And it’s not just the fact of MBIA’s triple-A rating that drives Mr. Ackman batty; it’s its transcendent importance to the company’s business. As Gary. Following New York and U.S. probes of his trading and reports, Ackman persisted in challenging MBIA’s AAA credit rating for more than five. That AAA rating being essential to MBIA staying afloat as a bond insurer. Later on Thursday, Bill Ackman, of Pershing Square – the massively.

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Ackman’s Letter to Moody’s: A Must Read

Ackman had warned that MBIA was magnifying its risks by backing instruments such as those based on loans to the least creditworthy homebuyers. The letter arrived only after he wrote to the SEC chairman and the agency’s four commissioners demanding it.

Views Read Edit View history. This is best understood by example. Captive reinsurers whose ratings are not regularly updated offer the potential for abuse. PurchaseNew York. The MBIA surplus note issuance is perhaps the clearest example of the failure of the rating agencies to accurately assess the creditworthiness of a bond insurer.

Can this possibly make sense? As you well know, depression lines of credit can only be drawn to pay claims on municipal obligations and only after a substantial deductible.

The company went public in Webarchive template wayback links. It also provides a fixed-income asset management service with about forty billion dollars under management. Ackman is a slick salesman who doesn’t know much about insurance,” Whitman said. Your analysis makes the aggressive assumption that the bond insurers will remain going concerns and will therefore be able to continue to write new premiums and generate income in the future.

Insurance claims must be paid in cash. Marty Whitman can call him what he wants, but the guy knows his stuff. Spitzer, now the New York governor, didn’t respond to a request for comment.


Ackman says he recently received notification that the SEC had ended its investigation of him without any finding of wrongdoing. In the MBIA documents, Ackman says he saw that the insurer was guaranteeing untested asset-backed securities. Fitch Ratings 99 Church St. The two never agreed to work together. Lastly I encourage you to ask yourself the following question while looking at your image in the mirror: The San Francisco Chronicle.

He says he plans to give his personal gains on the bond insurers to Pershing Square’s charitable foundation. Ackman may soon be proved right. That is, you reduce their credit exposure by those exposures that have been reinsured.

Bond Insurer Ratings Ladies and Gentlemen: Please call me if you have any questions about the above. It was founded in as the Municipal Bond Insurance Association. Even in the event the bond insurers generate taxable income in future years, it may be many years before these tax benefits can be realized, if ever, particularly in the event of corporate ownership changes caused by capital raising or stockholder turnover.

In addition, bond insurers with substantial investment management or swap operations have additional liquidity needs in the event of a downgrade. Gotham made a profit selling a stake in the property to Goldman, Ackman says. The swaps would rise in value if doubts about MBIA grew.

The transaction covered MBIA for losses related to the bankruptcy of a Pennsylvania hospital group. We believe that the bond insurers and the rating agencies do not adequately consider the facts that: Moody’s upgrades the ratings of MBIA group: We believe a shareholder vote and approved registration statement will likely be required in such a circumstance, delaying the ability to consummate the transaction beyond the March 31st Warburg backstop drop dead date.

By using this site, you agree to the Terms of Use and Privacy Policy. Most bond insurer holding companies have limited cash, have lost or will lose access to liquidity facilities, and have substantial cash needs for interest payments, operating expenses, and dividends for so long as they continue to be paid.


He says his dad called off the wager the morning of the test for fear he would lose the bet, though Ackman ended up scoring wrong on one answer. They are persistent about important things. Languages Deutsch Edit links. The independent research firm CreditSights Inc. As you well know, we have privately, in meetings and correspondence with you, and publicly in various presentations that we have made, called into question your ratings of the bond insurance industry, in particular, the ratings mvia MBIA Insurance Corp.

Ackman Devoured , Pages to Prove “MBIA was never AAA”

Ackman reportedly attempted to warn regulators, rating agencies and investors about the bond insurers’ high risk business models.

The impact of the loss of these facilities is material to the liquidity aaw of the holding mvia and their insurance subsidiaries and must be considered in your credit assessment. Ackman also bought credit-default swaps, financial instruments based on bonds and loans that are used to speculate on a company’s ability to repay debt. Because the holding companies avkman provide indemnities for employees and directors, we would expect that directors would be loathe to allow liquidity to leave afkman holding company estate, depriving directors and employees of the resources to protect themselves from claims.

From Wikipedia, the free encyclopedia. Net operating loss carryforwards are not cash and are not available to pay claims and should therefore not be deducted from losses in calculating bond insurer capital adequacy.

Financial insurance or Financial Guarantees are a form of credit enhancement. While some commentators have suggested that this might create a pricing umbrella that will benefit the existing bond insurers, this is demonstrably false.