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Mon Feb 4th 12:26 PM | Rating: 0 0
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What's Going on with MBIA's Stake in Channel Reinsurance?

This has not been called the way you describe it as it not a violation of GAAP but an absurd consequence of GAAP rules. They are forced to recognise MTM on derivative positions which likely will never be realised. I agree, though, that it is not common sense. MBIA, like all of Channel's investors has to hold the investment at zero value because the negative mark exceeds other sources of equity capital, but it is untrue to say that they think it has no value.

Furthermore, it is entirely possible for an insurance company to suffer losses equal to its equity capital and still pay out on every insurance claim.
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