True to plan, monoline guarantor Financial Guaranty Insurance Co. rapidly grew its book of business in the first quarter, after freeing itself from conservative former parent General Electric and hiring Howard Pfeffer away from rival Ambac (see ASR 1/26/04). The fact that FGIC was able to accomplish a whopping $4.6 billion in wrapped ABS in a tightening spread environment makes the feat all the more notable (see accompanying guarantor supplement). It also highlights what the new FGIC has to offer both issuers and investors - monoline diversity and an unencumbered balance sheet.

Look for FGIC to continue its expansion into other consumer asset classes, CDOs and new geographic regions. Just last week, FGIC hired Tracy Pridgen as a managing director focusing on CDOs and Dana Skelton as a vice president working on mortgage ABS.

Throughout the first quarter, FGIC relied primarily on its historical strength - HELOCs for volume. The firm wrapped four HELOCs totaling $3.4 billion. Overall, FGIC wrote policies on $4.6 billion of new issue ABS throughout the quarter. Non-HELOC deals included Avis Holding's $600 million AESOP 2004-2 deal and GMAC-RFC's RFMSII 2004-HS1 second lien securitization.

FGIC also brought two first-time HELOC issuers to the market: First Tennessee National Bank and IndyMac Mortgage. Both issuers, however, have issued mortgage-related ABS in the past.

For FGIC, this represents a rapid ramp-up as promised by Pfeffer. He expects the addition of 50 more ABS staffers by year-end.

"We're beginning to explore synergistic opportunities, both domestically and internationally, with one of our investors, the PMI Group, Inc.," said Pfeffer regarding leveraging FGIC's relationship with the mortgage insurer, which owns 42% of FGIC.

Unlike other recent new entrants to the monoline market, FGIC had legacy relationships with mortgage lenders that issued HELOC ABS. In addition, the FGIC underwriting team, with consumer asset underwriting headed by senior managing director Thomas Adams - also formerly of Ambac - can carry over the relationships to FGIC.

With Adams on board, FGIC can build upon the relationships he brings from Ambac in other assets. "We're receiving strong interest from issuers and investors in a number of consumer asset classes, including non-prime mortgages, student loans and autos," Adams said.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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