NY insurance head sees "developments" in bond talks

ALBANY (Reuters) - New York Insurance Superintendent Eric Dinallo cited on Friday "a number of developments" in his talks with bond insurers but gave no details after morning reports of a rescue plan boosted some companies' share prices.

Dinallo, in a statement, said the talks were complicated and would take time. He added his three-point plan included bringing new players into the bond insurance arena and helping the current insurers get new capital.

Credit agencies have warned bond insurers, including Ambac Financial Group (ABK.N) and MBIA Inc (MBI.N), they must raise capital to strengthen their finances because they face billion-dollar write-downs from the subprime mortgage sector.

Dinallo also said he wanted to "rewrite regulations so they do not limit creativity essential to strong financial markets, but effectively prevent fraud and improper risk," adding he wanted to "protect policyholders by seeking solutions to the broader problems in the bond insurance industry."

A group of banks is looking at ways to shore up Ambac and at least one other consortium is looking at other bond insurers, a person briefed on the matter said on Friday.

(Reporting by Elizabeth Flood Morrow in Albany and Dan Wilchins in New York; Editing by James Dalgleish)