Bond Insurer FGIC Plans to Split in Two

FGIC Corp, a bond insurer that has lost its top credit ratings, has told New York regulators it wants to split into two companies, a spokesman for the state insurance regulator said on Friday.

The move is the latest step in the rescue of the U.S. bond insurance industry, which is expected to make billions of dollars of payouts in coming years after insuring bonds linked to subprime mortgage bonds and other risky debt.

FGIC, whose owners include private equity giant Blackstone Group LP, plans to apply to create a new insurance company, into which it would move its municipal bond insurance operations, New York Insurance Department spokesman David Neustadt said.

FGIC's structured finance business -- which guarantees repackaged consumer loans and other debt, and is expected to make big payouts in coming years -- would remain in the current company.

Source :- Reuters.com (Reuters, New York)

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