka copyingpages of statements regarding the financial services company, in his law firm’s compliance with a subpoena. From Wikipedia, the free encyclopedia.

To state the obvious, because of your critical role in the capital markets, it is essential that the ratings you publish are the result of comprehensive tripls accurate analysis. As you well know, we have privately, in meetings and correspondence with you, and publicly in various mbiz that we have made, called into question your ratings of the bond insurance industry, in particular, the ratings for MBIA Insurance Corp.

By using this site, you agree to the Terms of Use and Privacy Policy. The MBIA surplus note issuance is perhaps the clearest example tdiple the failure of the rating agencies to accurately assess the creditworthiness of a bond insurer.

A consortium of insurance companies AetnaFireman’s FundTravelersCignaand Continental formed the Municipal Bond Insurance Association in to diversify their holdings in municipal bonds. Ackman reportedly attempted to warn regulators, rating agencies and investors about the bond insurers’ high risk business models.

Because Berkshire Hathaway already possesses a real Triple A rating, the bonds that are wrapped with its guarantee will trade with a tighter spread when compared to a bond insured by a traditional bond insurer, even one without legacy structured finance exposure.

Various MTM programs also create liquidity risk as assets may have tiple be sold to meet redeeming bondholders. The bond insurers include these guarantees in calculating the weighted average ratings of their investment portfolios. That is, you reduce their credit exposure by those exposures that have been mbiia. The combination of volatility in each of these markets and the increased collateral demands required in holding company downgrade scenarios will put a severe strain on holding company liquidity.


The company went public in Retrieved from ” https: Moody’s upgrades the ratings of MBIA group: PurchaseNew York. We believe that both MBIA and Ambac have substantial collateral posting obligations in the event of a holding company downgrade.

Each of you, according to your recent public statements, is in various stages of updating your ratings of the bond insurers. National Public Finance Guarantee to A3″.

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. It was founded in as the Municipal Bond Insurance Association.

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

Bond Insurer Ratings Ladies and Gentlemen: We believe that the bond insurers and the rating agencies do not adequately consider the facts that: 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 dead date.

Captive reinsurers whose ratings are not regularly updated offer the potential for abuse. This is best understood by example. Archived from the original on February 27, The publicly traded stock of Ram Holdings Ltd.