About 15 financial institutions plan to meet Thursday with New York State Insurance Superintendent Eric Dinallo to complain about MBIA's ( MBI) decision to split its bond-insurance unit into two companies, the Wall Street Journal reports, citing people familiar with the matter said.

The group includes many banks that feel disadvantaged by MBIA's move last month to separate its municipal-bond insurance business from its commitments to insure mortgage-backed bonds and other structured securities, the newspaper reports.

The banks are counterparties to MBIA on derivatives called credit-default swaps that were written on securities they own, many of which have deteriorated since the onset of the credit crisis.

MBIA and New York State's insurance regulator -- which endorsed the restructuring - are facing a backlash from banks, investment funds and other policyholders. These institutions were left holding contracts with a financially weaker MBIA when the insurer transferred about $5 billion in capital from its main unit to another company that guarantees only U.S. municipal bonds, the Journal reports.

MBIA writes insurance policies promising to repay bondholders when bond issuers default. Like others in its industry, MBIA was hit hard in the past two years by losses on its coverage of risky financial instruments such as mortgage-backed securities. Its rating was lowered in mid-2008 to "AA" from the highest "AAA" rating by Standard & Poor's and other ratings agencies.

MBIA said earlier in March that its net premiums written increased 10% during the fourth quarter and it posted fewer investment losses. In February, MBIA said it will split its traditional municipal bond insurance operations from the units that provide guarantees on those riskier products to try and boost business.
Copyright 2008 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.