MBIA Inc. said it and other bond insurers have settled a 2008 lawsuit filed by the city of Los Angeles claiming violation of California's antitrust laws.
The settlement is expected to be finalized in the first half of the year. Its terms were not disclosed.
The insurers were accused of maintaining a dual credit rating scale that misstated the credit default risk of certain issuers, thereby creating market demand for bond insurance. The city also claimed that individual bond insurers participated in risky financial transactions in other lines of business that damaged each bond insurer's financial condition.
Respondents were also accused of failing to adequately disclose the impact of those transactions on their financial condition.
Other insurers named in the complaint included Ambac Financial Group Inc., XL Capital Assurance Inc., ACA Financial Guaranty Corp., Financial Guaranty Insurance Co. and CIFG Assurance North America Inc.
