Bankrupt bond insurer Ambac Financial Group had a net loss of $963 million in the fourth quarter of 2011.
This loss was up from $82 million in the fourth quarter of 2010.
Relative to the fourth quarter of 2010, net premiums earned increased $2 million to $113 million, net investment income increased $17 million to $92 million, net loss and loss expenses incurred rose $662 million to $804 million, loss on variable interest entities increased $154 million to $266 million, and derivative product revenues declined $121 million to a net loss of $20 million.
Fourth-quarter 2011 losses and loss expenses “were driven by higher estimated losses in the first-lien residential mortgage-backed securities and student loan portfolios,” Ambac reported Thursday.
“Loss and loss expenses paid, including commutations, net of recoveries from all policies, amounted to $230.3 million during the fourth quarter 2011…. The amount of actual claims paid during [the quarter] was impacted by the payment moratorium imposed on March 24, 2010, by the court overseeing the rehabilitation of the segregated account established under Wisconsin law to which Ambac Assurance allocated certain liabilities…. Since the establishment of the segregated account in March 2010, a total of $2,768.6 million of claims have been presented to Ambac Assurance and remain unpaid due to the moratorium.”
From the beginning to the end of the fourth quarter Ambac’s total assets slipped from $27.6 billion to $27.1 billion.
On March 14 a U.S. bankruptcy court approved Ambac’s plan of reorganization. However company cannot start the reorganization until several conditions are met, the chief one being the resolution of a dispute with the Internal Revenue Service. The U.S. government is currently considering a proposal that would resolve the dispute.