MBIA Records Third Straight Loss as CDO Funk Deepens

MBIA, the world’s largest bond insurer, posted its third consecutive loss this morning, sending shares tumbling 5.5%. The company lost $2.4 billion in the first quarter, the equivalent of $3.01 in operating loss per share, more than twice the consensus figure of $1.21. Bloomberg:

The loss was MBIA’s third straight and comes less than three months after the bond insurer successfully retained its AAA credit rating. MBIA, Ambac Financial Group Inc. and the rest of the industry posted record losses after misjudging the value of collateralized debt obligations and securities backed by home- equity loans they guaranteed. MBIA said today it expects to pay more than $1 billion in additional claims.

“We’re not out of the woods yet,” said Richard Larkin, senior vice president at Herbert J. Sims & Co. in Iselin, New Jersey. “I’m not sure AAA bond insurers will ever be viewed the same way as in the past.”

Despite the staggering loss, the company insists that it has “ample liquidity.” MBIA has fought hard to retain its AAA rating in the past months as the subprime crisis has deepened, raising $2.6 billion in capital to shore up its capital reserve.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.