Even though bond insurer MBIA has its hands full these days, the recently announced interim - but still pending - resolution with bankrupt auto lender Union Acceptance Corp. is one less worry. But how MBIA handles adversity goes a long way in creating asset-backed investors' perception of a surety provider and how it protects its interest and the interests of its shareholders.

"The triple-A ratings are integral to the financial guarantors' ongoing business, as they cannot afford to jeopardize their ratings. The no-loss underwriting standard is an important consideration for the rating agencies," penned former Banc of America ABS researcher Meredith Hill in a 1999 report entitled: Financial Guaranty Insurance,' which was reprinted in this publication.

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