The New York State Department of Financial Services has licensed the first mutual bond insurer to operate in the municipal market in the United States, it said today.
The insurer, New York City–based Build America Mutual Assurance Co. (BAM), will offer bond insurance in the small and mid-sized municipal bond markets. A mutual insurer is owned by the issuers who are its policyholders.
“BAM’s unique business model will create dozens of jobs within the state,” DFS Superintendent Benjamin Lawsky said in a news release. “Further, the company should enable smaller and mid-sized communities to undertake essential capital projects that are good for the economy.”
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The company’s focal point will be on municipal bonds up to $75 million. It plans to insure only investment-grade general obligation bonds and other revenue bonds funding government facilities and services marked as essential. It will not insure structured securities.
BAM expects to issue its first policy in September. The firm estimates that it will employ 40 people initially and grow to 100 employees within two years.
Contact Seltzer at rseltzer@cnybj.com
