S&P Takes Rating Actions Against Monolines

Standard & Poor’s Ratings Services announced various ratings actions on six financial guaranty insurance companies, including ACA Financial Guaranty Corp., Ambac Assurance Corp., Connie Lee Insurance Co.,FGIC, MBIA and XLCA. S&P said that these rating actions were based on worsening expectations for the performance of insured nonprime RMBS and ABS CDOs. The rating agency said that based on current stress test analysis, the affected companies can potentially experience claims and/or capital consumptive negative rating transitions resulting in their capital resources no longer being enough at their respective rating levels. S&P added that another consideration in the analysis of the possibility of a capital shortfall is the magnitude of the shortfall and the extent to which the insurance firm has raised or is planning to raise new capital, specifically the capital plan’s viability, S&P said.