MBIA Takes Another Hit

A call to MBIA's CEO Gary Dunton in Armonk, N.Y., was directed to a spokesman, who did not return a call. The company issued a statement Wednesday noting that Moody's had not yet taken action and that other monoline insurers were in the same boat.

"The company believes that maintaining a strong balance sheet and an adequate capital cushion is prudent," the statement read. "Therefore, the company has been pursuing capital contingency plans, even in the absence of any immediate rating agency requirements."

MBIA shares were rallying 3.8% to $28.45 on Thursday.

The Moody's statement also comes a week after activist Bill Ackman of Pershing Square Capital publicly lambasted the insurer, accusing the firm of improprieties in its business operations and saying that it was not deserving of its triple-A rating.

Ackman, who is betting in his $6 billion hedge fund that MBIA will fail, says he looks to make hundreds of millions in the event the insurer collapses.

Rating agencies have not been swift to downgrade these insurers, preferring to give the companies sufficient time to address the capital concerns that have been raised. The implications of a significant monoline downgrade for these companies, which rely heavily on their credit rating to underwrite debt insurance, are significant because the insurers provide guarantees for some $2.5 trillion in debt.

Options for many have included turning to outsiders or their parent entities for more cash or forming a reinsurance pool that would act as an additional buffer in the event securities default.

CIFG received a $1.5 billion cash injection from its French parent Banque Populaire Group and the Caisse d'Epargne Group, which own controlling stakes in the entity. Other insurers, including FGIC, continue to wait for their parents to intervene.

The Blackstone Group(BX), which holds a 23% stake in FGIC, is believed to be leading the charge in assessing the capital requirements of the monoline insurer but has yet to lay out a plan, which has been unsettling for staffers within the company, sources familiar with the company tell TheStreet.com.

Calls to Blackstone and FGIC were not immediately returned.

FGIC is also 23% owned by private-equity firm Cypress Group and 42% by the PMI Group(PMI).

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