The Oklahoma Insurance Department has approved Assured Guaranty Ltd.’s proposed acquisition of Financial Security Assurance Holdings Ltd., Assured announced late Wednesday.

The companies needed the approval of Oklahoma’s insurance regulators because FSA subsidiary FSA Insurance Co. is based in the state. FSA Insurance operates primarily as a reinsurer of bond insurer Financial Security Assurance Inc.

Assured said the deal now awaits finalization of agreements that will ensure Dexia SA and the French and Belgian governments retain all responsibilities for FSA’s troubled financial products unit, which is not included in the deal. The companies also need the assurance of Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings that neither of their insurance ratings will be negatively impacted by the transaction.

“We are pleased to have received all the necessary regulatory approvals required for our acquisition of FSA,” said Assured president and chief executive officer Dominic Frederico. “We are excited by the opportunities that this acquisition will provide to Assured and its shareholders and look forward to its expected close in the second quarter of 2009.”

Assured Wednesday also released its annual proxy statement, including details on the compensation it paid to five top executives.

Frederico’s compensation totaled $7.4 million in 2008 as reported to the Securities and Exchange Commission, down from $11.9 million in 2007. Together, the five executives received compensation worth $15.7 million in 2008, compared to $24 million in 2007.

In 2008, Frederico earned $750,000 in salary and a $2.2 million bonus; Assured Guaranty Corp. president Michael Schozer earned $400,000 in salary and a $500,000 bonus; general counsel James Michener earned $390,000 in salary and a $650,000 bonus; chief financial officer Robert Mills earned $520,000 in salary and a $400,000 bonus; and chief accounting officer Robert Bailenson received $350,000 in salary and a $400,000 bonus.

The executives also received stock awards, options, and other compensation, which includes contributions to retirement plans, tax preparation and financial planning, and club fees.

The filing said Assured’s compensation committee considered performance in 2008 “a combination of both favorable and unfavorable.”

It said: “2008 operating income was significantly below our 2008 business plan. However, our 2008 results exceeded our competitors’ results and were achieved during the worst credit conditions in decades.”

Assured Guaranty reported a net income of $74.5 million in 2008, compared to many of its rivals that reported billions in losses.

Its stock, though, fell from $26.49 at the beginning of 2008 to $11.40 at the end. As a result, the value of the unvested restricted stock and stock options that had been given to those five executives fell more than 66% each from the end of 2007 to the end of 2008.

“Generally, restricted stock and stock option grants serve as strong retention incentives since the executive officers generally forfeit unvested … stock grants and stock options if they leave the company,” the filing said. “However, due to the decline of our stock price, in 2008, prior equity awards have lost much of their value and may not provide as strong a retention incentive as in the past.” 


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