Guaranty insurers Ambac Financial Group and MBIA Inc. criticized Moody's announcement that it placed the companies on review for possible downgrade, one calling the announcement driven by marketplace "panic."

Late yesterday, Moody's Investors Service issued a statement saying the ratings of New York-based Ambac and Armonk, N.Y.-based MBIA were being placed on review for possible downgrade because its stress models indicated loss projections from exposure to loss in subprime residential mortgage backed securities may be higher than originally projected.

The rating agency said its projections indicate that cumulative loss rate projections on subprime mortgage related exposure will be substantially above its earlier projections.

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