Syncora Guarantee Inc. expects to post a material decrease in its statutory surplus for the fourth quarter, the company announced Friday. It also said restructuring efforts may be nearing completion and that it hopes to recommence paying claims.
The troubled bond insurer said the anticipated fourth-quarter decline in its statutory surplus is related to an increase in anticipated claims related to guarantees of residential mortgage-backed securities.
At the end of the third quarter, Syncora reported a year-to-date net income loss of $1.4 billion, which reduced its policyholders’ surplus to $181.8 million.
Mike Corbally, managing director and chief administrative officer of Syncora, declined to provide additional comment, but a press release said the statutory surplus is not expected to breach the regulatory minimum of $65 million, as set by the New York Insurance Department.
The NYID has prohibited Syncora from writing new business or paying any claims since April, and it may only operate to bring about a restructuring.
According to the press release, those efforts might pay off soon. Syncora stated it is one step away from completing its comprehensive restructuring, which may be accomplished “in the near future.” Upon closing one final transaction, Syncora said it will submit documents to the NYID with the aim of lifting the suspension on paying claims. If successful, it will recommence payments, including those that were suspended.
“The company is currently in advanced negotiations with respect to the remaining transaction and anticipates that it may be able to close the transaction in the near future, subject to obtaining NYID approval and a waiver from certain parties,” the press release said.
“However, there can be no assurance that the transaction will close in the near future or at all. Furthermore, there can be no assurance that the NYID will accept the company’s submission and lift the claims suspension order.”
The company also announced it has relocated its U.S. headquarters to One Worldwide Plaza, 825 Eighth Avenue, 24th Floor, New York, N.Y.
In November, Bermuda-based parent company Syncora Holdings Ltd. appointed Susan Comparato chief executive officer and president.