Bond Insurer Records $545M in Earnings

Mortgage-related bond insurer Assured Guaranty Ltd., Hamilton, Bermuda, recorded $545.2 million in net income during the quarter ended June 30 but noted that the higher earnings stemmed primarily from accounting gains that are expected to fall to zero over time. Like some of its peers, the company credited an "increase in after-tax unrealized gains on credit derivatives" as the principal reason for a notable increase in net income in the most recent earnings period. "The company's credit derivatives are generally held to maturity, and management expects that the unrealized gain or loss on a credit derivative will reduce to zero as the exposure approaches its maturity date, unless there is a payment default on the exposure," Assured Guaranty said.