Bond insurers such as MBIA's National Public Finance Guarantee and Assured Guaranty are set to bolster their capital positions on a continuing wave of municipal refundings of guaranteed bonds.

Low-interest rate environments encourage issuers to refund bonds, and with rates remaining low, bonds surpassing their 10-year no-call provisions will propel refundings in 2014 and 2015, analysts and rating agencies said. Insurers reduce risk and take unearned premiums into revenue immediately when bonds are refunded, improving the guarantors’ capital adequacy positions.

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