With borrowing costs at their lowest levels since 2004, reinsurers are loading up on corporate debt in part to fund stock buybacks. The latest tally, according to Bloomberg News, is $1.34 billion in additional borrowing, with Endurance Specialty Holdings (ENH), a Bermuda-based company, recently selling $85 million in bonds. Other recent transactions include Axis Capital Holdings (AXS) and PartnerRe (PRE) each issuing $500 million in bonds and RenaissanceRe (RNR) adding $250 million to the count.

Continue reading Reinsurers Returning Capital Despite Catastrophes

Reinsurers Returning Capital Despite Catastrophes originally appeared on BloggingStocks on Sun, 28 Mar 2010 11:40:00 EST. Please see our terms for use of feeds.

After weeks of speculation, the financial damage from the Chile earthquake and Windstorm Xynthia in Europe is starting to emerge. According to a recent report by Moody's, 16 global reinsurance companies have reported their net insured losses (before taxes) from the catastrophe event, and the damage has already reached $3.5 billion, increasing an already high tally. The firm expects these events to have a noticeable impact on first quarter results for the industry.

According to the report, the first quarter of 2010's results "will have many moving pieces, including the possibility of favorable loss reserve development." It continues, though, that "we would expect a number of reinsurers to post both operating and net losses for the quarter."

Continue reading Q1 Cats Likely to Have Reinsurance Earnings Impact

Q1 Cats Likely to Have Reinsurance Earnings Impact originally appeared on BloggingStocks on Sat, 20 Mar 2010 14:10:00 EST. Please see our terms for use of feeds.

In what surely must be the PR move of the decade, Moody's Corp. (NYSE: MCO) has downgraded Berkshire Hathaway (NYSE: BRK.A) from AAA to AA2.

Why is this a great PR move? Well, Berkshire owns 20% of Moody's. And what could be a better demonstration of Moody's independence and objectivity than its decision to downgrade the financial strength of its biggest shareholder?

Pretty clever, no? Sure -- unless you start to consider that Moody's and the other ratings agencies gorged on fees from investment banks to rate toxic waste for years -- using their AAA credit ratings to convince investors to buy the securities. Now that the ratings agencies have no fees to earn from rating toxic waste, they are studiously trying to rebuild their reputation for objectivity.

Continue reading Berkshire's Moody's downgrades Buffett

Berkshire's Moody's downgrades Buffett originally appeared on BloggingStocks on Wed, 08 Apr 2009 20:40:00 EST. Please see our terms for use of feeds.

Bloomberg News reports that Moody's (NYSE: MCO) may downgrade municipal bond insurer MBIA (NYSE: MBI) after it reported deepening losses from the mortgage-market slump. MBIA's insurance financial strength rating may fall to the Aa range, although a drop to the A category is possible. MBIA's stock is down 91% since the end of May 2007.

That's when I first suggested that investors consider selling MBIA shares short. William Ackman had already shorted MBIA because he thought it lacked the capital needed to support its obligations. Back then, MBIA traded at $66.59 a share -- today it's down to $5.88. His bet proved prescient.

Meanwhile, investors are wagering that MBIA won't make it. Credit-default swaps tied to MBIA's insurance unit rose to a record as investors hedged against the risk the company's guarantees will sour. Sellers of five-year contracts demanded 23% upfront and 5% a year. That's up from 18.5% initially and 5% a year yesterday.

Only $5.88 more to go.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in MBIA securities.

MBIA downgrade? How low can it go? originally appeared on BloggingStocks on Wed, 04 Jun 2008 14:48:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• Barnes & Noble Inc (NYSE: BKS) is considering a bid for rival bookseller Borders Group Inc (NYSE: BGP), the Wall Street Journal reported, a move which would allow Barnes & Noble to improve profits and reduce costs. Antitrust issues could prevent a deal.
• The Wall Street Journal also reported that Carl Icahn's effort to remove Yahoo! Inc's (NASDAQ: YHOO) board has picked up new supporters, including T. Boone Pickens, who acquired a 0.75% stake. Some Yahoo shareholders believe it is still too early to predict whether Icahn will be able to carry July 3's shareholder vote.
• A Financial Times investigation discovered that Moody's Corporation (NYSE: MCO) incorrectly awarded top ratings to billions of dollars to debt products due to an error in its computer models. Moody's said it is in the process of "conducting a thorough review" of the rating of the constant proportion debt obligations, which should have been up to four notches lower.

• According to the people briefed on the matter, the New York Times reported that the buyout of Penn National Gaming Inc (NASDAQ: PENN) by Fortress Investment Group (FIG) and Centerbridge Parters may involve revised terms. The sources said the negotiations may "delay or even imperil" the deal.

Newspaper wrap-up: Barnes & Noble may bid for Borders originally appeared on BloggingStocks on Wed, 21 May 2008 08:00:00 EST. Please see our terms for use of feeds.

Junk sometimes is just that originally appeared on BloggingStocks on Tue, 08 Jan 2008 14:22:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• CIBC cut SanDisk Corp (NASDAQ: SNDK) to Sector Performer from Outperformer on valuation.

• Nationwide Financial (NYSE: NFS) was downgraded to Underweight from Equal-Weight at Morgan Stanley on valuation.

• Ferris Baker cut Unica Corp (NASDAQ: UNCA) to Sell from Hold following the company's announcement that it has dismissed auditors Ernst & Young. Montgomery downgraded Unica to Hold from Buy on valuation.

• International Paper (NYSE: IP) was downgraded to Neutral from Outperform at Credit Suisse on valuation.

• UBS downgraded the Apartment REIT sector to Underweight and downgraded BRE Properties (NYSE: BRE), Camden Property Trust (NYSE: CPT) and Meruelo Maddux Properties (NASDAQ: MMPI) to Neutral from Buy...

• JP Morgan cut Moody's Corp (NYSE: MCO) to Neutral from Overweight.

• Lehman downgraded Powerwave Technologies (NASDAQ: PWAV) to Equal-Weight from Overweight.

• Goldman downgraded Target Corp (NYSE: TGT) to Neutral from Buy.

Analyst downgrades 7-02-07: NFS, PWAV, SNDK, TGT and UNCA originally appeared on BloggingStocks on Mon, 02 Jul 2007 10:36:00 EST. Please see our terms for use of feeds.

• Lehman Brothers cut the New York Times Co (NYSE: NYT) to Underweight from Equal-Weight as they believe the company's recent cost cuts reflect management's concerns over its top-line.

• Moody's Corp (NYSE: MCO) was downgraded to Underperform from Neutral at Credit Suisse based on the potential to impact from a slowdown in collateralized debt obligation issuance on growth.

• Nokia Corp ADS (NYSE: NOK) was removed from Goldman Sachs's Conviction Buy List based on its recent strength.

• William Blair cut Circuit City Stores (NYSE: CC) to Underperform from Market Perform as the firm has concerns over the slowing of the advanced TV cycle and challenges to the company's turnaround plans.

• UBS lowered Cypress Semiconductor Corp's (NYSE: CY) rating to Neutral from Buy based on valuation.

• Citigroup cut BAE Systems plc ADR (OTC: BAESY) to Hold from Buy.

• Raymond James downgraded Caremark RX (NYSE: CMX) to Market Perform from Outperform.

• Matrix USA downgraded The Goodyear Tire & Rubber Co (NYSE: GT) to Hold from Buy and removed the company from its Focus List as they see little upside from its recent rally.

• Nollenberger downgraded shares of Station Casinos (NYSE: STN) to Neutral from Buy after the company accepted a revised buyout offer from Fertitta Colony Partners as they feel the chance for a higher offer to emerge is unlikely.

Analyst downgrades 2-26-07: Circuit City & The New York Times downgraded originally appeared on BloggingStocks on Mon, 26 Feb 2007 00:00:00 EST. Please see our terms for use of feeds.