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Ambac Financial Group (AMBC) reported a net income in the fourth quarter 2013 of $68.6 million, or $1.49 per share, down from $143.6 million, or 47 cents per share, in 2012. 

In the same period, operating earnings hit $292 million, or $6.34 per share, up from $218.2 million, or 72 cents per diluted share.

"Ambac accomplished a great deal in the fourth quarter of 2013. We generated solid financial results and made further tangible progress on our loss mitigation strategy. Most notably, we acquired and effectively commuted approximately 52% of an insured whole-business securitization, representing our most distressed General Account exposure, and subsequently sold the securitization's underlying business assets,” Diana Adams, president and CEO said.

“Nevertheless, we continue to confront challenging market conditions as we seek to effectively de-risk our insured portfolio and maximize returns on our investment portfolio," Adams continued.

In addition, loss and loss expenses for the fourth quarter of 2013 came in at a net benefit of $4.7 million, compared to a net benefit of $36.7 million for the fourth quarter 2012.

The results were primarily driven by lower estimated losses in residential mortgage-backed securities but partially offset by higher estimated losses in student loans and public finance. In comparison, the fourth quarter 2012 results were impacted by lower estimated losses in RMBS, student loans and public finance.

Loss reserves at the end of 2013 hit a net of $2.2 billion of estimated representation and warranty breach remediation recoveries, down from $2.4 billion the previous quarter.

According to the earnings report, “The decline in estimated remediation recoveries was due to several factors, including, lower expected RMBS losses and the modeled impact of trustee settlements, which we expect to affect certain insured transactions.”

Ambac Assurance said it is pursuing remedies and enforcing its rights, through lawsuits and other methods, to seek redress for breaches of representations and warranties and fraud related to various RMBS transactions.

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