Stock prices for many bond insurers dipped yesterday because of their exposure to Orange County, Calif., but officials for the firms said the crisis will ultimately prove to be good for business.

At the New York Stock Exchange's 4 p.m. close, AMBAC Indemnity Corp.'s stock ended the day down 1 1/4 points, while Enhance Financial Services Group Inc., a reinsurer, finished down 7/8 point, and Financial Security Assurance closed down 3/8 point.

Spokespersons at each firm attributed the losses to the insurers' exposure to bonds issued by either Orange County or municipalities that participated in the county's troubled investment pool.

On Tuesday, the county filed for bankruptcy after announcing huge losses in its pooled investment fund.

The stocks of other insurers performed better. During the day, Capital Reinsurance Corp. fell as much as a point, but ended the session 7/8 point higher. Capital Guaranty Insurance Co. ended 1/8 point higher, and Municipal Bond Investors Assurance Corp. rose 3/4 point.

John Cathey, a spokesman for AMBAC, attributed the decline in his firm's stock prices to Orange County. AMBAC has insured approximately $253.7 million of revenue bonds for Orange County since 1982, according to Securities Data Co.

Financial Security Assurance insured $20.6 million of county debt. It could not be determined if Enhance has any exposure to county debt.

Cathey of AMBAC said he suspected that MBIA stock was up yesterday because AMBAC has more exposure to Orange County bonds than MBIA.

MBIA spokesman Michael C. Ballinger said the firm never comments on its stock activity, up or down, as a matter of policy.

But other insurance officials did address Orange County's recently declared bankruptcy, saying the industry will eventually benefit from the crisis even though stocks are taking an initial hit.

Roger Taylor, chief operating officer for FSA, said yesterday's lower stock prices marketwide reflected a "knee-jerk concern" that "there are more Orange Counties out there." In terms of the bond insurance industry, Taylor said, such concern will turn out to be nothing more than a "market blip."

"When Bridgeport and Philadelphia got hit and stocks went down quite significantly, bond insurers bounced back," Taylor said. "It just made insurance a more attractive product."

A spokeswoman for Enhance Financial Services Group said the volatility in industry stocks was "inappropriate," despite the problems in Orange County.

The whole financial guaranty industry believes there will not be major repercussions to insurers from Orange County," the spokeswoman said. "Some Street sources say the value of bond insurance is clearly recognized in an event of this sort, which may provide more business for the insurers going forward. This is why people buy insured bonds."

But some insurance executives said both underwriters and bond insurers need to demand higher spreads on the deals they underwrite given the risks involved.

Insurers pledge to cover both interest and principal on the securities they guarantee.

"This is finally an opportunity to increase pricing," said a market participant. "The Orange County situation shows how much value bond insurers and underwriters add to the process, and we're not properly compensated for it."

Financial Guaranty Insurance Co. is not priced on the open stock market. FGIC is a subsidiary of GE Capital, and FGIC's stock does not trade publicly, said L. Harrison Thayer, director of corporate communications for the firm.

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