* Cites Harrisburg, Jefferson County filings
* Calls trend "disturbing"
Nov 15 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)