Fitch Ratings yesterday placed the insurer financial strength rating of MBIA Insurance Corp. and CIFG Assurance NA on negative watch while affirming their AAA ratings, saying continuing loss estimates on subprime mortgage-backed securities had led the agency to revise its earlier models. Fitch said adequate capital reserves may no longer be enough to prevent downgrades.

"Fitch believes it is possible that modeled losses for structured finance collateralized debt obligations could increase materially," the rating agency said in a report. "A material increase in claim payments would be inconsistent with AAA ratings standards for financial guarantors, and could potentially call into question the appropriateness of AAA ratings for those affected companies, regardless of their ultimate capital levels."

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