Ambac’s losses mount

Ambac Financial Group the second-largest US bond insurer, posted a $2.34bn fourth-quarter loss on Wednesday, as it set aside more money for troubled mortgage debt.

The company also said it ended the year with a negative net worth of $3.78bn after its disastrous move into structured finance to diversify from the relatively safe but lower-margin business of guaranteeing municipal bond payments.

Highlights:

• Fourth quarter net loss of $2,340.8m, or $8.14 per share. This compares to fourth quarter 2007 net loss of $3,273.9m, or $32.03 per share.
• Net premiums earned for the fourth quarter of 2008 were $228.1m, up 9% from $209.6m earned in the fourth quarter of 2007.
• Normal earned premiums in the fourth quarter 2008 of $146.9m were 18% lower than $179.8m reported in the fourth quarter 2007, primarily due to reduced premiums written in 2008, the high level of public finance refunding activity in 2008 and the Assured Guaranty Re cede which took place in December 2007.
• Net premiums earned include accelerated premiums, which result from refundings, calls and other accelerations recognised during the quarter. Accelerated premiums were $81.2m in the fourth quarter of 2008, up 172% from the comparable period in 2007.

Ambac’s President and Chief Executive Officer, David Wallis said: “In the face of the most difficult recession in many decades, Ambac continues to meet its financial obligations. Our business model is proving to be solid and flexible and I am cautiously optimistic that the Federal economic recovery programs announced to date will help the markets to begin the gradual road back to recovery.”