S&P’s Report Looks at Multiline Insurers, Guaranties

February 28, 2003

Standard & Poor’s has published a report that examines multiline insurers’ willingness to pay financial guaranty claims in a timely fashion.

“Events over the past year starkly reinforce the need for investors to be certain that insurers providing financial guaranties pay in full and on demand,” Standard & Poor’s credit analyst Frederick Loeloff said. “This concern – that otherwise financially strong insurers might be unwilling to play by the ‘pay now/litigate later’ rules of the capital markets – prompted Standard & Poor’s to introduce its Financial Enhancement Rating (FER) service in 2000.

In a financially guaranteed transaction, bondholders expect prompt payout under the terms of the guaranty. However, the insurance company guarantor’s traditional answer reportedly has been, “Maybe, but obviously not until the claim has been reviewed.”

In addition to examining these issues, the article includes a complete
list of multiline and monoline companies with financial enhancement ratings.

The article, which is titled “Financial Guaranties: Will Multiline Insurers
Pay When They’ve Promised To?” can be found on RatingsDirect, Standard & Poor’s Web-based credit analysis system. The article can also be found on Standard & Poor’s Web site at www.standardandpoors.com. Under Fixed Income, select Credit Ratings Criteria.

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