Warren Buffett's efforts to
reinsure $800 billion in municipal bonds for MBIA Inc., Ambac Financial Group Inc. and Financial Guaranty Insurance Co. while leaving them with what have been termed toxic mortgage-backed securities may have been in vain as two of the three have told the Oracle to go back to Omaha.
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Ambac in a statement released after the close of market Tuesday said the Berkshire Hathaway Inc. chairman and chief executive's deal "would result in little to no net capital relief to support Ambac's ratings," adding that it was not in the interest of its policy holders, according to media reports. The Deal was unable to obtain the statement, and an Ambac officials did not return calls. "Ambac continues to vigorously pursue various alternatives for taking our franchise forward to benefit all of our policy holders," the statement added.
Buffett in a CNBC interview Tusday said that one of the three insurers to which he made the offer had turned him down. Ambac last night said it had not spoken with Buffett prior to issuing its statement.
MBIA was considered by the Street to be the most likely to have shunned Buffett's advances because it recently raised capital from private equity firm Warburg Pincus. However FGIC, which may be able to lean on deep-pocketed owners Blackstone Group LP and Cypress Group LP, may also have rejected the billionaire's bailout plan. - Michael Rudnick
