American Overseas to commute Financial Guaranty business portfolio

By Caroline Salls

Pittsburgh, Aug. 24 - American Overseas Group Ltd. operating subsidiary American Overseas Reinsurance Co. Ltd. (AORE), has entered into a settlement, commutation and release agreement that would commute the entire portfolio of financial guaranty reinsurance business it has assumed from Financial Guaranty Insurance Co. (FGIC), according to an American Overseas news release.

Under the agreement, AORE will make a $64.8 million commutation payment to FGIC. The company said the commutation will take effect upon FGIC's receipt of the payment.

American Overseas said a rehabilitation proceeding is currently pending for FGIC before the Supreme Court of the State of New York, and the commutation agreement is subject to approval by that court.

According to the release, the total outstanding par value of the reinsurance portfolio proposed to be commuted was $4.5 billion as of March 31.

American Overseas Group is a Bermuda-based holding company. Operating subsidiary American Overseas Reinsurance provides financial guaranty reinsurance for U.S. and international public finance and structured finance transactions.

FGIC is based in New York and provides credit enhancement on public finance, structured and global infrastructure and utility securities.

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