This post was written by David Schlecker and Andrea Pincus.
3rd Quarter Financials Lead to Action By NYS Superintendent of Insurance and ISDA
On November 24, 2009, Financial Guaranty Insurance Company (“FGIC”), a New York- domiciled monoline financial guaranty insurer, was ordered by New York’s Superintendent of Insurance to cease writing any new policies and to suspend payment of all claims. The Superintendent’s order follows FGIC’s Quarterly Statement for the third quarter of 2009, in which FGIC reported that as of September 30, 2009, it suffered an impairment of its required minimum surplus to policyholders of $932,234,577.
FGIC presented the Insurance Department with a proposed “Surplus Restoration Plan” intended to remediate its exposure to certain residential mortgage-backed securities (“RMBS”) and collateralized debt obligations of asset-backed securities (“ABS CDOs”). Under the plan, FGIC proposes to take the following steps: