MBIA could be exposed to credit loss in several deals it wrapped for Student Finance Corp., should multi-line insurance company Royal Indemnity successfully rescind the policies it wrote on several hundred million dollars worth of loans. In a suit filed by MBIA and deal trustee Wells Fargo against Royal's rescission, the surety claims that 70% of the portfolio will be in default if Royal Indemnity wipes its hands clean. MBIA is guarantying full payment on eight SFC securitizations issued over the last two years, with about $400 million outstanding.

MBIA intends to honor its wrap, according to a prepared statement from Chairman Jay Brown, even if Royal successfully dodges its own obligations. In comments released by Moody's Investors Service, the agency affirmed its rating at triple-A rated

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