Losses weigh on MBIA

Bond insurer MBIA (MBI) posted a steep fourth-quarter loss that will only intensify questions about its chances of fending off a ratings agency downgrade. The Armonk, N.Y., company lost $2.3 billion, or $18.61 a share, for the quarter ended Dec. 31, reversing the year-ago profit of $181 million, or $1.32 a share. MBIA did say it closed a $500 million stock sale to private equity firm Warburg Pincus, and that it is considering its alternatives for raising additional equity, including a $500 million rights offering Warburg has agreed to backstop. Given rising losses tied to the crumbling value of mortgage-related securities, it’s likely the company will have to raise more money soon to hold onto its triple-A ratings from Moody’s and S&P. Complicating those efforts, though, is a push by hedge fund investor Bill Ackman, who is short MBIA, to raise questions about the accounting practices and financial prospects of MBIA and rival Ambac (ABK). Elsewhere, S&P is forecasting banking industry losses of $265 billion on mortgage securities and collateralized debt obligations - very much the sorts of holdings that have investors worried about Ambac and MBIA. Those sorts of observations are part of what pushed both stocks to double-digit percentage losses Wednesday - and why Thursday may well bring more of the same.