Over the last 30 years Wall Street has used structured finance techniques to create more than $30 trillion in a wide variety of asset-backed securities. FGIC was among the pioneers, as the first to insure a mortgage-backed security, a large and important market sector that provides an expansion of credit to homeowners and greater liquidity and flexibility for lenders. In 2001, FGIC insured $7.8 billion of structured finance transactions – a 16% increase over 2000 – including our first single asset-backed credit from a major international bank.
Reorganizing around the customer. We’re expanding our vision and our opportunities by building dedicated account relationships, making proactive visits and responding with action plans to our customers’ “CTQ’s” (Critical to Quality). As a result, we combined our three business groups into a single platform to establish a well-defined and coordinated strategy. In addition, we realigned our staffing so that analysts are freed up to add value, to build innovative structures that work economically and mitigate additional credit risk. Most of all, we’re maintaining the dialogue to eliminate surprises, keeping customers on top of changes as they happen.
Shifting our focus to high-quality assets and top-tier sponsors. We increased the strength and diversity of our asset-backed portfolio by growing exposure to prime quality borrowers by 65% and expanding our relationships with higher quality seller servicers and sponsors, e.g., Countrywide, RFC, WestLB and Citibank.
Continuing to enhance our working relationships. Our issuers depend on us to work with them on innovative structures and we have consistently demonstrated our willingness and ability to deliver. We have developed state-of-the-art analytic tools based on years of experience with a variety of mortgage products and offered solutions to our asset-backed issuers that go beyond bond insurance. To safeguard the assets of our customers, our structured finance surveillance system has been fully automated to detect potential issues early in order to proactively engage successful loss mitigation procedures.
It’s about the market. FGIC is focused on providing creative structures which offer economic benefit for issuers while mitigating credit risk. These efficiencies will continue to bring advantages to the consumer such as the expansion of credit and more affordable home ownership. In addition, FGIC will continue to bring the benefits of exceptional capitalization and disciplined underwriting to the issuers and marketers of these securities.
Not surprisingly, the work-out was highly successful. It is this type of collaboration that creates the most innovative solutions.
