Report concludes bond insurer MBIA may bounce back
Bond insurer MBIA (MBI) is looking better in the eyes of one analyst group as long as the monoline is close to settling years-old litigation regarding the bifurcation of its insurance operations. Research and investing firm BTIG released a report suggesting challenges to MBIA's transformation could be resolved in a settlement in the near future. BTIG said such an action could result in shares nearly tripling "in a post-announcement short squeeze." The remaining litigation is over a complaint filed by 21 banking entities in 2009, challenging MBIA creating a second firm using $5 billion siphoned off from the company's original insurance subsidiary. In the past year, dozens of plaintiffs have dropped out of the suit, resulting in only a handful of financial firms left as plaintiffs. BTIG's report and a recent Wall Street Journal article suggest the remaining parties could also be close to some type of settlement. Such a settlement would be a boon for the insurer, BTIG reported. "Following almost four years of uncertainty during which its status as a viable entity has been in question, MBIA appears closer to resolving the various challenges it faces, unlocking the value of National Public Finance Guaranty Corporation – the company's public finance unit – to the benefit of shareholders, and resuming its role as one of the last remaining players within that industry," the BTIG report concluded. Write to Kerri Panchuk.