European bond insurer takes ratings hit

Bond insurers took a hit today as yet another major insurer was downgraded by Standard & Poor’s. CFIG, a privately held European insurer, was downgraded today to A+ from its former AAA rating, according to published reports. It was the latest in a series of downgrades for CFIG, which had previously had its AAA status revoked by Moody’s Investors Service and Fitch ratings, the most prominent ratings agencies. The recent downgrades come amid market uncertainty and doubts that large bond insurers hold the necessary cash to insure their products. Expected market contraction compounds the problem, owing to the increasing levels of market uncertainty. Only two major bond insurers have maintained AAA ratings: MBIA Inc. and Assured Guarantee Ltd.