Syncora Holdings has obtained regulatory approval from the New York State Department of Financial Services (NYDFS) for its proposed $13.5 billion reinsurance transaction with Assured Guaranty Corp., as well as for the related $400 million payment on the Syncora Guarantee Surplus Notes held by third party holders.
The reinsurance transaction, which was announced in February 2018, will see Assured Guarantee help cap insured exposure on $13.5 billion of net par outstanding financial guaranty policies insured by Syncora Guarantee (SGI), the financial guarantee subsidiary of Syncora Holdings.
Under the agreement, Assured Guaranty will provide reinsurance generally on a 100% quota share basis on policies representing approximately 91% of SGI’s outstanding insured exposure.
The closing of the transaction has been awaiting approval, now received, from the NYDFS regarding the approval of a payment of principal and accrued interest of at least $400 million on SGI’s surplus notes.
Frederick B. Hnat, President and Chief Executive Officer (CEO) of Syncora, commented: “With the approval of payment to the surplus noteholders and the waiver described above, we are now in a position to move toward closing the reinsurance transaction with Assured Guaranty.
“We are very pleased to be able to execute on a transaction that we believe will cap our insured exposure, leaving SGI in a more stable and significantly de-levered financial position and making it possible for us to continue to return value to our stakeholders.”
Syncora also confirmed that it had received the required level of consents from holders of Surplus Notes to the waiver of certain restrictions of its master transaction agreement to permit the reinsurance transaction, which is now expected to close on June 1, 2018.
As consideration for the transaction, SGI is expected to pay approximately $360 million, and will assign over future instalment premium for the reinsured policies.
Additionally, SGI has entered into an administrative services agreement with Assured Guaranty, and will retain the option to cede certain debt service reserve fund surety and interest rate swap policies for an immaterial additional premium payment
