Bond insurer Financial Guaranty Insurance Company, partly owned by private-equity power Blackstone Group, asked New York's regulator for approval to divide into two firms after Moody's Investors Service lowered its financial strength ratings below "AAA."
New York Insurance Superintendent Eric Dinallo, interviewed on CNBC, said that his department had received notification from FGIC that they have sought application to have their business "actually split into two."
The two-company plan would involve one firm holding FGIC's more secure municipal bond insurance, and the other its riskier business involving repackaged mortgages and other debt linked to the subprime market–a so-called good bank/bad bank plan.
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