Municipal bond insurers slapped coverage on nearly 40%. or $58.3 billion, of the $146.3 billion in new issues sold between January and June, setting a volume record for the sixth consecutive half-year period.

Virtually every bond insurer reported dramatic increases over the first six months of 1992, with the industry's overall volume up almost 48% from the $39.5 billion insured in the first half of last year, according to tallies supplied by company officials and Securities Data Co.

The $18.8 billion increase from last year's figure was the biggest jump ever, both year-over-year and from one six-month period to the next.

The unprecedented gains were fueled predominantly by low interest rates and the resulting refunding boom. Refundings of issues that carry insurance are almost always insured again by the same company, and $98.4 billion of the $146.3 billion in new issuance for the half were refundings.

The effect is dramatic on insurers' bottom lines. For example, refundings accounted for nearly 75% of the $22.5 billion insured in the half by Municipal Bond Investors Assurance Corp., the market share leader for the period.

With such a large portion of current business attributable to refundings, some market analysts have been warning that declines are inevitable in coming months as refundings begins to taper off.

But David H. Elliott, president and chief executive officer at MBIA, said he does not expect that to be a problem anytime soon. "There is still a lot of volume that is capable of being refunded," Elliott said. "I don't think it will drop off the cliff."

In fact, Elliott raised his predictions of overall volume for all of 1993, saying he now expects $250 billion of new issues to be brought to market, instead of the $235 billion figure he projected earlier this year. If the current 40% penetration rate for insurance is maintained through December, that would mean insurance companies would split $100 billion in new business by yearend.

MBIA's $22.5 billion so far this year represents 39% of the overall insured pie for the first six months of 1993. AMBAC Indemnity Corp. guaranteed $16.4 billion, a 28% share that put the company in second place. Financial Guaranty Insurance Co. was third, with $14.7 billion and 25% of the market.

Among the major companies, volume increases over last year's business ranged from a low of 41% at FGIC to a high of 60% at MBIA.

Only Capital Guaranty Insurance Co., which struggled through a series of thorny ownership questions during the first half of the year, experienced a volume decline during the period. The company's business dropped to $724 million from $1.1 billion during the first six months of 1992.

Capital Guaranty has recently begun to put ownership questions behind it, however, announcing tentative plans for an initial public stock offering. And Michael Djordjevich, the company's chairman and chief executive officer, predicted last month that the company will have a 5% market share by the middle of 1994, notwithstanding the 1% share it has mustered so far this year.

That big a gain would put Capital Guaranty within range of Financial Security Assurance Inc., which ranked fourth in market share for the first half with $3.6 billion, or just over 6% of the overall market.

Connie Lee Insurance Co., a specialty guarantor of tax-exempt education issues, has not yet tallied its first-half volume statistics, company officials said this week. But preliminary figures from Securities Data peg Connie Lee's volume at $469 million, a 57% increase over the $298 million the company insured in the first six months of 1992.

While industry executives often point to market share as a means of comparison between companies, most say they are more concerned with other factors, like profitability and portfolio quality.

"We're looking for a balance of business," said Roger Taylor, chief operating officer at FSA, which has a portfolio split almost evenly between municipals and structured finance.

FSA insured $2.4 billion in structured finance deals during the first six months. Taylor said the amount would have been slightly higher, but a few large deals expected in the half were pushed into the third quarter.

MBIA and FGIC were in a virtual dead heat for first-half structured finance business, with $2.19 billion and $2.18 billion respectively.

AMBAC, which market sources say has insured a handful of structured finance transactions, has not publicly disclosed the size of its exposure.

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