RAM Reinsurance Co. has entered an agreement to pay MBIA Insurance Corp. $156.5 million to commute its exposure to the $10.6 billion portfolio of business it had assumed from MBIA, RAM Holdings Ltd. announced earlier this week

As of Sept. 30, the portfolio consisted of a par of $6.8 billion in structured finance exposure and $3.8 billion in public finance exposure, representing a small portion of MBIA's overall portfolio. The bond insurer had $778 billion in net par outstanding as of Sept. 30, including the $159 billion of Financial Guaranty Insurance Co.'s public finance book it earlier this year agreed to reinsure, according to third-quarter earnings documents.

Of the $3.8 billion in public finance exposures in the portfolio, $1.2 billion are related to international public finance transactions.

The $156.5 million payment includes $51.5 million in unearned premiums and $61.3 million of estimated loss reserves and impairments as of Sept. 30.

The deal should benefit both firms. At its current ratings, MBIA does not need the capital credit under rating agency models, and can recapture the book of business and its associated premiums. RAM reduces its exposure to collateralized debt obligations of asset-backed securities and certain vintages of U.S. residential mortgage-backed securities.

Meanwhile, earlier this week, MBIA Insurance parent MBIA Inc. announced that Charles R. Rinehart, a former chairman and chief executive officer of H.F. Ahmanson, would join its board of directors. In September, Rinehart became CEO of Downey Financial Corp. and Downey Savings and Loan Association FA.

Rinehart has also worked as the CEO of Avco Financial Services and in various positions at the Fireman's Fund Insurance Co. He has also served as a director for a number of companies.

"Charlie is a respected business leader with over 40 years of experience in the financial services industry," MBIA nominating/corporate governance committee chair Claire Gaudiani said. "His expertise in banking and insurance will benefit MBIA and its shareholders, particularly as we work to transform the company for future success. We are pleased to welcome Charlie to MBIA's board."

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