Mortgage insurance providers have abandoned their recent efforts to levitate on hopes that some recovery in the housing market is going to spell a revival of their business models. It seemed like a silly notion when investors were bidding them up from rock-bottom share prices in the six-week period that stretched from August through mid-September, and – in retrospect – seems like a crazy notion from the perspective of another six-week remove.
Shares of Ambac (ABK)?have erased more than one-third of their value in Tuesday’s trading, after the company finally ‘fessed up to the grim reality that a prepackaged bankruptcy plan could be in?its future. Sure, it’s pretty much the same kind of canned patter that carnival barkers use to lure chumps into the tent: there?isn’t any more risk today to a bankruptcy filing than had been the case yesterday – the company said it believed it had sufficient liquidity to carry it through the second quarter of 2011 -?nor any less risk than there was before it made the admission about a prepack. The words themselves?served as a grim reminded.
The prospect of increased regulatory oversight, after?Ambac talked in a regulatory filing about the mounting interest?on the part of state?insurance regulators at looking at its business. Again, there’s been?no indication that anything substantive has changed, just a more-explicit acknowledgement by the company about the situation.
Meanwhile, shares of MBIA (MBI)?lost about one-quarter of their value, after the company recorded a third-quarter loss late Monday that amounted to $728 million, or about $3.50 a share, as some $810 million in pre-tax unrealized losses showed up on its books.
Most of the companies in the business have struggled to write new business?insuring credit obligations since losing their top credit ratings. Shares of Radian Group (RDN)?have held up the best, at least on a relative basis, the last! several weeks. Shares have fallen ”just” 9% in Tuesday’s trading.
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