Joseph "Jay" W. Brown returned to Armonk, N.Y-based MBIA Inc. to resume his positions as chairman, chief executive officer and president of the financial guarantee insurer effective immediately, the company said today.
He replaces Gary C. Dunton, who resigned from MBIA.
Until May 2004, Mr. Brown served as chairman and CEO of MBIA Inc., and of its main operating unit, MBIA Insurance Corporation. He retired as executive chairman of MBIA in May 2007. He joined the company as chairman and CEO in 1999, serving as a director since 1986.
"MBIA faces meaningful challenges," said Mr. Brown in a statement. "Thanks to Gary's hard work, we can now build on our enhanced capitalization and reframe our risk policies and strategies. I see significant opportunities ahead for MBIA. Our shareholders, policyholders, bond owners and employees need us to re-examine our business model to address changing conditions. I look forward to working with the MBIA team to frame a new model for the financial guarantee business."
He said that, in addition, it is critical that "we expedite our communications with the New York State Insurance Department. I have already spoken with Superintendent Eric Dinallo. I believe we can look forward to improved dialog with the Department. Eric and I had a constructive discussion regarding MBIA's plans and he provided us with helpful guidance. We expect to rebuild confidence in the company and in the industry."
During the past two months, MBIA said it has increased its claims-paying resources by as much as $3.2 billion, including $1.1 billion from the sale of 94.6 million shares of common stock, $500 million from the sale of 16.1 million shares of common stock to Warburg Pincus, the sale of $1 billion in surplus notes, and $200-to-$500 million (varies by rating agency) in additional net capital generated from operations due to maturing insured transactions during the fourth quarter of 2007. MBIA currently has more than $17 billion in total claims-paying resources.
Mr. Brown said that the board appreciated Mr. Dunton's service to the company and his work to recapitalize the company.
Mr. Brown's experience dates back to 1974 when he joined Fireman's Fund.
MBIA has been embroiled in the subprime crisis for exposure to financial notes related to the mortgage securities market. This has put pressure on the company's ratings that the rating agencies have threatened to lower because of questions about its claims paying ability.
In the fourth quarter of 2007 the company reported a loss of $3.5 billion pretax on security notes.
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