Assured Guaranty's future is a bit more certain than its competitor MBIA. MBIA has said they have enough cash at the holding company until 2014, but some are questioning if they have enough to satisfy the outstanding claims, Ryan said.

The foreclosure crisis will also determine the monolines future since they guaranteed, or wrapped, many of the mortgage-backed securitizations (MBS) that are currently failing. Recently, the monolines have rebounded since mortgage "put backs" have limited failure claims against MBS.

"The foreclosures are only going to accelerate those losses and will affect the monolines . Their whole future is determined on a lawsuit," Ryan said. "Put backs would be reimbursements on the packages they issued. That would work for them and their claims, but it is difficult to see where they will end up in the future."

MBIA recently said that its estimated recoveries related to put backs from lawsuits on several banks including Bank of America ( BAC) of $2.2 billion. The monoline also reported a $213 million loss in its third quarter earnings.

MBIA had a plan to write new business, similar to Assured Guaranty, but that was curtailed by lawsuits 18 banks brought against the company's restructuring. Under the restructuring MBIA would break into two; a good insurer and a bad insurer. The insurer moved $5 billion in assets and the profitable business and assets into a new entity called National Public Finance Guaranty Corp. That has left the old business with a questionable amount of capital to cover the banks' guarantees.

"If you are buying a share in one of the bond insurers-- Ambac or MBIA-- you are basically betting on the outcome of the litigation process in bankruptcy, and that is the only reason you would want to take a chance on those companies now," said Grebeck. "Basically if you buy a share you are basically buying their argument that they will get something back."

Grebeck argues that MBIA will have difficult convincing investors they can turn the business around.

"MBIA will tell you and has told you for the last 10 years that everything is hunky- dory," Grebeck adds. "We know that in the case of Ambac that was not so. A couple weeks ago people were saying that Ambac had sufficient claims paying reserves, and then they filed for bankruptcy."

--Written by Maria Woehr in New York.

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