FGIC says New York agency asks to take it over
June 11 (Reuters) - Financial Guaranty Insurance Co, the bond insurance unit of bankrupt FGIC Corp, said on Monday that the New York State Department of Financial Services had begun a rehabilitation process that will include taking over the business of the bond insurer.
FGIC filed for bankruptcy in August of 2010 as a result of the financial crisis and a deterioration in the U.S. housing and mortgage markets. It was once the fourth-most active bond insurer.
The issues that affected FGIC were widespread. Ambac Financial Group, once the second largest bond insurer, went through a state-led reorganization process in Wisconsin and also filed for bankruptcy.
The bond insurance unit stopped writing new financial guaranty insurance policies in January of 2008 in order to preserve capital and also stopped paying dividends to its parent company FGIC, which led to its bankruptcy.
Benjamin Lawsky, superintendent of the New York State Department of Financial Services, filed a petition with the Supreme Court of the State of New York for an order to allow the process to move forward, according to a statement.
FGIC has agreed to allow the proceeding to begin, the statement said.
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