bond insurers appear shaky as credit climate worsens

--AMBAC Financial Group, MBIA are leading the pack who agree to cover interest and principal payemnt in the event of default. Others like ACA Capital, Security Capital Assurance, PMI group. --deterioation in the credit market will weigh on the earnings of bond insuers and rating agencies will downgrade them too, another domino effect of bond-rating downgrades --lured by larger profits and higher growth rates, some bond inurers expanded into aggresive business of writing insurance for bonds backed by subprime. --Most guaranteors insured only AAA CDO and above. --value of CDS will be reflected in insuers' earnings --Market: according to Fitch, guarantors have written insurance on more than 80 bil of CDOs --AMBAC insured 29 bil of CDOs backed by subprime mortgages, the most among U.S guarantors. Est loss 4.4 bil