Syncora Holdings Ltd. (OTCMKTS:SYCRF) reported that its wholly owned subsidiary unit, Syncora Guarantee Inc. has settled a clash with an RMBS originator pertaining to an insured RMBS-related deal that was not the matter of litigation, in lieu of a cash payment of $40 million.
The highlights
Syncore Holdings reported that this settlement is projected to increase its subsidiary unit shareholders’ equity and GAAP net income by $40 million. It is also anticipated to have the same impact on company’s statutory-basis net income as well as policyholders’ surplus. The reported settlement will be mirrored in SGI’s and SHL’s 2Q statutory-basis and consolidated GAAP financial statements, respectively. With this settlement, now Syncore subsidiary is not involved in any clash pertaining any material RMBS-linked issue.
The performance
In the first week of July, Syncora Holdings and its subsidiaries reported that they have released interim GAAP consolidated financial report for the quarter closed March 31, 2016 on the company’s official website. Additionally, the company updated that it has entered into the “RSA” with the “PREPA” and some of its creditors in connection with principal amount worth $197 million of guarantees released by SGI casing bonds released by PREPA.
Syncore stated that these guarantees are completely reinsured to SCAI depending to an affiliate reinsurance treaty. Considering the terms precedent to the “PREPA” Settlement are contented in line with existing expectations, the firm believes that the deal will not have a material impact on the its consolidated financial condition.
The terms
Under the conditions of this PREPA Settlement, Syncore was required to buy PREPA bonds worth $38.5 million, and may be stated to make further bond purchases in the coming period. In addition, the firm reported that SCAI finalized a settlement deal with an institutional counterparty, which covered, among other things, the closure of a clash pertaning to its guarantee of definite interest rate swaps dispensed pertaining to the City of Detroit.
