Susan Comparato was appointed chief executive officer and president of Syncora Holdings Ltd., the Bermuda-based parent of beleaguered bond insurer Syncora Guarantee Inc., the company announced late last week. Also last week, the bond insurer posted a net income loss of $1.4 billion in the nine months ending Sept. 30.
Comparato, 40, has been serving as acting CEO and president for more than 15 months. She joined Syncora Guarantee in 2001 as associate general counsel, focusing on the financial instruments that would have a major role in the 2008 credit crisis — asset-backed securities and collateralized debt obligations.
In February 2008, Comparato was appointed general counsel. Her responsibilities included interacting with regulatory institutions and guiding the company’s key business initiatives.
In her new role, she will serve on the board of the parent company as well as its two principal operating subsidies, Syncora Guarantee and Syncora Capital Assurance Inc.
In Syncora Guarantee’s third-quarter financial statement, filed with the New York Insurance Department, the insurer reported a policyholders’ surplus of $181.8 million, nearly triple the regulator’s $65 million minimum requirement.
However, the NYID has allowed Syncora Guarantee to use accounting standards that have avoided liquidation of the company, which would hurt policyholders.
According to the statement, the department agreed to “de-recognize,” or free up, about $5.7 billion of reserves for unpaid losses, largely accounting for the surplus and allowing the company to continue operating.
The regulator’s decision was based on the insurer’s July 15 agreement with multiple counterparties to effectively commute multiple credit-default swap contracts, thereby removing $3.4 billion of capital impairments from the books, according to Mike Moriarty, deputy superintendent of property and capital markets with the NYID.
“We basically agreed with the company that they shouldn’t have to carry billions of dollars in reserves that they contractually don’t have to pay,” he said. “It really isn’t a legal liability.”
However, when using standard accounting practices from the National Association of Insurance Commissioners, the insurer is actually in deficit of $3.5 billion, the statement said.
Syncora Guarantee has been undergoing major structural changes since April, when the NYID issued an order prohibiting it from writing new business or paying any claims, only allowing the company to operate to bring about a restructuring.
The regulatory suspension came after Syncora recorded two straight quarters of material increases in anticipated claims related to its guarantees on collateralized debt obligations secured by asset-backed securities.
In early July, the suspension caused Syncora to become the first major bond insurer to default on its obligation to pay an insurance claim when Jefferson County, Ala. was unable to pony up $46 million of accelerated principal on debt for sewer warrants.
On July 20, the New York regulator indicated that Syncora’s efforts to strip risky policies from its books would soon allow the company to resume paying claims; however, the suspension has yet to be lifted.
Michael Corbally, Syncora’s chief administrative officer, was unable to comment on when the suspension might be lifted. NYID spokesman Andy Mais also could not comment.
Comparato, who was unavailable for additional comment, said in a company press release: “While the July restructuring and other similar transactions have placed the company on a firmer footing, I look forward to working with a very supportive board and dedicated team of employees to achieve the ongoing strategic goals of the company.”