Municipal Bond Forum
Bond insurers
Q
I would like to know the difference in the various insurance companies that insure your tax-free bonds. Which are better? Most safe?
A
James A. Klotz responds:
All of the major bond insurers are rated “AAA” by Standard & Poor’s or Moody’s equivalent, “Aaa.” These insurers (which include MBIA, FSA and Ambac) have been in business a long time, have strong insured portfolios and are well capitalized. They are continually reviewed by the rating agencies and their insurance commitment is the same, regardless of the company.
Two other insurers, Radian Asset Assurance (rated “AA”) and American Capital Access (rated “A”), are considered “specialty” insurers since they focus on smaller, infrequent issuers of bonds, often ignored by the “AAA” insurers. Both Radian and ACA are also reviewed continually by the rating agencies and also have strong histories.
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The responses provided in this forum are meant to address specific questions posed by investors about their municipal bonds and to provide market insight for our general audience. Please note, your investments, objectives, results and experience may differ significantly. Our answers and any potential strategies discussed should not be construed as a solicitation to buy nor sell any security or investment product. All investing entails risk.
