CIFG Holding today announced that its financial guaranty subsidiaries have reached agreements to commute approximately $12 billion in structured finance exposures.
Under the memorandum of understanding signed with its counterparties, CIFG also said it will find an insurer to reinsure its public finance portfolio.
CIFG will pay an undisclosed amount of cash and equity to terminate its agreements with counterparties of its ABS of CDOs and commercial real estate CDO exposures. The agreements should improve CIFGs capital position and claims paying resources.
While much work remains to be done, this is a major step forward. When we reach final agreement, it will work to the mutual benefit of all parties, as it will restore CIFG to financial health and better position the company to honor its obligations to policyholders, said John Pizzarelli, chief executive officer of CIFG, in a statement. I would especially like to thank New York State Insurance Superintendent, Eric Dinallo, and his team for their continuing support and guidance in leading us through this process.
CIFGs announcement comes less than a week after MBIA announced that it would reinsure $184 billion worth of Financial Guaranty Insurance Corp.s U.S. public finance book. Dinallos office was involved in that arrangement as well.
Dinallo at the time of the MBIA-FGIC announcement had said FGIC and CIFG were in binary situations: they either needed to commute some of their exposures or face insolvency.
He said in a conference call with reporters after that announcement that CIFG was his departments top priority.