While admitting no guilt or denying the charges, the company did enter into a cease and desist order.

The case stems from the bankruptcy of Allegheny Health, Education and Research Foundation (AHERF) in 1998, when the company defaulted on $256 million in bonds MBIA insured.

To allegedly cover up an anticipated $170 million in losses, MBIA engaged three companies for reinsurance contracts that were in fact loans to cover up losses and prop up the company's stock at that time.

According to an assurance agreement filed by New York Attorney General Eliot Spitzer in November 2005, MBIA Chief Financial Officer Juliette S. Tehrani engaged three insurers, Munich Re, Axa, and Zurich, to provide insurance policies retroactively to the AHERF default, totaling $170 million. In return, MBIA would pay premiums of $340 million to cover the insurance payments, according to an SEC filing.

An SEC spokesman said he could not comment, but a source said that the agreement, signed by the state in 2005, was awaiting SEC approval.

As side agreements fell apart in 2004, auditors and reporters began to question the transfer of risk, and several attempts to do so by MBIA failed. This eventually led to investigations by the attorney general's office, insurance department and SEC.

In the agreement, the attorney general alleges that both Ms. Tehrani and then Chief Executive Officer and Chairman David Elliott benefited from the fraud in bonus and stock options of more $2.5 million. Mr. Elliott retired in 1999. Ms. Tehrani left the company in 1999, according to a company spokesman.

In a statement, Gary C. Dunton, MBIA CEO said, "We are pleased that the AHERF-related investigations are fully behind us," adding that the company has cooperated fully.

The company said the independent consultant began work in 2006, and no additional enforcement actions are expected in the case.

An SEC spokesman said this ends its investigation of MBIA, except for the review of specific reinsurance transactions.

"This office will continue to focus on investor protection and on pursuing corporations that spread misleading information to dupe investors and regulators," said New York Attorney General Andrew M. Cuomo. "Corporations must not be allowed to engage in fictitious transactions to manipulate their financial reports."

"We are pleased they cooperated with this investigation and that those adversely affected by MBIA's conduct will be compensated," said Acting Insurance Superintendent Eric R. Dinallo. "The integrity and transparency of the bond insurance market is essential and must be maintained."

As far as ratings, Standard & Poor's said today that the settlement would have no effect on MBIA's "triple-A-rating." S&P said the money was reserved and that the company has sufficient capital to cover the payment.