Ambac Financial Group earned $143.6 million in net profit for the fourth quarter of 2012, up from
The company, which has been undergoing bankruptcy reorganization, among other things saw its financial guarantee net investment income increase by 6% to $89.7 million from $84.9 million in a move it said was “largely attributable to the greater percentage of holdings in higher yielding residential mortgage-backed securities insured.”
The amortized cost of the financial guarantee long-term investment portfolio declined by about $191.5 million “as the collection of installment premiums, and coupon receipts on invested assets were offset by claims payments, including the resumption of partial claim payments on segregated account policies, commutation payments, and the repurchase of surplus notes in the second quarter of 2012.”
Other-than-temporary impairments related to investments in RMBS that were recognized in earnings declined to $200,000 during the period, down from $33.7 million the same quarter in 2011.
Loss and loss expenses during 4Q 2012 were a net benefit of $36.7 million, compared to a net loss of $803.6 million during 4Q 2011. The company said the net benefit in 4Q 2012 was driven by lower estimated losses for first-lien RMBS and certain student loan transactions that was partially offset by an increase in loss estimates for second lien RMBS and certain Ambac U.K. credits.
Loss reserves related specifically to RMBS insurance exposures, including unpaid claims, dropped 9% to $3.6 billion in 4Q 2012 from $3.9 billion in 3Q 2012. The company said RMBS reserves as of Dec. 31, 2012 were net of $2.5 billion of estimated representation and warranty breach remediation recoveries, down 6% from $2.7 billion as of Sept. 30, 2012.
Ambac said it continues to pursue remedies and enforce its rights “through lawsuits and other methods, to seek redress for breaches of representations and warranties and fraud related to various RMBS transactions.”
