MBIA Inc. (NYSE: MBI) issued the following statement in response to the
decision today by Moody's Investors Service to downgrade MBIA Insurance
Corporation’s insurance financial strength
rating from AAA to A2 with negative outlook.
We are disappointed to learn of Moody’s
decision and baffled by their analysis. We believe the fundamentals of
the Company support a higher rating. Moody’s
states in its release, for instance, that “…the
group remains strongly capitalized, estimated to be consistent with a Aa
level rating, and benefits from substantial embedded earnings in its
existing insurance portfolio.” Yet that fact
would seem to support sustaining a Aa rating while satisfying Aaa
minimum capital requirements. With $16 billion in claims-paying
resources, as the Company has made clear in numerous public statements,
we have more than enough capital to meet obligations to policyholders.
This is an issue of ratings and not solvency.
Given the varying public statements from Moody’s
over the past several weeks, the outcome was difficult to gauge –
although the Company is not unprepared. This ratings action will give
certain holders of guaranteed investment contracts the right to
terminate the contracts or to require that additional collateral be
posted. Again, we have more than sufficient liquid assets to meet any
additional requirements arising from any terminations or collateral
posting requirements.
"Despite the change in our ratings from Moody’s,
our financial condition is very strong,” said
Jay Brown, MBIA Chairman and Chief Executive Officer. “We
remain committed to maintaining capital strength for our policyholders
and financial flexibility consistent with our goals of increasing
shareholder value. We are moving forward with our transformation plan,
which we will pursue in conjunction with the New York State Insurance
Department and in consideration of our stakeholders.”
The following ratings have been downgraded by Moody’s:
-
MBIA Insurance Corporation -- insurance financial strength to A2 from
Aaa, and surplus notes to Baa1 from Aa2;
-
MBIA Insurance Corporation of Illinois -- insurance financial strength
to A2 from Aaa;
-
Capital Markets Assurance Corporation -- insurance financial strength
to A2 from Aaa;
-
MBIA UK Insurance Limited -- insurance financial strength to A2 from
Aaa;
-
MBIA Assurance S.A.
