Ambac's Quarterly Loss Widens

The Wall Street Journal

Ambac Financial Group Inc.'s first-quarter loss widened as an accounting change and the impact of derivatives skewed results. The amount paid on claims fell.

A foray into insuring mortgage-backed securities, which soured along with the housing market and home loans, combined with weak consumer sentiment and economic contraction sent the bond-insurance industry into a tailspin.

But the housing market has shown some signs of stabilization, and Ambac has been terminating some contracts with counterparties to reduce risk exposure.

For the latest quarter, Ambac's loss widened to $690.1 million, or $2.39 a share, from $392.2 million, or $1.36 a share, a year earlier.

The latest quarter included a $1.71 a share negative impact from the accounting change.

Revenue was negative $499.1 million, compared with positive $1.13 billion in 2009, as results in both periods were skewed by derivative impacts.

Earned net premiums plunged 36% to $125.2 million while net investment income grew 17% to $117.6 million. Claims paid fell 29% to $231.7 million, primarily related to residential mortgage-backed securities, while total net loss and loss expenses plummeted 88% to $89.2 million on prior-year woes from Ambac's RMBS portfolio.