In 2006 Tony Ettinger, a founder of two of the most successful specialty finance companies, C-BASS and Sherman Financial, joined Fortress Investment Group as a Managing Director. Fortress is a global alternative investment and asset management firm with over $23 billion of equity capital under management. Tony is responsible for forming joint ventures with premier talent in attractive spaces.
In 2005 Tony founded Credit Based Capital, a merchant banking entity focusing on credit based businesses. The credit based businesses that Tony has started have generated over $1 billion of income and an average 35% ROE since inception. Credit Based Capital has competencies in capital formation, valuation analytics, value added servicing and creating learning organizations through integrated feedback loops.
In 2003, Tony became Global Head of Specialty Finance for Maple Financial, a private financial services holding company with $13 billion of assets. In that capacity, Tony was responsible for Maple's specialty finance businesses including Commercial Finance.
In 1995, Tony joined Enhance Financial Services Group (NYSE: EFS), Inc, the world's largest financial guaranty re-insurer, and became President, Credit-Based Businesses, and the number two executive at Enhance. Tony's main focus was the creation of four businesses and the management of three virtual start-ups. The two largest businesses, C-BASS and Sherman Financial have generated around $1 billion of income since inception with average ROEs of 35%. Each business focused on assets where strategic advantage could be created from understanding and managing credit risk better than the market at large.
The seven businesses all became market leaders in their respective fields. The businesses share the same underlying approach of technologically linking data, analytics, servicing and financing/securitization with a feedback loop to allow each business to "get smarter" and build sustainable advantage with each new, asset it touches. Each of the businesses reached cash flow break-even by the second year, at the latest. None of the businesses have lost money since reaching the break-even stage. The four start-ups required seven acquisitions and are all in the form of joint ventures.
The largest business is C-BASS, which Tony started in 1996. C-BASS is the nation's largest purchaser, servicer and securitizer of credit-sensitive residential mortgages (and was voted North American Issuer of the year for 2002 by 11,000 peers). Tony developed the idea for C-BASS based on the thinking that delinquent residential mortgages, albeit an asset class of huge size, was viewed as a homogeneous segment and not focused on in value added approaches by the industry players. For example, most deeply delinquent accounts traded at 50% while C-BASS' first securitizations yielded results at 75%. Tony recognized that in order to succeed in the space, value added servicing focused on curing, needed to be combined with non-traditional data and adaptive analytics with feedback loops. One example of non-traditional data is court house foreclosure backlogs which have a direct impact on the ultimate net present value of the asset. He implemented the concept by purchasing Litton Loan Servicing, recruiting a capital markets management and analytics team, and securing sources of non-traditional data. He fully integrated these functions into a learning organization which provided significant competitive advantages over the larger players who had built huge, economies of scale based servicing shops that were difficult to reengineer.
C-BASS purchased delinquent and all other types of credit sensitive residential mortgages from virtually all of the major banks and mortgage banks in the U.S. C-BASS proceeded to create seventeen brand new securitization types that were rated by the major rating agencies from the previously homogenous asset class. By understanding the asset at a finer and finer level, C-BASS could buy at the market price yet finance the asset at less than the industry cost. C-BASS was also able to add significant value to the asset by curing over 80% of the delinquent loans they touched, providing Litton the highest cure rates of all U.S. residential mortgage servicers for five years running. Litton regularly doubled the cure rates of the average industry rates. Litton was the first servicer to achieve the highest rating from all three agencies.
The next largest business that Tony created was Sherman Financial (the market leader in profiting from charged-off credit card receivables). Sherman, like C-BASS, was based on the premise that the market viewed delinquent credit card receivables as a homogeneous group. For example, the market for “fresh charge-offs” trades in a narrow band around 9%, although the internal analysis showed a range of values between 3%-18%.
Tony acquired Allegis Servicing (a small but high quality third party servicer) and Sherman Management (a capital markets and analytics management team) to create Sherman Financial. The implementation required the integration of the servicer, adaptive analytics and non-traditional data into a learning organization. With this integrated approach Sherman Financial was able to achieve significant competitive advantages vs. the majors in both evaluating delinquent accounts as well as curing them.
Sherman proceeded to purchase charged off accounts from virtually every major player in the credit card industry. By analyzing the accounts at a more detailed level, they were able to purchase the asset attractively. By developing new sub-asset classes, they were able to finance more cheaply. By dramatically increasing cure rates, they were able to add significant value to the bottom line.
Tony's other businesses included Resurgent Capital (the market leader in profiting from Chapter 13 bankruptcy plans), UBF (the largest surety company in Brazil), Finpac (the largest mortgage-like structured finance provider in Brazil), and the FI group at Enhance (the global market leader in providing securities-protection guaranties for companies such as Morgan Stanley, Merrill Lynch, Fidelity, and Prudential; and innovator in the Supply Bond market for commercial finance transactions).
Tony also started Credit2B to bring huge value to the underserved and large market of trade receivables. Credit2B built the world's leading predictive analytics for trade receivables and linked them to sellers and financial institutions so risk mitigation and financing could be delivered in a highly efficient manner. The suite of adaptive models relied on both traditional and non-traditional data and out-predicted the industry standard models by 30%. Credit2B was sold to Standard & Poors in 2001 to be their platform in trade receivables and an important component in their Basel II implementation.
Tony also served on the Boards of both the AAA and AA financial guarantors.
Tony joined MONY Financial Services in 1985 as Head of Corporate Development. While there, he was promoted to be head of Mergers & Acquisitions and holding company COO for eight financial services companies including a top ten Canadian Life Insurer, the U.S.'s second largest financial planning company, a broker dealer, a securities clearing firm and transfer agent, a start-up mutual fund family, a mortgage bank, a real estate syndicator, and a property-casualty re-insurer. Collectively, the group generated $40mm in pre-tax income and had combined balance sheets of $1.4b, with 1800 employees. The highlights of Tony's career at MONY include the sale of MONY Life of Canada for $100mm (a record sales margin at the time in Canada which generated a profit of $33mm), the turnaround of MONY Securities (the internal broker dealer) from consistently losing $2mm a year to making $5mm, and the launch of the Enterprise Family of Mutual Funds which achieved award-winning status for performance and currently has over $20b under management. Tony was the youngest corporate officer named at MONY.
Tony started at The Travelers in 1981, where he developed, implemented, and managed the U.S.'s first automated cash management account for small businesses and wholesale account for individuals, Capital T. Business Capital T combined products for businesses including loans, charge cards, checking accounts, insurance, and securities and utilized a consolidated cash flow statement. Individual Capital T included insurance, securities and loans, charge cards and checking accounts and could be customized by a network of independent broker-dealers across the country. The product was marketed through 5,000 independent agents and 100 broker-dealers. Tony was responsible for having over 1,000 insurance agents NASD licensed with Travelers broker dealer. $1.5 billion of money market funds were raised by the second year of operations. Tony was then promoted to head the Integrated Financial Accounts Division that housed all technologically oriented products crossing departmental lines. Tony was the youngest officer named at The Travelers.
Tony received his BA from Tufts University with majors in History and Economics. He received his MA in Economics from Tufts as well. He received his MBA from Dartmouth's Amos Tuck School of Business where he has recently been an Executive-In-Residence for the Mergers and Acquisitions and Financial Institutions courses. Tony is a Registered Securities Principal of the NASD and holds a CLU and ChFC. Tony is on the Advisory Board of Rio Bravo, an investment fund focused on financial services in Latin America. Tony was an Executive Advisor to The Advisory Board on their landmark study “Insurance Delivery: Vision of the Future”.
Tony is married with two children and two dogs. He has been a tournament level player in table tennis, platform tennis, paddleball and tennis. He also play Ice Hockey regularly and is a board member of local hockey club.