Private equity firm Ripplewood Holdings LLC may be looking to dive into the troubled bond insurer sector. According to a Wednesday
New York Post report, the firm is considering the launch of a bond insurance business. Discussions to start a monoline are in very early stages and may not materialize, the report added. When The Deal contact Ripplewood, a spokesman declined to comment.
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The bond insurance industry has taken a beating over the past year as major monolines MBIA Inc., Ambac Financial Group Inc. and FGIC Corp. have been forced to hunt for new capital to guard against future losses tied to the insurance of risky structured finance products. MBIA and Ambac managed to secure capital earlier this year, MBIA via an equity offering, a surplus notes offering and an $800 million Warburg Pincus LP equity infusion and Ambac via a straight forward equity offering. FGIC, riddled with junk credit ratings and the worst off of the three, remains in a desperate hunt for funding or some type of restructuring solution.
Ripplewood would not be the first new entrant to step into this troubled sector of late. Warren Buffett in late December 2007 launched a bond insurance unit labeled Berkshire Hathaway Assurance Corp., which focuses exclusively on the more stable municipal bonds. Sticking with what is safe has paid off for the Oracle of Omaha as his business wrote about $400 million of municipal debt policies in the first quarter of 2008 and has secured triple-A ratings from Moody's Investors Service and Standard & Poor's. - Michael Rudnick
See Dealscape: FGIC still searching for a lifeline
See Dealscape: Deal of the Quarter: Ensuring the insurer
See Dealscape: Connecticut investigates Berkshire's conflicts of interest
