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Investing.com -- Moody’s Ratings has downgraded MBIA Insurance Corporation’s insurance financial strength rating to Caa3 from Caa2 and changed the outlook from negative to stable.
In the same action on Thursday, Moody’s affirmed the senior unsecured debt rating of MBIA Inc. at Ba3 and the insurance financial strength rating of National Public Finance Guarantee Corporation at Baa3, while changing their outlooks from stable to negative.
The downgrade of MBIA Corp. reflects its stressed liquidity position, reduction in total cash and invested assets, and significant write-down of salvage recoverable assets in recent years. The company reported statutory cash and investments of $154 million in the first half of 2025, with only $34 million immediately available.
MBIA Corp.’s policyholders’ surplus stands just $22 million above New York’s minimum regulatory threshold, making the company vulnerable to further deterioration in its insured portfolio. Its long-term solvency depends on the outcome of asset recovery efforts.
National’s Baa3 rating affirmation reflects its capital resources relative to remaining exposures and continued portfolio amortization. However, Moody’s noted the company faces heightened volatility due to large single risks that have experienced credit deterioration in recent months.
National’s capital base has been significantly reduced, driven by a $647 million capital extraction through dividends in 2023. While another dividend of this scale is considered highly unlikely, Moody’s does not anticipate any return to pre-2023 capital levels.
MBIA Inc.’s Ba3 senior unsecured debt rating affirmation positions it three notches below National’s Baa3 rating, consistent with typical notching practices for U.S. insurance holding company structures. The company reported $355 million in cash and invested assets in the first half of 2025.
National’s insured portfolio has decreased to less than $34 billion of gross par outstanding, resulting in higher concentration of single risks and below investment grade exposure. Approximately 9.4% of its insured book was rated below investment grade in the first half of 2025, representing about 262% of its qualified statutory capital plus gross loss reserves.
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