Municipal Bond Forum
ACA, Radian
Q
What is your opinion of the bond insurer ACA, and do you think it will stay afloat and get ratings again? Also, do you have an opinion on Radian Asset Insurance as well? I am a customer of FMSbonds.
A
James A. Klotz responds:
ACA continues to pay claims. The former “A”-rated bond insurer is under administration by the Maryland Department of Insurance. According to a study done by a consultant to the department, ACA should have sufficient claims paying ability to meet any anticipated claims until its last insured bonds mature. ACA posts its most current financials on its Web site, www.aca.com. ACA continues to monitor its outstanding policies and provide interventional measures when required. ACA has no plans to regain its rating or re-enter the bond insurance market.
Radian continues to be rated “BB-” by Standard & Poor’s. Radian’s downgrades were in response to the sub-prime real estate exposure of its parent company and real estate affiliates. Radian’s public finance book of business is performing in line with expectations and Radian continues to generate income for its parent. It is doubtful that Radian will regain its “AA” rating or resume writing new business.
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