What is Municipal Bond Insurance?
Municipal bond insurance guarantees the timely payment of principal and interest on municipal bonds.

By investing in municipal bonds with insurance, investors gain a guarantee that the debt will be repaid and issuers can benefit from reduced borrowing costs and potentially enhanced marketability.

However, ANY payments by and insurer are subject to the credit of the insurer.

A bond that is insured municipal bonds are usually assigned the credit rating of the insurer, as long as that rating is higher then the underlying issuers rating. (underlying rating refers to the ACTUAL rating of the issuer)

Bonds are classified as either investment grade or below investment grade.

Investment grade bonds must be rated Baa3/BBB-/BBB or higher by Moody’s Investors Services, Standard & Poor’s and/or Fitch Ratings, respectively.

The rating agencies review a bond insurer’s capital adequacy each year in order to ensure the accuracy of the assigned ratings.

Below you will find a useful reference of the recent and prospective rating actions for the major municipal bond insurers.

This information is correct as of April 8, 2011.