NEW YORK (Bloomberg) — Credit-default swaps linked to Syncora Guarantee Inc. will be settled at auction today, according to Markit Group Ltd.

Syncora, a Bermuda-based insurer that's part of Syncora Holdings Ltd., suspended paying claims after the New York Insurance Department ordered it to cease and restore its surplus to policyholders. Banks, hedge funds, insurance companies and other investors bought or sold about $1 billion of protection on the insurer through credit-default swaps as of April 24, according to data from the Depository Trust & Clearing Corp., which runs a central registry that captures most trading.

Credit-default swaps, contracts used to hedge against losses or speculate on a company's creditworthiness, pay the buyer face value in exchange for the underlying bonds or loans or the cash equivalent set by the auction.