MBIA, Inc. (MBI)

We remain concerned with MBIA Inc.'s (MBI - Analyst Report) asset management business and its ability to write new insurance business, given the continued pressure from lower credit agency ratings. The company is still losing money on risky mortgage-backed securities that it insured at the height of the U.S. housing bubble.

Despite MBI's efforts to separate the muni bond insurance business from structured finance business, there remains an air of uncertainty about the business prospects of the new company (National). Moreover, we expect continued whipsawing of the financial markets till 1H09.

Given the prolonged uncertainty for the group, we maintain a Sell rating. Our six-month price target is now $3.80 per share, reflecting a 0.10x to our adjusted book value estimate of $38.00 per share at September 30, 2009. We still think there is substantial digestion of residential real estate concerns.