Friday, April 4, 2008 0 comments ++[ CLICK TO COMMENT ]++

Fitch Cuts MBIA to AA; Articles On SCA Downgrade

Well, not too surprising given the war of words between the two, Fitch cut MBIA's financial strength rating to AA and the holding company rating to A from AA. Fitch says MBIA is short by $3.4 billion to $3.8 billion. Rating outlook is negative and Fitch supposedly is using subprime RMBS loss assumptions of 21% for 2006 vintages and 26% for 2007 vintages.

MBIA, as well as FGIC, have asked Fitch to stop issuing financial strength ratings for thier insurance subsidiaires but Fitch seems likely to continue issuing them. Fitch won't be paid by these insurers for issuing these ratings but I suspect that Fitch is content to absorb losses on their monoline insurer ratings work for the time being.

I haven't read them yet but there are a couple of good articles from Businessweek covering SCA in Death of a Bond Insurer and Dissecting the ACA Downgrade.


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