FGIC Concedes to Split

Closely held bond insurer Financial Guarantee Insurance Co. has told regulators it wants to separate its municipal and structured finance businesses, New York state Insurance Superintendent Eric Dinallo said Friday.

Dinallo, appearing on CNBC the morning after testifying on Capitol Hill that bond insurers should separate healthy parts of its business from the bad, said FGIC had made its wishes known. FGIC was hit late Thursday with a downgrade to A3 from triple-A by Moody's Investors Service, which followed earlier downgrades from Fitch Ratings and Standard & Poor's.

Losing its pristine triple-A rating is a major hit for the firm, undermining its ability to win new business underwriting municipal and corporate debt. ...