Moody’s Investors Service late Wednesday downgraded to 'Ca' from 'Caa2' the insurance financial strength ratings of CIFG Guaranty, CIFG Europe and CIFG Assurance North America.
The decision, which concludes a review initiated in August, reflects increased loss estimates on some of the company’s CDOs.
Moody’s also said it will withdraw its insurance financial strength rating of CIFG for business reasons.
“Material deterioration in CIFG’s insured portfolio adversely affected the guarantor’s capital adequacy profile and Moody’s believes that CIFG may no longer have sufficient financial resources to pay all insurance claims,” a press release from the rating agency said.
The risk of regulatory intervention is “meaningful,” Moody’s added, given CIFG’s “failure to meet minimum regulatory capital requirements.”
The outlook for the rating is developing, reflecting both positive and negative pressures.
“If CIFG is able to commute some of its more impaired insured exposures under favorable terms, the capital adequacy profile of the company could improve," Moody’s said in its release. "However, further deterioration in its insured portfolio, or a regulatory takeover, could weaken the firm’s capital adequacy metrics.”