Reinsurance is another alternative to having Bond Insurance Policies and their Coverages currently at risk. The current risk is not due to pending claims but instead to falling credit ratings of some Bond Insurance Companies. The Bond Insurance Companies that issued the existing Policies also made other investments that have gone south.
The "gone south" other investments have affected the Bond Insurers' financial ratings for the worse, not municipal or other local government bonds. The local government bonds remain as safe as they ever were, and as profitable to insure.
It should not be difficult to attract Reinsurance now, to provide present Coverage to Bond Insurance Companies for theoretically possible future losses on municipal and other local government bonds (losses that based on past experience, the foundation of Underwriting, may never happen). That would clearly seem to prevent the Bond Insurance Policies and their Coverages from being at risk. That would also be an alternative to a "bailout" whether private or public funds are suggested. See generally Tomoeh Murakami Tse, "Buffett Unveils Proposal to Bail Out Bond Insurers/Investor Would Insure Firms' Healthy Municipal Portfolios" (washingtonpost.com, Wed., February 13, 2008).
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