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Assured Guaranty Swings To Q1 Net Loss; Announces RMBS Settlement Agreement

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5/10/2012 8:17 PM ET

Assured Guaranty Ltd. (AGO: Quote) reported a net loss for the first quarter of $483.0 million or $2.65 per share, compared to net income of $139.3 million or $0.74 per share for the year-ago quarter. The latest quarter net loss includes non-economic net fair value losses of $560.0 million, while the year-ago net income included non-economic net fair value losses of $119.2 million as well as the benefit of the Bank of America agreement that was executed last year.

Operating income, a non-GAAP measure, for first quarter was $71.2 million or $0.38 per share, compared to $247.4 million or $1.32 per share in the prior year quarter.

The latest quarter operating income includes commutation gains of $54.2 million, or $0.30 per share, from two re-assumptions of previously ceded books of business. It also includes an after-tax net loss of $136.5 million or $0.73 per share representing the company's expected ultimate loss on its Greek sovereign exposures.

Net earned premium for the quarter dropped to $193.7 million from $254.0 million in the year-ago quarter.

Analysts polled by Thomson Reuters expected the company to earn $0.36 per share on revenue of $192.65 million for the first quarter. Analysts' estimates typically exclude special items.

Additionally, Assured Guaranty said that it has reached a settlement with Deutsche Bank AG and certain of its affiliates, resolving claims related to residential mortgage-backed securities transactions issued, underwritten or sponsored by Deutsche Bank that were insured by Assured Guaranty under financial guaranty insurance policies and to certain RMBS exposures in re-securitization transactions on which Assured Guaranty provided credit protection through credit default swaps.

As part of the agreement with Deutsche Bank, Assured Guaranty said it received a cash payment of $165.6 million, a portion of which will partially reimburse Assured Guaranty for past losses on certain transactions that are covered by a loss-sharing agreement, which also requires Deutsche Bank to pay a portion of Assured Guaranty's future RMBS related losses.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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