MBIA Inc., Ambac Financial Group Inc., and the rest of the bond insurance industry will have to disclose troubled securities they insured and speed the pace of reserving against deteriorating credits under new accounting rules.
The Financial Accounting Standards Board will require bond insurers to recognize a claim liability when there is evidence of credit deterioration rather than waiting for a default, according to a statement Friday on its Web site.
Bond insurers also will be required to disclose securities on their watch lists and provide more information about risk management.
The rules, which took almost three years to develop, are part of an effort by FASB to standardize accounting by financial guarantee insurance companies. Bond insurers have posted record losses as they boost reserves for expected claims on securities backed by subprime mortgages and home equity loans, often using different methods.
The new standard — known as FASB Statement No. 163, Accounting for Financial Guarantee Insurance Contracts — applies to financial statements issued for fiscal years that will begin after Dec. 15.
