“The best way to protect policyholders is to preserve the triple-A ratings of the bond insurers where that is possible,” Dinallo said. “So we have been facilitating additions to the capital strength of the bond insurers, not for their own sake, but to protect policyholders and help stabilize the broader economy.”
The New York State Insurance Department, along with fellow state insurance regulators, has worked with insurers and interested stakeholders to bring additional capital and capacity to the market. The department is also working to address the needs of distressed companies and is considering regulatory changes to mitigate the issues raised by the recent insurer downgrades.
Dinallo’s testimony highlighted these efforts and noted the entry of new, healthy guarantors that can provide market depth and should help the municipal bond market stabilize over time.
“We continue to work with all parties, including the insurers, banks, financial advisors, private equity investors, rating agencies and federal officials,” Dinallo said, “to support efforts to strengthen the bond insurance market for all of its policyholders.”