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Could someone explain the following quote from Bill's interview?

BM: A loss or two at 35:1 leverage becomes pretty tough.
TJ: And plus, the financial guaranty business is a business where you can't get out of the risk you have underwritten. The beauty of our business and why I like our model very much is that you have liquidity. You can get out if you want to get out. You may have to pay to get out, but you can get out.


What precisely is the difference between PRS' guaranty and one provided in the "financial guaranty business"?

What concerns me is their use of leverage. Am I right in thinking that the unsecured nature of the guaranty makes their use of such leverage reasonable?

I like the growing market, like the float derived from the business model, but want to make sure I understand the possible impacts of 35:1 leverage before deciding to take a position.

Thanks,
Stephen
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