Ambac Financial Group posts $819.25 million first-quarter net loss

By Caroline Salls

Pittsburgh, May 10 - Ambac Financial Group, Inc. reported an $819.25 million net loss for the quarter ended March 31 on $71.67 million in net investment income, according to a company news release.

In comparison, Ambac posted a $690.06 million net loss for the quarter ended March 31, 2010 on $117.57 million in net investment income.

According to the release, the first-quarter 2011 results reflect an increase in loss and loss expenses, lower net premiums earned and lower net investment income and realized gains.

The company said this was partially offset by a lower net loss on the change in fair value of credit derivatives, lower other-than-temporary impairment losses on securities held, improvements in financial services segment revenues and an increase in "other income" to $28.3 million from negative $55.9 million in the first quarter of last year.

Ambac said the 39% decrease in net investment income can be mostly attributed to a decline in the invested asset base and lower average yields in its portfolio, which were driven by required payment obligations to cover insurance losses and to settle commutation of insurance policies and credit default swaps.

The company had $7.63 million in cash and cash equivalents at March 31, down from $9.5 million at Dec. 31.

First-quarter reorganization items totaled $24.8 million and were mostly related to professional advisory fees and a lease settlement charge associated with the termination of the company's existing headquarters office lease, according to the release.

The company's total assets decreased during the first quarter of 2011 to $27.4 billion from $29 billion at Dec. 31.

Ambac is a New York-based company that provides financial guarantee insurance for public and structured finance obligations. The company filed for bankruptcy on Nov. 8, 2010 in the U.S. Bankruptcy Court for the Southern District of New York, and its Chapter 11 case number is 10-15973.

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