Syncora Holdings Ltd. reported a 2008 net loss of $1.4 billion, up from a $1.2 billion net loss in 2007, according to documents filed late Tuesday with the Securities and Exchange Commission.

Syncora, which continues to work with its structured finance counterparties to reduce its exposures, reported a net loss and loss adjustment expenses of $1.8 billion, according to the filing.

Fourth-quarter deterioration in the portfolio of the guarantees made on collateralized debt obligations of asset-backed securities and residential mortgage-backed securities led bond insurer subsidiary Syncora Guarantee Inc. to report a policyholders' deficit of $2.4 billion as of Dec. 31. The New York Insurance Department could step in to rehabilitate or liquidate the insurer if the deficit remains, but regulators have so far held off on intervening.

Syncora Guarantee, rated CC by Standard & Poor's and Ca by Moody's Investors Service, has guarantees on $51.6 billion in direct public finance par outstanding and $806 million in public finance reinsurance outstanding.

The company has recently unveiled its latest plan for trying to reduce its structured finance exposures. Part of its plan includes a fund making a tender offer for the RMBS insured by Syncora, while a nonbinding letter of intent it signed with most of its counterparties says it will try to negotiate a deal to commute credit default swaps in return for cash, stock, and other considerations.

As part of the contemplated transaction, Syncora would create a drop-down insurer that would back certain public finance and global infrastructure credits. It has said it could capitalize the company to have a policyholders' surplus of between $200 million and $300 million.

If all the transactions it is considering had occurred, Syncora earlier this year said it would have recorded a policyholders' surplus of $241.9 million instead of a $2.4 billion deficit.

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