Before Financial Guaranty Insurance Co. agreed to have MBIA Inc. reinsure $184 billion of its public finance portfolio, it initially selected Assured Guaranty Ltd. as the winner of its auction to take on the book, according to documents FGIC filed with the New York Insurance Department earlier this month.

FGIC asked MBIA if it was still interested in bidding on the deal after the auction had concluded, in part due to concerns from the department about the initial winning bid, the documents say. Although they do not name Assured, they single it out by mentioning the winning bidder had its stock negatively impacted by Moody's Investors Service's decision to put its rating on watch July 21. Moody's took action on Assured and Financial Security Assurance Inc. that day, and only Assured is publicly traded.

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