Financial Winners & Losers: MBIA

MBIA (MBI Quote) led a financial stock rally on Thursday after the bond insurer entered a $200 billion reinsurance deal with FGIC Corp. MBIA gained more than 24% in recent trading to $14.90.

Other insurers followed suit, with Ambac (ABK Quote) up almost 16% to $6.07; MGIC (MTG Quote) up 13.4% to $7.97; and PMI Group (PMI Quote) gaining 5.2% to $3.04.

MBIA will receive $741 million in premiums to reinsure municipal bonds for FGIC's Financial Guaranty Insurance business. The deal was welcome news for MBIA, which lost its "AAA" ratings this month, and FGIC, whose bond ratings recently dropped to "junk" status. Bond insurers have posted losses and suffered sharp declines in market value this year as the credit markets seized up and the assets they insure lost significant value.

Other financial stocks also performed well, as the market rose following positive reports on gross domestic product and jobless claims. The NYSE Financial Sector Index gained almost 150 points, or 2.4%, in recent trading, and the KBW Bank Index rose 1.5%. The Dow Jones Industrial Average was up more than 180 points, or 1.6%.

Government-supported mortgage buyers Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote) continued their streak of double-digit gains the day after Fannie outlined a management shake-up and analysts continued to express positive sentiment about their capital position.

Elsewhere in the sector, CME Group (CME Quote) gained 4.3% to $344.58 after reporting finalized terms of its cash-versus-stock payout for its acquisition of Nymex Holdings (NMX Quote). About 61% of Nymex investors will receive $7.29 in cash and a bit more than a fifth of a CME share for each share of Nymex. The rest will receive $81.16 in cash, with CME's full cash payout totaling $3.4 billion.