More Videos
- Japan Third Quarter GDP Jumps; 2010 Growth May Slow
- Shift Into High-Quality Stocks Could Move Market Higher
- China: Low US Interest Rates Threaten Recovery
- Drug Study Questions Effectiveness of Merck's Drugs
- Military Arms Race Dominates Dubai Air Show
- Disaster Film '2012' Drowns Rivals at Box Office
- Cramer: 5 Earnings Reports to Watch Next Week
- Cities With the Most Home Price Reductions
- This Year's Biggest Thanksgiving Leftover: Cash
- U.S. Stocks Rally for the Second Straight Week
- Dollar is Not Plunging—So 'Calm Down': Market Strategist
- Strategists Say Markets Have More Upside — But How Much?
- Hirschhorn: Risk-Averse Traders
- Roginsky: A Funny Thing Happened on the Way to Financial Reform
- This Year's Biggest Thanksgiving Leftover: Cash
- TV Series Inks Unique Deal For Fight
- First Time Buyers Rescue Housing: Realtors
- Dollar General Trades Higher After Its IPO
MOST SHARED
- CNBC Video: Warren Buffett & Bill Gates - Keeping American Great
- Japan Third Quarter GDP Jumps; 2010 Growth May Slow
- Dipping Into Green Investing
- CNBC TRANSCRIPT: Warren Buffett & Bill Gates - Keeping America Great
- For Investors, The New Green Looks To Be White
- Analysis: APEC Nations Back Face-Saving Climate Plan
- U.S. May Wind Up Green With Envy
- The Cost of Thanksgiving Dinner 2009
- Finding Value and Growth In The Green Sector
Text Size 
Billionaire investor Wilbur Ross will take a stake of up to a billion dollars in bond insurance company Assured Guaranty [AGO
Loading...
()
].
 |
Bermuda-based Assured Guaranty has a market capitalization of $1.8 billion.
Ross told CNBC the deal has been in the works for several weeks, and described the investment in Assured Guaranty as "opportunity capital rather than damage-curing capital."
"We've looked at quite a few of the financial guaranty companies, and the reason that we picked Assured for our first point of entry is a pretty straightforward one," he said. "The other ones, by and large, need capital simply to preserve their triple-A rating status. Assured is one of the few that's ranked as a strong, stable triple-A, even without our capital."
He also indicated Assured's relatively conservative approach is consistent with his own.
"I think if you're going to be a true triple-A, you need to behave like one, and not take cowboy-type risks," he said.
The bond insurance sector, particularly major players like MBIA [AGO
Loading...
()
] and Ambac [ABK
Loading...
()
], have been under pressure in recent weeks, as problems in the credit markets has put pressure on their operations. There have been hopes that infusions of outside capital will help the sector revive, which in turn would help loosen tight credit operations.
Ross hinted at additional investments to come.
"We're still in discussions with some of the other people in the industry," he said. "I think we will wind up putting capital, through Assured, into others, either through reinsurance treaties, or through direct purchase."
And he indicated that the industry itself faces transformation.
"We believe that there will be some consolidation within the financial guaranty industry, and that it will end up with fewer, larger companies."
Financier Warren Buffett has also made dramatic moves in bond insurance.
In December, Buffett created his own bond insurer, led by Ajit Jain, the top insurance executive of Buffett's Berkshire Hathaway [BRK
Loading...
()
].
Buffett's new insurer started insuring municipal bonds in January.
"I guess we are in competition with Warren," Ross told CNBC. "It's easier for him to go from scratch than it would be for us."
Print
Email
- Where, what, how.
- Warren Buffett and Bill Gates spoke to Columbia students, and Buffett made the students a startling offer.
- For the chief of cable company Comcast, growth has been about making deals – generally very large deals.
- Some companies may start using insurance to shift carbon risk from their balance sheets to maybe... yours?
- The president and founder of Genesis Today wants to improve America’s health, and thinks Wal-Mart can help.
- Switzerland's privacy watchdog is taking legal action to force Google to make changes to its Street View service.
Data is a real-time snapshot *Data is delayed at least 15 minutes