Municipal Bond Forum
The support behind bond insurance
Q
What is the nature of the insurance that insured municipal bonds carry?
A
James A. Klotz responds:
Bond insurance is supported by a combination of hard capital on the books of the bond insurers, as well as other forms of credit support, including re-insurance, lines of credit and other support traditional to the overall insurance industry. Bond insurers are regulated by state insurance regulators, who set the capital requirements necessary for the insurers to do business within their respective states.
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