Insurance penetration in early September had fallen to new lows since Moody's Investors Service placed triple-A insurers Assured Guaranty Corp. and Financial Security Assurance Inc. on review for downgrade. About 6.2% of new issues came to the market insured in the ensuing two-week period, compared with 20.9% year-to-date, according to Thomson Reuters data. As a result of the announcement, both companies have taken steps to try to reassure the market of their stability.

"We're very confident in the strength of our company. I think when the dust settles, we expect to see a lot more interest and appetite in our product," says Bill Hogan, senior managing director of public finance at Assured.

In placing both companies on review for downgrade, Moody's cited problems for the financial guaranty industry as a whole and concerns with each company. Although Assured exceeded triple-A capital adequacy requirements, Moody's took issue with the insurer's concentration of exposures to corporate collateralized debt obligations. Much of that debt, as Assured noted, had received high ratings from Moody's itself. FSA, on the other hand, fell below Moody's requirements at the time of the announcement, and has significant exposure to direct residential mortgage-backed securities and to Jefferson County, Ala., the rating agency says. Jefferson County, which has some $3.2 billion in debt outstanding for its sewer system, is considering filing for bankruptcy protection perhaps as early as this week.

Both companies have sought to reassure the market in the meantime. Unlike downgraded insurers, both have continued to write new business in spite of the turmoil. Two weeks after Moody's announcement, Assured had wrapped $1.44 billion on 76 new issues while FSA had wrapped $651.2 million on 41 new issues, according to Thomson Reuters data.