Moody's Puts Monolines on Downgrade Review

Moody’s Investors Services has placed MBIA Insurance Corp.’s 'Aaa' insurance financial strength ratings on review for possible downgrade.

Moody’s also placed MBIA Insurance’s 'Aa2'-rated surplus note and MBIA holding company’s 'As3'-rated senior debt on review for possible downgrade.

These actions reflect the rating agency’s concern regarding a lack of consistency in MBIA’s credit profile and current ratings, given the insurance firm’s diminished new business prospects and financial flexibility as well as the potential for higher expected and stress losses within its insurance portfolio.

Moody’s said it will most likely downgrade the ratings, since MBIA’s insurance financial strength rating will likely fall within the 'Aa' range.  A downgrade to the single–A rating category is possible, however.

Before today’s rating action, MBIA’s rating outlook was negative.

Meanwhile, Moody’s also placed on review for possible downgrade the 'Aaa' insurance financial strength ratings of Ambac Assurance Corp. and Ambac Assurance UK.

Moody’s also reviewed Ambac Financial Group’s 'As3' rating for possible downgrade .

These ratings actions are a result of Moody’s concern for Ambac’s general credit profile, including constrained new prospects and flexibility, and possible increased expected and stress loss projections among its mortgage-related risk exposures, the rating agency said.

Moody's had previously placed Ambac's rating on negative outlook. Since Ambac’s insurance financial strength rating is most likely to remain in the 'Aa' rating category, the rating agency said said it will probably downgrade the ratings.