Various major banks in the bond insurer introduced last night in relief plan is facing new pressure. • Warren Buffett (Warren Buffett) had disclosed that he has made the acquisition of most of these insurers of the highest quality assets.
The net worth hundreds of millions of investors to CNBC said that he had proposed acquisition of three bond insurers - Ambac, MBIA and FGIC - secured 800 billion U.S. dollars of municipal bonds. This three companies are struggling to maintain its AAA credit rating. In the loan-to-appear after the loss, AAA credit ratings of these companies has become a business model for the survival of the party.
Buffett's intervention seems to be a New York insurance regulators Eric • Dina Luo (Eric Dinallo) permission. This pushed up the stock market, but by the bond insurers and their potential impact on the bank losses, it is a challenge.
5 Aug 2008
Buffett extended to the three major bond insurers "olive branch"
"Unit God," said the U.S. investment master Warren »Buffett said that on the 12th,'s Berkshire» Hathaway (Berkshire Hathaway) will be willing to three insurers underwriting of the bonds worth about 8000 100 million U.S. dollars of municipal bonds to provide reinsurance. This news eased the initial investors in the further deterioration in the credit market concerns.
Bond insurers facing huge claims
Buffett in the United States CNBC TV interview, said that Hathaway had three largest U.S. bond insurer Ambac, MBIA and FGIC proposed, is willing to their underwriting of municipal bonds to provide reinsurance, but does not include other complex high-risk Financial instruments.
Bond insurer's role is in bonds issued to lose the solvency of responsibility on their behalf. Since the outbreak of the crisis, loan and mortgage bonds Wei Yuelv continues to rise, bond insurers facing huge claims. The world's largest bond insurer MBIA Inc. announced that its 2007 fourth quarter in its history with the most serious single-quarter loss. Ambac, FGIC failed to keep the bond insurer crucial 3 A credit rating.
The United States and the municipal authorities usually only received the highest rating of the insurance business. With some insurers ratings decline, many municipal bond issuers choose to give up insurance. As a rating of only 3 A large reinsurers, Berkshire in helping to stabilize the highest ratings of municipal bonds, municipal bond insurance was boosted resale value is uniquely advantageous position. This professional reinsurance will also bring new areas of the capital. Over the years, bond mutual insurer has been providing reinsurance, as the bond insurer's overall loss increase, the market also secured by the value of the doubt.
Buffett disclosed that a body had rejected his proposal, he is waiting for the other two institutions answer. He said in an interview: "It seems they did not open the door to accept us." Buffett also said that he was prepared for these bonds the insurer 30 days time to find a better deal.
Real help or limited
The industry pointed out that Buffett's aid scheme seemingly timely help, but in fact, the insurers have little real meaning. Buffett is the re-insurance is limited to the major targets of insurers minimize the risk of default, the best quality assets - municipal bonds, and real hot potato - all kinds of high-risk structured finance tools (such as vouchers, and other unsecured claims ) Were excluded, there is no fundamentally solve the problems faced by insurers. At the same time, high-quality assets will be re-insurance, the remaining asset portfolio risk levels actually increase, insurers downward pressure on the ratings was not the slightest mitigation.
Paris banking transactions in U.S. interest rates Co-Head Nicholas »Beckman said that this is good news, the market breathed a sigh of relief. But I think some of the excessive market reaction, the real problem lies not in municipal bonds, but the structural financial products.
Assured Guaranty Ltd. Chief executive officer of Dominica » said that Buffett's proposal includes only the bond insurer in the municipal bond business, so Chouzou funds to the bond insurer will exceed the benefits . Assured Guaranty is a stability has been received 3 A rating of the bond insurer, to provide reinsurance to other insurers. said that if the bond insurer of municipal bond business will be transferred to the Buffett, will find that they need more funds, because by then their business will be a higher risk of over-reliance on the private debt market.
Bond insurers facing huge claims
Buffett in the United States CNBC TV interview, said that Hathaway had three largest U.S. bond insurer Ambac, MBIA and FGIC proposed, is willing to their underwriting of municipal bonds to provide reinsurance, but does not include other complex high-risk Financial instruments.
Bond insurer's role is in bonds issued to lose the solvency of responsibility on their behalf. Since the outbreak of the crisis, loan and mortgage bonds Wei Yuelv continues to rise, bond insurers facing huge claims. The world's largest bond insurer MBIA Inc. announced that its 2007 fourth quarter in its history with the most serious single-quarter loss. Ambac, FGIC failed to keep the bond insurer crucial 3 A credit rating.
The United States and the municipal authorities usually only received the highest rating of the insurance business. With some insurers ratings decline, many municipal bond issuers choose to give up insurance. As a rating of only 3 A large reinsurers, Berkshire in helping to stabilize the highest ratings of municipal bonds, municipal bond insurance was boosted resale value is uniquely advantageous position. This professional reinsurance will also bring new areas of the capital. Over the years, bond mutual insurer has been providing reinsurance, as the bond insurer's overall loss increase, the market also secured by the value of the doubt.
Buffett disclosed that a body had rejected his proposal, he is waiting for the other two institutions answer. He said in an interview: "It seems they did not open the door to accept us." Buffett also said that he was prepared for these bonds the insurer 30 days time to find a better deal.
Real help or limited
The industry pointed out that Buffett's aid scheme seemingly timely help, but in fact, the insurers have little real meaning. Buffett is the re-insurance is limited to the major targets of insurers minimize the risk of default, the best quality assets - municipal bonds, and real hot potato - all kinds of high-risk structured finance tools (such as vouchers, and other unsecured claims ) Were excluded, there is no fundamentally solve the problems faced by insurers. At the same time, high-quality assets will be re-insurance, the remaining asset portfolio risk levels actually increase, insurers downward pressure on the ratings was not the slightest mitigation.
Paris banking transactions in U.S. interest rates Co-Head Nicholas »Beckman said that this is good news, the market breathed a sigh of relief. But I think some of the excessive market reaction, the real problem lies not in municipal bonds, but the structural financial products.
Assured Guaranty Ltd. Chief executive officer of Dominica » said that Buffett's proposal includes only the bond insurer in the municipal bond business, so Chouzou funds to the bond insurer will exceed the benefits . Assured Guaranty is a stability has been received 3 A rating of the bond insurer, to provide reinsurance to other insurers. said that if the bond insurer of municipal bond business will be transferred to the Buffett, will find that they need more funds, because by then their business will be a higher risk of over-reliance on the private debt market.
U.S. bond insurer rescue plan is expected to introduced before the rating cut
-- February 15, according to foreign media reports, the U.S. bond insurer rescue plan for new progress. According to the New York Insurance Department Director Eric Dinallo said, MBIA Inc. And Ambac Financial Group Inc. A loss of three ratings, is expected to introduced a rescue plan.
The departments concerned are trying to help the two companies was 15 billion U.S. dollars of funds, the rating was lowered to avoid the fate. And Jian Guanceng these companies will be interested in municipal bonds and secondary mortgage bond business division.
Dinallo in an interview said: "You will see the capital injection plan, or a more radical restructuring plan from now on the future, within a few months, these companies will show a different face."
Dinallo find a solution, however the short time, less than two weeks. Rating agency Moody's Investors Service said it planned to be completed by the end of the ratings of MBIA and Ambac recalled. Both the world's largest bond insurer for 1.2 trillion U.S. dollars bonds secured, and if they lose the highest level of investment grade, the United States will Lianlei thousands of schools, hospitals and local governments.
The departments concerned are trying to help the two companies was 15 billion U.S. dollars of funds, the rating was lowered to avoid the fate. And Jian Guanceng these companies will be interested in municipal bonds and secondary mortgage bond business division.
Dinallo in an interview said: "You will see the capital injection plan, or a more radical restructuring plan from now on the future, within a few months, these companies will show a different face."
Dinallo find a solution, however the short time, less than two weeks. Rating agency Moody's Investors Service said it planned to be completed by the end of the ratings of MBIA and Ambac recalled. Both the world's largest bond insurer for 1.2 trillion U.S. dollars bonds secured, and if they lose the highest level of investment grade, the United States will Lianlei thousands of schools, hospitals and local governments.
AIG into the vortex of Ciji Zhai
Although AIG in reply to clarify this message - "have not yet actual loss," but the industry believes that even if the "non-substantive impact" will be with not a small figure.
February 12, the world's largest insurance provider AIG (American International Group) auditors audit issues, and therefore the debt will be secured by the previously announced loss of 1 billion U.S. dollars, revised to 4.88 billion U.S. dollars. This covers only loss in October 2007, two in November.
Goldman Sachs analyst Thomas Keernuoji (ThomasCholnoky) in the February 13th release of the report, the fourth quarter, AIG and the debt-related assets may be diminished 10 billion U.S. dollars.
AIG loss in the amendment, the German Finance Minister PeerSteinbrück the G7 meeting of finance ministers warned on the market, the Ciji Zhai huge losses from AIG may provide bonds guaranteed by the insurance companies assume.
The insurance industry will become HPLS dimension of the crisis collapsed under more than one domino »
Audit crisis
Since March 2005 from the hands of Greenberg succession since the post of president of AIG, Martin Sullivan, 53-year-old commitment to allow AIG to become more transparent, hopes it from the time of the audit from the scandal out.
But overnight, a new audit issues Sullivan in trouble again. February 11, AIG submitted to the U.S. Securities and Exchange Commission 8 - K in the document pointed out that the external auditor of the existence of internal audit found that its "significant deficiencies."
AIG in December 2007 reassure investors, saying in October, November 2 in the CDS in the loss of only around 1 billion U.S. dollars, the loss "is still within the controllable range." But now, this has turned a loss of nearly four times.
Disclosure of information that day, AIG in the New York Stock Exchange shares were down 12 percent, to 44.74 U.S. dollars per share. This is the October 19, 1987 "Black Monday" stock market crash, the biggest one-day drop.
At the same time, Moody's, Standard & Poor's and Fitch rating agencies will be three rating to AIG's prospects, in addition, Standard & Poor's also said, "If the audit market losses for the troubled company, will also further reduce the company's rating."
May lead to loss of the product is to CDO (mortgage bonds) to provide credit protection of the CDS (CreditDefaultSwaps) contracts, also known as credit default swaps. According to the International Commercial Bank the information provided during the contract period, if not secured credit default products, customers will guarantee the payment of fixed costs to obtain the protection of default risk, relatively, once secured a credit default products, The security side, will pay for the losses caused by default.
AIG currently guaranteed by the CDO product of about 62.4 billion U.S. dollars.
The industry believes that this audit was wrong, because the initial valuation of AIG is in accordance with the standard package of CDO prices, and by tracking Ciji Zhai adjustment CDO securities index value. But when the CDO value of a loss when, AIG's loss is not correspond directly with the CDO, but the hands of the CDS with the corresponding contracts, because AIG is not directly held CDO, but secured a direct product of the swap contract .
The crux of the problem is: how for such products valuation » According to analysts, even in normal circumstances, this highly specialized financial derivatives used the frequency is not high, so their pricing more difficult and increase uncertainty in the market, the trading volume of such products will be Narrow, resulting in pricing more difficult.
Analysts believe that the AIG, the current situation may become more painful, because after AIG had to use the same standards of similar products to be evaluated.
Kyrgyzstan-US credit (GimmeCredit) analyst Kase Lin Li-shan in an analytical report said: "AIG's Greenberg will strive to audit and regulatory issues and in this cut from a big step, but recent internal control 'Major loss' has once again undermined investor confidence in it. "
AIG in response to an interview to clarify our message, said the loss has not yet actually happened, but also in the "implementation of these derivatives contracts facing the loss of AIG will not constitute a material impact", but that Li-shan, "if we consider the AIG-scale enterprises, you can imagine, 'the impact of non-real' should also be a significant figure. "
Business model has been questioned
According to the British "Financial Times" reported that Standard & Poor's analyst Catherine Xifuerte that the incident not only threaten to Sullivan's position, but also from people suspected of AIG's business model, in particular, it deviated from the mainstream of the insurance industry expansion .
But Sullivan is the greatest challenge facing from his predecessor is also a major shareholder of AIG - Maurice Greenberg.
The 82-year-old Greenberg is recognized as a Xiongcaitailue the people, he single-handedly AIG will be trained today's giant, until three years ago, an accounting scandal of the FBI was "invited" to the office. Greenberg after the outgoing CEO, with the exception of AIG companies still hold 12 percent of the voting rights stock, are still a number of insurance products in direct competition with AIG.
A few months ago, Greenberg has hinted will be forced to sell the assets of AIG, but have recently said they had no plans to sell all or most of AIG's stock, "unless the need for liquidity in investment activities."
Three years ago, when the 50-year-old Sullivan to take over AIG, the world's biggest insurance group when, AIG are receiving multiple legal investigations, AIG accounts at the time of confusion and even its auditors have refused to audit its accounts. Sullivan took office in the first 18 months, AIG has also been three major typhoons and the strong impact of the earthquake in South Asia. 2007, a loan-to-crisis and the profits of AIG an enormous impact, their 2007 third-quarter loss of 27 percent.
Sullivan has already begun discussions with the Board on whether to begin strategic transformation, if necessary, or even reduce the size of the company.
More and more investors and analysts that AIG should be developed in the sale of Greenberg era of non-insurance business, such as aircraft leasing, capital market transactions and consumer credit sectors.
JP Morgan Chase credit analyst hollow Ma Nyquist said: "Unless the loss of AIG confirmed down, otherwise the market unrest will continue."
Under more than one domino »
AIG made on the amendment before Yukui, German Finance Minister PeerSteinbrück the G7 meeting of finance ministers warned on the market, with the United States Ciji Zhai losses related to the bonds may reach 400 billion U.S. dollars, so there may be a huge loss, such as bonds from AIG Commitment to the security of insurance companies.
U.S. Mortgage Bankers Association said that currently the United States Wei Yuelv all types of housing loans had reached 7.3 percent, in the 1970s is the highest level. December 2007 loan insurance Wei Yueshuai increased by 37 percent from a year earlier. In response, the University of Pennsylvania accounting professor Edward Kezi also pointed out that there may be more behind the startling loss.
February 13, as American families unable to pay housing loans, the largest U.S. mortgage insurer MGIC fourth quarter of single-quarter loss of 1.47 billion U.S. dollars and is expected there may be further losses 3.5 billion U.S. dollars. The company has hired consultants to help finance.
Despite the substantial losses, MGIC chairman and president of still insist that the insurance industry is experiencing "the strongest I have seen the security business base."
Another large insurer CNA Financial companies also 610 million U.S. dollars of losses. The world's largest reinsurers - Swiss Re insurance group in October in two credit default swap contracts on the loss of 1.07 billion U.S. dollars. Three other major bond insurer Ambac, MBIA and FGIC also huge losses.
AMBest in reply to this message that the insurance industry in the debt crisis of the loss should not be great. As of mid-2007, the insurance industry in the debt of its investment accounted for only a total investment of around 3 percent.
And MGIC has announced to give up to provide loans for the bonds of insurance.
February 12, the world's largest insurance provider AIG (American International Group) auditors audit issues, and therefore the debt will be secured by the previously announced loss of 1 billion U.S. dollars, revised to 4.88 billion U.S. dollars. This covers only loss in October 2007, two in November.
Goldman Sachs analyst Thomas Keernuoji (ThomasCholnoky) in the February 13th release of the report, the fourth quarter, AIG and the debt-related assets may be diminished 10 billion U.S. dollars.
AIG loss in the amendment, the German Finance Minister PeerSteinbrück the G7 meeting of finance ministers warned on the market, the Ciji Zhai huge losses from AIG may provide bonds guaranteed by the insurance companies assume.
The insurance industry will become HPLS dimension of the crisis collapsed under more than one domino »
Audit crisis
Since March 2005 from the hands of Greenberg succession since the post of president of AIG, Martin Sullivan, 53-year-old commitment to allow AIG to become more transparent, hopes it from the time of the audit from the scandal out.
But overnight, a new audit issues Sullivan in trouble again. February 11, AIG submitted to the U.S. Securities and Exchange Commission 8 - K in the document pointed out that the external auditor of the existence of internal audit found that its "significant deficiencies."
AIG in December 2007 reassure investors, saying in October, November 2 in the CDS in the loss of only around 1 billion U.S. dollars, the loss "is still within the controllable range." But now, this has turned a loss of nearly four times.
Disclosure of information that day, AIG in the New York Stock Exchange shares were down 12 percent, to 44.74 U.S. dollars per share. This is the October 19, 1987 "Black Monday" stock market crash, the biggest one-day drop.
At the same time, Moody's, Standard & Poor's and Fitch rating agencies will be three rating to AIG's prospects, in addition, Standard & Poor's also said, "If the audit market losses for the troubled company, will also further reduce the company's rating."
May lead to loss of the product is to CDO (mortgage bonds) to provide credit protection of the CDS (CreditDefaultSwaps) contracts, also known as credit default swaps. According to the International Commercial Bank the information provided during the contract period, if not secured credit default products, customers will guarantee the payment of fixed costs to obtain the protection of default risk, relatively, once secured a credit default products, The security side, will pay for the losses caused by default.
AIG currently guaranteed by the CDO product of about 62.4 billion U.S. dollars.
The industry believes that this audit was wrong, because the initial valuation of AIG is in accordance with the standard package of CDO prices, and by tracking Ciji Zhai adjustment CDO securities index value. But when the CDO value of a loss when, AIG's loss is not correspond directly with the CDO, but the hands of the CDS with the corresponding contracts, because AIG is not directly held CDO, but secured a direct product of the swap contract .
The crux of the problem is: how for such products valuation » According to analysts, even in normal circumstances, this highly specialized financial derivatives used the frequency is not high, so their pricing more difficult and increase uncertainty in the market, the trading volume of such products will be Narrow, resulting in pricing more difficult.
Analysts believe that the AIG, the current situation may become more painful, because after AIG had to use the same standards of similar products to be evaluated.
Kyrgyzstan-US credit (GimmeCredit) analyst Kase Lin Li-shan in an analytical report said: "AIG's Greenberg will strive to audit and regulatory issues and in this cut from a big step, but recent internal control 'Major loss' has once again undermined investor confidence in it. "
AIG in response to an interview to clarify our message, said the loss has not yet actually happened, but also in the "implementation of these derivatives contracts facing the loss of AIG will not constitute a material impact", but that Li-shan, "if we consider the AIG-scale enterprises, you can imagine, 'the impact of non-real' should also be a significant figure. "
Business model has been questioned
According to the British "Financial Times" reported that Standard & Poor's analyst Catherine Xifuerte that the incident not only threaten to Sullivan's position, but also from people suspected of AIG's business model, in particular, it deviated from the mainstream of the insurance industry expansion .
But Sullivan is the greatest challenge facing from his predecessor is also a major shareholder of AIG - Maurice Greenberg.
The 82-year-old Greenberg is recognized as a Xiongcaitailue the people, he single-handedly AIG will be trained today's giant, until three years ago, an accounting scandal of the FBI was "invited" to the office. Greenberg after the outgoing CEO, with the exception of AIG companies still hold 12 percent of the voting rights stock, are still a number of insurance products in direct competition with AIG.
A few months ago, Greenberg has hinted will be forced to sell the assets of AIG, but have recently said they had no plans to sell all or most of AIG's stock, "unless the need for liquidity in investment activities."
Three years ago, when the 50-year-old Sullivan to take over AIG, the world's biggest insurance group when, AIG are receiving multiple legal investigations, AIG accounts at the time of confusion and even its auditors have refused to audit its accounts. Sullivan took office in the first 18 months, AIG has also been three major typhoons and the strong impact of the earthquake in South Asia. 2007, a loan-to-crisis and the profits of AIG an enormous impact, their 2007 third-quarter loss of 27 percent.
Sullivan has already begun discussions with the Board on whether to begin strategic transformation, if necessary, or even reduce the size of the company.
More and more investors and analysts that AIG should be developed in the sale of Greenberg era of non-insurance business, such as aircraft leasing, capital market transactions and consumer credit sectors.
JP Morgan Chase credit analyst hollow Ma Nyquist said: "Unless the loss of AIG confirmed down, otherwise the market unrest will continue."
Under more than one domino »
AIG made on the amendment before Yukui, German Finance Minister PeerSteinbrück the G7 meeting of finance ministers warned on the market, with the United States Ciji Zhai losses related to the bonds may reach 400 billion U.S. dollars, so there may be a huge loss, such as bonds from AIG Commitment to the security of insurance companies.
U.S. Mortgage Bankers Association said that currently the United States Wei Yuelv all types of housing loans had reached 7.3 percent, in the 1970s is the highest level. December 2007 loan insurance Wei Yueshuai increased by 37 percent from a year earlier. In response, the University of Pennsylvania accounting professor Edward Kezi also pointed out that there may be more behind the startling loss.
February 13, as American families unable to pay housing loans, the largest U.S. mortgage insurer MGIC fourth quarter of single-quarter loss of 1.47 billion U.S. dollars and is expected there may be further losses 3.5 billion U.S. dollars. The company has hired consultants to help finance.
Despite the substantial losses, MGIC chairman and president of still insist that the insurance industry is experiencing "the strongest I have seen the security business base."
Another large insurer CNA Financial companies also 610 million U.S. dollars of losses. The world's largest reinsurers - Swiss Re insurance group in October in two credit default swap contracts on the loss of 1.07 billion U.S. dollars. Three other major bond insurer Ambac, MBIA and FGIC also huge losses.
AMBest in reply to this message that the insurance industry in the debt crisis of the loss should not be great. As of mid-2007, the insurance industry in the debt of its investment accounted for only a total investment of around 3 percent.
And MGIC has announced to give up to provide loans for the bonds of insurance.
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.
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.
The loan-to-crisis spread to the U.S. mortgage insurer compulsory preservation of government actions
While the United States and the insurance industry to do all the growing losses and face the risk of lower credit ratings, the original mortgage insurance company is not interesting in the same severe attack. With the reduction of funds on hand, these companies may be unable to meet some of underwriting requirements, thereby enabling the real estate market is down more worse.
The mortgage insurer Triad Guaranty Inc. Last week announced a 75 million U.S. dollars loss for the quarter. , In the U.S. market share of first place in MGIC Investment Corp. Also said that fourth-quarter loss of funds a total of 1.47 billion U.S. dollars.
The so-called mortgage insurer, is for those who pay less than 20% of housing property rights of the first payment, provide a "mortgage insurance", the general mortgage payment agencies hope that these loans to purchase such insurance, because once they are unable to meet repayment obligations, Insurance companies will be responsible for reimbursement of part of loans, the loan amount is usually 25% to 35%.
Now, the mortgage insurer in the U.S. housing market boom of the underwriting business is more and more to bear the burden of insurance claims. Analysts point out that the available assets of insurance companies continue to weaken, the insurer may be unable to meet demand, thereby affecting demand for consumer purchases, inhibit the housing market recovery.
Sub-loan-to-crisis environment of the problems in the mortgage insurance companies will force insurers to raise the threshold. To MGIC example, some states will no longer purchase the urban areas of the first payment Fangkuan less than 5% of the total mortgage loan borrowers to offer insurance. This allow more people to buy housing. "Insurance is raising the threshold consumers face another negative factor", housing research firm Zelman & Associates, chief executive of (Ivy Zelman) said.
Fortunately, the Federal Housing Loan Mortgage Corporation (Freddie Mac, Fannie short) last Thursday announced that preparations for the interim adjustment for private mortgage insurance companies to the relevant provisions, the goal is to retain more mortgage insurance premiums for the insurance company claims , As well as the restoration of their asset base.
Freddie said that if the mortgage insurance company's credit rating was lowered to AA grade or below the same level, it would not be in accordance with the regulations of these companies in raising capital adequacy ratio and other requirements. Freddie also provides insurance premium income in mortgage loans to so-called professional captive to transfer part of not more than 25 percent in order to leave more premium income, increased at a faster rate of capital.
Freddie and the Federal National Mortgage Association (Fannie Mae) the establishment of two government-sponsored company acquired many of the claims of mortgage loans, they rely on mortgage loans to help insurance companies to share part of their mortgage loan risks.
These mandatory mortgage insurance companies protection initiatives will help mortgage insurer faster cumulative capital and reduce the impact on consumers underwriting, thus easing the effect of the real estate market.
The mortgage insurer Triad Guaranty Inc. Last week announced a 75 million U.S. dollars loss for the quarter. , In the U.S. market share of first place in MGIC Investment Corp. Also said that fourth-quarter loss of funds a total of 1.47 billion U.S. dollars.
The so-called mortgage insurer, is for those who pay less than 20% of housing property rights of the first payment, provide a "mortgage insurance", the general mortgage payment agencies hope that these loans to purchase such insurance, because once they are unable to meet repayment obligations, Insurance companies will be responsible for reimbursement of part of loans, the loan amount is usually 25% to 35%.
Now, the mortgage insurer in the U.S. housing market boom of the underwriting business is more and more to bear the burden of insurance claims. Analysts point out that the available assets of insurance companies continue to weaken, the insurer may be unable to meet demand, thereby affecting demand for consumer purchases, inhibit the housing market recovery.
Sub-loan-to-crisis environment of the problems in the mortgage insurance companies will force insurers to raise the threshold. To MGIC example, some states will no longer purchase the urban areas of the first payment Fangkuan less than 5% of the total mortgage loan borrowers to offer insurance. This allow more people to buy housing. "Insurance is raising the threshold consumers face another negative factor", housing research firm Zelman & Associates, chief executive of (Ivy Zelman) said.
Fortunately, the Federal Housing Loan Mortgage Corporation (Freddie Mac, Fannie short) last Thursday announced that preparations for the interim adjustment for private mortgage insurance companies to the relevant provisions, the goal is to retain more mortgage insurance premiums for the insurance company claims , As well as the restoration of their asset base.
Freddie said that if the mortgage insurance company's credit rating was lowered to AA grade or below the same level, it would not be in accordance with the regulations of these companies in raising capital adequacy ratio and other requirements. Freddie also provides insurance premium income in mortgage loans to so-called professional captive to transfer part of not more than 25 percent in order to leave more premium income, increased at a faster rate of capital.
Freddie and the Federal National Mortgage Association (Fannie Mae) the establishment of two government-sponsored company acquired many of the claims of mortgage loans, they rely on mortgage loans to help insurance companies to share part of their mortgage loan risks.
These mandatory mortgage insurance companies protection initiatives will help mortgage insurer faster cumulative capital and reduce the impact on consumers underwriting, thus easing the effect of the real estate market.
Thai insurance industry to cover the southern border joint enterprise
Thai insurance industry management committee yesterday, the Secretary-General Zhanta (16) said that in view of CS Pattani province on the 15th night in the hotel bombings, will bring together the insurance industry to discuss how to help the three southern border House enterprises, more than hope that through insurance Companies underwriting approach, to reduce the risk of compensation insurance company. Since Thailand does not JING situation in the region continued, the insurance industry all the local enterprises have increased the premium.
Zhanta said that the evening of 15 in Pattani province CS hotel explosion, causing 13 people were injured two people died, and a large amount of property damage to the tragedy. Currently insurance companies are investigating the implementation of the deceased and the injured have insurance coverage or not, in accordance with the relevant requirements for compensation. CS hotel owners and to the Thai commercial insurance companies and insurance companies in Bangkok to take out insurance, the insurance is the amount of 10 million baht and 50,000 baht a year to pay the premium. However, this policy has already expired early this year. After due to local insecurity situation continues, so will the insurance company premiums increased to 270,000 baht a year, CS premiums too high and that the hotel did not continue to renewal.
Insurance Management Committee Secretary-General Zhanta said that in order to help the three southern border House enterprises tide over their difficulties, the Committee decided to convene the 18th meeting of the insurance companies to discuss how to give local enterprises in the insurance help. May take a number of insurance companies underwriting the common way for local companies to provide insurance services. At the same time can also reduce the exclusive insurance companies underwriting risk.
Zhanta said that the evening of 15 in Pattani province CS hotel explosion, causing 13 people were injured two people died, and a large amount of property damage to the tragedy. Currently insurance companies are investigating the implementation of the deceased and the injured have insurance coverage or not, in accordance with the relevant requirements for compensation. CS hotel owners and to the Thai commercial insurance companies and insurance companies in Bangkok to take out insurance, the insurance is the amount of 10 million baht and 50,000 baht a year to pay the premium. However, this policy has already expired early this year. After due to local insecurity situation continues, so will the insurance company premiums increased to 270,000 baht a year, CS premiums too high and that the hotel did not continue to renewal.
Insurance Management Committee Secretary-General Zhanta said that in order to help the three southern border House enterprises tide over their difficulties, the Committee decided to convene the 18th meeting of the insurance companies to discuss how to give local enterprises in the insurance help. May take a number of insurance companies underwriting the common way for local companies to provide insurance services. At the same time can also reduce the exclusive insurance companies underwriting risk.
Barclays to sell local life insurance business Swiss Re took over the 753 million pounds
Yesterday, Britain's third-largest banks - Barclays Bank (Barclays Plc) to agree to its British life insurance business to 753 million pounds sold to Swiss Re (Swiss Re-insurance Company).
Swiss Re ( "Swiss Re") said yesterday's announcement, the company will buy about 760,000 of life insurance policy and pension insurance contracts, which is equivalent to about 6.8 billion pounds of assets investment. Collins Stewart analyst estimates, Barclays Bank life insurance business in the valuation of about 750 million to 1 billion pounds between.
Analysts said that Barclays Bank is financing this time in order to expand its overseas investment operations, particularly in the consumer banking business in Asia and the United States securities trading and wealth management business. Barclays to sell assets to improve its capital adequacy ratio, the bank's capital adequacy ratio of credit losses resulted in 6.4 billion after the write-down of assets has deteriorated. Barclays last month also approved the sale of shares to raise about 4.5 billion pounds of funds.
Swiss Re Chief Financial Officer Chris Lucas said in a statement, Barclays Bank's life insurance business is attractive despite the high quality business, but not the core business of Barclays. Through the sale of the business, Barclays will be in the net profit of 330 million pounds, the deal will be completed on October 31.
As the world's largest reinsurance companies, Swiss Re is working to break through its life insurance and health insurance business on the bottleneck, in response to the slow rise in premium income, and credit loss due to the expanded write-down of assets. Through its Admin Re sector, the company has acquired more than 50 institutions of policy, its balance sheet into at least 75 billion Swiss francs of assets.
Swiss Re ( "Swiss Re") said yesterday's announcement, the company will buy about 760,000 of life insurance policy and pension insurance contracts, which is equivalent to about 6.8 billion pounds of assets investment. Collins Stewart analyst estimates, Barclays Bank life insurance business in the valuation of about 750 million to 1 billion pounds between.
Analysts said that Barclays Bank is financing this time in order to expand its overseas investment operations, particularly in the consumer banking business in Asia and the United States securities trading and wealth management business. Barclays to sell assets to improve its capital adequacy ratio, the bank's capital adequacy ratio of credit losses resulted in 6.4 billion after the write-down of assets has deteriorated. Barclays last month also approved the sale of shares to raise about 4.5 billion pounds of funds.
Swiss Re Chief Financial Officer Chris Lucas said in a statement, Barclays Bank's life insurance business is attractive despite the high quality business, but not the core business of Barclays. Through the sale of the business, Barclays will be in the net profit of 330 million pounds, the deal will be completed on October 31.
As the world's largest reinsurance companies, Swiss Re is working to break through its life insurance and health insurance business on the bottleneck, in response to the slow rise in premium income, and credit loss due to the expanded write-down of assets. Through its Admin Re sector, the company has acquired more than 50 institutions of policy, its balance sheet into at least 75 billion Swiss francs of assets.
Swiss Re second-quarter profit halved
Yesterday, the world's largest reinsurer Swiss Re's announcement of that second-quarter 2008 net income will reach about 600 million Swiss francs. This data is far below the same period last year 11.9 billion Swiss francs, down about 50 percent.
According to Notice, Switzerland again in the second quarter did not achieve the non-existence of the structural business credit default swaps transactions loss products should be adjusted according to market prices for 362 million Swiss francs (about 345 million U.S. dollars), making corporate profits declined. Rui again that, although the business of the non-existence, Swiss Re is still subject to market fluctuations in the value of the impact of the product, it is estimated that in July 2008 the non-existence of the structural business credit default swaps transactions loss products should be adjusted according to market prices 163 million Swiss francs.
"The rate of decline in investment income was mainly due to hedging by the Group of the negative impact of the project. These projects contribute to the protection of the investment portfolio to withstand risks, but in a relatively short period of Swiss Re will increase investment yield in the accounting sense of the volatility." Swiss Re insurance related to this that in order to be in premiums and investment income were lower circumstances boost revenue, the company will also buy 753 million pounds to Barclays life insurance sector.
According to Notice, Switzerland again in the second quarter did not achieve the non-existence of the structural business credit default swaps transactions loss products should be adjusted according to market prices for 362 million Swiss francs (about 345 million U.S. dollars), making corporate profits declined. Rui again that, although the business of the non-existence, Swiss Re is still subject to market fluctuations in the value of the impact of the product, it is estimated that in July 2008 the non-existence of the structural business credit default swaps transactions loss products should be adjusted according to market prices 163 million Swiss francs.
"The rate of decline in investment income was mainly due to hedging by the Group of the negative impact of the project. These projects contribute to the protection of the investment portfolio to withstand risks, but in a relatively short period of Swiss Re will increase investment yield in the accounting sense of the volatility." Swiss Re insurance related to this that in order to be in premiums and investment income were lower circumstances boost revenue, the company will also buy 753 million pounds to Barclays life insurance sector.
300 billion U.S. government pushed the mortgage insurer salvation reshuffle imminent
Who are the survivors of the loan-to-crisis »
"Mortgage insurance is the only beacon of the financial sector. This industry so far has not been a major bankruptcy, has not encountered does not work, the crisis of debts, with any investment banks, commercial banks, even the two are compared Is the best. "August 2, the U.S. mortgage insurance companies RMIC, chief economist at Tong Zhong Yi, told reporters.
With the July 30, President of the United States formally signed in 2008 housing and economic recovery bill (the Housing and Economic Recovery Act of
2008, the mortgage insurer to further strengthen the role. However, the Government's hand only to save the market, virtually the United States also promoted the mortgage insurer's reshuffle. 300000000000 "government guaranteed"
Founded in 1932 the federal residential Authority (FHA), will lead the resumption of play from the Bills in the "rescue" role.
FHA mortgage insurance is to provide the U.S. government organizations. Equally active in the mortgage insurance market, there are seven other furniture agencies, including the market ranked first in MGIC (NYSE: MTG), PMI Group
Inc. (PMI), Republic Mortgage Insurance Company (RMIC), Radian Group
Inc. (RDN), American International Group (AIG)'s mortgage insurance subsidiary of AIG United Guaranty, Genworth Financial, Old
Republic International (ORI), and Triad Guaranty Inc. (Nasdaq: TGIC).
Mainly led by mortgage insurer paid less than 20 percent of the buyers to provide guarantees that once a breach of these buyers, they will be responsible for payment for their loans to repay part of lending institutions.
"But in the housing market during the peak period, many Wall Street investment banks and a number of mercenary financial companies to bypass the" two-room ", the development of the sub-loan products and securities products, and stimulate this market to flourish. Before 2002, the loan-to-products in all housing mortgage loans in no more than 4 percent, but in 2006 this proportion reached 16 percent of the opera. "Tong Zhong Yi explained.
This is too liberal in the mode of payment loans, loan-to-grave crisis was a lesson.
Wei Yuelv housing loans and housing confiscation of the rate of increase further blow to the housing needs of the market. U.S. mortgage insurer Association (MICA) the latest data show that by the end of June, the U.S. market collateral loss of the right to redeem the mortgage loan volume has been as high as 252,000, than the same period last year increased by 53 per cent of the outstanding loans reached 67,967 in May T, surged 48 percent year-on-year.
In this context, the resumption of the Bill is not a huge amount of funding for FHA, is to strengthen its representative of the industry's position and role.
The bill just signed the restoration of that funding will be 300 billion U.S. dollars in the FHA under the management of the establishment of special funds, to a total of about 400,000 applications for 30-year fixed-rate mortgage the property to provide security, to improve its credit, to protect them Access to financing, thereby avoiding the ultimate breach occurred.
"We hope that through the FHA, to ensure that more worthy of ownership of U.S. households own homes hold their own property." White House spokesman Tony Fratto (Tony Fratto) in the Bills signed the same day issued a statement.
Conservatives against radical » Can not escape is that the mortgage insurers are facing more and more insurance claims.
The industry, the loan-to-climax, the U.S. mortgage market of about 20 percent to 30 percent of the market have been filled with secondary mortgage loans, when high-quality mortgage resources have been emptied after the snatch, the mortgage insurer will also be extended to the war in the loan-to-market.
Last qualifying mortgage insurer Triad Guaranty underwriting a lot of the secondary mortgage loan business; another positive performance of the mortgage insurer Radian
Group, for the loan guarantees, insurance share of the total assets of 10% to 15%, the highest even reached nearly 20 percent. The two companies have been because of the housing market boom radical underwriting business later suffered from.
By the end of June, Triad
Guaranty because of insufficient capital reserves, announced to stop selling new policies, the policy has only to pay the claims until all the policies expire. "Can not be said that it will go bankrupt, it has the ability to maintain existing business, but because there is no sufficient capital, unable to launch a new business. Now can do, only better to wait for opportunities, and other markets resume." Tong said.
By contrast, Radian
Group because of the larger, more adequate funds owned, is also accepted a new business, but the industry is worried that if prices continue to fall, the company will face the situation of inadequate capital reserves. In early July, Radian
Group appointed a new president of the mortgage insurance sector, by trying to reshape it the confidence of investors. This relative, conservative style of the mortgage insurer is to greatly enhance its market position.
To RMIC example, the asset ranked sixth, a mortgage insurer's profit margin to the crisis. "Unlike some companies a greater risk of mortgage insurance, our more conservative in this regard, the credit rating, from the current 6 rose to third place." Tong Zhong Yi said.
But on the other hand, the mortgage insurer underwriting more cautious attitude, in effect an increase of the housing market recovery more difficult.
Mortgage insurer to take two major initiatives, the first is to increase the credibility of scores of the requirements of the group itself should not get loans, the situation is very serious breach of the buyers excluded; Secondly, the decline in housing prices the hardest hit different Down payment requirements, the mortgage insurers now require at least 10 percent of the down payment, even in some areas will reach 15 percent, but in the past, perhaps only request is usually 3-5 percent of the down payment.
"These moves must be recognized will be an obstacle to home buyers, but the premise is that we want to keep the healthy development of industry, this is the price we must pay. This is the housing market adversely on the one hand, but if the mortgage insurance industry There are problems, take greater risks, the city will resume more slowly. "A senior U.S. housing market source said.
"Mortgage insurance is the only beacon of the financial sector. This industry so far has not been a major bankruptcy, has not encountered does not work, the crisis of debts, with any investment banks, commercial banks, even the two are compared Is the best. "August 2, the U.S. mortgage insurance companies RMIC, chief economist at Tong Zhong Yi, told reporters.
With the July 30, President of the United States formally signed in 2008 housing and economic recovery bill (the Housing and Economic Recovery Act of
2008, the mortgage insurer to further strengthen the role. However, the Government's hand only to save the market, virtually the United States also promoted the mortgage insurer's reshuffle. 300000000000 "government guaranteed"
Founded in 1932 the federal residential Authority (FHA), will lead the resumption of play from the Bills in the "rescue" role.
FHA mortgage insurance is to provide the U.S. government organizations. Equally active in the mortgage insurance market, there are seven other furniture agencies, including the market ranked first in MGIC (NYSE: MTG), PMI Group
Inc. (PMI), Republic Mortgage Insurance Company (RMIC), Radian Group
Inc. (RDN), American International Group (AIG)'s mortgage insurance subsidiary of AIG United Guaranty, Genworth Financial, Old
Republic International (ORI), and Triad Guaranty Inc. (Nasdaq: TGIC).
Mainly led by mortgage insurer paid less than 20 percent of the buyers to provide guarantees that once a breach of these buyers, they will be responsible for payment for their loans to repay part of lending institutions.
"But in the housing market during the peak period, many Wall Street investment banks and a number of mercenary financial companies to bypass the" two-room ", the development of the sub-loan products and securities products, and stimulate this market to flourish. Before 2002, the loan-to-products in all housing mortgage loans in no more than 4 percent, but in 2006 this proportion reached 16 percent of the opera. "Tong Zhong Yi explained.
This is too liberal in the mode of payment loans, loan-to-grave crisis was a lesson.
Wei Yuelv housing loans and housing confiscation of the rate of increase further blow to the housing needs of the market. U.S. mortgage insurer Association (MICA) the latest data show that by the end of June, the U.S. market collateral loss of the right to redeem the mortgage loan volume has been as high as 252,000, than the same period last year increased by 53 per cent of the outstanding loans reached 67,967 in May T, surged 48 percent year-on-year.
In this context, the resumption of the Bill is not a huge amount of funding for FHA, is to strengthen its representative of the industry's position and role.
The bill just signed the restoration of that funding will be 300 billion U.S. dollars in the FHA under the management of the establishment of special funds, to a total of about 400,000 applications for 30-year fixed-rate mortgage the property to provide security, to improve its credit, to protect them Access to financing, thereby avoiding the ultimate breach occurred.
"We hope that through the FHA, to ensure that more worthy of ownership of U.S. households own homes hold their own property." White House spokesman Tony Fratto (Tony Fratto) in the Bills signed the same day issued a statement.
Conservatives against radical » Can not escape is that the mortgage insurers are facing more and more insurance claims.
The industry, the loan-to-climax, the U.S. mortgage market of about 20 percent to 30 percent of the market have been filled with secondary mortgage loans, when high-quality mortgage resources have been emptied after the snatch, the mortgage insurer will also be extended to the war in the loan-to-market.
Last qualifying mortgage insurer Triad Guaranty underwriting a lot of the secondary mortgage loan business; another positive performance of the mortgage insurer Radian
Group, for the loan guarantees, insurance share of the total assets of 10% to 15%, the highest even reached nearly 20 percent. The two companies have been because of the housing market boom radical underwriting business later suffered from.
By the end of June, Triad
Guaranty because of insufficient capital reserves, announced to stop selling new policies, the policy has only to pay the claims until all the policies expire. "Can not be said that it will go bankrupt, it has the ability to maintain existing business, but because there is no sufficient capital, unable to launch a new business. Now can do, only better to wait for opportunities, and other markets resume." Tong said.
By contrast, Radian
Group because of the larger, more adequate funds owned, is also accepted a new business, but the industry is worried that if prices continue to fall, the company will face the situation of inadequate capital reserves. In early July, Radian
Group appointed a new president of the mortgage insurance sector, by trying to reshape it the confidence of investors. This relative, conservative style of the mortgage insurer is to greatly enhance its market position.
To RMIC example, the asset ranked sixth, a mortgage insurer's profit margin to the crisis. "Unlike some companies a greater risk of mortgage insurance, our more conservative in this regard, the credit rating, from the current 6 rose to third place." Tong Zhong Yi said.
But on the other hand, the mortgage insurer underwriting more cautious attitude, in effect an increase of the housing market recovery more difficult.
Mortgage insurer to take two major initiatives, the first is to increase the credibility of scores of the requirements of the group itself should not get loans, the situation is very serious breach of the buyers excluded; Secondly, the decline in housing prices the hardest hit different Down payment requirements, the mortgage insurers now require at least 10 percent of the down payment, even in some areas will reach 15 percent, but in the past, perhaps only request is usually 3-5 percent of the down payment.
"These moves must be recognized will be an obstacle to home buyers, but the premise is that we want to keep the healthy development of industry, this is the price we must pay. This is the housing market adversely on the one hand, but if the mortgage insurance industry There are problems, take greater risks, the city will resume more slowly. "A senior U.S. housing market source said.
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