MBIA chief: We are not under pressure to split

Speculation over a coming business split for the biggest bond insurers has overlooked the different issues facing the companies, said the chief executive of the largest bond insurer Thursday.

People are confusing it," said Jay Brown, chairman and chief executive of MBIA Inc.in an interview Thursday. Some rivals "have not been able to raise capital, and have more significant capital needs than we have."

"Because of that, various institutional and public finance customers" have pushed for changes, Brown said. "They are working with regulators to determine if that is a way to stabilize" the business.

Brown took the helm just 10 days ago after leaving the company in 2007. His return came as the third-largest bond insurer Financial Guaranty Insurance Corp. made a request to insurance regulators that it be allowed to split its businesses in order to protect its municipal bond insurance business from the more shaky structured finance business that insured securities backed by subprime home mortgages.

Ambac Financial Group the second-largest insurer, has also spoken of the need for a split.

Both bond insurers have been hard hit by losses on guarantees they wrote on securities backed by subprime mortgages. Market concern over bond insurers' ability to pay off on potential claims has slowed business and threatened the top bond insurers' AAA credit ratings.

In recent weeks, Ambac has been in a struggle to raise capital in order to retain its AAA rating. One rating agency, Standard & Poor's reaffirmed Ambac's rating partly on the expectation that it would be able to raise the funds. MBIA's AAA rating was affirmed by both S&P and Moody's Investors Service this week.

n a Thursday research note, CreditSights analyst Rob Haines said that regulators had suggested to him that a restructuring plan for some insurers could be coming in weeks, rather than months or years.

But MBIA is in no hurry Brown said, partly because it raised capital earlier than its rivals, with a $500 million investment by Warburg Pincus, a $1 billion debt offering and a $1.1 billion shareholder rights offering, as well eliminating its dividend.

Although MBIA was able to raise capital, it was at "very expensive rates," Brown said, and he envisions a split as a way of making it simpler to raise capital in the future, if necessary.

"This is about the future, not today," Brown said. "Not a single regulator, no one I know of is asking us to split up. We have all the time in the world."

Shares of MBIA recently traded down 6.7% to $13.86.