With the Dexia merger closed, Financial Security Assurance will ramp its competitive edge in both the domestic and international bond insurance markets, further increasing its penetration into asset-backed securities market, said company Chairman and Chief Executive Officer Robert P. Cochran.

"It will certainly permit us to keep more of what we insure," Cochran said. "And [it will allow us] to push ahead into markets, not from a credit, but from a market penetration perspective with the knowledge that we have a huge capital base behind us."

The $2.6 billion acquisition by French bank Dexia was officiated last week, landing owners of FSA stock $76 per share.

"We fulfill a significant piece of strategy for them," Cochran said, explaining that Dexia is attempting to boost its role in the worldwide public finance markets.

"Just as importantly for us, our most import growth market right now is Europe," He added. "Dexia of course brings to us deep roots and huge resources in Europe that neither we nor any of our competitors have, so we think it's a great combination in that respect."

Theoretically, in parts of Europe, Dexia as an investment banking institution could underwrite deals that FSA insures. Similarly, on a swap basis, if a domestic client of FSA wanted to sell securities in the U.S. and Europe simultaneously, Dexia could be part of the selling sydicate.

According to Cochran, FSA has been operating in London since 1987, and has done a good deal of European business, but rarely on a repeat or flow basis. Rather, FSA has retained business episodically, insuring very large, infrequent transactions, as a reflection of the market.

"But that's beginning to change, primarily because of the euro, and the confluence of the capital markets in Europe into one major capital market, which is producing more investors and more issuers," Cochran said.

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