NEW YORK, June 21 /PRNewswire-FirstCall/ -- Syncora Holdings Ltd. ("Syncora") today announced that, despite having made significant progress on certain of its planned liquidity remediation actions, its wholly owned New York financial guarantee subsidiary, Syncora Guarantee Inc. ("Syncora Guarantee") remains materially short of its remediation plan. Syncora also announced that on June 17, 2010 the New York Insurance Department (the "NYID") issued a supplemental order withdrawing the order issued on April 10, 2009 under Section 1310 of the New York Insurance Law (the "1310 Order"), which prohibited Syncora Guarantee from paying claims until it had removed the impairment to its statutorily mandated minimum surplus to policyholders. In connection with this, Syncora Guarantee has been ordered to provide the NYID with a plan for the payment of accrued and unpaid claims and for the payment of new claims as they become due in the ordinary course of business.
Notwithstanding the withdrawal of the 1310 Order following Syncora Guarantee's elimination of the impairment of its statutory capital and its return to compliance with statutorily mandated required minimum surplus to policyholders, Syncora Guarantee believes that it needs to complete further significant actions in order to satisfy its known and anticipated short and medium term liquidity needs and resume claims payments. Some of the required actions are outside of Syncora Guarantee's ordinary course of business and will require the consent or approval of parties outside of its control. No assurance can be given that Syncora Guarantee will be successful in pursuing or effectuating such actions or obtaining such consents or approvals in a timely manner or at all.
Since the issuance of the 1310 Order on April 10, 2009, Syncora Guarantee has made material progress towards removing the impairment to its statutory capital and restoring it beyond the minimum statutory requirement of $65 million. At March 31, 2010, Syncora Guarantee's statutory surplus was reported as $104.1 million. Based on preliminary second quarter 2010 reserve estimates, continued remediation efforts during the second quarter are expected to have a material positive effect on statutory surplus; however, this is expected to be offset in part, or possibly exceeded, by adverse development in Syncora Guarantee's reserves.
In light of its liquidity position and needs and the current timing of the withdrawal of the 1310 Order, Syncora Guarantee is considering all of its options, is continuing to seek to resolve its liquidity issues and will continue to evaluate whether it can make sufficient progress towards the implementation of its ongoing liquidity remediation plan to be able to resume claims payments. In the event Syncora Guarantee is unable to resolve its anticipated liquidity needs in order to resume claims payments at this time, or is unable to provide the NYID with a plan that is acceptable to Syncora Guarantee and the NYID for the payment of accrued and unpaid claims and for the payment of new claims as they become due in the ordinary course of business, the NYID could take regulatory action against it or Syncora Guarantee could submit itself to regulatory action by the NYID, including placing Syncora Guarantee in rehabilitation or liquidation.
About Syncora Holdings Ltd.
Syncora Holdings Ltd. (OTC: SYCRF) is a Bermuda-domiciled holding company. Syncora Guarantee Inc. is a wholly owned subsidiary of Syncora Holdings Ltd. For more information, please visit www.syncora.com.
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This release contains statements about future results, plans and events that may constitute "forward looking" statements. The use of terms such as "may," "will," expects," projects," and "should" indicate the presence of forward-looking statements. You are cautioned that these statements are not guarantees of future results, plans or events and such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Syncora Guarantee's control. These factors include, but are not limited to: Syncora Guarantee's ability to provide the NYID with a plan acceptable to it for the payment of accrued and unpaid claims and for the payment of new claims as they become due; Syncora Guarantee's ability to achieve a level of solvency and liquidity that would allow it to resume claims payments and pay accrued and unpaid claims; Syncora Guarantee's ability to obtain the necessary consents and approvals in order to take actions to remediate its anticipated liquidity needs; Syncora Guarantee's ability to maintain minimum policyholders' surplus; higher losses and adverse development of reserves on guaranteed obligations due to deterioration in the credit and mortgage markets; the suspension of writing substantially all new business; uncertainty as to the fair value of credit default swap ("CDS") contracts and liabilities thereon; decision by Syncora Guarantee's, Syncora Capital Assurance Inc.'s or Syncora Guarantee (U.K.) Limited's regulators to take regulatory action such as administration, rehabilitation or liquidation of such entity at any time; Syncora Capital Assurance Inc.'s payment of amounts under the surplus notes issued to Syncora Guarantee; Syncora Capital Assurance Inc., a wholly-owned subsidiary of Syncora Guarantee, being required to make mark-to-market termination payments under its CDS contracts; the ability of each of Syncora Guarantee and Syncora to continue as a going concern; payment of claims on guaranteed obligations and residential mortgage backed securities ("RMBS"); bankruptcy events involving counterparties to CDS contracts; the potential loss of certain control rights under certain financial guarantee insurance; non-payment of premium and make-wholes owed or cancellation of policies; effect of the non-payment of dividends on Syncora's series A preference shares on the composition of Syncora's Board of Directors; uncertainty in portfolio modeling which makes it difficult to estimate potential paid claims and loss reserves; reduced availability of funds due to the purchase of certain RMBS and the potential inability to convert those assets to cash at their carrying value; reduced availability of funds due to capitalization of Syncora Capital Assurance Inc.; reduced availability of funds due to consideration paid in connection with the master transaction agreement between Syncora Guarantee and certain financial counterparties to its CDS contracts (the "2009 MTA"); potential adverse developments at Syncora Capital Assurance Inc. and recapture of business to be ceded to Syncora Capital Assurance Inc. under the 2009 MTA; the financial condition of Syncora Guarantee (U.K.) Limited and action by the Financial Services Authority, whether by means of cessation or suspension of amounts owing to Syncora Guarantee or by termination of the reinsurance agreement between Syncora Guarantee and Syncora Guarantee (U.K.) Limited or otherwise; requirement of Syncora Guarantee to provide Syncora Guarantee (U.K.) Limited with sufficient funds to maintain its minimum solvency margin; challenges to the Master Commutation, Release and Restructuring Agreement dated July 28, 2008, as amended, and related commutations and releases and/or the 2009 MTA; defaults by counterparties to reinsurance arrangements; the interconnectedness of risks that affect Syncora Guarantee's and its affiliates' reinsurance and insurance portfolio and financial guarantee products; termination payments related to less traditional products, including CDS contracts, possibly in excess of current resources; nonpayment of premiums by policyholders; changes in accounting policies or practices or the application thereof; changes in officers or key employees; further deterioration in general economic conditions, including as a result of the financial crisis as well as inflation or deflation, interest rates, foreign currency exchange rates and other factors and the effects of disruption or economic contraction due to catastrophic events or terrorist acts; the commencement of new litigation or investigations or the outcome of current and new litigation or investigations; legislative or regulatory developments, including changes in tax laws and regulation of mortgages; losses from fraudulent conduct due to unconditional and irrevocable nature of financial guarantee insurance; problems with the transaction servicers in relation to structured finance transactions; limitations on the availability of net operating loss carry forwards; uncertainty as to federal income tax treatment of CDS contracts; conflicts of interests with significant shareholders of Syncora; limitations on the transferability of the common shares of Syncora and other additional factors, risks or uncertainties described in Syncora's filings with the Securities and Exchange Commission, including in its Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as amended and in the financial statements of Syncora and Syncora Guarantee posted at http://www.syncora.com. Readers are cautioned not to place undue reliance on forward looking statements which speak only as of the date they are made. Syncora does not undertake to update forward-looking statements to reflect the effects of circumstances or events that arise after the date the forward-looking statements are made.
SOURCE Syncora Holdings Ltd.; Syncora Guarantee Inc.