ACA Must Pay For Defaulted Muni Bonds: Suit

Law360, New York (July 18, 2011, 12:56 PM EDT) -- An ACA Financial Guaranty Corp. policyholder launched a putative class action in Mississippi federal court on Friday accusing the insurer of unlawfully dropping its coverage of certain municipal bonds after the bond issuer stopped making its required payments.

Mississippi resident James E. Davis claims that toll road revenue bonds that he and other putative class members held were insured by ACA in the event of nonpayment by issuer Connector 2000 Association Inc.

But after Connector failed to make its required payment on the bonds on July...
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