Wachovia Corporation has formed a Bermuda-based financial guaranty reinsurance company.

As previously reported in this newspaper, BluePoint Re Limited has been rated Aa3/AA by Moody's Investor Service and Standard & Poor's, respectively.

Wachovia capitalised BluePoint Re with $300 million and will not pay a dividend from any retained earnings or capital from BluePoint Re for at least five years from the start of the company.

BluePoint Re will serve the primary financial guaranty companies and reinsuring investment grade structured finance and municipal transactions.

Tom Wickwire, managing director and head of the Structured Products Division of Wachovia Securities, said in a media statement yesterday: "We are looking forward to strengthening our partnership with the monoline financial guaranty companies and view this platform as an extension of the core credit, structuring and securitisation skills that are resident within Wachovia."

Wachovia has experienced recent growth in its Structured Products platform which has made the financial guaranty sector an increasingly strategic part of the business.

The company said that Wachovia has many of these transactions insured, or "wrapped," on behalf of issuers or for its own balance sheet. Wachovia can now provide additional financial guaranty capacity to its clients and strengthen its ties to the primary insurers through BluePoint Re.

John McEvoy has been appointed BluePoint Re's CEO while Dan Farrell is president. Mr. McEvoy was most recently founder and CEO of Creditex, Inc, a credit derivative trading platform sponsored, in part, by several financial guaranty companies.

Before that, he was a credit and fixed-income derivative specialist at Deutsche Bank and Bankers Trust.

Mr. Farrell was previously director and member of the management and operating committees of FSA, Inc., and ran its US asset-backed business.