A $2.3-billion loss for bond insurer

MBIA Inc. reported a $2.3-billion fourth-quarter loss Thursday, but the bond insurer’s executives defiantly told investors its business was fortified against turbulence in the credit markets and worthy of a top-notch rating.

“Our own conclusion is that the market has overreacted to the real and obvious problems that we’ve had,” Chief Executive Gary Dunton said. Investors responded, sending MBIA shares 11% higher to $15.50, reversing losses that saw the stock go as low as $11.80.

Bond insurers have been under pressure recently as the quality of the assets underlying the bonds they insure has deteriorated. Late Thursday, Standard & Poor’s Ratings Services placed MBIA ratings on a watch list “with negative implications,” which means there is a 50% chance that the agency will drop the rating at least a notch within the next 90 days. Such a move would severely undermine the insurer’s ability to win new business.