Third Quarter Net Loss Per Diluted Share of $8.45
NEW YORK--(BUSINESS WIRE)--Nov. 5, 2008--Ambac Financial Group,
Inc. (NYSE: ABK) (Ambac) today announced third quarter 2008 net loss
of $2,431.2 million, or net loss of $8.45 on a per share basis. This
compares to third quarter 2007 net loss of $360.6 million, or net loss
of $3.53 on a per share basis. The increased net loss in the third
quarter of 2008 is primarily due to recording net mark-to-market
losses on credit derivatives, increased loss provisioning primarily
related to second-lien residential mortgage-backed securities (RMBS)
insurance transactions and market losses on RMBS within the financial
services investment portfolio, partially offset by increased
accelerated premiums from refundings.
Quarter Summary
Net loss provisioning of $607.7 million was recorded for the
quarter primarily relating to the second-lien RMBS insurance
portfolio. The quarterly provision was offset by a benefit resulting
from an estimate of substantiated representation and warranty breach
recoveries in certain RMBS transactions.
Net mark-to-market losses on credit derivatives amounted to
$2,705.2 million. Estimated impairment losses in this portfolio
amounted to approximately $2,509.0 million during the quarter
primarily due to increased future loss projections in our portfolio of
high grade collateralized debt obligations (CDOs). Operating earnings
and core earnings for the third quarter and nine months of 2008, shown
below in table I, include the impact of estimated credit impairment
for those periods. See footnote 1, below, for definitions of operating
and core earnings.
Financial guarantee revenues, excluding net securities
gains/losses and accelerated premiums from refundings (both are
defined below), were $294.4 million in the third quarter 2008, down 6%
from the third quarter 2007.
On September 18, 2008, Moody's put Ambac Assurance Corporation's
(AAC) Aa3 rating on review for possible downgrade. As a result, the
$850 million capital contribution to Connie Lee that had been approved
by the Office of the Commissioner of Insurance of the State of
Wisconsin (OCI) has been postponed.
Ambac's President and Chief Executive Officer, David Wallis,
commented, "Housing related data continues to vacillate, having taken
a turn for the worse over the past few months after showing positive
signs earlier in the year. Our loss provisioning and on a more forward
looking basis, our CDO impairments, are indicative of this." Mr.
Wallis continued, "Our commitment to the management of our portfolio
remains paramount and we continue to make progress in this important
area."
Financial Results
Net (Loss)/Income Per Share
Net income per diluted share and net loss per share are computed
in conformity with U.S. generally accepted accounting principles
(GAAP). However, many research analysts and investors do not limit
their analysis of our earnings to a strictly GAAP basis. In order to
assist investors in their understanding of quarterly results, Ambac
provides additional information.
Earnings measures reported by research analysts exclude the net
(loss)/income impact of net gains and losses from sales of investment
securities and mark-to-market gains and losses on credit, total return
and non-trading derivative contracts that are not impaired
(collectively "net security gains and losses") and certain other
items. Certain research analysts and investors further exclude the net
income impact of accelerated premiums earned on guaranteed obligations
that have been refunded and other accelerated earnings ("accelerated
earnings"). Table I, below, provides third quarter and nine-month
comparisons of earnings for 2008 and 2007.
Table I
Earnings Per Diluted Share
Third Quarter Nine Months
2008 2007 2008 2007
-------- --------- --------- -------
Net (loss) per share / income per
diluted share ($ 8.45) ($ 3.53) ($ 13.66) $ 0.25
Effect of net security losses 6.31 5.42 10.58 5.63
Less impairment losses (5.67) 0.00 (12.26) 0.00
-------- --------- --------- -------
Operating (loss) earnings (a)(b) ($ 7.81) $ 1.89 ($ 15.34) $ 5.88
Effect of accelerated earnings (0.30) (0.10) (0.81) (0.57)
-------- --------- --------- -------
Core (loss) earnings(b) ($ 8.11) $ 1.79 ($ 16.15) $ 5.31
======== ========= ========= =======
(a) Consensus earnings that are reported by earnings estimate
services, such as First Call, are on this basis.
(b) Operating and core earnings are non-GAAP measures. See footnote 1,
below.
Net Premiums Earned
Net premiums earned for the third quarter of 2008 were $282.3
million, up 45% from $194.8 million earned in the third quarter of
2007. Normal earned premiums in the third quarter 2008 of $155.0
million were 13% lower than $178.4 million reported in the third
quarter 2007, primarily due to reduced premiums written in 2008, the
high level of public finance refunding activity in 2008 and the
Assured Guaranty Re cede which took place in December 2007.
Net premiums earned include accelerated premiums, which result
from refundings, calls and other accelerations recognized during the
quarter. Accelerated premiums were $127.3 million in the third quarter
of 2008, up $110.9 million from the third quarter of 2007. During the
third quarter of 2008 and 2007, approximately 89% and 88%,
respectively, of the accelerated premiums related to U.S. public
finance transactions.
A breakdown of net premiums earned by market sector for 2008 and
2007 are included in Table II. Normal net premiums earned exclude
accelerated premiums that result from refundings, calls and other
accelerations.
Table II
Net Premiums Earned
$-millions Third Quarter Nine Months
% %
2008 2007 Change 2008 2007 Change
------ ------ ------- ------ ------ -------
Public Finance $ 48.5 $ 59.0 - 18% $157.4 $176.4 - 11%
Structured Finance 63.3 73.0 - 13% 201.0 218.8 - 8%
International 43.2 46.4 - 7% 135.7 137.4 - 1%
------ ------ ------ ------
Total Normal Premiums 155.0 178.4 - 13% 494.1 532.6 - 7%
Accelerated Premiums 127.3 16.4 + 676% 300.6 99.2 + 203%
------ ------ ------ ------
Total $282.3 $194.8 + 45% $794.7 $631.8 + 26%
====== ====== ====== ======
Net Investment Income
Net investment income for the third quarter of 2008 was $126.8
million, representing an increase of 8% from $117.0 million in the
comparable period of 2007. This increase was due primarily to growth
in the investment portfolio driven by the ongoing collection of
financial guarantee premiums and fees, coupon receipts on invested
assets, and the impact from $1.3 billion of capital contributed by
Ambac Financial Group, Inc. from the capital raise in March 2008,
partially offset by cash outflows related to increased claims payments
and the $850 million commutation payment made in August 2008.
Net Change in Fair Value of Credit Derivatives
Realized gain/losses and other settlements from credit derivative
contracts represents the normal accretion into income of premiums
received for transactions executed in credit derivative format, offset
by payments on such transactions. Net realized gains/(losses) and
other settlements from credit derivative contracts in the third
quarter of 2008 amounted to ($837.9) million representing $15.3
million of premiums received offset by the previously reported $850
million payment to commute the AA Bespoke transaction in August 2008
and $3.2 million of interest payments on other CDO exposures during
the quarter. In the third quarter 2007 premiums received amounted to
$20.0 million while no payments were made.
Net unrealized losses on Ambac's CDO portfolio amounted to
($1,867.3) million in the third quarter 2008, compared to net
unrealized losses of ($743.4) million in the comparable prior year
quarter. The net unrealized losses during the third quarter 2008
resulted primarily from (i) lower values on the reference obligations
across all asset classes; and (ii) internal ratings downgrades of the
CDO of ABS portfolio, partially offset by a reclassification of $850
million to realized losses in connection with the CDO settlement
described above. In the third quarter 2008, the net effect of
adjusting the fair value of credit derivative liabilities to reflect
AAC's own credit risk, as required under SFAS 157, resulted in a
$1,380 million reduction of the change in unrealized losses. During
the third quarter 2007, net unrealized losses resulted primarily from
declining quoted values on CDO of ABS reference obligations.
During the third quarter 2008, Ambac increased its estimate of
credit impairment by approximately $2.5 billion primarily driven by
increased future loss assumptions applied to underlying Alt-A and
subprime RMBS collateral of our CDO of ABS transactions. Ambac
utilized these higher future loss assumptions in its consideration of
whether credit impairment exists for every CDO of ABS transaction. For
the CDO of ABS transactions indicating credit impairment, Ambac
believes it may have to pay claims in the future. Certain recent
federal actions (such as lower interest rates) or federally sponsored
economic stimulus programs (such as the Troubled Asset Relief Program
and other programs under the Emergency Economic Stabilization Act and
the HOPE for Homeowners Program) are expected to have a positive
impact on liquidity and credit throughout the markets and, therefore,
were factored into management's global assumptions of cumulative
losses in the underlying collateral of the CDO of ABS transactions.
Financial Guarantee Loss Reserves
Total net loss and loss expenses were $607.7 million in the third
quarter 2008, up from net expense of $19.1 million in the third
quarter of 2007, primarily driven by increased second-lien RMBS losses
in the third quarter 2008 as further deterioration in the performance
of the underlying loans was observed, resulting in increased modeled
losses. The losses related to second lien transactions are net of
remediation benefits recorded for substantiated representation and
warranty breaches in certain transactions amounting to approximately
$250 million in the third quarter 2008. Such recoveries are expected
to take several years for ultimate collection. Despite management's
expectation to recover under Ambac's remediation rights, Ambac is
required to meet all of its scheduled obligations to the bondholders
of the impacted securities.
A roll forward of case basis and ACR reserves from June 30, 2008
to September 30, 2008 is shown in Table III.
Table III
Insurance Loss Reserves Roll Forward
$-millions
Case Incurred
Reserves ACR Total Loss
--------- -------- --------- --------
Balance at June 30, 2008 $ 520.2 $ 555.5 $1,075.7 $ -
Additions to reserves 383.8 223.9 607.7 607.7
Transfers from ACR to Case 179.1 (179.1) - -
Less: claims paid (182.4) - (182.4) -
--------- -------- --------- --------
Balance at September 30, 2008 $ 900.7 $ 600.3 $1,501.0 $607.7
========= ======== ========= ========
The increase in case reserves was primarily driven by
deteriorating performance in certain underperforming second-lien RMBS
transactions partially offset by the impact of expected future
remediation benefits. Total net claims paid during the quarter
amounted to $182.4 million primarily related to second lien RMBS
transactions.
Active credit reserves (ACR) are established for probable and
estimable losses due to credit deterioration on certain adversely
classified insured transactions. The ACR increase was primarily driven
by deteriorating performance in certain underperforming RMBS and
non-RMBS transactions partially offset by the impact of expected
future remediation benefits as well as transfers of reserves to case
basis as a result of defaults on certain second-lien RMBS that
occurred during the quarter.
Case reserves and ACR for all RMBS insurance exposures at
September 30, 2008 total $1,248.3 million, of which four transactions
make up approximately 50% of the balance. The four transactions
account for 54% of the total loss and loss adjustment expenses
incurred during the third quarter 2008.
Financial Services
The financial services segment comprises the investment agreement
business and the derivative products business. Gross interest income
less gross interest expense from investment and payment agreements
plus results from the derivative products business, excluding net
realized investment gains and losses and unrealized gains and losses
on total return swaps and non-trading derivative contracts, was ($3.1)
million in the third quarter of 2008, down from $9.8 million in the
third quarter of 2007. The decrease resulted primarily from the
increase in short-term municipal bond rates, which has caused a
corresponding increase in Ambac's payment obligations on related
interest rate swaps, partially offset by increased net investment
income from the investment agreement business
During the first quarter 2008, Ambac announced that it would
discontinue writing new Financial Services business as part of its
efforts to refocus its business. The interest rate swap and investment
agreement businesses are being run-off. Since year end 2007,
approximately $960 million of swap notional has been terminated and
approximately $725 million mitigated via restructuring or other
strategies while the investment and payment agreement portfolio has
been reduced by approximately $2.8 billion to $5.1 billion at
September 30, 2008, through negotiated terminations and scheduled
amortization.
Taxes
During the third quarter 2008, Ambac booked a $519 million
valuation allowance against its deferred tax asset. The valuation
allowance resulted from the significant increase in the unrealized
loss on credit derivatives during the quarter.
Liquidity
Ambac's financial guarantee investment portfolio amounts to $9.9
billion at September 30, 2008, and includes $1.1 billion of short-term
securities. The portfolio consists primarily of high quality municipal
bonds, Treasuries, U.S. Agencies and Agency MBS. In late October,
Ambac received a $546 million tax refund related to taxes paid in
prior years.
Cash available at the holding company amounted to $186.6 million
at quarter end. In October 2008, AAC made a dividend payment amounting
to $54.6 million to the holding company and management expects to hold
approximately 1.9 times debt service requirements at year end 2008.
With respect to the impact of a potential downgrade on liquidity
of the financial services business (which includes the investment
agreement and derivative products businesses), Ambac has updated its
calculations of the liquidity gap between the market value of the
investment securities it holds in its financial services businesses
and the value of the financial services liabilities that would need to
be collateralized or terminated under various downgrade scenarios as
of September 30. This liquidity gap is approximately $2.8 billion and
$3.2 billion based on downgrades to A/A2 and BBB/Baa2, respectively.
Almost all of the transactions entered into by our financial services
businesses are guaranteed by AAC. Ambac continues to have discussions
with the Commissioner of Insurance of the State of Wisconsin (OCI)
regarding solutions to this potential shortfall.
Ambac's claims paying resources at September 30, 2008 increased to
$15.4 billion from $14.5 billion at December 31, 2007, primarily on
the strength of the net proceeds received from the $1.5 billion
capital raise in March. AAC is currently rated AA and Aa3 by S&P and
Moody's, respectively. Moody's announced on September 18 that its
rating of Ambac is on review for possible downgrade after the agency
significantly increased its subprime RMBS loss assumptions.
Connie Lee Update
In early September, Ambac announced that it had received
regulatory approval from the OCI to capitalize and reactivate Connie
Lee Insurance Company, which has been renamed Everspan Financial
Guaranty Corp. ("Everspan"). AAC had planned to inject $850 million
into Everspan with the intention of operating it as a separate
corporate and legal entity. However, on September 18,
Moody's announced that it is reviewing AAC for possible downgrade. As
a result, management postponed the $850 million capital injection,
pending greater clarity on AAC's rating. The Everspan team has
continued to work closely with Moody's and Standard and Poor's in its
efforts to achieve the highest ratings for the entity. Douglas
Renfield-Miller, CEO of Everspan, stated, "While the start up of the
new entity has been postponed due to capital uncertainties at AAC, our
resolve towards initiating a fully transparent, municipal-only
financial guarantee company has not wavered. I remain optimistic
about this business proposition while ongoing dislocation in the
municipal finance market clearly highlights the urgent need for its
product."
About Ambac
Ambac Financial Group, Inc., headquartered in New York City, is a
holding company whose affiliates provide financial guarantees and
financial services to clients in both the public and private sectors
around the world. Ambac's principal operating subsidiary, Ambac
Assurance Corporation, a guarantor of public finance and structured
finance obligations, has earned a Aa3 rating (on review for possible
downgrade) from Moody's Investors Service, Inc. and a AA rating
(negative outlook) from Standard & Poor's Ratings Services. Ambac
Financial Group, Inc. common stock is listed on the New York Stock
Exchange (ticker symbol ABK).
Forward-Looking Statements
This release contains statements that may constitute
"forward-looking statements" within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Any or all of management's forward-looking statements here or in other
publications may turn out to be wrong and are based on Ambac's
management current belief or opinions. Ambac's actual results may vary
materially, and there are no guarantees about the performance of
Ambac's securities. Among events, risks, uncertainties or factors that
could cause actual results to differ materially are: (1) changes in
Ambac's and/or Ambac Assurance's credit or financial strength ratings;
(2) the risk of credit and liquidity risk due to unscheduled and
unanticipated withdrawals on investment agreements; (3) the risk that
market risks impact assets in our investment portfolio; (4) inadequacy
of reserves established for losses and loss expenses; (5) credit risk
throughout our business, including credit risk related to residential
mortgage-backed securities and CDOs and large single exposures to
reinsurers; (6) market spreads and pricing on insured collateralized
debt obligations ("CDOs") and other derivative products insured or
issued by Ambac; (7) the risk that holders of debt securities or
counterparties on credit default swaps or other similar agreements
seek to declare events of default or seek judicial relief or bring
claims alleging violation or breach of covenants by Ambac or one of
its subsidiaries; (8) default by one or more of Ambac
Assurance's portfolio investments, insured issuers, counterparties or
reinsurers; (9) the risk that we may be required to raise additional
capital, which could have a dilutive effect on our outstanding equity
capital and/or future earnings; (10) our ability or inability to raise
additional capital, including the risks that regulatory or other
approvals for any plan to raise capital are not obtained, or that
various conditions to such a plan, either imposed by third parties or
imposed by Ambac or its Board of Directors, are not satisfied and thus
potentially necessary capital raising transactions do not occur, or
the risk that for other reasons the Company cannot accomplish any
potentially necessary capital raising transactions; (11) the risk that
Ambac's holding company structure and certain regulatory and other
constraints, including adverse business performance, affect Ambac's
ability to pay dividends and make other payments; (12) legislative and
regulatory developments, including the Troubled Asset Relief Program
and other programs under the Emergency Economic Stabilization Act and
other similar programs; (13) changes in the economic, credit, foreign
currency or interest rate environment in the United States and abroad;
(14) changes in capital requirements whether resulting from downgrades
in our insured portfolio or changes in rating agencies' rating
criteria or other reasons; (15) changes in accounting principles or
practices relating to the financial guarantee industry or that may
impact Ambac's reported financial results; (16) the level of activity
within the national and worldwide credit markets; (17) competitive
conditions, pricing levels and reduction in demand for financial
guarantee products; (18) changes in our business plan, our decision to
discontinue writing new business in the financial services area, to
significantly reduce new underwriting of structured finance business
and to discontinue all new underwritings of structured finance
business; (19) the risk that our underwriting and risk management
policies and practices do not anticipate certain risks and/or the
magnitude of potential for loss as a result of unforeseen risks;
(20) the risk of volatility in income and earnings, including
volatility due to the application of fair value accounting, or FAS
133, to the portion of our credit enhancement business which is
executed in credit derivative form; (21) changes in expectations
regarding future realization of gross deferred tax assets; (22) risks
relating to the re-launch of Connie Lee as Everspan Financial Guaranty
Corp.; (23) operational risks, including with respect to internal
processes, risk models, systems and employees; (24) the risk of
decline in market position; (25) changes in prepayment speeds on
insured asset-backed securities; (26) factors that may influence the
amount of installment premiums paid to Ambac; (27) the risk of
litigation and regulatory inquiries or investigations, and the risk of
adverse outcomes in connection therewith, which could have a material
adverse effect on our business, operations, financial position,
profitability or cash flows; (28) changes in tax laws; (29) the
policies and actions of the United States and other governments; (30)
other factors described in the Risk Factors section in Part I, 1A of
our Annual Report on Form 10-K for the fiscal year ended December 31,
2007 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for
the quarters ended March 31, 2008 and June 30, 2008, and also
disclosed from time to time by Ambac in its subsequent reports on Form
10-Q and Form 8-K, which are or will be available on the Ambac website
at www.ambac.com and at the SEC's website, www.sec.gov; and (31) other
risks and uncertainties that have not been identified at this time.
Readers are cautioned that forward-looking statements speak only as of
the date they are made and that Ambac does not undertake to update
forward-looking statements to reflect circumstances or events that
arise after the date the statements are made. You are therefore
advised to consult any further disclosures we make on related subjects
in Ambac's reports to the SEC.
Footnote
(1) Operating earnings and core earnings are not substitutes for
net income computed in accordance with GAAP, but are useful measures
of performance used by management, equity analysts and investors
because they allow more consistent period-to-period comparison of our
earnings without the effects of net securities gains/losses and
accelerated earnings. Net securities gains/losses excluded from
operating earnings consists of investment portfolio realized gains and
losses, mark-to-market gains and losses on credit, total return and
non-trading derivative contracts in excess of estimated impairment
amounts, and certain other items. Core earnings further exclude the
impact of refundings, calls and other accelerations. The definitions
of operating earnings and core earnings used by Ambac may differ from
definitions of operating earnings and core earnings used by other
public holding companies of financial guarantors.
Ambac Financial Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
For the Three and Nine Months Ended September 30, 2008 and 2007
(Dollars in Thousands Except Share Data)
Three Months Ended
September 30,
---------------------------
2008 2007
---------------------------
Revenues:
Financial Guarantee:
Gross premiums written $ 118,645 $ 286,585
Ceded premiums written 4,371 (35,095)
------------- -------------
Net premiums written $ 123,016 $ 251,490
============= =============
Net premiums earned $ 282,326 $ 194,795
Net investment income 126,757 116,992
Net realized investment gains 49,378 3,965
Change in fair value of credit
derivatives:
Realized gains and losses and other
settlements (837,929) 20,035
Unrealized (losses) gains (1,867,250) (743,379)
------------- -------------
Net change in fair value of credit
derivatives (2,705,179) (723,344)
Other (loss) income (2,713) (1,291)
Financial Services:
Investment income 63,810 120,603
Derivative products (16,878) 1,216
Net realized investment (losses)
gains (84,991) (1,344)
Net mark-to-market losses on total
return swap contracts (28,600) (12,856)
Net mark-to-market (losses) gains on
non-trading derivatives (5,230) 222
Corporate:
Net investment income 887 1,225
------------- -------------
Total revenues (2,320,433) (299,817)
------------- -------------
Expenses:
Financial Guarantee:
Loss and loss expenses 607,702 19,082
Underwriting and operating expenses 46,896 34,576
Interest expense on variable interest
entity notes 3,367 1,167
Financial Services:
Interest on investment and payment
agreements 50,048 112,000
Operating expenses 3,466 3,164
Interest 29,970 22,232
Corporate 10,027 2,857
------------- -------------
Total expenses 751,476 195,078
------------- -------------
(Loss) income before income taxes (3,071,909) (494,895)
(Benefit) provision for income taxes (640,687) (134,282)
------------- -------------
Net (loss) income ($2,431,222) ($360,613)
============= =============
Net (loss) income per share ($8.45) ($3.53)
============= =============
Net (loss) income per diluted share ($8.45) ($3.53)
============= =============
Weighted average number of common shares
outstanding:
Basic 287,599,495 102,297,811
============= =============
Diluted 287,599,495 102,297,811
============= =============
Nine Months Ended
September 30,
---------------------------
2008 2007
---------------------------
Revenues:
Financial Guarantee:
Gross premiums written $ 419,132 $ 797,636
Ceded premiums written (36,609) (93,016)
------------- -------------
Net premiums written $ 382,523 $ 704,620
============= =============
Net premiums earned $ 794,663 $ 631,820
Net investment income 381,142 342,246
Net realized investment gains 70,463 5,286
Change in fair value of credit
derivatives:
Realized gains and losses and other
settlements (805,921) 52,920
Unrealized (losses) gains (2,630,842) (805,370)
------------- -------------
Net change in fair value of credit
derivatives (3,436,763) (752,450)
Other (loss) income 7,797 7,214
Financial Services:
Investment income 205,458 334,476
Derivative products (100,835) 7,286
Net realized investment (losses) gains (396,759) 5,127
Net mark-to-market losses on total
return swap contracts (74,199) (10,623)
Net mark-to-market (losses) gains on
non-trading derivatives (4,968) 63
Corporate:
Net investment income 2,751 4,147
------------- -------------
Total revenues (2,551,250) 574,592
------------- -------------
Expenses:
Financial Guarantee:
Loss and loss expenses 1,311,169 47,600
Underwriting and operating expenses 157,831 104,390
Interest expense on variable interest
entity notes 10,303 1,167
Financial Services:
Interest on investment and payment
agreements 196,965 312,082
Operating expenses 10,152 9,569
Interest 84,422 63,612
Corporate 33,216 9,777
------------- -------------
Total expenses 1,804,058 548,197
------------- -------------
(Loss) income before income taxes (4,355,308) 26,395
(Benefit) provision for income taxes (1,086,877) 628
------------- -------------
Net (loss) income ($3,268,431) $ 25,767
============= =============
Net (loss) income per share ($13.66) $ 0.25
============= =============
Net (loss) income per diluted share ($13.66) $ 0.25
============= =============
Weighted average number of common shares
outstanding:
Basic 239,265,594 103,171,675
============= =============
Diluted 239,265,594 103,937,780
============= =============
Ambac Financial Group, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2008 and December 31, 2007
(Dollars in Thousands Except Share Data)
September 30, December 31,
2008 2007
------------- -------------
(unaudited)
Assets
-----------------------------------------
Investments:
Fixed income securities, at fair
value
(amortized cost of $14,117,861
in 2008 and $17,225,611 in
2007) $ 12,407,606 $ 17,127,485
Fixed income securities pledged as
collateral, at fair value
(amortized cost of $0 in 2008
and $345,140 in 2007) - 374,840
Short-term investments
(amortized cost of $1,334,266
and $879,039 in 2007) 1,334,266 879,067
Other (cost of $13,769 in 2008 and
$13,571 in 2007) 13,475 14,278
------------- -------------
Total investments 13,755,347 18,395,670
Cash 92,380 123,933
Receivable for securities sold 165,626 11,068
Investment income due and accrued 139,967 202,737
Reinsurance recoverable on paid and
unpaid losses 72,376 11,862
Prepaid reinsurance 327,165 489,028
Ceded reinsurance balances receivable 14,323 -
Deferred taxes 2,905,260 2,116,380
Current income taxes 753,832 -
Deferred acquisition costs 221,788 255,639
Loans 830,985 867,676
Derivative assets 904,151 990,534
Other assets 249,516 100,484
------------- -------------
Total assets $ 20,432,716 $ 23,565,011
============= =============
Liabilities and Stockholders' Equity
-----------------------------------------
Liabilities:
Unearned premiums $ 2,547,414 $ 3,123,860
Loss and loss expense reserve 1,556,715 484,276
Ceded reinsurance balances payable - 32,435
Obligations under investment and
payment agreements 5,482,983 8,570,902
Obligations under investment
repurchase agreements 135,305 135,524
Securities sold under agreement to
repurchase - 100,000
Current income taxes - 97,826
Long-term debt 1,895,858 1,669,945
Accrued interest payable 67,328 113,443
Derivative liabilities 9,419,466 6,685,528
Other liabilities 206,590 270,734
Payable for securities purchased 7,969 645
------------- -------------
Total liabilities 21,319,628 21,285,118
------------- -------------
Stockholders' equity:
Preferred stock - -
Common stock 2,944 1,092
Additional paid-in capital 2,028,141 839,952
Accumulated other comprehensive loss (1,116,627) (22,138)
Retained earnings (1,205,956) 2,107,773
Common stock held in treasury at cost (595,414) (646,786)
------------- -------------
Total stockholders' equity (886,912) 2,279,893
------------- -------------
Total liabilities and
stockholders' equity $ 20,432,716 $ 23,565,011
============= =============
Number of shares outstanding (net of
treasury shares) 287,228,352 101,550,023
============= =============
Book value per share ($3.09) $ 22.45
============= =============
CONTACT: Ambac Financial Group, Inc.
Investor/Media:
Vandana Sharma, 212-208-3333
vsharma@ambac.com
or
Fixed Income:
Peter Poillon, 212-208-3222
ppoillon@ambac.com
SOURCE: Ambac Financial Group, Inc.
