Adam Bergonzi was named chief risk officer this week of National Public Finance Guarantee Corp., where he will oversee a half-trillion-dollar portfolio of insured municipal bonds.
NPFG is the municipal bond insurer launched by MBIA Inc. in February 2009. The new entity is not writing insurance contracts as MBIA awaits the outcome of ongoing litigation contesting its restructuring, but NPFG is actively managing an insured portfolio of $481 billion of municipal debt that is the largest in the industry.
“We have a very large insured portfolio and portfolio surveillance is among the areas I’m responsible for,” Bergonzi said. “I’m also responsible for the risk management function, where we evaluate not only the creditworthiness of each new transaction, but also how all our insured exposures fit together.”
Bergonzi reports to William C. Fallon, chief executive of NPFG and president and chief operating officer of MBIA.
In the first three quarters, NPFG paid $41.7 million in claims from its public finance portfolio. Last year it paid out $93.9 million, according to its third-quarter financial supplement.
More than 52% of the credits in NPFG’s public finance portfolio are rated double-A or higher, and just 0.6% are rated below investment grade, the supplement shows.
Bergonzi said the portfolio is not immune to future defaults, but is not as stressed as credits in the broader municipal space.
“It’s a new world, but we don’t expect the municipal catastrophe that some are predicting,” he said. “While some individual credits have problems that need to be worked through, we see no evidence of a systemic problem in our insured portfolio.”
Bergonzi joins NPFG after more than two years as chief risk officer at Municipal and Infrastructure Assurance Corp., a startup bond insurer that failed to raise enough capital to enter the business.
Bergonzi will be a familiar face in his new office. Beginning in 1994, he spent 12 years at MBIA, managing its insurance portfolio and working on its new business, finance, and corporate strategy.
Bergonzi started his career at MBIA as an intern, and then worked up the ladder to become director. After his departure in 2006, he spent about two years at Security Capital Assurance, where he was chief risk officer and responsible for supporting domestic and international public finance.
Bergonzi said his role will also include surveying credits of potential new business.
NPFG, rated A with a developing outlook from Standard and Poor’s and Baa1 with a developing outlook from Moody’s Investors Service, is not currently writing business because MBIA’s February 2009 restructuring is being contested by a number of financial institutions that hold residential mortgage-backed securities insured by MBIA. The main case is set to go to trial Jan. 19, 2011.
