Assured Guaranty Reports 4Q Loss of $244M, Less Than in '07

Assured Guaranty Ltd. yesterday reported a fourth-quarter 2008 net loss of $243.8 million, which compares to a $260.1 million net loss it took in the fourth quarter of 2007.

The company's pre-tax loss and loss-adjustment expenses - most of which were related directly or indirectly to residential mortgage-backed securities exposure - rose to $90.0 million in the fourth quarter, an increase of $72.4 million from a year earlier.

Assured says it will "aggressively pursue all of our rights and remedies under the terms of our contracts in order to minimize the ultimate net losses that we will pay on mortgage-related exposures."

The increase in loss and loss-adjustment expenses offset 70% growth in net premiums to $77.4 million and 25% in investment income to $42.3 million. Assured recorded operating income of $3.5 million in the fourth quarter, compared to $37 million in the fourth quarter of 2007.

For the year, Assured reported a net income of $68.9 million, much higher than the $303.3 million net loss it recorded in 2007. The company attributed the difference primarily to after-tax unrealized gains on credit derivatives of $57.1 million, compared to after-tax unrealized losses on credit derivatives of $480 million in 2007.

Assured avoided backing the collateralized debt obligations of asset-backed securities that plagued other financial guarantors, leaving it as the dominant insurer in the market. It last year agreed to acquire the insurance business of Financial Security Assurance Holdings Ltd., in a transaction it hopes to complete by the second quarter of this year.

"Assured's long-standing focus on disciplined underwriting and proactive risk management helped protect our company from the catastrophic losses experienced by so many other leading financial institutions this year," president and chief executive officer Dominic Frederico said in a statement. "We are one of the few financial institutions to report net income and operating income for the year and we also had an increase in our book value per share, despite losses on U.S. RMBS."

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