On June 19, Moody’s Investors Service removed the triple-A financial strength rating  for bond insurers MBIA Insurance Corp. and Ambac Assurance Corp., downgrading both companies in response to their continued exposure to the struggling mortgage market.  MBIA was downgraded from Aaa to A2, while Ambac was downgraded from Aaa to Aa3.  Moody’s stated that the ratings downgrade for MBIA reflects the firm’s limited financial flexibility and impaired franchise, as well as the substantial risk within its portfolio of insured exposures, as well as a movement toward more aggressive capital management within the group.

Moody’s stated that its outlook for MBIA and Ambac’s future ratings are “negative” since it was concerned with uncertainties regarding the companies’ strategic plans going forward, as well as the possibility of further adverse developments in its insured portfolio.

On June 26, Fitch announced that it would stop rating MBIA, Inc. and Ambac Assurance Corp. and their related entities, pursuant to the request from both companies.  MBIA  had asked Fitch to withdraw its ratings in March  and Ambac  made a similar request in early June.   Fitch, in its announcement regarding the ratings withdrawal, noted that the withholding of substantive non-public information by MBIA and Ambac’s  management made it difficult for Fitch to generate ratings for the companies using its capital analysis model.  Fitch was the first of the three ratings agencies to cut Ambac’s rating, when it downgraded the company’s financial strength rating to AA in March.

Both Ambac and MBIA’s financial strength ratings were also downgraded earlier this month by Standard & Poor’s, from AAA to AA.