Financial Guaranty: Financial Guaranty Global Rating Methodology

Executive Summary

This document describes KBRA’s rating methodology as it pertains to the financial strength of a financial guaranty company. For the purposes of this methodology, a financial guarantor is defined as a company whose primary business is the guarantee of interest and principal on debt instruments and other financial obligations. KBRA assigns an insurance financial strength rating (IFSR) to financial guarantors. For information on KBRA’s rating scales, please see KBRA’s Rating Scales.

The major rating determinants in KBRA’s financial guaranty methodology are i) an assessment of the company’s management, strategy and organization; ii) an evaluation and modeling of its insured portfolio and ability to pay claims in run-off; and iii) an analysis of its claims-paying resources and overall financial profile. KBRA believes these factors are the key elements that determine the credit profile of a…