Thomas G. McLoughlin is stepping down from his role as president and chief executive officer at National Public Finance Guarantee Corp. to join UBS Financial Services as head of its municipal research division.
National, the municipal bond insurer created by MBIA Inc. in February 2009, announced the news Tuesday morning.
McLoughlin, who steps down July 23, has been at MBIA since 1994. He was named CEO of National upon its formation after serving in a variety of roles, including head of global public finance from 2005 to 2008. Prior to joining MBIA, he was a vice president with the government finance group of Legg Mason, an asset management firm.
National maintains the largest public finance portfolio in the bond insurance industry, with $499.2 billion insured. However, MBIA and its subsidiaries have not written new bond insurance policies since being stripped of their triple-A ratings in 2008 due to exposure to mortgage-related structured finance bonds and remain enmeshed in litigation associated with insured assets that turned toxic.
The presence of bond insurance in the municipal bond market has diminished from more than 50% of new issues to less than 10% since 2007.
“We are confident that our municipal research team, under Tom’s leadership, will provide the type of guidance that clients both demand and require in these volatile times,” an internal memo at UBS said.
McLoughlin is joining UBS to be head of municipal research within the firm’s wealth management research group, called Wealth Management Americas. He will report to Mike Ryan, head of wealth management solutions.
The need for research in the sector “has never been greater,” given the challenges faced by municipalities across the country, according to UBS.
“Tom will lead our research and strategy efforts within the municipal market and will direct a team of leading analysts dedicated to providing thoughtful commentary, timely guidance and in-depth analysis to our clients and financial advisors,” the memo said.
William C. Fallon has been named interim CEO at National. Fallon is currently president and chief operating officer of MBIA. He joined the company in 2005 as head of corporate and strategic planning. Previously he was a partner in the financial institutions group at McKinsey & Co.
“Tom McLoughlin’s many contributions to the success of our business over the past 16 years cannot be overstated,” Fallon said in the release. “He was instrumental in building National’s high-quality insured portfolio and positioning the company as the world’s largest U.S. public finance-only guarantor. We wish him continued success in the future.”
National said McLoughlin’s departure does not affect the insurer’s intention to re-engage in the U.S. municipal bond insurance business.
The insurer, rated A by Standard and Poor’s and Baa1 by Moody’s Investors Service, is officially open for business but is not expected to write new policies until litigation contesting the creation of National is resolved.
Meanwhile, MBIA has been plaintiff in a series of lawsuits to recover billions of dollars from a number of financial institutions it said purposely misled the insurer into guaranteeing assets that turned toxic.
Share value of MBIA rose 11.5% to $7.17 on Tuesday after Fairholme Capital Management disclosed late Monday that it purchased 22 million shares of the company. That gives the fund, run by Bruce Berkowitz, an 11.1% stake in MBIA, according to a filing with the Securities and Exchange Commission.