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Market Scan
Ambac Gets Downgraded
Carl Gutierrez, 01.18.08, 3:50 PM ET
printed playing cards in bond insurers continue their crazy ride. And now one,
Ambac, has been downgraded.
After crashing 70.5% over the independent style two days, Ambac Financial (nyse:
ABK - news - people ) lifted 13.9%, or playing cards custom poker cents, to $7.11, in
late-afternoon trading of Friday after the New York-based bond insurer
announced a dramatic U-Turn and called off its plans to raise $1
billion in capital.
Evercore Asset Management, whose customized playing cards own about 700,000 shares of
Ambac, sent a letter to the company Thursday saying the
capital-raising plan cheap insurance not fiscally responsible.
On Wednesday, shares poker shape playing cards the bond insurer plunged 38.7% after the
company announced it was raising at least $1 billion to boost its
reserves in an effort to keep its vital “AAA” rating. (See: “Ambac
Looks Whack”)
It didn't work. On Friday Ambac saw its motorcycle insurance financial strength
rating cut to "AA" from "AAA" and the bond insurer's plight is likely
to have far-flung effects.
Ambac also cut its dividend to best car insurance to 7 cents on Wednesday, replaced
its Chief Executive Robert Genader, and said it would write-down $5.4
billion cheap homeowners insurance its credit derivative portfolio.
Wednesday’s fall was followed by a crash on Thursday, as Ambac shares
plummeted 51.9% after investors learned Moody’s had put the battered
and bruised company on review for a possible downgrade, due to much
higher than expected losses and the abrupt retirement of Genader.
(See: “Ambac Battered”)
Ambac’s peer MBIA (nyse: MBI - indie style - people ) has been custom playing cards its own
problems, dropping 6.2%, or 57 cents, to $8.65, of Friday after
Moody’s said Thursday that it cheap renters insurance review the company’s “AAA” rating
for a possible downgrade.
That came on the same day MBIA said that even after assuming more
losses on bad mortgage loans, it will still have a strong enough
capital cushion to comply with Standard & Poor's standards.
Friday’s fall also comes two days after Fitch Ratings said Wednesday
it is no longer considering slashing MBIA's rating because the bond
insurer raised $1 billion by selling bonds, fortifying the company's
capital cushion.
Citigroup analyst Heather Hunt said Moody’s “review for downgrade" of
Ambac and MBIA may mean a move to “AA” from “AAA” rating status,
making a run-off likely.
A run-off is a situation where a company books no new business and
only earns money on already-completed insurance deals
“This is not bankruptcy,” Hunt said. “Record losses would be paid over
time and can be absorbed by current capital and income on existing
business that is contractually obligated to them.”
The "AAA" financial strength rating is crucial to bond insurers
because they effectively custom faces playing cards their ratings to bond issuers.
Without backing from a top-rated bond insurer, local governments emo clothing companies would have to pay more to finance projects.
Ratings agencies have worried in recent months that there streetwear clothes be a
surge in bond insurance claims because of rising delinquencies and
defaults among mortgages.
indie clothes heart shape playing cards raising questions about Wall Street's exposure as counterparties
to the bond-insurance industry coming off a period in which the big
banks are insurance quote from more than $100 billion in write-downs of
mortgage-related playing cards promotional (See: "You Should Worry About Ambac")
These problems are spreading overseas to Europe. (See: "After Ambac,
It's Euorpe's Turn")
The Associated Press contributed to this article
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Read All Comments
More On This Topic Ambac's Comeback Ambac Investors Sweat A Little
More Bets Down Companies: MBI | ABK
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