A handful of bond insurers, which were hammered with double-digit declines on Wednesday following news that Ambac Financial Group Inc.
reported a $1.66 billion quarterly loss, saw some relief Thursday on Moody's Investors Service comments that while Ambac losses exceeded analysts' expectations, they were below worst-case-scenario losses the agency uses to evaluate Ambac's capital adequacy.
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Ambac's shares gained 8.67% to close at $3.67 per share following a nearly 43% tumble in the prior trading session. Rival monoline MBIA Inc., which also faces future losses related to its structured finance wraps, benefitted from the Moody's news, as its shares climbed 11.49% to $9.80 per share after falling nearly 27% in the prior session.
PMI Group, one of the owners of bond insurer FGIC Corp., recorded a 6.05% gain on the day to close at $5.43 per share after falling nearly 2% the day before. FGIC, unlike its aforementioned peers, has yet to receive a much-needed capital infusion to regain its triple-A rating. The troubled monoline earlier this month hired Goldman, Sachs & Co. to advise it on strategic alternatives, which could include a sale of all or part of the company or a "bulk reinsurance transaction."
The Dow Jones Industrial Average picked up 85.73 points to close at 12,848.95 due in part to a Labor Department report showing a decline in weekly unemployment claims. - Michael Rudnick
