Monoline insurer Assured Guaranty (AGO) reported a net loss of $57.7 million, or 31 cents per share, in the second quarter, as it dealt with the effects of fair value losses on consolidated financial-guaranty variable-interest entities and credit derivatives. That includes $195.4 million that is expected to reverse to zero as the assets and liabilities of each financial-guaranty variable-interest entity (FG VIEs) and credit derivative contracts approach maturity, the firm said. That compares to net income of $203.5 million in the year-ago quarter, or $1.o8 per share, which included fair value gains on credit derivatives and FG VIEs of $46.6 million that are expected to reverse to zero. “I am pleased with the progress we made in the second quarter,” said Dominic Frederico, president and CEO of Assured Guaranty. “We reported strong operating earnings for the quarter, which contributed to a year-over-year operating income increase of 35.3%. Additionally, during the quarter, we originated 32% more municipal PVP than in the first quarter of 2011, we reached an important agreement with Bank of America (BAC) regarding representation and warranty claims.” Assured's first-quarter results were boosted by a $1.6 billion settlement with Bank of America over mortgage-backed securities. The present value of new business production in the second quarter was 34.8% higher than in the first quarter, the firm said, with Frederico pointing out the company "insured 12.1%, or approximately one out of every eight transactions sold in the municipal market in the second quarter, which is an increase over both our first quarter 2011 and fourth quarter 2010 results." Write to Kerri Panchuk.