Barry Robbins

Save Those Bond Insurers, and Avert a Bigger Crash

A bond insurer is really 2 companies: an insurance company that writes the bond insurance, and a holding company. The holding company is publicly-traded, and receives dividends from the insurance company. Executives hold stock options in the holding company. If the insurance company went bankrupt, all of the policy holders who took out policies from the insurance company would be severely damaged. If the holding company goes bankrupt, only the shareholders are affected. Regulators are now looking into plans to save the insurance company. The holding companies of Ambak and MBIA will not be able to aviod bankruptcy, in my opinion.