View this article online: https://www.insurancejournal.com/news/national/2000/02/04/10856.htm
Countrywide Credit Industries, Inc., a residential finance corporation, announced it has an agreement with National Indemnity Company, an insurance subsidiary of Berkshire Hathaway Inc.
The agreement will provide Countrywide’s newly acquired insurance unit, Balboa Life and Casualty, with an extra layer of protection against property and casualty risk. This arrangement supplements the existing capital, reserves and reinsurance agreements of Balboa, which currently has an “A” rating from A.M. Best.
The agreement calls for National Indemnity Company to purchase up to $100 million in newly issued shares of a special-purpose class of Countrywide preferred stock if certain events take place. The primary trigger would be weather and fire related catastrophic events exceeding the coverage under Balboa’s existing reinsurance agreements, which are already designed to protect against events of remote probability. This agreement with National Indemnity Company runs through January 1, 2003.
“This agreement with Berkshire Hathaway is a milestone event for Countrywide in terms of capital structure and financial flexibility,” Angelo R. Mozilo, Countrywide’s chairman and chief executive officer said. “On-demand access to capital in the case of a highly unlikely event provides risk protection to our shareholders and creditors, and at the same time enables us to maximize our existing capital base while avoiding the costly step of raising new equity. Countrywide believes this breakthrough methodology may also have applications in the capital structure of our loan servicing business.”
Founded in 1969, Countrywide Credit Industries, Inc. originates, purchases, securitizes, sells and services loans for single-family homes through its primary subsidiary, Countrywide Home Loans, Inc. The company is headquartered in Calabasas, California and has more than 10,000 employees with over 550 offices across the nation.
Balboa Life and Casualty, acquired in November 1999, is a national credit-related insurance and also provides voluntary homeowners and life and disability insurance products. Balboa writes insurance in all 50 states and serves over 1,500 financial institutions.