Syncora Posts $621M Second-Quarter Loss

Syncora Ltd. lost $620.8 million in the second quarter as the bond insurer continued to record hefty losses on structured debt without much revenue to offset the costs.

The Bermuda-based insurer recorded more than $650 million in losses, mostly on credit-default swaps and mortgage credit, according to statutory filings late Tuesday.

Most of those losses trickled directly to the bottom line, as the company is not writing new business and recorded just $73.34 million in revenue for the quarter.

Syncora has said it doubts it can remain a going concern.

The company paid bondholders and counterparties about $1.7 billion during the quarter, plus $625 million of debt and a 40% stake in the company, to essentially de-insure their debt.

The concept behind this was to rid the company's books of loss-laden policies.

The programs cost the company about $2.5 billion. More important, it freed up about $3.2 billion, depending on the accounting used, because the company no longer has to assume it will pay claims on the de-insured debt.

Syncora claims a policyholders' surplus — or excess of assets over liabilities — of $178 million, which is in compliance with the $65 million minimum mandated by the New York Insurance Department.

That is using a more lenient accounting system, which the NYID approved this year.

Under the prior accounting system, the policyholders' surplus actually would be a deficit of $544.5 million.

Syncora said it is still awaiting permission to begin paying claims again, including the claims on the defaulted sewer debt in Jefferson County, Ala..

The NYID in April suspended Syncora from paying claims.