MBIA's CDO Strategy

MBIA's strategy for insuring CDOs involves a rigorous four part underwriting process: 1) Evaluating proposed collateral pools, 2) Evaluating collateral managers through due diligence for managed CDOs, 3) Undertaking cash flow and quantitative modeling, and 4) Evaluating legal structures. MBIA focuses on insuring the most senior risk layers of CDOs across various asset classes to take advantage of diversification and protect against correlated defaults. MBIA segments multi-sector CDOs into high grade and mezzanine categories based on underlying collateral ratings and typically insures at support levels well above triple-A requirements.