The fixed-income management group at MBIA Inc. received new branding yesterday.
MBIA Asset Management, created in 1991, will now be known as Cutwater Asset Management. It will continue to operate under the MBIA corporate umbrella, but a number of changes have been implemented to give the subsidiary greater autonomy and to give investors increased clarity about MBIA’s operations.
Cutwater now has its own in-house legal, information technology, and accounting resources and will report its financial results as a stand-alone segment of MBIA Inc. In the past, it relied on the parent company and affiliates for those services. “It’s a turnkey operation — meaning we have total reliance and capabilities unto ourselves,” said Clifford D. Corso, Cutwater’s president and chief executive officer.
The company’s aim is to focus on the third-party advisory business. Cutwater manages close to $43 billion in fixed-income assets, including $4 billion of municipals, which Corso said makes it one of the 50 largest fixed-income asset managers in the world.
Its clients include governments, pension funds, public industry unions, corporations, endowments, financial institutions, and insurance companies. About $17 billion of the portfolio is affiliate money from MBIA’s other subsidiaries.
The restructuring is part of a broader effort for MBIA to become a traditional holding company in which its individual business units operate as separate entities.
During the financial crisis, the interconnectedness of MBIA’s structured finance guarantees with its fixed-income business nearly brought down the entire company — as of yesterday’s close, company shares were still down 92% from their peak in October 2007.
In February 2009 the company created National Public Finance Guarantee Corp. by splitting its public finance portfolio from its structured finance guarantees. The muni insurer hopes to enter the market by mid-year but is currently held back by litigation issues as a number of hedge funds opposed the flow of capital away from MBIA Insurance Corp.
More recently, on Jan. 1 MBIA created Optinuity Alliance Resources, a service-oriented arm that provides operational support to all of MBIA’s subsidiaries, as well as to an outside client base.
Bill Fallon, MBIA’s chief operating officer, called the rebranding of Cutwater “the next logical step in implementing the transformation strategy that we began pursuing nearly two years ago.”
As for the name, Corso said it captured the image of the company mission. “A 'cutwater’ is the steel strap on the bow of a boat which cuts through turbulent waters and allows the boat to keep pointing at the horizon,” he said.
Cutwater has a staff of 127 employees and is based in Armonk, N.Y.
