SOURCE: The Bedford Report

The Bedford Report

October 19, 2010 12:25 ET

Bond Insurers' Stocks Soar Amid New Revelations in Foreclosure Crisis

The Bedford Report Provides Analyst Research on Ambac & MBIA

NEW YORK, NY--(Marketwire - October 19, 2010) -  After experiencing catastrophic losses in 2008, and being rescued by massive capital injections from the government, the insurance industry has been taking steps forward on the path to recovery. In 2009, the arrest of activity in credit markets caused bond prices to drop. Insurers have been hit especially hard by the poor bond market. They hold as much as two-thirds of their assets in bonds, and as such are highly sensitive to credit market conditions. It is expected that weak investment portfolios and reduced income from the variable annuities, in addition to weak underwriting, will make for downside pressure on these companies in the coming months. The Bedford Report examines the outlook for companies in the Surety & Title Insurance Industry and provides research reports on Ambac Financial Group, inc. (NYSE: ABK) and MBIA, Inc. (NYSE: MBI). Access to the full company reports can be found at:

Last week, bond insurers such as Ambac and MBIA saw their shares surge after a report from Manal Mehta and Branch Hill Capital claimed these insurers may be well positioned to benefit from put backs or rescissions related to the mortgage bond fallout. Bond insurers have been requesting that banks buy back pools of mortgages littered with home loans that violate the warranties banks made when selling mortgage-backed securities. Mehta argues that put backs in the magnitude of $2 billion to $3 billion could double the stock price of a bond insurer such as MBIA.

The Bedford Report releases regular market updates on the Surety & Title Insurance Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us for free at and get exclusive access to our numerous analyst reports and industry newsletters.

The Mehta report sees Bank of America as one of the biggest losers in this foreclosure mess due in part to the liabilities it took on when it acquired Countrywide. Coincidentally, in late September, Ambac filed suit against Bank of America over the lending practices of Countrywide, the mortgage lending business the bank bought, saying the lender failed to follow its own standards when making loans.

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