Slabbed finds Ajax’s Achilles Heel: Rock Mountain High or Just Stoned in Bermuda?

Special thanks to Chris Sposato. If memory serves there were a dirty (half) dozen “guaranteed” Cat Bond issues connected to Lehman. The second to come tumbling down belongs to Bermuda based Aspen Insurance Holdings, Ltd. and their special purpose entity Ajax Re Ltd. The associated ri$k to take a hit is covered earthquake damage in California. The story itself begs additional research as this deal sounds as if there might be Cat Bonds stuck inside Cat Bonds with a (subprime) Mortgage Backed Security twist. The list of players per the article is very convoluted as well.  The Royal Gazette has the Bloomberg story:

Ajax Re Ltd., a catastrophe bond sold by Bermuda-based Aspen Insurance Holdings Ltd., is likely to default on an interest payment this month, Standard & Poor’s said, the second such security hurt by Lehman Brothers Holdings Inc.’s collapse.

S&P said it may downgrade $100 million of debt issued through Ajax Re Ltd. to D, the lowest grade, from CC, citing an “imminent interest payment default”, according to a statement from the New York-based ratings company yesterday.

Aspen sold the bonds in 2007 to protect against claims from Californian earthquakes.

“The issuer has notified us that it will not have sufficient funds available in the collateral payment account to make the scheduled interest payment,” S&P said. “We anticipate the transaction will default.” Continue reading “Slabbed finds Ajax’s Achilles Heel: Rock Mountain High or Just Stoned in Bermuda?”

News that couldn’t wait – Paulson considering bailout of insurance companies UPDATED Will US have a pot to pee in if Paulson keeps spending on his friends?

UPDATE: An afterthought of finding more versions of this story as I continued reading tonight is that a better title for this post might have been “Will the US have a pot to pee in if Paulson keeps spending on his friends?” (see the updated news below)

I picked the story up over at All finance and couldn’t wait wait to get it up – not to mention it makes me sick to think about Paulson using some of the taxpayers money to bailout the insurance industry’s bad investments.

The U.S. Treasury Department is studying how it could give relief to insurance companies under a $700 billion financial services rescue package, two sources familiar with the deliberations said on Friday.

Last week, the Treasury tried to squash rumors the government was preparing to give bond and mortgage insurance companies a capital injection. But senior officials are considering how the Treasury might be able to aid state-regulated insurance companies, the sources said.

The Treasury so far has used capital powers to aid only federally regulated institutions. But the program, known as TARP, could be used to buy sour assets from other financial companies and help them scrub their balance sheets.

It takes a sick mind to come up with TARP as the name of a program to bailout the insurance industry – CRAP would be my suggestion. Continue reading “News that couldn’t wait – Paulson considering bailout of insurance companies UPDATED Will US have a pot to pee in if Paulson keeps spending on his friends?”

News that couldn't wait – Paulson considering bailout of insurance companies UPDATED Will US have a pot to pee in if Paulson keeps spending on his friends?

UPDATE: An afterthought of finding more versions of this story as I continued reading tonight is that a better title for this post might have been “Will the US have a pot to pee in if Paulson keeps spending on his friends?” (see the updated news below)

I picked the story up over at All finance and couldn’t wait wait to get it up – not to mention it makes me sick to think about Paulson using some of the taxpayers money to bailout the insurance industry’s bad investments.

The U.S. Treasury Department is studying how it could give relief to insurance companies under a $700 billion financial services rescue package, two sources familiar with the deliberations said on Friday.

Last week, the Treasury tried to squash rumors the government was preparing to give bond and mortgage insurance companies a capital injection. But senior officials are considering how the Treasury might be able to aid state-regulated insurance companies, the sources said.

The Treasury so far has used capital powers to aid only federally regulated institutions. But the program, known as TARP, could be used to buy sour assets from other financial companies and help them scrub their balance sheets.

It takes a sick mind to come up with TARP as the name of a program to bailout the insurance industry – CRAP would be my suggestion. Continue reading “News that couldn't wait – Paulson considering bailout of insurance companies UPDATED Will US have a pot to pee in if Paulson keeps spending on his friends?”