Bank trust departments now have an easier way to insure money held by trustees during estate settlements.
MBIA Insurance Corp. is offering banks the insurance product, dubbed Assurety, to guarantee deposits before they are assigned to trust accounts and later invested. Known as a surety bond, the product holds the insurance company liable for the principal and interest.
The Armonk, N.Y.-based company - best known for its municipal deposit insurance - began offering the product last month to banks and other trustees.
MBIA, which is triple-A rated by Moody's Investors Service and Standard and Poor's, originally developed Assurety to cover municipal deposits held by financial institutions.
The product gives trustees an alternative to guaranteeing deposits through treasury notes or other low-yield securities. The insurance is also being offered to enhance letters of credit issued by private banks.