Bond Insurer ACA Holds Off State Takeover
NEW YORK April 25 (BestWire) — Financial guaranty insurer ACA Capital Holdings Inc. will have an additional month to restructure agreements with its counterparties under terms of a new forbearance agreement — its fourth in the past six months — that looks to stave off takeover by the Maryland Insurance Administration.
The agreement will see ACA counterparties continue to waive through the end of May all collateral posting requirements, termination rights and policy claims related to the financial strength ratings of Maryland-based subsidiary ACA Financial Guaranty Corp. from major rating agencies. ACA is not currently rated by A.M. Best Co.
In a statement, the company said it was "pleased to have reached an additional agreement with its counterparties and continues to work closely with them to develop a permanent solution to stabilize its capital position."
ACA was launched in a Nov. 9, 2006, public offering of 6.9 million shares of common stock, providing an initial capitalization of $89.4 million. However, a string of collateral write-downs related to the subprime mortgage market — including $1.7 billion in third-quarter 2007 pretax mark-to-market losses on a book of structured credit transactions — led the company's share price to plummet. ACA has yet to file formal earnings reports for either the fourth-quarter 2007 or first-quarter 2008.
In late December, the company said it had agreed to a consent order with the Maryland Insurance Administration under which it "agreed not to object to, and, if requested, to consent to, a petition by the commissioner to institute delinquency proceedings" (BestWire, Dec. 28, 2007). The company's last forbearance agreement, reached in February, expired at 6 p.m. April 23.
"This is a complicated matter that takes time to resolve in the best interests of all stakeholders," said Karen Barrow, spokeswoman for the Maryland Insurance Administration. "However, the administration is satisfied that significant progress is being made toward a permanent restructuring solution."
Early in December, the company's shares were delisted by the New York Stock Exchange, after falling below listing standards that require average global market capitalization and total stockholders' equity both remain above $75 million (BestWire, Dec. 18, 2007).
(By R.J. Lehmann, Washington bureau manager: raymond.lehmann@ambest.com) BN-NJ-04-25-2008 1543 ET #
Published on April 25, 2008
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