Posted on 04 Nov 2009
Ambac Financial Group Inc., the bond insurer whose shares have plunged 99 percent from their 2007 high, reported third-quarter net income of $2.19 billion, reversing a year-earlier loss, after unrealized mark-to-market gains in its credit derivatives portfolio.
The profit, equal to $7.58 a share, compares with a net loss in the year-earlier period of $2.43 billion, or $8.45 a share, the New York-based company said today in a statement distributed by Business Wire. The latest quarter includes gains from reinsurance cancellations. The loss in the 2008 period reflected $3 billion that the company set aside to pay anticipated claims.
Ambac, the world’s second-largest bond insurer, was stripped of its AAA financial guarantee credit ratings last year as claims on securities backed by mortgages and home equity loans surged. The company has stopped writing new policies and this year Chief Executive Officer David Wallis canceled plans to create a bond insurance unit that would back only municipal bonds.
“The range of outcomes is so wide that we can’t assign a valuation to the companies,” said Jim Ryan, an insurance analyst with Morningstar in Chicago. Ryan has a rating of “extreme uncertainty” on both Ambac and MBIA Inc., the largest bond insurer.