Moody's Investors Service has put bond insurer Syncora Guarantee on review for an upgrade.

Moody's currently rates Syncora at Ca, its second-lowest rating.

The rating agency's action is in response to Syncora's announcement on July 17 of a $375 million settlement with Countrywide and its owner Bank of America. The settlement ended a Syncora suit against the financial firms, which stemmed from what the insurer claimed were misrepresentations made by Countrywide concerning mortgage-backed securities that Syncora insured.

"Being in excess of [Syncora's first quarter] 2012 aggregate putback receivable of $233 million, the settlement should, in itself, improve the firm's statutory capital position, which stood at $295 million at the end of the first quarter of 2012," Moody's analysts wrote.

On July 17 Syncora noted that it had remediated credits in the second quarter, paying at least $96 million.

Moody's places ratings on wrapped bonds equal to the higher of either the insurer's rating or the underlying rating. Moody's has placed Syncora's wrapped bonds on review for an upgrade.

Moody's normally resolves reviews for rating changes within 90 days.

Syncora Guarantee is a subsidiary of Bermuda-based Syncora Holdings Ltd. Syncora Guarantee is currently not insuring new municipal bond issues.

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