Ambac Financial Group, New York, has reported that under U.S. accounting rules it generated net income of $823.1 million in the second quarter despite mortgage-related losses.

But the bond insurer said it would have taken a net loss for the quarter if a number of items normally excluded by research analysts were removed.

"The increase in the second quarter of 2008 is primarily due to recording net mark-to-market gains on credit derivatives, increased accelerated premiums from refundings, and loss reserve reductions on the direct residential mortgage-backed securities portfolio, partially offset by market losses on RMBS within the financial services investment portfolio," the company said.

Ambac can be found on the Web at http://www.ambac.com./

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