BAM reduces pre-tax loss, builds claims paying resources

Build America Mutual reduced its pre-tax loss and built its claims paying resources, according to its 2017 and fourth quarter financial results.

Statutory comprehensive income more than doubled to $11.9 million from $5.4 million in 2016, while claims-paying resources grew $64.7 million to $708.4 million, acccording to results published Monday.

“BAM had a strong quarter to close out a solid year in which our claims-paying resources grew in every quarter,” said Seán McCarthy, chief executive officer. “Volatile market conditions in the fourth quarter, particularly during the tax-reform debate in November and December, highlighted the value of our guaranty, and the average size of BAM’s primary market transactions was up on the year, reflecting increasing demand from institutional investors who prefer to invest in larger transactions.”

Maury A. Spadoto

On Feb. 7, White Mountains Insurance Group LTD., the insurance holding company that lent the municipal bond insurer its startup investment in 2012, reported pre-tax loss related to BAM of $14 million and $50 million in the fourth quarter under generally accepted accounting principles, compared compared with a GAAP pre-tax loss of $19 million and $49 million in the fourth quarter and year ended Dec. 31, 2016. BAM is a mutual insurance company, owned by its members. BAM’s results are consolidated into White Mountain’s GAAP financial statements and attributed to non-controlling interests.

As issuers were rushing to market to beat the tax reform clock, it helped BAM, which was selected to insure 201 primary market transactions that priced in the fourth quarter, totaling $2.7 billion of par, up 15.5% from the same period in 2016. Total premiums for priced transactions rose 34% in the quarter to $30.8 million, and gross par outstanding rose 7.4% in the quarter to $42.1 billion.