Assured Guaranty: Chapter 9s could force pullback
* Cites Harrisburg, Jefferson County filings
* Calls trend "disturbing"
Nov 15 (Reuters) - Bond insurer Assured Guaranty (AGO.N) may stop underwriting bonds in states without tighter controls on municipal bankruptcies, after two recent high-profile filings, the company's chief executive said on Tuesday.
Assured is the last active insurer of municipal bonds in the United States, after the financial crisis struck down most of its competitors. But the company said Tuesday there were "disturbing trends" of late in local government bankruptcies that had it reconsidering some of its book of business.
"We will reconsider insuring any municipality in states that do not have a framework in place to review and approve local bankruptcy petitions," Chief Executive Dominic Frederico said on a conference call with analysts.
The company cited two recent filings in particular: the Pennsylvania capital Harrisburg and Jefferson County, Alabama, both of which have been highly contentious.
There are questions about whether either had the right to file for Chapter 9 bankruptcy protection, given state laws that may interfere.
Municipal bond insurance is often used to help borrowers obtain more favorable terms by adding the insurer's guarantee. Assured Guaranty, which no longer has an "AAA" credit rating, has said its backing can still help smaller and lower-rated entities come to market affordably. (Reporting by Ben Berkowitz, editing by Dave Zimmerman)
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