National Public Finance takes primary insurer role on FGIC policies

By Susanna Moon

Chicago, Aug. 19 - National Public Finance Guarantee Corp., an indirect subsidiary of MBIA Inc., announced a plan of rehabilitation for Financial Guaranty Insurance Co. that includes a novation agreement between the companies effective Monday.

Covered policies that previously benefited from the reinsurance agreement and second to pay policies entered into by MBIA Insurance Corp. in 2008 and subsequently assigned to and reinsured by National in 2009, have been novated to National, which now becomes the primary insurer under the policies, according to a company press release.

"Policyholders are supported by National's financial strength, substantial claims-paying resources and established operating platform as FGIC has been released from all future obligations under the Covered Policies," Dan McManus, National's general counsel, said in the press release.

"We expect that Moody's Investors Service will now apply the higher of National's rating or the underlying rating to covered policies."

National Public Finance is an Armonk, N.Y.-based U.S. public finance-only financial guarantee insurance company.

FGIC, a New York-based privately held insurance company, filed for bankruptcy on Aug. 3, 2010. Its Chapter 11 case number is 10-14215.

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