Fitch Ratings downgraded the insurer financial strength rating of FGIC Corp. and its financial guaranty insurance subsidiaries Financial Guaranty Insurance Co. and FGIC UK to 'AA' from 'AAA'. The rating agency also downgraded FGIC Corp.'s long-term issuer rating to 'A' from 'AA' and $325 million of 6% senior notes due Jan. 15, 2034 to 'A' from 'AA'. The ratings remain on Rating Watch Negative. Fitch said that it took these actions because FGIC has not yet raised new capital or taken other risk mitigation actions to meet the rating agency's 'AAA' capital guidelines within a timeframe consistent with Fitch's expectations. FGIC has a modeled capital shortfall of approximately $1.3 billion at the 'AAA' rating threshold. Last month FGIC said that had developed, and was actively pursuing, a comprehensive plan to enhance its capital resources and created an adequate cushion in excess of Fitch's triple-A capital requirements. However the company said that it was not certain that the plan would be completed in a timely manner to satisfy all of the rating agencies. Standard & Poor's and Moody's Investors Service have the company on CreditWatch with Negative Implications and review for a downgrade, respectively.
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