Two municipal bond insurers that until now had avoided the difficulties faced by competitors have had their top financial strength ratings placed on review by Moody's Investors Service.
The rating service said it was examining the "Aaa" ratings of Financial Security Assurance Inc. (FSA) and Assured Guaranty Corp. for possible downgrade. The rating agency cited elevated risks they faced from the residential mortgage market as well as issues with the individual firms as reasons for the review.
Regarding FSA, Moody's said "significant deterioration in the financial conditions of both insurance and asset management operations of FSA, as assessed by our updated analysis...may be inconsistent with the expectations of a "Aaa"-rated insurance company given the operational and strategic sensitivities that such stress may exemplify."
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