NEW YORK (Reuters) - Bond insurer MBIA Inc (MBI.N) could be insolvent as soon as the second quarter of 2008 if it were unable to access additional capital, according to a slide at a presentation by Pershing Square’s William Ackman.
Ackman estimates MBIA will incur $2.2 billion of losses in the fourth quarter, and rival bond insurer Ambac Financial Group Inc ABK.N will incur $4.2 billion of losses.
Ackman was speaking at a conference in New York. Activist hedge fund Pershing Square Capital Management LP has been short the bond insurers for years, meaning that the firm profits when bond insurers’ shares decline. Shares of Ambac and MBIA have fallen more than 50 percent this year, but both were up more than 4 percent in Wednesday morning trading on the New York Stock Exchange.
Reporting by Megan Davies and Michael Flaherty; writing by Dan Wilchins, editing by Gerald E. McCormick