Financial institutions that see themselves as losers in bond insurer MBIA Inc.'s (MBI) split into two companies met with the insurer's regulator Thursday to ask for a redo.

According to people familiar with the matter, the meeting didn't result in a resolution, but talks will continue. MBIA's chief executive didn't attend.

The issue is New York State Insurance Superintendent Eric Dinallo's approval last month of MBIA's plan to separate its U.S. municipal-bond insurance business from its commitments to insure mortgage-backed bonds and other structured securities. The financial institutions are counterparties to MBIA on derivatives called credit-default swaps that were written on securities they own, many of which have deteriorated since the onset of the credit crisis.

MBIA and New York State's insurance regulator are facing a growing backlash from banks, investment funds and other policyholders. These institutions were left holding contracts with a financially weaker insurer when MBIA transferred about $5 billion in capital from its main unit to its newly relaunched business that will guarantee only U.S. municipal bonds. A spokesman for Dinallo declined to comment about the meeting.

Adding to the pressure to come to some kind of solution is a lawyer representing a group of bond owners that filed a lawsuit in New York federal court Wednesday that seeks to reverse the restructuring.

The suit seeks class action status, and one of the lead attorneys said he has been in discussions with some financial institutions to try to persuade them to join the suit.

The split is "nothing short of a looting" of MBIA Insurance Corp., the firm's main operating unit, by its parent company, the lawsuit said. The plaintiffs, a group of hedge funds, are asking the court to reverse MBIA's plan and to award damages that the suit's lead attorney said could rise to billions of dollars. The value of MBIA-insured bonds dropped after the company announced its restructuring, the suit said.

An MBIA spokesman said the company believes the allegations in the lawsuit are "without merit" and intends to defend itself vigorously. He added that MBIA's restructuring was approved by state regulators "after a thorough examination, including an assessment ... of its ability to meet its obligations to all policyholders."

MBIA wouldn't comment on Thursday's meeting.

MBIA undertook restructuring in mid-February as part of an attempt to restart its business of selling financial guarantees on bonds issued by cities, water authorities and other public-finance entities. Its main unit was left with fewer claims-paying resources for its troubled mortgage exposures, and was downgraded by several credit-ratings firms.

Shares of MBIA traded down 2.1% recently, while shares of rival Ambac Financial Group (ABK) were up 6.2%.

Ambac also announced a plan to launch a new municipal-only insurer, called Everspan, which will operate as a subsidiary of its main insurance business, rather than the separate structure of MBIA's new insurer.

-By Lavonne Kuykendall, Dow Jones Newswires; 312-750-4141; lavonne.kuykendall@dowjones.com