FGIC Corp., parent of bond insurer Financial Guaranty Insurance Co., earlier this week reported a net loss of nearly $1.2 billion in 2008.
The results include loss and loss adjustment expenses of $1.1 billion. They compare to the net loss of $1.8 billion — with loss and loss-adjustment expenses of $1.2 billion — that FGIC reported in 2007.
FGIC has concentrated on reducing its structured finance exposures. Last year, for instance, it paid French bank Calyon $200 million to commute $1.875 billion of exposure to collateralized debt obligations of asset-backed securities.
FGIC last year also entered an agreement in which MBIA Insurance Corp. reinsured $188 billion of its public finance book in a cut-through deal. The reinsured credits have since been transferred to National Public Finance Guarantee Corp. — the old MBIA Insurance Corp. of Illinois — under MBIA’s restructuring plan.
Net of reinsurance, FGIC still had insured municipal principal of $16.9 billion as of Dec. 31, according to documents. Tax-supported issues, at $9 billion, represent the biggest sector in the portfolio, and California, at $4.3 billion, is the state where FGIC has the most exposure.
FGIC also has $1.3 billion in exposure within Alabama, which includes the insurance for financially troubled Jefferson County. FGIC had paid $25.365 million on the county’s insurance policy to pay principal on sewer warrants the county failed to pay, and $3.3 million on a debt service reserve fund policy to make interest payments on sewer warrants. according to court documents.
FGIC also has an additional $57.8 billion in non-municipal principal outstanding, net of reinsurance, including $24 billion of mortgage-backed exposure. And it has $16.4 billion of international exposure.
All told, FGIC has principal insured outstanding of $91.1 billion, net of reinsurance.
FGIC is rated CCC with a negative outlook by Standard & Poor’s. Moody’s Investors Service last month downgraded FGIC to Caa3 from Caa1 and then removed its rating on the credit.
Shelly Sigo contributed to this story.
