Fitch Ratingsaffirmed the insurer financial strength ratings for both Ambac and FSA at 'AAA' as well as the long-term debt ratings of both insurers at 'AA' with stable outlook. Despite the slowdown in the market for financial insurance, and increased competition between the monolines, Fitch said that it did not envision reduced business production or pricing over the near- to medium- term, affecting the company's ratings.
Fitch said that FSA maintained a solid market position in the financial guaranty industry, where it ranks as the third-largest guarantor based As of 1Q05 net par outstanding of $332.7 billion. Although its insured portfolio is generally well diversified, there is some concentration to the CDO and RMBS sectors, but that is mitigated by the high percentage of transactions with investment grade attachment points. Ambac continues to deliver strong and stable earnings, despite a slowdown in business, said analysts. Financial performance over the near- to medium-term is expected to be moderately affected by reduced business production and pricing, but Fitch does not envision this affecting the company's ratings.