New York State's Department of Insurance has filed its rehabilitation plan for Financial Guaranty Insurance Company, outlining how payments will be made in cash to claimants as available funds allow.
In June, the troubled guaranty insurer was placed into rehabilitation under the direction of Benjamin M. Lawsky, Superintendent of the New York State Department of Financial Services.
The rehabilitation plan tears up FGIC's reinsurance agreement with National Public Finance Guarantee Corp., an affiliate of MBIA Insurance Corp., where it had an exposure of $138 billion. An MBIA spokesman points out that there is a novation agreement in place replacing the reinsurance agreement making National the primary insurer. The plan also calls for the commutation of credit-default-swap agreements, so that FGIC would pay less than the original value of the coverage.
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