We should have bought the stock.

Investors are pounding their foreheads over missed opportunities to buy AMBAC Indemnity Corp. and Municipal Bond Investors Assurance Corp. common stock. Both are clear winners.

MBIA last week hit a 52-week high of $42.75 per share, as did AMBAC when it closed at $30.50 per share on Thursday. Bot companies, listed on the New York Stock Exchange, enjoyed hefty buying interest and price gains, regardless of whether the rest of the stock market was correcting or taking off.

AMBAC's stock, at this early stage anyway, appears to be a real gem. Sold at $20 in July, investors already have reaped 50% returns -- not bad for three months. And MBIA has recovered completely from the emotional drubbing it took last year over the Philadelphia hysteria, which drove its stock to below $20 per share.

Robert Genader, senior executive vice president of AMBAC, said both MBIA and AMBAC are two of "only a handful" of high quality financial stocks. "If you're a portfolio manager and you're looking for a stable company to invest in -- and you still want to stay in the insurance sector -- you'll rotate into the bond insurance companies," Mr. Genader said.

Other positive factors for insurance stock include wider dissemination of equity analyses -- Salomon Brothers Inc., Morgan Stanley & Co., and Ladenburg Thalmann & Co. have published reports on the firms -- and steady, predictable earnings industrywide, he said.

"The market seems to be looking for quality earnings," agreed Michael C. Ballinger, vice president at MBIA. "We've demonstrated our ability to generate predictable and growing earnings. It could also be the recognition that insured bond volume is headed toward an all-time high."

Predictable earnings have been a forte of both AMBAC and MBIA. In the first half of 1991, AMBAC had a 19.5% increase in statutory net income, while MBIA increased statutory net income 12.1%. MBIA's price/earnings ratio is now at about 12.3, while AMBAC's is at 9.4.

The bond insurers are on a pace to back more new-issue bonds than ever before. Annualizing January-through-September data, the industry would insure $49.03 billion of municipal par amounts sold, besting by more than 10% the previous industry high in 1985 of $44.38 billion.

Equity investors interested in AMBAC's stock are likely to get a crack at some fresh stock soon. When Citibank sold 50.3% of the firm to the public in July, it announced intentions to spin off at least another 24.8%, which at today's levels would bring Citibank a sorely needed $518 million. Citibank was the sole owner of AMBAC before the July sale.

"Citicorp has reached understandings with the staff of the Board of Governors with the Federal Reserve System and with the Comptroller" of the Currency, the initial public offering prospectus said, "to make substantial and good faith efforts to reduce its indirect equity interest to less than 25% of the Company as soon as practicable."

That Citibank wants capital is well known. Two weeks ago, it announced a whopping loss of $855 million for the third quarter, and the stock market since then has devalued the common stock by 16%, pushing it down to a 52-week low of $10.25 per share.

More bound insurance stock could come into the markets from other sources. Industry rumors have swirled for months that a bond insurer is weighing an initial public offering. The most likely candidate is Capital Guaranty Insurance Co., the San Francisco-based insurer that announced one of its owners plans to sell a 10% stake.

Executives at Capital Guaranty, however, deny the firm will seek public ownership at this time. Fleet/Nortstar Financial Group, the New England bank holding company, would recude its Capital Guaranty ownership to 25.16% from 35.16%, presumably through a sale to other institutional investors.

In the meantime, investors who bought AMBAC at the opening bell and those who bought MBIA when it dropped like a stone are doing quite well. In the meantine, MBIA increased its dividend last month by 21%, to 17 cents from 14 cents per share.

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