Fitch Ratings Affirms ACA at 'A'.Business Editors NEW YORK--(BUSINESS WIRE)--May 8, 2002 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. affirms ACA ACA - Application Control Architecture Financial Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. Corp.'s (ACA) insurer financial strength rating at 'A'. The company insures U.S. municipal bonds and selected structured transactions, offers insurance products to provide customized financial solutions, and, under a new platform established in 2001, structures and manages proprietary collateralized debt obligations Collateralized Debt Obligation (CDO) A general inclusive term which covers Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations, (CDOs) consisting of investment-grade assets, retaining credit exposure to the equity tranches Tranches A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". while syndicating out higher quality layers. As of Dec. 31, 2001, ACA had $5.6 billion of net par in force supported by total claims-paying resources of $383 million including $121 million of qualified statutory capital. Fitch removed ACA from Rating Watch Negative in February 2001, following a $45 million equity infusion by existing and new investors. ACA has had full-year statutory net losses since its inception although it did have a small gain in the fourth quarter of 2001. As a result, the company's surplus dropped from $114 million at year-end 1997 to $76 million at Dec. 31, 2000. At year-end 2001, statutory surplus increased to $107 million, reflecting the $45 million capital contribution during the year. ACA executed its first transaction under its new proprietary CDO (Collaborative Data Objects) A programming interface from Microsoft for accessing MAPI-based e-mail, calendaring and scheduling servers. Originally called "OLE Messaging" and "Active Messaging," CDO wraps the Enhanced MAPI library into a COM object that provides the strategy in February 2002. That transaction, a synthetic CDO, generates three sources of revenue: asset management fees; structuring fees; and insurance premiums. ACA expects a greater benefit to net income from this and similar transactions, as premiums and other fees are earned faster and the business is more profitable than its core municipal business. ACA anticipates closing several proprietary CDO deals in 2002. In 2001, ACA had a statutory net loss of $3.3 million compared to a $13.6 million statutory loss in 2000. The loss narrowed in 2001 as a result of realized capital gains, a decrease in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , and increased investment income. A copy of the report titled 'ACA Financial Guaranty Corp.' is available on Fitch Ratings' web site at 'www.fitchratings.com' by visiting the U.S. Public Finance page and looking at the criteria reports listed in the Financial Guaranties section, or by contacting Market Services at 1-800-853-4824. |
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