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Bond Insurers' Municipal Profitability Trends Are Disappointing
Standard & Poors, Sep 2005
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
Bond insurers in the U.S. municipal market saw the continuation of discouraging pricing trends through the first half of 2005. Average premium rates for the six-month period ending June 30, 2005, are down about 21% compared with the first six months of June 30, 2004. The decline is attributable to continued aggressive competition and tight credit spreads. Had it not been for robust new issue municipal volume in the first half of the year, the decline might have been more severe. The sole bright spot in the first-half profitability picture was credit quality stability, with the industry's weighted average capital charge remaining at a very low level and essentially unchanged from recent periods. The new issue municipal market was surprisingly...
Companies mentioned in this report are: Ambac Assurance Corp.,Financial Guaranty Insurance Co.,Assured Guaranty Municipal Corp.,MBIA Insurance Corp.,Assured Guaranty Corp,Syncora Guarantee Inc.,CIFG GUARANTY
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