News Column

Kroll Bond Rating Agency Assigns AA+, Stable Outlook, to National Public Finance Guarantee Corporation

May 12, 2014



NEW YORK--(BUSINESS WIRE)-- Kroll Bond Rating Agency (KBRA) has assigned a AA+, Stable Outlook, insurance financial strength rating to National Public Finance Guarantee Corporation (National). The rating reflects National’s intention to begin underwriting within the U.S. Public Finance market. National and its parent MBIA Inc., (MBIA) benefit from a management team with a strong understanding of the municipal marketplace and the financial guaranty product, very robust systems and business teams with deep market relationships. National’s experienced management team has many years of direct credit risk management and underwriting experience in the municipal and financial guarantor industry.

National is expected to benefit from an insured portfolio created through two separate agreements that transferred a U.S. book of business from MBIA Corp. to National. The portfolio’s revenue stream lends a significant degree of financial resources and flexibility to National as it seeks to establish its market position after a period of dormancy. National’s very well developed systems for credit underwriting, credit risk exposure management and surveillance are also a major strength.

As noted in KBRA’s Financial Guaranty Rating Methodology, based on its evaluation of a guarantor’s insured portfolio, KBRA tests the ability of an insurer’s claims-paying resources to support potential losses through a Monte Carlo simulation. The modeling approach produces a distribution of the insured portfolio’s expected future losses. KBRA focuses on losses in the tail of the loss distribution to assess the company’s ability to perform under stress conditions. The tail losses are then assessed against the company’s claims-paying resources in a financial model which places the company in run-off. The rating level for a guarantor is largely based on its ability to pay claims under KBRA’s stress case scenario which places the company in run-off.

To view the rating report, please visit National Public Finance Guarantee Corporation.

Related Publications:

Financial Guaranty Rating Methodology




Analytical Contacts:

Kroll Bond Rating Agency

Karen Daly, Senior Managing Director

kdaly@krollbondratings.com, 646-731-2347

or

Alessandra D'Imperio, Senior Director

adimperio@krollbondratings.com, 646-731-2383

or

Andy Clarke, Director

aclarke@krollbondratings.com, 646-731-2380

or

Kate Hackett, Managing Director

khackett@krollbondratings.com, 646-731-2304

or

Paul Kwiatkoski, Managing Director

pkwiatkoski@krollbondratings.com, 646-731-2387

Source: Kroll Bond Rating Agency


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