Moody's Investors Service cut FGIC Corp.'s key bond insurer ratings but indicated it might be more lenient with MBIA Inc. and Ambac Financial Group Inc., saying they "are better positioned from a capitalization and business franchise perspective."
On Thursday, Moody's downgraded its ratings for FGIC's Financial Guaranty Insurance Co. and FGIC UK Ltd. to A3, from Aaa. The agency also cut the parent's senior debt rating to Ba1, a junk-level rating, from Aa2.
The actions were the result of FGIC's "meaningfully weakened capitalization and business profile resulting, in part, from its exposures to the U.S. residential mortgage market," Moody's said.
FGIC's capital base is $4 billion short of what would be needed to retain a Aaa rating, the agency said.
This month Moody's stripped XL Capital Assurance Inc. of its Aaa bond insurer ratings, lowering those ratings to A3.
The ratings for MBIA and Ambac remain under review for possible downgrade, Moody's said, and those reviews are expected to be completed in the next few weeks. "Although further analysis remains to be completed before those reviews can be brought to conclusion, Moody's believes that, in contrast to XL Capital Assurance and FGIC, MBIA and Ambac are better positioned from a capitalization and business franchise perspective," the agency said.
