Monoline Insurance Company

AAA

DEFINITION of 'Monoline Insurance Company'

An insurance company that provides guarantees to issuers, often in the form of credit wraps, that enhance the credit of the issuer. These insurance companies first began providing wraps for municipal bond issues, but now provide credit enhancement for other types of bonds, such as mortgage backed securities and collateralized debt obligations.

INVESTOPEDIA EXPLAINS 'Monoline Insurance Company'

Issuers will often go to monoline insurance companies to either boost the rating of one of their debt issues or to ensure that a debt issue does not become downgraded. The ratings of debt issues that are securitized by credit wraps often reflect the wrap provider's credit rating.

Along with providing credit wraps, monoline insurance companies also provide bonds that protect against default in transactions that deal with physical goods.

RELATED TERMS
  1. Collateralized Debt Obligation ...

    An investment-grade security backed by a pool of bonds, loans ...
  2. Asset-Backed Security - ABS

    A financial security backed by a loan, lease or receivables against ...
  3. Corporate Bond

    A debt security issued by a corporation and sold to investors. ...
  4. Indemnity

    Compensation for damages or loss. Indemnity in the legal sense ...
  5. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  6. Reinsurance

    The practice of insurers transferring portions of risk portfolios ...
Related Articles
  1. Home & Auto

    Is Your Insurance Company Going Belly ...

  2. Insurance

    Investing In Health Insurance Companies

  3. A credit rating is a useful tool not only for the investor, but also for the entities looking for investors.
    Investing Basics

    What Is A Corporate Credit Rating?

  4. Bonds & Fixed Income

    Corporate Bonds: An Introduction To ...

Hot Definitions
  1. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  2. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  5. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  6. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
Trading Center