Gary Dunton, who succeeded Brown as CEO in 2004 and added the title of chairman last year, will leave the company, Armonk, New York-based MBIA said today in a statement.
Brown, 59, will be tasked with forging a plan to restructure and revive MBIA, which has recorded losses of more than $5 billion on subprime-mortgage securities, threatening its credit rating and sending its shares plunging 83 percent in the past year. New York Insurance Superintendent Eric Dinallo said last week bond insurers may need to be split into two businesses to protect more than $1 trillion of insured municipal debt from subprime losses.
``MBIA faces meaningful challenges,'' Brown said in the statement. Brown said he is seeking to ``frame a new model,'' for MBIA.
Brown said he has already discussed MBIA's plans with Dinallo who provided ``helpful guidance.'' Dinallo, who is taking the lead among the nation's insurance regulators, brought in Warren Buffett to start a new insurer and also asked the billionaire investor to value the guarantors' municipal business.
Insurers Splitting
FGIC Corp., the third-largest bond insurer, sought permission to split up last week. Dinallo said MBIA and Ambac Financial Group Inc., the market leaders, may do the same if they can't raise capital.
The companies and Security Capital Assurance Ltd. insure about $580 billion of asset-backed debt, including collateralized debt obligations that package bonds into new securities.
MBIA, New York-based Ambac and FGIC of New York are struggling after more than $8 billion in losses tied to the slumping value of subprime debt.
MBIA rose 53 cents to $12.77 in early New York Stock Exchange trading. Ambac, down 88 percent this year, fell 24 cents to $9.98. FGIC is owned by New York-based leveraged buyout firm Blackstone Group LP and mortgage insurer PMI Group Inc. of Walnut Creek, California.
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