UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____ to _____
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Commission file number 0-19564
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FGIC Securities Purchase, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3633082
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
115 Broadway, New York, New York 10006 (212) 312-3000
(Address of principal executive offices) (Zip Code) (Registrant's telephone
number, including area
code)
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SECURITIES REGISTERED PURSUANT
TO SECTION 12(b) OF THE ACT:
None.
SECURITIES REGISTERED PURSUANT
TO SECTION 12(g) OF THE ACT:
Title of each class
Common Stock, par value $10.00 per share
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---- ----
Aggregate market value of the voting stock held by nonaffiliates of the
registrant at March 22, 1997. None.
At March 22, 1997, 10 shares of common stock with a par value of
$10.00 per share were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(a) AND
(b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM 10-K WITH THE REDUCED
DISCLOSURE FORMAT.
TABLE OF CONTENTS
Page
PART I
Item 1. Business 1
Item 2. Properties 1
Item 3. Legal Proceedings 1
Item 4. Submission of Matters to a
Vote of Security Holders 1
PART II
Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters 2
Item 6. Selected Financial Data 2
Item 7. Management's Discussion and Analysis
of Results of Operations 2
Item 8. Financial Statements and Supplementary Data 4
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 13
PART III
Item 10. Directors and Executive Officers
of the Registrant 13
Item 11. Executive Compensation 13
Item 12. Security Ownership of Certain Beneficial
Owners and Management 13
Item 13. Certain Relationships and Related
Transactions 13
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 13
Signatures 15
PART I
Item 1. Business.
FGIC Securities Purchase, Inc. ("FGIC-SPI") was incorporated in
1990 in the State of Delaware. As of December 31, 1997, all
outstanding capital stock of FGIC-SPI was owned by FGIC
Holdings, Inc., a Delaware corporation, a wholly-owned
subsidiary of General Electric Capital Corporation ("GE
Capital"), a New York corporation, the ultimate parent of which
is General Electric Company.
The business of FGIC-SPI consists of providing liquidity for
certain floating rate municipal securities through a "liquidity
facility". These floating rate municipal securities are
typically remarketed by registered broker-dealers at par on a
periodic basis to establish the applicable interest rate for
the next interest period and to provide a secondary market
liquidity mechanism for security holders desiring to sell their
securities. In the event that such securities cannot be
remarketed, FGIC-SPI, pursuant to a standby purchase agreement
with the issuer of the securities, will be obligated to
purchase unremarketed securities, at par, from the holders
thereof who desire to remarket their securities. In order to
obtain funds to purchase the securities, FGIC-SPI has entered
into standby loan agreements, with GE Capital, under which GE
Capital will be irrevocably obligated to lend funds as needed
for FGIC-SPI to purchase the securities.
Item 2. Properties.
FGIC-SPI conducts its business from the facilities of Financial
Guaranty Insurance Company, a wholly-owned subsidiary of FGIC
Corporation.
Item 3. Legal Proceedings.
FGIC-SPI is not involved in any pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
Omitted.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
As of December 31, 1992, all of FGIC-SPI's common stock, its
sole class of common equity, was owned by FGIC Corporation. In
January 1993, the common stock of FGIC-SPI was dividended to
GE Capital. GE Capital, in turn, made a capital contribution
of the common stock of FGIC-SPI to FGIC Holdings, Inc., which
now owns 100% of the common stock of FGIC-SPI. Accordingly,
there is no public trading market for FGIC-SPI's common stock.
Item 6. Selected Financial Data.
Omitted.
Item 7. Management's Discussion and Analysis of Results of Operations.
FGIC-SPI commenced operations in March 1992. Fees are paid
up-front and in installments. Up-front fees are earned on a
straight-line basis over the life of the liquidity commitment,
and installment fees are earned straight-line over the
installment period.
For the years ended December 31, 1997 and 1996, fees earned
totaled $9,283,899 and $11,785,585 respectively. The decrease
in earnings is primarily due to a reduction in the liquidity
facility utilized during 1997. FGIC-SPI also incurred $678,169
and $459,685 in expenses for the years ended December 31, 1997
and 1996, respectively. Expenses increased $218,484 or 48% from
1996 to 1997 primarily as a result of increased sales efforts.
During 1997, two deals closed totaling $96.4 million of
liquidity facility. During 1996, four deals closed totaling
$75.4 million of liquidity facility.
For the years ended December 31, 1996 and 1995, fees earned
totaled $11,785,585 and $12,331,893 respectively. The decrease
in earnings is primarily due to a reduction in the liquidity
facility utilized during 1996. FGIC-SPI also incurred $459,685
and $510,649 in expenses for the years ended December 31, 1996
and 1995 respectively. Expenses decreased $50,964 or 10% from
1995 to 1996 primarily as a result of a decrease in the number
of transactions for which FGIC-SPI provided a liquidity
facility. During 1996, four deals closed totaling $75.4 million
of liquidity facility. During 1995, one deal closed totaling
$220.3 million of liquidity facility.
Independent Auditors' Report
The Board of Directors and Stockholder
FGIC Securities Purchase, Inc.
We have audited the accompanying balance sheets of FGIC Securities Purchase,
Inc. as of December 31, 1997 and 1996, and the related statements of income,
changes in stockholder's equity, and cash flows for each of the years in the
three-year period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly in
all material respects, the financial position of FGIC Securities Purchase,
Inc. as of December 31, 1997 and 1996, and the results of its operations and
its cash flows for each of the years in the three-year period ended December
31, 1997, in conformity with generally accepted accounting principles.
KPMG Peat Marwick
/s/KPMG Peat Marwick
- -------------------------
KPMG Peat Marwick
January 17, 1998
New York, New York
Item 8. Financial Statements and Supplementary Data.
FGIC Securities Purchase, Inc.
Balance Sheets
ASSETS December 31, December 31,
1997 1996
------------- ------------
Short-term investments $ 117,390 $ 109,277
Liquidity fees receivable 1,278,386 1,905,938
Due from affiliates 18,408,928 13,284,308
Deferred tax asset 1,964,434 1,377,427
Other assets 456,074 322,079
----------- -----------
Total assets $22,225,212 $16,999,029
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Deferred liquidity fee income $ 211,178 $ 347,223
Due to affiliates 140,980 -
Commitment fees payable to GE Capital 822,145 643,741
Accounts payable and accrued expenses 283,259 412,619
Taxes payable 8,087,541 8,094,410
---------- ----------
Total liabilities 9,545,103 9,497,993
---------- ----------
Stockholder's Equity:
Common stock, par value $10.00 per share;
10 shares authorized, issued and
outstanding 100 100
Retained earnings 12,680,009 7,500,936
---------- -------------
Total stockholder's equity 12,680,109 7,501,036
---------- -------------
Total liabilities and stockholder's
equity $22,225,212 $16,999,029
=========== ===========
See accompanying notes to financial statements.
FGIC Securities Purchase, Inc.
Statements of Income
For the Year Ended
December 31,
1997 1996 1995
---- ---- ----
Liquidity fee income $9,283,899 $11,785,585 $12,331,893
Investment income 8,113 1,414 77,686
----------- ----------- -----------
Total revenues 9,292,012 11,786,999 12,409,579
General and administrative
expenses 499,765 280,673 313,197
GE Capital commitment fees 178,404 179,012 197,452
---------- ---------- -----------
Total expenses 678,169 459,685 510,649
---------- ---------- -----------
Income before provision for
income taxes 8,613,843 11,327,314 11,898,930
Income tax expense (benefit):
Federal
Current 3,375,738 3,730,193 4,204,078
Deferred (587,006) (62,654) (341,679)
State and local 646,038 849,549 890,170
---------- ---------- -----------
Total income tax expense 3,434,770 4,517,088 4,752,569
---------- ---------- -----------
Net income $5,179,073 $6,810,226 $7,146,361
========== ========== ===========
See accompanying notes to financial statements.
FGIC Securities Purchase, Inc.
Statements of Changes in Stockholder's Equity
For the Years Ended December 31, 1997, 1996, and 1995
Common Retained
Stock Earnings Total
Balance, January 1, 1995 $100 $6,044,349 $ 6,044,449
Net Income - 7,146,361 7,146,361
Dividends paid - (10,500,000) (10,500,000)
------- ------------ ------------
Balance, December 31, 1995 100 2,690,710 2,690,810
Net Income - 6,810,226 6,810,266
Dividends Paid - (2,000,000) (2,000,000)
------- ------------ -----------
Balance December 31, 1996 100 7,500,936 7,501,036
Net Income - 5,179,073 5,179,073
Dividends Paid - - -
-------- ------------ -----------
Balance, December 31, 1997 $100 $12,680,009 $12,680,109
==== =========== ===========
See accompanying notes to financial statements.
FGIC Securities Purchase, Inc.
Statements of Cash Flows
For the Year Ended
December 31,
1997 1996 1995
---- ---- ----
Operating activities:
Net income $5,179,073 $ 6,810,226 $ 7,146,361
Adjustments to reconcile net
income to net cash
provided by operating activities:
Change in taxes payable (6,869) (5,365,431) 5,094,248
Change in due from affiliates (5,124,620) (727,847) (11,326,395)
Change in due to affiliates 140,980 (31,069) (217,439)
Change in liquidity fees
receivable 627,552 1,022,679 (982,215)
Change in deferred tax asset (587,007) (62,654) (341,679)
Change in deferred liquidity
fee income (136,045) (6,125) (42,350)
Change in other assets (133,995) 1,600 -
Change in accounts payable and
accrued expenses (129,360) 181,023 78,086
Change in commitment fees
payable to GE Capital 178,404 179,012 197,452
----------- ----------- -----------
Cash provided by (used in)
operating activities 8,113 (2,001,414) (393,931)
----------- ------------ ---------
Financing activities:
Dividends paid - (2,000,000) (10,500,000)
----------- ------------ -----------
Cash used in financing
activities - (2,000,000) (10,500,000)
----------- ------------ -----------
Net change in cash and cash
equivalents 8,113 1,414 (10,893,931)
Cash and cash equivalents at
beginning of period 109,277 107,863 11,001,794
---------- ----------- ------------
Cash and cash equivalents at
end of period $ 117,390 $ 109,277 $ 107,863
========== =========== =============
See accompanying notes to financial statements.
FGIC Securities Purchase, Inc.
Notes to Financial Statements
December 31, 1997
(1) Business
FGIC Securities Purchase, Inc. ("FGIC-SPI") is a wholly-owned
subsidiary of FGIC Holdings, Inc. (the "Parent") which, in turn, is
wholly-owned by General Electric Capital Corporation ("GE Capital").
FGIC-SPI was capitalized on September 24, 1991. FGIC-SPI was formed
to provide liquidity for certain floating rate municipal securities
whereby FGIC-SPI will, under certain circumstances, purchase such
securities in the event they are tendered by the holders thereof as
permitted under the terms of the respective bond indentures. As of
December 31, 1997, FGIC-SPI had approximately $2.8 billion par and
interest of potential obligations under such arrangements. In order
to obtain funds, in the event such purchases are necessary, FGIC-SPI
has entered into standby loan agreements, with GE Capital, under
which GE Capital will be irrevocably obligated to lend funds as
needed for FGIC-SPI to purchase the securities.
(2) Significant Accounting Policies
The accompanying financial statements have been prepared on the basis
of generally accepted accounting principles. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
Significant accounting policies are as follows:
Revenue Recognition
Fees are paid up-front and in installments. Up-front fees are earned
on a straight-line basis over the life of the liquidity commitment,
usually five years, and installment fees are earned straight-line
over the installment period.
Cash and Cash Equivalents
Cash and cash equivalents are carried at cost, which approximates
fair value. For purposes of the statement of cash flows, FGIC-SPI
considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
Fair Values of Financial Instruments
The carrying amounts of FGIC-SPI's financial instruments, relating
primarily to short-term investments and liquidity fees, approximate
their fair values.
SEC Registration Fees
SEC registrations fees are reimbursable to FGIC-SPI, as a separate
item at the closing, by issuers as transactions are consummated. Such
fees are deferred when paid and netted against the related
reimbursement as transactions are consummated. Management evaluates
the recoverability of such deferred fees at each reporting date.
Expenses
Direct expenses incurred by the Parent are fully allocated to
FGIC-SPI on a specific identification basis. Employee related
expenses are allocated by affiliates to FGIC-SPI based on the
percentage of time such employees devote to the activities of
FGIC-SPI. Management believes that such allocation method is
reasonable. Management believes that such expenses, as reported in
the statement of income, would not differ materially from what
expenses would have been on a stand-alone basis.
Reserve for Losses
It is management's policy to establish a reserve for losses based
upon its estimate of the ultimate aggregate losses relative to its
obligations under the liquidity facility arrangements written. At
December 31, 1997, management does not anticipate any losses relative
to such arrangements.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases, on a stand alone basis, as provided in
SFAs No. 109, "Accounting for Income Taxes". These temporary
differences relate principally to accrued state taxes not settled
with GE Capital. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(3) Income Taxes
Under an intercompany tax-sharing agreement with its parent, FGIC-SPI
is included in the consolidated Federal income tax returns filed by
GE Capital. FGIC-SPI provides for taxes as if it filed a separate tax
return.
FGIC-SPI's effective Federal tax rate differs from the corporate tax
rate on ordinary income of 35 percent in 1997, 1996 and 1995. The
differences between the statutory Federal tax rate and expense
computed by applying the statutory tax rate to earnings before income
taxes are as follows:
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1997 1996 1995
------------ ------------ ------------
Computed Statutory
tax provision $3,014,845 $3,964,559 $4,164,626
State and local
income taxes, net
of Federal income
tax benefit 419,925 552,207 578,611
Other - 322 9,332
---------- ------------ -------------
Income tax expense $3,434,770 $4,517,088 $4,752,569
========== ========== =============
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at
December 31, 1997 and 1996 are as follows:
1997 1996
---- ----
State taxes $1,754,812 $1,230,246
Commitment fees 287,912 225,471
---------- -----------
Total gross deferred tax assets 2,042,724 1,455,717
Deferred tax liabilities - other 78,290 78,290
---------- ------------
Net deferred tax asset $1,964,434 $1,377,427
========== ==========
To the extent that the state and local income tax liability provided
for by FGIC-SPI has exceeded the overall consolidated state and local
income tax liability of GE Capital, such liability has not been
settled (in accordance with the tax-sharing agreement) and remains a
current liability of FGIC-SPI. Given that such state and local taxes
will not be paid until some future period, the related federal income
tax benefit is considered a deferred item. FGIC-SPI believes it is
more likely than not that it will realize the benefits of these
deductible differences and has not established a valuation allowance
at December 31, 1997 and 1996.
(4) Related Party Transactions
All municipal securities for which FGIC-SPI provides liquidity are
insured by Financial Guaranty Insurance Company, a subsidiary of the
Parent.
As part of a standby loan agreement with GE Capital (see Note 6),
FGIC-SPI has incurred commitment fees for the years ended December
31, 1997, 1996 and 1995 of $178,404, $179,012, and $197,452,
respectively.
At December 31, 1997 and 1996, $18,408,928 and $8,696,139,
respectively, of the amount classified as due from affiliates relates
to cash balances held by GE Capital. FGIC-SPI has access to these
funds on an as needed basis.
In 1995 and 1996, FGIC-SPI paid certain expenses on behalf of FGIC
Advisors, Inc., and FGIC Plus Corp., affiliated companies. The unpaid
balance of these expenses, which are classified as due from
affiliates, amounted to $1,001,091 at December 31, 1996, and was
reimbursed to FGIC-SPI, in the first quarter of 1997.
In April 1995, FGIC-SPI supplied its parent, FGIC Holdings, Inc.,
with $1.5 million to purchase Applied Municipal Network. This
balance, which remained unpaid at December 31, 1996, was reimbursed
to FGIC-SPI, in the first quarter of 1997.
All amounts due from affiliates and due to affiliates are
non-interest bearing.
(5) Off-Balance-Sheet Risk
FGIC-SPI provides liquidity for certain floating rate municipal
securities whereby FGIC-SPI will, under certain circumstances,
purchase such securities at par in the event they are tendered by the
holders thereof as permitted under the terms of the respective bond
indentures.
The geographical distribution of the underlying par value supported
by the thirty six liquidity facilities outstanding at December 31,
1997 was as follows (dollars in millions):
New York $ 1,649.4
California 301.6
Connecticut 289.6
Pennsylvania 163.6
Florida 135.1
Ohio 114.2
Louisiana 56.1
Texas 31.1
Oklahoma 21.4
South Carolina 9.0
Michigan 8.0
---------------
Total $ 2,779.1
===============
The maturity distribution of the underlying par value supported by
the thirty six liquidity facilities outstanding at December 31, 1997
was as follows (dollars in millions):
Less than one year $ 298.6
One to two years 447.8
Two to three years 0.0
Three to four years 449.9
Four to five years 1,423.3
Over five years 159.5
---------------
Total $ 2,779.1
===============
The liquidity agreements are for a term of approximately five years
(subject to renewal) or earlier if the bonds are no longer
outstanding.
As of December 31, 1997, the fair value of the uncollected balances
on outstanding facilities was $23.8 million. The fair value was
calculated based upon current expected cash inflows, assuming current
outstanding facilities at current fee rates, discounted at the risk
free rate of 5.9%.
FGIC-SPI is exposed to credit risk that the issuer defaults on the
underlying municipal security at a time that FGIC-SPI is holding
securities purchased pursuant to a liquidity facility and the
financial guarantor fails to perform on its insurance contract. It is
the accounting policy of FGIC-SPI to evaluate the likelihood of any
credit loss at each reporting period and to establish reserves for
credit losses when deemed appropriate. Management believes that no
such reserves were required at December 31, 1997 and 1996.
FGIC-SPI is exposed to market risk in the event that FGIC-SPI is
required to purchase municipal securities at their par amount at a
time when such par value is in excess of the securities' fair value.
It is the accounting policy of FGIC-SPI to evaluate the likelihood of
it being called upon to purchase securities under its liquidity
arrangements at amounts greater than their fair value at each
reporting period and to establish valuation reserves when deemed
appropriate. Management believes that no such valuation reserves were
required at December 31, 1997 and 1996.
(6) Standby Loan Agreements
FGIC-SPI secured the right to obtain funds for the purchase of
tendered bonds by entering into standby loan agreements with GE
Capital who will lend funds to FGIC-SPI in amounts not exceeding the
purchase price of the tendered bonds. Such agreements totaled $4.0
billion at December 31, 1997.
In consideration of the commitment of GE Capital to make loans to
FGIC-SPI, FGIC-SPI agrees to pay GE Capital a fee equal to 0.625
basis points on the outstanding facility. The fee is payable on dates
mutually agreed to by FGIC-SPI and GE Capital.
(7) Year 2000
Year 2000 compliance programs and information systems reviews have
been initiated in an attempt to ensure that these systems and key
processes will remain functional. This objective is expected to be
achieved by modifying present systems using existing internal and
external programming resources and by monitoring supplier and other
third-party interfaces. While there can be no assurance that all such
modifications will be successful, management does not expect that
either costs of modifications or consequences of any unsuccessful
modifications should have a material adverse effect on the financial
position, results of operations or liquidity of FGIC-SPI.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure. NONE
Part III
Item 10. Directors and Executive Officers of the Registrant.
Omitted.
Item 11. Executive Compensation.
Omitted.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Omitted.
Item 13. Certain Relationships and Related Transactions.
Omitted.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Financial Statements
Included in Part II of this report:
Report of Independent Auditors
Balance Sheets as of December 31, 1997 and 1996
Statements of Income for the years ended
December 31, 1997, 1996 and 1995.
Statements of Changes in Stockholder's Equity for the years
ended December 31, 1997, 1996 and 1995
Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995.
Notes to Financial Statements
All Schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or
are inapplicable and, therefore, have been omitted.
(b) Reports On Form 8-K
During the fourth quarter, reports on Form 8-K were filed on
October 1, 1997 (dated September 25, 1997), November 11, 1997
and a Form 8-KA relating to such report (each dated October 2,
1997).
All Reports on Form 8-K related to Item 5 and Item 7.
(c) Exhibit Index
Exhibit
1.1 --Certificate of Incorporation of FGIC-SPI
(Incorporated by reference to Exhibit 1.1 of
FGIC-SPI's December 31, 1991 Form 10K)
1.2 -- By-Laws of FGIC-SPI
(Incorporated by reference to Exhibit 1.2 of
FGIC-SPI's December 31, 1991 Form 10K)
1.3 -- Consent of Independent Auditors
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/Ann C. Stern President (principal 3/27/98
- --------------------------- executive officer),
Director
Ann C. Stern
/s/Christopher Jacobs Treasurer, Director 3/27/98
- --------------------------
Christopher Jacobs
/s/Amedeo Edward Turi, III
- -------------------------- Director 3/27/98
Amedeo Edward Turi, III
Consent of Independent Auditors
The Board of Directors and Stockholder
FGIC Securities Purchase, Inc.
We consent to incorporation by reference in the registration statement (No.
33-84062) on Form S-3 of FGIC Securities Purchase, Inc. of our report dated
January 17, 1998, relating to the balance sheets of FGIC Securities Purchase,
Inc. of December 31, 1997 and 1996, and the related statements of income,
changes in stockholder's equity, and cash flows for each of the years in the
three-year period ended December 31, 1997, which report appears in the
December 31, 1997 annual report on Form 10-K of FGIC Securities Purchase, Inc.
KPMG Peat Marwick
/s/ KPMG Peat Marwick
- ---------------------------
KMPG Peat Marwick
New York, New York
March 24, 1998