Macq bond insurance will diversify group
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Macquarie Group is wading into the US bond insurance market – a move that is consistent with the company’s international diversification strategy, says Moody’s Investor Services.
Eric Dinallo, New York’s state insurance superintendent, told The New York Times he has been discussing the deal with Macquarie since April and that he welcomes their interest in the bond insurance market. The move is being reported widely in both the US and Australia.
Meanwhile both Australian and US-based Macquarie representatives have refused to comment on the potential deal.
However ratings house Moody’s said the move is consistent with the Macquarie Group’s international diversification strategy.
“The Group’s diversity of earnings is a major rating strength. However it must be said that insurance hasn’t been a meaningful business line for the Group before,” said Moody’s senior vice president, Patrick Winbury.
Moody’s said Macquarie’s rating impact would depend on how the insurance business is financed. Winbury said the $2.5 billion capitalisation for the proposed operation is a substantial sum, and expects to see additional capital raised from external sources for the Group’s rating to remain unaffected.
“Rating stability would also depend …on the Group being able to demonstrate it has that requisite expertise to run this business – and that its risk appetite remains in line with the proposed capitalisation,” said Winbury.
Macquarie’s venture into the US market will see it compete with bond insurers Ambac Financial Group Inc and MBIA Inc among other companies hampered by credit-rating downgrades, reports Bloomberg.
Ruth Liew
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