Thursday, February 25, 2010

Monoline datapoint of the day

Feb 23, 2010 19:00 EST

Bloomberg reports:

Ambac, MBIA Inc. and Assured Guaranty, the three largest bond insurers, have set aside 0.04 percent of the total public finance debt they insure, or $520 million, to pay claims on municipal securities, according to regulatory filings by the companies.

No, that’s not a misprint: the claims-paying reserves are 4 basis points of the total quantity of municipal bonds insured. What’s more, the market capitalization of all three monolines combined is less than $5 billion; the amount of municipal bonds insured, by contrast, is well over $1 trillion.

What could possibly go wrong?

Update: MBIA’s Kevin Brown emails to point out that loss reserves are not the same thing as total claims-paying resources, which are $5.5 billion at National Public Finance Guarantee, the muni arm of MBIA. That’s about 1.1% of its insured bonds.

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