Financial Guaranty Insurance Policies – Keep Your Eyes Open For Potential Pitfalls

Corporate Counsel

PUBLISHED ON: September 16, 2008

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The health of monoline insurance companies increasingly has come into question as a result of pressure from mortgage backed security writedowns. As a result, many financial institutions are taking a second look at an instrument more often viewed as a generic tripleA credit enhancement wrap than a true insurance policy. In the current fiscal environment, obligations under these complex policies may need re-examination, particularly as they apply to payment, rights of the monoline, and their potential effect upon the larger transaction.