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. ...
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