Goldman Sachs Eyes Financial Guarantee Insurance Market: Report

By | March 21, 2012

Famed investment banking and securities firm Goldman Sachs is planning to get into the financial guarantee insurance market, according to a media report.

Financial Times reported this week that Goldman Sachs had placed ads to hire New York-based staff for financial guarantee products.

A financial guarantee is an insurance policy on a security or other financial instrument which pays out if the security doesn’t perform. In Goldman Sachs job postings — which appear to have been taken down since the Financial Times story first ran — the company reportedly stated that monoline insurers that specialize in financial guarantees are struggling, which presents an opportunity for potential competitors.

According to the report, Goldman Sachs said on its posting, “Monoline insurance companies specialize in financial guarantees. They issue these polices both directly, and as a wrapping on a bond at issuance. Part of the reason this is a potentially interesting opportunity is that the monolines are bust or close to bust. Goldman would use one of our insurance entities to issue these.”

Goldman Sachs may leverage its recent acquisition of Ariel Reinsurance’s insurance and reinsurance operations in Bermuda to diversify its business. With tightened regulations and oversight from Dodd-Frank, more banks are looking to diversify into areas like insurance, according to Financial Times.

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