Security Capital Reduces Workforce
Monoline bond insuer Security Capital Assurance Ltd said Wednesday that it will reduce its workforce by approximately 60 positions, as it continues to reposition itself amid a loss of its top credit ratings. The reductions, not surprisingly, are focused largely on the insurance business origination staff and are intended to reduce long term operating costs and align resources with current needs, the company said in a press statement. SCA said earlier in March that it had ceased writing new business via its XL Capital Insurance and XL Financial Assurance subsidiaries as a measure to preserve capital. "Decisions such as this one are always difficult, but as we are not writing new business at this time, today's action was necessary," said Paul Giordano, SCA's president and chief executive officer. "Our action today is consistent with our recently described plans, and we intend to treat our employees as fairly as we can under the circumstances. I am grateful for all the hard work and dedication of our employees, and for their continued professionalism in this very difficult environment." Insurers like SCA provided the top-rated portions of RMBS and related CDO deals with a guarantee that essentially is designed to serve as a private-party proxy for the government guarantee that exists on Fannie/Freddie/Ginnie bond issues. But the strength of that guarantee is only as good as the rating of the firm that provides it, which means that downgrades to bond insurers have wreaked havoc on an already unsteady mortgage-backed bond market. For more information, visit http://www.scafg.com. Disclosure: The author owned no positions in SCA when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.