Financial Guaranty Insurance Corporation

Financial Guaranty Insurance Corporation

A private company providing financial guarantee insurance for different types of transactions. For example, an insurance policy may cover a lender from liability resulting from the failure of the borrower to repay the loan. FGIC originally provided this insurance exclusively for municipal bonds, but expanded into different transactions such as IPOs. Clients pay FGIC the appropriate premium in exchange for a guarantee of repayment in case of default; this increases the bond's credit rating and usually decreases its interest rate. The services FGIC provides are similar to sureties or co-signed loans.

Financial Guaranty Insurance Corporation (FGIC)

A private insurer of interest and principal payments on municipal bond issues. As with other insurers, the municipality issuing the bond pays the required premium to FGIC in order to obtain a higher rating on the issue. In this way, the bonds can be sold at a lower interest rate.
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