Financial Guaranty Insurance Corp. has big plans in 2004, eyeing asset-backed deals outside of HELOCs - the only ABS sector it has historically dabbled in - said recently named President and Chief Underwriting Officer Howard Pfeffer.
The newly restructured monoline plans to expand into CDOs, among other fresh areas, including non-mortgage consumer finance, leasing and commercial finance, global RMBS and other quadrants of the real estate ABS market, such as subprime and Alt-A product.
"The plan is really to roll out into new areas with FGIC during the course of the year," Pfeffer said. "We only have about 10% of our book in asset-backeds right now, therefore we have capacity for new product areas."
Early last year, Frank Bivona stepped down from his position as vice chairman and CFO of Ambac to become CEO of FGIC. In December, just after FGIC officially broke off from GE Capital Corp, the firm announced the hire of Pfeffer along with three others - Tim Travers, Thomas Adams and Jeffrey Fried - all from Ambac. Travers is heading the London office of FGIC, while Adams will lead the consumer assets effort. Fried runs the structured public finance group. The firm is currently ramping up its staff, both in the U.S. and abroad.
Meanwhile, Greg Raab, who has been with FGIC for several years, will lead the commercial finance side of business.
Not to draw similarities in substance or business models, but, undeniably, over the past few years there has been trend of monoline talent being snatched up by firms with clean slates and fresh capital. CDC IXIS Financial Guaranty's poaching of several ex-MBIA is one example. While FGIC has been a name in the municipal and home equity market for quite some time, the firm was always under the strong arm - directly or not - of its conservative parent, which limited strategic expansion into new risk areas, or so it was understood.
"One thing we are finding is that there's a lot of interest in the FGIC name," Pfeffer said. "It's a good way for investors to diversify their portfolios."
The sale of FGIC from GECC to the PMI Group, the Blackstone Group, the Cypress Group and CIVC Partners was completed on Dec. 18. The purchase price was $2.18 billion.
As to what extent the PMI Group and the other primary investors will be involved in FGIC's management, Pfeffer states simply, "This is an independent company."
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