New York regulator stops Syncora payouts as debts mounts
New York’s insurance regulator has forced bond insurer Syncora, better known by its former name SCA, to stop paying claims so that it could try to negotiate an agreement with banks to reduce its liabilities enough to manage future claims, The FT reports.
No other insurers have so far been forced to cease paying claims.
It said Syncora has guaranteed more than $140bn of bonds, mainly municipal debt and structured finance.
If the company were unable to restructure by May 29, New York’s insurance regulators may take it over in order to manage its liquidation, which would allow them to prioritise claims.
Syncora has been negotiating with banks since last July as it has attempted to write off or to “commute” some of the $56bn of guarantees that SCA wrote on collateralised debt obligations (CDOs).
