Syncora Holdings has said that despite having made significant progress on certain of its planned liquidity remediation actions, its New York financial guarantee subsidiary, Syncora Guarantee remains materially short of its remediation plan.
Syncora has added that on June 17, 2010, the New York Insurance Department (NYID) issued a supplemental order withdrawing the order issued on April 10, 2009 under Section 1310 of the New York Insurance Law, which prohibited Syncora Guarantee from paying claims until it had removed the impairment to its statutorily mandated minimum surplus to policyholders.
In connection with this, Syncora Guarantee has been ordered to provide the NYID with a plan for the payment of accrued and unpaid claims and for the payment of new claims as they become due in the ordinary course of business.
Notwithstanding the withdrawal of the 1310 Order, Syncora Guarantee believes that it needs to complete further significant actions in order to satisfy its known and anticipated short and medium term liquidity needs and resume claims payments.
According to Syncora, some of the required actions are outside of its ordinary course of business and will require the consent or approval of parties outside of its control. No assurance can be given that Syncora Guarantee will be successful in pursuing or effectuating such actions or obtaining such consents or approvals in a timely manner or at all.
Since the issuance of the 1310 Order on April 10, 2009, Syncora Guarantee has made material progress towards removing the impairment to its statutory capital and restoring it beyond the minimum statutory requirement of $65m, further added Syncora.
Pertaining the withdrawal of the 1310 Order, Syncora Guarantee is continuing to seek to resolve its liquidity issues and will continue to evaluate whether it can make sufficient progress towards the implementation of its ongoing liquidity remediation plan to be able to resume claims payments.
In the event Syncora Guarantee is unable to resolve its anticipated liquidity needs, or is unable to provide the NYID with a plan that is acceptable to Syncora Guarantee and the NYID for the payment of accrued and unpaid claims and for the payment of new claims, the NYID could take regulatory action against it or Syncora Guarantee could submit itself to regulatory action by the NYID, including placing Syncora Guarantee in rehabilitation or liquidation.
Syncora Holdings is a Bermuda-based company and whose operating subsidiary provides financial guarantee insurance and other credit enhancement for debt obligations in the US and international capital markets.