MBIA Under Heavy Pressure

MBIA, Inc. (MBI) underwrites municipal bond insurance and municipal and structured finance obligations. The company also provides asset, investment, and treasury management services, along with the reinsurance of guaranteed investment contracts. It divides its operations into two main segments: Insurance and Investment Management Services.

We remain concerned with MBIA's 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.

The core 3Q8 loss of $2.22 per share, reflected the $961.0 million increase to the case loss reserve for its exposures to second-lien residential mortgages.

We expect continued whipsawing of the financial markets for the rest of 2008, and into mid-2009. Therefore, given the prolonged uncertainty for the group, we maintain a Sell rating.

Read the full analyst report on MBI

Read the full analyst report on MBI