MBIA asset manager to operate as separate unit

MBIA Inc. said on Monday that its asset management unit will function as a separate operating company, a move that sent shares of the bond insurer higher in midday trading. The unit, now known as Cutwater Asset Management, will operate under the parent's umbrella as a separate company focused on managing bond investments, MBIA said. The Armonk, N.Y., company said the change is part of broader shift begun nearly two years ago to create a traditional holding company structure in which its individual business units operate as separate entities. MBIA's public finance and structured finance insurance businesses already operate separately. MBIA has been hit hard in the past two years by losses on its insurance coverage of risky financial instruments such as mortgage-backed securities. Shares of MBIA rose 28 cents, or 5.8 percent, to $5.09 in midday trading. Also based in Armonk, Cutwater traces its origins to 1991, when MBIA Asset Management was created to offer investment products to institutional clients. With more than 120 employees, Cutwater now manages $42 billion for clients ranging from local governments to pension funds and insurance companies. Cutwater currently reports financial results as a standalone segment of MBIA. Under the unit's shift to a separate entity, MBIA transferred some of its own employees to Cutwater to expand in-house information technology, legal, marketing and accounting capabilities. Giving Cutwater more financial and operational independence will allow it to "accelerate the solid growth it has achieved over the past two decades," said Bill Fallon, MBIA president and chief operating officer. Cutwater's existing management team will continue to run the company in its transition to a separate entity. Clifford Corso, who had served as president and chief investment officer of MBIA Asset Management, will hold those two titles at Cutwater.