U.S. second-largest bond insurer to be divided into two

In response to the launch of the bond insurer "relegation", the second-largest U.S. bond insurer Ambac companies are separate issues to discuss with the departments concerned to ensure that its municipal bond insurance sector will not be deprived of the highest AAA credit rating.

As the crisis in the loan-to-experienced great loss, many U.S. bond insurers are worsening the situation. Many large insurance companies have been the bond rating agency lowered its ratings, including the United States the third largest bond insurer FGIC Corporation.

According to statistics, MBIA and Ambac two bonds secured bond insurance company assets reached 1.2 trillion U.S. dollars of bonds. Once the two companies lost AAA rating, the United States thousands of schools, hospitals and local government bonds issued ratings may also be affected, which will not only bring huge losses on investments, it may lead to a new round of serious credit crunch.

New York Gov. Spitzer and New York state insurance regulators, such as heavyweight Dina Luo people who last week that it is necessary to keep MBIA and Ambac, the highest rating, there are two paths to follow: First, as soon as possible for capital injection from the outside, First, the existing business into two, retaining only a better quality of the municipal bond business.

Ambac will be split means that the quality of two completely different companies, is a high-quality municipal bond underwriting the AAA-level enterprises, another is a "mess", mainly involving various kinds of serious shrinking of the market value of high-risk CDO assets.

According to reports, FGIC last Friday informed the New York state insurance regulators who Dina Luo, said it intends to be split. However, according to informed sources, the company's decision has been interested in part to the injection of the consortium's opposition, the two sides will further discuss this.

Allegedly, Ambac split the plan could come as early as this week announced. However, sources also pointed out that compared to FGIC, Ambac the split would be more complicated because no prior similar to a bond insurer into two precedent.