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Bond Insurers Finalize Innovative Agreements to Raise Contingent Capital
Standard & Poors, March 2002
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
Abstract
For many years, bond insurers have sought protection against catastrophic levels of losses through the use of various contractual arrangements with third parties, also known as 'soft capital' arrangements. While considered part of the claims-paying resources of the company, these arrangements are not 'money in the bank' but rather commitments to provide resources in the future that rely on the willingness and ability of third parties to perform their contractual obligations. Recently, bond insurers have finalized two new forms of agreements. These agreements address some weaknesses in the existing arrangements, setting the stage for either greater usage of these new types of arrangements or the possible development of additional new forms of capital support. The Asset-Backed Capital Commitment Securities (ABC)...
Companies mentioned in this report are: Ambac Assurance Corp.,Financial Guaranty Insurance Co.,Assured Guaranty Municipal Corp.,Radian Reinsurance Inc.,MBIA Insurance Corp.,Assured Guaranty Corp,Radian Asset Assurance Inc.,RAM Reinsurance Co Ltd.,ACA Financial Guaranty Corp.,CIFG GUARANTY
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