BAILOUT? - New York Insurance Superintendent watching bond insurers, may intervene

Cdntrader · Feb 22, 2008

Quote from IzzyfoShizzy:

this is the real deal, ambac will be rescued by someone investing 3 billion into it and it will likely split into two. hopefully the announcement on monday will boost up the rest of the market just like it did at the end of todays trading session.

for 3 bil you could buy the company 3 times over

IzzyfoShizzy · Feb 22, 2008

Quote from Cdntrader:

for 3 bil you could buy the company 3 times over

its understandable to be doubtful about the plan but wait and see, come monday morning there will be an announcement. i just hope it will have a positive effect on the rest of the market.

Cdntrader · Feb 22, 2008

Quote from IzzyfoShizzy:

its understandable to be doubtful about the plan but wait and see, come monday morning there will be an announcement. i just hope it will have a positive effect on the rest of the market.

Odds are good there won't be a deal next week.

Daal · Feb 22, 2008

either the banks are in for collective suicide or abk shareholders will take it on the chin

IzzyfoShizzy · Feb 22, 2008

Quote from Cdntrader:

Odds are good there won't be a deal next week.

i guess all we can do is wait and see.

but dont always follow the odds, i stand behind my statement that there will be an announcement next week

Cdntrader · Feb 22, 2008

Quote from IzzyfoShizzy:

i guess all we can do is wait and see.

but dont always follow the odds, i stand behind my statement that there will be an announcement next week

don't trade on hope.

IzzyfoShizzy · Feb 22, 2008

I wouldn't label it as hope.

I just feel extremely confident in stating that there will be a plan announced next week and those who are brave enough to hop on board now will probably be happy they did so.

Cdntrader · Feb 22, 2008

Quote from Cdntrader:

Moody's cuts Channel Re's Aaa rating

By Alistair Barr
Last update: 3:40 p.m. EST Feb. 22, 2008

SAN FRANCISCO (MarketWatch) -- Moody's Investors Service said on Friday that it has cut the Aaa rating of Channel Reinsurance Ltd., a reinsurer that backs some of MBIA Inc.'s exposures. The rating was lowered to Aa3 from Aaa because Channel Re's capital position has been weakened by its exposure to the U.S. residential mortgage market, Moody's said. "Channel Re's weakened credit profile could negatively impact the value proposition of its reinsurance relationship with its sole customer, MBIA,"

FLASHBACK

Jan. 17, 2008
SAN FRANCISCO (MarketWatch) -- MBIA Inc.'s troubles may be exacerbated by a crisis at CHANNEL Reinsurance Ltd., a Bermuda-based reinsurer that took on moRE than $8 billion worth of risks from the bond insurer.
MBIA said recently that it will take a $3.3 billion charge in the fourth quarter to cut the fair market value of some of its mortgage-related exposures.
Because ChannelRE reinsures some of MBIA's risks, it will also take write-downs. Those charges will exceed its shareholder equity, or net worth, under generally accepted accounting principals, according to RenaissanceRE , two big ChannelRE shareholders.
ChannelRE was set up in 2004 to exclusively reinsuRE some of MBIA's risks. At the end of September, it reinsured $8.4 billion of exposures for the bond insurer. MBIA owns 17.4% of the Bermuda firm, while RenaissanceRE owns 32.7%. PartnerRE and Koch Financial aRE the other investors.
RenaissanceRE and PartnerRE said late Wednesday that their stakes in ChannelRE aRE now worthless, wiping out positions that weRE valued at $126.7 million and $74 million at the end of September. See full story.
'The primary insurer is always on the hook if the reinsurer fails. So if ChannelRE is in trouble, MBIA could still be on the hook.'
â Kathleen Shanley, Gimme Credit LLC
Reinsurance is back-up coverage bought by insurers to help them spread the risks they've taken on. But this type of protection only works if the reinsurer is financially strong enough to pay claims when due.
The problems at ChannelRE have sparked concern that MBIA may have to take back some of the risks it off-loaded onto the Bermuda firm and set aside moRE capital. The bond insurer may also have to write-down the value of its 17.4% stake, too.
That would be bad news for MBIA, which is already in danger of losing its crucial AAA rating because of waning capital.

Eliot Hosewater · Feb 22, 2008

Quote from Daal:

either the banks are in for collective suicide or abk shareholders will take it on the chin

There is no way they can resolve this without someone getting shafted.

Daal · Feb 22, 2008

Quote from Daal:

"The total amount of capital credit that we get for reinsurance ranges from $1 billion to nearly $2 billion depending on which rating agency model you are looking at." the cfo of mbia said on the conf cal

theres another flashback. Channel Re is still Aa3 it might take awhile before before they go to junk then that might get through peoples heads that these companies are financial blackholes and this capital demands will keep going up and up, I dont think anybody expects the housing market to rebound soon so why they think these companies can make it if they just throw a little more money at them