Moody’s monitoring U.S. financial guarantee insurance investigation

Moody’s Ratings Service is carefully monitoring U.S. financial regulators’ subpoenas against parents of several financial guaranty insurance companies in connection with an ongoing criminal investigation of alleged bid-rigging of awards of municipal guaranteed investment contracts.
“Inherent wrongdoing is not indicated but the subpoenas could portend governance or control failures, so we are closely following developments and will comment as appropriate,” Moody’s said in an online statement.
The guarantors that have disclosed the receipt of a subpoena are Financial Security Assurance Holdings, Ltd., Financial Guaranty Insurance Corporation, and Security Capital Assurance Ltd, Moody’s noted on its Web site. The ratings agency confirmed all of the ratings of the affected guarantors remain stable at this time.
In addition, at least one subsidiary of XL Capital Ltd has also received a subpoena. At this time, the ratings of XL Capital Ltd remain stable.
“The receipt of a subpoena is a formal request for information, but it does not indicate wrongdoing by the recipient,” Moody’s said in a press release. “However, in some instances, subpoenas are means by which illegal actions or serious governance or control failures are uncovered.
“As a result, Moody’s will closely follow any developments related to the areas covered by the subpoenas and will make further comments when new material information emerges.”
Financial Security Assurance Holdings Ltd. is a New York-based holding company whose primary operating company, Financial Security Assurance Inc., provides credit enhancement and protection products to the public finance and structured finance markets throughout the United States and internationally. The Dexia Group, a European financial institution, owns FSA.
FGIC Corporation is a New York-based holding company whose primary operating company, Financial Guaranty Insurance Company, provides credit enhancement and protection products to the public finance and structured finance markets throughout the United States and internationally.
FGIC Corporation is owned by an investor group consisting of The PMI Group, Blackstone, Cypress and CIVC.
Security Capital Assurance Ltd (SCA) is a Bermuda-domiciled holding company whose primary operating subsidiaries, XL Capital Assurance Inc. and XL Financial Assurance Ltd., provide credit enhancement and protection products to the public finance and structured finance markets throughout the United States and internationally.
XL Capital Ltd, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products and services to industrial, commercial and professional service firms, insurance companies, and other enterprises on a worldwide basis.