View this article online: https://www.insurancejournal.com/news/east/2007/12/27/85937.htm
In more fallout from the troubled credit market, ACA Capital Holdings Inc. has agreed to let the Maryland Insurance Administration and Commissioner Ralph S. Tyler assume control of much of its bond insurance division, ACA Financial Guaranty Corp.
The company, which is incorporated in Maryland, revealed the arrangement in a Securities and Exchange Commission filing on Dec. 26.
Under the agreement, the financial guaranty insurance subsidiary of ACA will provide certain documentation and other reports to the Maryland Insurance Administration. ACA Financial Guaranty has also agreed not to engage in certain activities without providing prior notice and opportunity to object to the MIA including, without limitation, pledging or assigning any assets, paying dividends or engaging in certain material transactions.
ACA was also given until January to post $1.7 billion collateral that would have otherwise been due sooner.
The company also disclosed that it agreed not to object if Maryland regulators moved to initiate delinquency proceedings against it. No such proceedings have been initiated.
On Dec. 19, Standard & Poor’s downgraded ACA Financial Guaranty Corp. to the junk “CCC” rating from an investment-grade “A” rating. ACA and other bond insurers are being closely monitored for their ability to meet their insurance obligations as credit markets weaken and more defaults occur.