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Thursday, January 31, 2008

S&P Cuts FGIC To AA; MBIA, XLCA On Watch Neg

by Calculated Risk on 1/31/2008 04:14:00 PM

From S&P (no link):

Standard & Poor's Ratings Services today lowered its financial strength, financial enhancement, and issuer credit ratings on Financial Guaranty Insurance Co. to 'AA' from 'AAA' and its senior unsecured and issuer credit ratings on FGIC Corp. to 'A' from 'AA.' Standard & Poor's also placed all the above ratings on CreditWatch with developing implications.

At the same time, Standard & Poor's placed various ratings on MBIA Insurance Corp., XL Capital Assurance Inc., XL Financial Assurance Ltd., and their related entities on CreditWatch with negative implications. The ratings on various related contingent capital facilities were also affected.
Update: And from the WSJ a long time ago (this morning): AAA Rating Will Stand, MBIA Says.
Chief Executive Officer Gary Dunton mounted a spirited defense on a conference call, following MBIA's quarterly earnings report, against "fear mongering" and "distortions' that he said have contributed to last year's dramatic stock-price decline. He also said that MBIA's capital plan currently exceeds all stated rating agency requirements.
MBIA hasn't been downgraded so far; this is just a move to CreditWatch with negative implications. BTW, I don't think a CEO should ever comment on his company's stock price, only on the performance of the company:
Despite the significant losses posted by the company, Mr. Dunton said, "there is nothing that we can identify that justifies the 80% drop in our stock price since last year."