Syncora Holdings Ltd. Monday night reported a third-quarter net loss of $1.339 billion, in line with what the company expected last week when it said it would delay the release of its official 10-Q filing.
The news came as Syncora announced its chief financial officer, Elizabeth Keys, was leaving to pursue a position with another financial services company. The company said its board chose not to name a replacement at this time.
Syncora said the loss was primarily due to a $1.058 billion loss in the net change in the fair value of derivatives and $213.0 million in net losses and loss-adjustment expenses related mostly due to exposures to residential mortgage-backed securities.
“During the third quarter of 2008 U.S. residential mortgage performance continued to deteriorate, negatively impacting the company’s insured RMBS and ABS CDO portfolios and overall operating results,” acting chief executive officer and general counsel Susan Comparato said in a statement. “However, as previously announced, with the closing of the Master Transaction Agreement during the quarter, Syncora made progress in its restructuring.”
Syncora also said it would have fallen below the New York Insurance Department’s required $65 million minimum statutory policyholder surplus if the department had not approved an accounting move that allowed Syncora to release statutory-basis contingency reserves on terminated policies and on policies in which it had established case-based reserves. The accounting treatment — which differs from those in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual — boosted Syncora’s statutory surplus as of Sept. 30 to $83.3 million from $19.1 million.
Also, the company said Mary Hennessy had resigned from the board of directors effective Nov. 15. She left due to a “combination of factors,” including an increased time demand from the board and her own work commitments.