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Banking, finance, and taxes

Goldman Sachs Notes An Insurer Worth Zero In Run-Off (SCA, MBI, ABK)

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By Douglas A. McIntyre Updated Published
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Security Capital Assurance Ltd. (NYSE: SCA) has been terminated from coverage at bulge bracket firm Goldman Sachs after the company has seen shares plummet over recent months.  The company noted that all three ratings agencies have downgraded the credit rating of the bond insurer.  This notes the probability that the company will either struggle or will be ultimately unable to write new business entirely because it doesn’t have a Triple-A rating. 

Goldman Sachs has outlined ratings on this and other with several scenarios.  Its value for SCA in a run-off scenario now sits at ZERO.  It has been negative on financials.  Goldman Sachs previously gave a valuation matrix under multiple scenarios for the bond insurers.

SCA stock has traded over $30.00 in the last year.  Ambac Financial (NYSE: ABK) just cut its dividend to almost nothing.  Both it and MBIA Inc. (NYSE: MBI) are seeking rescue packages partly in order to keep their respective "Triple-A" ratings as well.  While their stocks have also been disasters, they might want to consider this scenario here.  The clock is ticking.

Jon C. Ogg
March 3, 2008

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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