By Christine Richard
Bloomberg News
Saturday, March 8, 2008; D02
The world’s largest bond insurer, MBIA, asked Fitch Ratings to stop issuing credit ratings on its insurance units, saying the grades have become less valuable to investors, of little use to the company and too expensive to maintain.
MBIA’s request covers business units including AAA-rated MBIA Insurance, the company said in a statement yesterday. Fitch has been reviewing the rankings because of concern that MBIA may not have enough capital to cushion against losses on mortgage-linked securities it guaranteed.
"The fact that they requested the withdrawal of the rating takes a lot of gall," said Martin Weiss, president of Weiss Research in Jupiter, Fla..
Fitch is alone among the top credit-rating companies in continuing to consider a downgrade of MBIA. Moody’s Investors Service and Standard & Poor’s both affirmed the company last week on the heels of MBIA raising $3 billion in capital, eliminating its dividend and shutting its asset-backed insurance business for six months to overcome losses on subprime mortgages.
Fitch, responding to the request from the new MBIA chief executive Joseph W. Brown, said it will have to consider whether it will be capable of properly evaluating the ratings without MBIA’s cooperation.
"The unique nature of the financial guaranty sector could make maintaining the MBIA [financial strength] and debt ratings difficult without access to the non-public details on their insured portfolio," Fitch said in a statement.
MBIA then sent out a second statement that raised the issue of how Fitch’s ratings methods differ from other credit-rating companies.
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