Finance 431: Property-Liability Insurance. Lecture : Financial Guaranty Insurance. Overview. Financial Guaranty Insurance Sub-Prime Crisis The Effect on Financial Guaranty Insurers Other Effects on the Insurance Industry. Financial Guaranty Insurance.
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Financial Guaranty Insurance
Definition: Insurance on a bond or other security which guarantees that interest and principal will be paid on time and in full in the event of default.
Default – when the issuer of the bond or security does not pay the principal and interest for the bond or security.
Also known as Bond Insurance
Financial strength is key due to the insurers obligation to pay the principal and interest if default occurs.
A) Asset-Backed Securities
B) International Securities
C) Mortgage Backed Securities
A) Mortgage Lenders
C) Home buyers
D) Rating Agencies
E) Bond Insurers