Assured Guaranty (AGO)
reported income of $762.2 million, or $4.13 per share, for the third quarter, as significant gains on credit derivatives boosted earnings for the Bermuda-based mortgage bond insurer.
The monoline reported
a loss of $57.7 million, or 31 cents per share, for the second quarter and earned $164.6 million, or 88 cents per share, for the year-ago third quarter.
The company said third-quarter income was "primarily driven by net fair-value gains on credit derivatives and financial guaranty variable interest entities" that total $749.4 million and "are expected to reverse to zero as the assets and liabilities approach their maturities."
"As a result of our extensive recovery efforts for breaches of representations and warranties, the third-quarter loss development was significantly offset by an increase in the R&W benefit," President and CEO Dominic Frederico said in a release.
Expected losses on U.S. residential mortgage-backed securities increased slightly to $2.59 billion at the end of the third quarter from $2.53 billion at the second-quarter close.
The company's rep and warrants benefit rose from $1.64 billion in the second quarter to $1.74 billion in the third.
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