Ambac Financial Group announced late Thursday net income of $558.1 million in the fourth quarter of 2009, according to an 8K filing with the Securities and Exchange Commision.
The gain compares to a fourth quarter 2008 net loss of $2.341 billion.
Company stock climbed 5.32% to $0.641 ahead of the results, which were posted about 90 minutes after the close of the New York Stock Exchange. In after-hours trading, stock climbed more than 40% to $0.90 within an hour.
The company said it received $472 million in tax benefits under legislation signed into law by President Obama on Nov. 6 and designed to help companies that had suffered in the financial crisis.
The legislation allowed the parent company to carry back 2008 and 2009 operating losses as far back as 2003.
"Total assets increased by approximately $787 million during the fourth quarter of 2009, primarily due to recording the tax recoverable related to the new tax legislation that passed during the fourth quarter of 2009," an earnings press release said.
Net premiums earned by Ambac Financial in the fourth quarter were $184.4 million, down 19% from the same period one year before. Net investment income was $118.7 million, an increase of 8% from the same period one year before.
Revenue was also boosted by a change in the net value of credit derivatives, which added $133.2 million to the balance sheet, versus a loss of $594.4 million in the same period one year before. Moreover, results for the derivative financial products business improved by $105.8 million.
Ambac Financial's primary losses in the quarter stemmed from deterioration in its portfolio of first-lien residential mortgage-backed securities, which saw a net loss of $385.4 million.
Also, other-than-temporary impairment losses in the portfolio of financial guarantee investments were $118.1 million in the quarter, compared to losses of $66.0 million in the fourth quarter of 2008.
Ambac Assurance Corp. — the holding company's principal subsidiary — posted a statutory surplus — defined as assets in excess of liabilities, subject to certain statutory adjustments — of $801.9 million, down from $855.6 million at the end of the third quarter 2009.
The decline in shareholder value was attributed to the insured portfolio of structured finance products, which deteriorated due to the underlying collateral of residential mortgage-backed securities.
The insurer's claims-paying resources totaled $10.8 billion at the end of last year, down from $11.4 billion a quarter before.
Ambac Financial was originally scheduled to release its fourth-quarter earnings on March 16, but citing discussions with financial institution counterparties which could "could have a material impact," the results were delayed until today.
The company will not be holding a conference call for investors. However, the the board of directors has set the 2010 annual meeting of stockholders for Monday, June 14, 2010, at 1:00 p.m. in New York City.