An important aspect of a bond insurer's financial strength is the quality of its invested assets. About 60% of bond insurers' total revenues are generated from investment income including realized capital gains. Approximately 70% of the insurers' investment portfolios consist of municipal bonds. Economic adversity resulting in insured defaults might cause a deterioration in asset quality and revenue base. Accordingly, the investment portfolio is one of the five major areas Fitch analyzes in assessing a bond insurer's claims-paying ability.
Growth in Invested Assets