MBIA: Fitch ratings process different; coverage limited
By Sue Chang
Last update: 6:35 p.m. EST March 7, 2008
SAN FRANCISCO (MarketWatch) - Elaborating on its earlier request to Fitch Ratings to withdraw insurer financial strength ratings on six of its units, MBIA (MBIMBI) late Friday noted that Fitch's rating process differs from other rating agencies. It also pointed out that Fitch's coverage of the underlying credit quality of transactions that MBIA insures is limited, which could lead to "misinterpretation" in turbulent times. In response, Fitch stated that its analysis is of the highest quality and its understanding of MBIA's municipal and structured exposure is strong. Nonetheless, the rating agency will evaluate its ability to maintain coverage on MBIA over the next few days and make a final announcement.
===============================
Press Release Source: MBIA
In Response to Inquiries, MBIA Further Addresses Its Decision to Request Withdrawal from Fitch Ratings
Friday March 7, 6:22 pm ET
ARMONK, N.Y.--(BUSINESS WIRE)--MBIA (NYSE:MBI - News) today announced that in response to inquiries it has received as a result of its decision to request immediate withdrawal of the Insurer Financial Strength (IFS) ratings assigned by Fitch Ratings, the Company is issuing this statement.
Fitch’s ratings process differs in many significant respects from those of the other rating agencies, which affects how investors assess value. Fitch’s coverage of the underlying credit quality of the transactions that MBIA insures is limited, and in turbulent times, the impact of this difference becomes significant, raising the risk of misinterpretation.
MBIA appreciates the service Fitch has provided in the past (but since you now decided to reveal our weaknesses we now have no use for you) at the transaction level in the sectors in which they have strong market share. As the Company continues to evaluate its five-year transformation plan, and with the expectation of a return to normality in the market’s valuation of the IFS rating, MBIA expects that there will be opportunities to work with Fitch for ratings on the Company’s future insurance entities. As MBIA’s new companies will be focused on customer segments, the Company’s legal entity alignment may facilitate the use of Fitch’s rating services. |
