Municipal Bond Forum
Insurers stepping up
Q
The insight in your article (“Amid Detroit Crisis, a Key Player Emerges“) applauding the virtues of bond insurance brings to light that with the exception of AGM, National and BAM, all other bond insurers are still in a serious financial state. This is largely due to their ill-advised venture into insuring toxic mortgages. Would you care to comment?
A
James A. Klotz responds:
Actually, we did point out the missteps of the bond insurers during the financial crises and, as you say, a good number of them have not retained the financial stature they once enjoyed.
More important, however, is many more insurers than you mentioned, such as ACA, Radian and Ambac, still have ongoing claims-paying ability and are also taking an active role, at their own expense, in protecting the interest of bondholders.
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