Ambac Financial Group, the bond insurer that emerged from bankruptcy in May, reported $206 million of net income in the two months after the company's exit from Chapter 11, and $3.1 billion in income during the prior month. The result compares with an $811 million loss in the second quarter of last year.

Ambac, which emerged from bankruptcy on May 1, applied "Fresh Start Accounting" to incorporate the discharge of debt obligations, issuance of new common stock, and fair value adjustments, according to a press release. Reporting of net premiums earned was not affected by the accounting policy.

Net premiums earned in the second quarter declined $15.3 million to $87.7 million from the year before, including $29.7 million in the month before emerging from bankruptcy, and $58 million in the two months after. Normal net premiums earned increased $0.5 million from $67 million

Loss reserves declined $0.5 billion on June 30 from $6 billion on March 31, primarily due to a newly consolidated variable interest entity, Ambac said. Residential mortgage-backed securities comprised $3.45 billion of the total $5.54 billion of loss reserves as of June 30, according to the statement.

Policyholder surplus for Ambac Assurance Corp and its Segregated Account increased by $234 million and $342 million, respectively, from March 31 to June 30. Earned premiums, net investor income and gains realized on securities sold contributed to the rise, Ambac said.

Ambac did not hold a company conference call regarding the quarterly results.

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