Monoline Insurance Company

What is a 'Monoline Insurance Company'

A monoline insurance company is 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.

BREAKING DOWN '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.

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RELATED FAQS
  1. What is a wrap account and what are the advantages of using one?

    Wrap accounts, in which brokerage account costs are "wrapped" into a single or fixed fee, are great if you don't have time ... Read Answer >>
  2. My FA recommended a wrap fee for me, is that appropriate?

  3. How important is credit rating on a fixed income security?

    Learn how credit ratings for fixed-income securities impact the yield and provide guidance for the amount of risk for the ... Read Answer >>
  4. Does a good credit rating guarantee repayment?

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  5. Who or what is backing municipal bonds?

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  6. How long are credit ratings valid?

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