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FGIC Weighing Sale, Split

The financial guarantor has hired Goldman Sachs to explore strategic alternatives.
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Financial guarantor


is weighing a possible sale as it considers its options after being downgraded by the major ratings agencies earlier this year, the company said late Monday.

The closely held firm said it has hired Goldman Sachs to help explore strategic alternatives, which also may include raising money to establish a new entity "dedicated exclusively to the global public finance business" or a bulk reinsurance program for all or part of the business.

FGIC in February

agreed to split

its safer business underwriting municipal borrowing from the more risky insurance on structured finance. That move came after Moody's Investors Service, Standard & Poor's and Fitch Ratings downgraded the firm's pristine credit rating, on fears it did not have enough capital to backstop potential defaults on debt during the credit crisis.

The ratings agencies had raised similar concerns about


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Ambac Financial


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, the two biggest financial guarantors, but those companies largely allayed fears through raising significant capital raises and dividend cuts, among other measures.

Without a perfect credit rating, financial guarantors are hamstrung in efforts to win new business and grow as a company.

FGIC's investors include fellow guarantor

PMI Group


and private equity firm the

Blackstone Group

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FGIC's performance helped Blackstone

swing to a fourth-quarter loss

. Blackstone said it had reduced the value of its investment in FGIC, which accounted for $122.2 million, or 69%, of the decline in revenues for the year.

This article was written by a staff member of