BondInsurance.Info Is On Auction At Sedo

BondInsurance.Info is on Auction At Sedo.

Auction starts on:       Mar/27/08 08:00 PM CET

Estimated end time:      Apr/03/08 08:00 PM CET


For more information on this, or if you want to buy this "BondInsurance.Info" you can place your bids by following the below mentioned URL :-

http://www.sedo.co.uk/auction/auction_detail.php?language=e&auction_id=27868&tracked=&partnerid=

Big bond investors say Fed plan works -- for now

The Federal Reserve's move to unfreeze panicky U.S. credit markets failed to assuage bond investors, with some of the biggest fixed-income investors braced for further credit deterioration in the market.

On Tuesday, the Fed said it will lend up to $200 billion of Treasury securities to banks for 28-day periods in return for debt including a range of mortgage-backed securities -- the root of the current credit crisis -- as collateral.

That news did send the yield premium on Fannie Mae MBS down 15 basis points to 2.151 percentage points over comparable Treasuries, but not before it hit its widest level in more than 20 years on Thursday, at 2.37 percentage points.

Mounting foreclosures and defaults along with further rating downgrades remain the clear and present danger.

MBIA Asks Fitch to Withdraw Insurer Ratings

MBIA Inc,the world's largest bond insurer, on Friday said it had asked Fitch Ratings to withdraw its insurer financial strength ratings for six units, including MBIA Insurance Corp., its main bond insurance arm.

Fitch is the only one of the three major U.S. credit rating agencies that was still reviewing MBIA's critical "AAA" ratings for a possible downgrade. It has also been faster than larger rivals Moody's Investors Service and Standard & Poor's to downgrade other bond insurers' ratings.

MBIA said in a statement that Fitch's rating process "differs in many significant respects from those of the other rating agencies, which affects how investors assess value."

Ambac Not Likely To Split Bond Insurance Business

Bond insurer Ambac Financial Group Inc is unlikely to announce a capital raising deal on Tuesday.

The second largest U.S. bond insurer is looking to raise capital to maintain top credit ratings at its main unit. Talks on finding a solution are continuing, but will not likely be concluded on Tuesday, the person briefed on the matter said.

Both Moody's Investors Service and Standard & Poor's are considering stripping Ambac Assurance Corp, Ambac's main insurance unit, of its top ratings.

The Financial Times reported on Tuesday that Ambac was not planning to split up its bond insurance businesses. Many bond insurers are thinking about dividing up the relatively risky structured finance guarantee business from the safe municipal bond insurance business.

CNBC reported on Tuesday that Ambac was progressing toward a deal, but had not yet reached an agreement.

MBIA expects loss payments of $700m-$800M for 2008

Bond insurer MBIA Inc. said it expects to make loss payments, before reinsurance, of $700 million to $800 million for 2008, mainly relating to insured credits in the residential mortgage-backed securities and home equity sectors.

In its annual report filed with the Securities and Exchange Commission, the Armonk, N.Y., financial services firm said it expects that its cash flow from operations in 2008 along with its current capital resources will be sufficient to meet its liquidity and operating cash requirements "in 2008 and the foreseeable future."

The company said it also expects surplus notes will require interest payments totaling $70 million in 2008.

MBIA said it expects additional material mark-to-market losses for January, due to widening credit-market spreads and rating action by two rating firms in late January and early February. The company said the mark-to-market position as of Jan. 31 isn't available at this time.

MBIA Writing `Very Little' New Business Amid Scrutiny

MBIA Inc. is writing ``very little'' new bond insurance business as borrowers balk at buying a guarantee from a money-losing company without stable AAA credit ratings.

MBIA, whose ratings were under scrutiny by Moody's Investors Service and Standard & Poor's for more than three months, said losses on mortgage-backed securities will probably increase this year and expand beyond subprime mortgages.

The company, based in Armonk, New York, is seeking to salvage its business insuring municipal bond debt after expanding into guarantees on collateralized debt obligations that tumbled in value as the subprime-mortgage market collapsed. Rival Assured Guaranty Ltd. today agreed to a $1 billion investment from investor Wilbur Ross to help it take more business from MBIA and Ambac Financial Group Inc.

``The demand for our product is the lowest it has been, and we are writing very little new business,'' the company said in a filing today with the U.S. Securities and Exchange Commission.

Sovereign funds, Cerberus eye bond insurer stakes

Sovereign wealth funds and private equity firm Cerberus are looking at investing in bond insurers as the insurance companies try to raise money and hang onto their top ratings.

New York's state insurance superintendent said on Wednesday he has talked to sovereign wealth funds about potential investments in U.S. bond insurers. He declined to say if those conversations have ended or are continuing.

Separately, a person familiar with the matter said Cerberus Capital Management CBS.UL is in talks to invest in Ambac Financial Group Inc, the second-largest bond insurer.

Ambac slashes dividend, suspends structured finance

Bond insurer Ambac Financial Group Inc said on Friday it is cutting its dividend to a penny a share, the second dividend cut this year, and does not plan to write new structured finance insurance for six months.

Suspending the writing of structured finance insurance should free up about $600 million of capital, Ambac said.

The insurer also said it will no longer enter guarantee credits using default swaps.

China's interbank bond insurance scores big gains in Jan

China's interbank bond insurance surged 89.75% over the same period of 2007 to reach RMB 127.6 billion (US$17.84 billion) in January, the People's Bank of China (PBOC) said in a report on Tuesday. The big increase was significantly contributed by the financial bonds issued by policy banks, which reached RMB 96.9 billion.

Berkshire Hathaway May Post Profit Drop as Insurance Rates Fall

Billionaire Warren Buffett's Berkshire Hathaway Inc. may report lower fourth-quarter profit later today because of falling insurance rates.

Berkshire has been scaling back coverage of coastal property as prices drop from their highs following Hurricane Katrina in 2005. Earnings probably declined 10 percent to $1,667 a share, excluding one-time gains such as the sale of shares of PetroChina Co., said Charles Hamilton, an analyst at FTN Midwest Securities Corp. in Nashville, Tennessee. Berkshire typically gets about half its profit from insurance.

``We're going into a much more volatile period for insurance earnings,'' Hamilton said in an interview. The fourth quarter of 2006 ``was extraordinarily good with low catastrophe losses. We're getting back more to normal historical levels.'' Hamilton rates the shares ``neutral.''

Berkshire has been investing in countries including China, the U.K. and Israel to spur profit growth at the Omaha, Nebraska-based company. Now, Buffett, 77, is expanding into bond insurance.

Buffett started a new bond insurer in December to compete with companies including MBIA Inc., charging more than rivals to guarantee payment on municipal debt while avoiding the mortgage- related securities that jeopardized their credit ratings.

As defaults on the securities climbed, Buffett offered to assume $800 billion of municipal bond obligations from MBIA, Ambac Financial Group Inc. and FGIC Corp. in exchange for more than $9 billion in reinsurance premiums.

``In the same way Buffett took advantage of the catastrophe market two years ago, there's a dislocation right now in the municipal bond marketplace,'' Joshua Shanker, an analyst at Citigroup Inc., said in an interview. ``He's happy to participate.'' Shanker rates Berkshire ``hold.''

Stock Gains

Berkshire rose 32 percent in New York trading during the past 12 months and gained about 4,700 percent in 20 years through Dec. 31, about six times more than the Standard & Poor's 500 Index including dividends.

Buffett is moving into bond insurance and expanding overseas after third-quarter earnings from insurance underwriting declined 47 percent and the U.S. housing slump reduced profit at its construction-related businesses.

Berkshire agreed in December to buy 60 percent of Marmon Holdings Inc. for $4.5 billion from the Pritzker family. Companies owned by Chicago-based Marmon have operations in North America, the U.K., Europe and Asia, making products ranging from railroad tank cars to wire used in appliances and telecommunications. The takeover will provide a ``steady stream of income,'' Shanker said.

Candy, Jets

Buffett built Berkshire over the past four decades through dozens of acquisitions. Along with insurance and reinsurance operations and a stock portfolio valued at $78 billion as of Sept. 30, Berkshire owns businesses ranging from candy making and jewelry to utilities and corporate jet leasing.

In the fourth quarter, investment losses, fallout from the collapse of the subprime mortgage market, claims from California wildfires, and falling property and casualty rates caused earnings declines or losses at 21 of the 24 members of the KBW Insurance Index.

Business insurance rates fell 12 percent in the fourth quarter, according to data compiled by the Washington-based Council of Insurance Agents and Brokers. Prices for reinsurance, which is coverage for insurance companies, dropped as much as 15 percent in the January renewal season, according to Willis Group Holdings Ltd., the world's fourth-largest reinsurance broker.

Housing Slump

At the same time, the worst housing slump in a quarter century hurt Berkshire's building-related businesses, including Shaw Industries, the world's largest carpet maker.

Along with fourth-quarter results, Buffett will publish his annual letter to shareholders. He wrote in his last letter that Berkshire ``sharply reduced'' its appetite for covering storm damage as prices fell.

``In 2007, our results from the bread-and-butter lines of insurance will deteriorate, though I think they will remain satisfactory,'' he wrote.

Buffett also revealed a year ago that he plans to split the roles of chief executive officer and chief investment officer among different successors. The CEO spot will go to an unnamed Berkshire manager who has already been selected, Buffett said.

Ross to Inject Up to $1 Billion Into Assured Guaranty

Wilbur L. Ross will acquire up to a $1 billion stake in bond insurer Assured Guaranty in a private placement, the company said Friday morning. He will also join Assured's board of directors.

Mr. Ross, who heads W. L. Ross & Company, has hinted for some time that he was looking to invest in one of the bond insurance companies, which have suffered of late from the subprime mortgage crisis. Mr. Ross said that he chose Assured, one of the smaller players in the field, because it was in better shape than the larger ones like MBIA and Ambac Financial.

"We chose Assured Guaranty because it's ranked as a strong, stable company," he told CNBC, adding that investing in other bond insurers would be akin to "damage control. Mr. Ross said he is interested in expanding Assured's reinsurance business.

Mr. Ross will buy $250 million in common shares and could buy up to $750 million in additional shares. In the initial part of the investment, Mr. Ross will pay a minimum of $21.76 for newly issued shares, but could pay more depending on how much higher Assured's stock price rises Friday and Monday. Assured Guaranty's stock closed at $22.78 on Thursday, down about 3.7 percent. Its stock price rose more than 14 percent in Friday morning trading to $26.

Assured has one year to exercise the $750 million option from Mr. Ross, and the price per share would be based on the 15-day average stock price prior to the firm announcing it would use the commitment.

At current prices, Mr. Ross's $1 bilion would give him nearly 46 million shares of Assured, or more than one-third of its shares outstanding after the investment.

Bond insurers have faced peril over their insurance of structured financial instruments that bundled together subprime mortgages. As mortgage defaults rates rose, such companies were exposed to higher and higher potential losses, leaving them undercapitalized should they have to pay out claims.

Some smaller insurers, like the Financial Guaranty Insurance Company, have already lost their all-important triple-A ratings. After announcing plans to separate their traditional municipal bond insurance businesses from their structured finance units — as well as gathering additional capital — MBIA and Ambac preserved their top ratings, though the credit ratings agencies have maintained a negative outlook on them.

Mr. Ross said that he sees more consolidation in the bond insurance industry ahead as weaker players are forced out.

AIG Shares Slip on 4Q Loss

American International Group Inc.'s stock slipped Friday after the insurer reported the credit crisis has eaten into the company's investments.

AIG lost $5.3 billion in the fourth quarter, mainly because of a portfolio of contracts known as credit default swaps.

These contracts, which pledge to cover missed payments on $579 billion of debt, lost more than $11 billion in value during the fourth quarter because of the perception that the insured debt is less likely to be repaid.

The insurer also lost more than $3 billion in its investment portfolio because of "significant, rapid declines" in the value of mortgage debt.

Keefe, Bruyette & Woods analyst Cliff Gallant cut his rating on AIG's stock to "Market Perform" from "Outperform." AIG suffers from "lingering balance sheet questions and now signs of profit deterioration," he said.

Shares of AIG slipped $3.29, or 6.6 percent, to $46.86. The stock had fallen Thursday in anticipation of the company's report, and the shares have dropped 10 percent in the past two days.

AIG in a conference call Friday said it owns $42.2 billion in bonds insured by bond insurers. The bond insurance sector is in upheaval as people wonder whether the companies will be able to pay claims on the debt they cover as more debt is expected to go into default.

Three-quarters of the insured bonds AIG owns are municipal bonds, which are safe even without insurance, the company said. The company also owns $7.4 billion in insured mortgage bonds.

Even assuming no help from bond insurance, AIG said 84 percent of these bonds are rated "A" or higher, and less than 2 percent are "junk" credit quality.