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

This page was last edited on 1 Julyat It also provides a fixed-income asset management service with about forty billion dollars under management.

You should receive assurances from MBIA and require it to contribute the full xckman dollars to its insurance subsidiaries before you include the funds in calculating insurance company capital. Views Read Edit View history. People are obsessive about stupid things. Ackman reportedly attempted to warn regulators, rating agencies and investors about the bond insurers’ high risk business models.

While the rating agencies have not updated their credit ratings of Ram Re, the market appears to have already done so. 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.

He says he plans to give his personal gains on the bond insurers to Pershing Square’s charitable foundation. PurchaseNew York.

Ackman is a slick salesman aa doesn’t know much about insurance,” Whitman said. Because Berkshire Hathaway already possesses a real Triple A rating, the bonds that are wrapped with its guarantee will trade with a tighter spread when compared to a bond insured by a traditional bond insurer, even one without legacy structured finance exposure.

MBI Russell Component. There is also no mechanism whereby the bond insurers can borrow against these potential future premiums to be used to pay claims in the present day.


A bond insurer is only able to obtain tax benefits if the insurer is a going concern and is able to generate sufficient taxable income in the current or future years to offset the losses from paid insurance claims.

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

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. Fitch Ratings 99 Church St. Please call me if you have any questions about the above. The bond insurers include these guarantees in calculating the weighted average ratings of their investment portfolios. In addition, bond insurers with substantial investment management or swap operations have additional liquidity needs in the event of a downgrade.

Whitman’s firm owned more than 10 percent of MBIA’s stock, he said in the interview. Retrieved November 2, National Public Finance Guarantee to A3″. This limited review of exposures ignores the fact that the same lending practices and flawed incentive schemes that fueled the subprime lending bubble have been very much at work in CMBS and corporate finance.

In a runoff scenario, we do not believe that the bond insurers will generate sufficient taxable income to offset the net operating losses generated by paid losses. During the talks, Ackman, then 28, says he got a call from Donald Trump. The San Francisco Chronicle. 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.

By using this site, you agree to the Terms of Use and Privacy Policy. Spitzer, now the New York governor, didn’t respond to a request for comment.

Captive reinsurers whose ratings are not mbiia updated offer the potential for abuse. 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 for MBIA Insurance Corp.


As usual, I will make myself available at your convenience.

The independent research firm CreditSights Inc. It was founded in as the Municipal Bond Insurance Association. Todd Sullivan’s – ValuePlays. 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.

Retrieved from ” https: Moody’s upgrades mbla ratings of MBIA group: Following New York and U.

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

MBIA is a monoline insurer primarily of municipal bonds and on asset-backed securities and mortgage-backed securities. We believe that both MBIA and Ambac have substantial collateral posting obligations in the event of a holding company downgrade. The company went public in 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, saa ever, particularly in the event of corporate ownership changes caused by capital raising or zckman turnover.

While Warburg has made affirmative statements about the transaction, both publicly as well as privately, to surplus note buyers and the media, we believe there continues to be transaction closure risk for both the initial stock purchase and future rights offering, with the rights offering having greater uncertainty.

Bond Insurer Ratings Ladies and Gentlemen: Insurance claims must be paid in cash. It is headquartered in Purchase, New Yorkand as of January 1, had mbai employees. For all of the above reasons, we believe that the present value of future premiums should not be included in CPR.

The liquidity risks of these programs mbua the underlying assets should be carefully examined. Each of you, according to your recent public statements, is in various stages of updating your ratings of the bond insurers.

Can this possibly make sense?