MIAC to enter municipal bond insurance market via expedited licensing pilot project

By Angela McDaniels

Tacoma, Wash., Feb. 24 - Municipal and Infrastructure Assurance Corp., a new financial guaranty insurance company based in New York, has been approved for participation in an expedited licensing pilot project, according to a company news release.

With the approval, MIAC anticipates it will be able to move quickly to become a licensed financial guaranty insurance company. It will begin providing full-service municipal bond insurance once it receives its credit rating.

The company said it will focus on the primary issuance market, "where many cities and municipal authorities are currently suffering from a lack of liquidity in the capital markets that most industry participants believe has been exacerbated by the current lack of triple-A rated insurance capacity."

The pilot program is being administered by a working group of the National Association of Insurance Commissioners.

According to the release, MIAC is the third private capital response to developments in the bond insurance industry, the others being the recapitalization of Assured Guaranty Ltd. by WL Ross & Co. and Warren Buffett's formation of a new bond insurance company, Berkshire Hathaway Assurance Corp.

Berkshire Hathaway Assurance participated in the pilot project for licensure in 2008 and was licensed in an expedited manner under an initiative led by New York State insurance superintendent Eric Dinallo.

"Participants across the U.S. public finance market continue to emphasize their strong demand for new long-term credit enhancement capacity from a clean, well-capitalized bond insurer unencumbered by legacy structured finance exposures," Richard Kolman, executive vice chairman of MIAC, said in the release.

"Issuers, investors, and key regulatory and elected officials have uniformly expressed a desire for increased municipal market liquidity and they view new bond insurers, such as MIAC, as essential to normalizing the municipal bond market."

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