Ambac posts a loss of $392.2m for first quarter; MBIA posts a profit of $696.7 million

I didn't get much time to review the results but Ambac announced its quarterly results today--MBIA announced after market close as well.

Ambac posted a loss $392.2 million:

Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today announced a first quarter 2009 net loss of $392.2 million, or a net loss of $1.36 per share. This compares to the first quarter 2008 net loss of $1,660.3 million, or a net loss of $11.69 on a per share basis. The first quarter 2009 results reflect pre-tax net income amounting to $279.7 million resulting primarily from a positive net change in fair value of credit derivatives. The unrealized gain in credit derivatives was partially offset by loss and loss expenses primarily related to the residential mortgage-backed securities (RMBS) portfolio and other-than-temporary impairment write downs of RMBS securities in the investment portfolio. During the quarter Ambac increased its deferred tax asset valuation allowance by approximately $600 million, causing the after-tax net loss. The first quarter 2008 results reflected a net change in fair value of credit derivatives amounting to ($1,708.2) million as a result of deterioration in certain insured CDO of ABS transactions and loss and loss expenses amounting to $1,042.8 million related to RMBS securities.


You can access the presentation here, the conference call here, and conference transcript (via SeekingAlpha) here.

Cursory look does not signal anything positive. Things still look ugly and Ambac's balance sheet keeps deteriorating.


On another note, MBIA announced its results after the bell:

The Company recorded net income available to common shareholders of $696.7 million, or $3.34 per share, for the first quarter of 2009, compared with a net loss of $2.4 billion, or $12.92 per share, for the first quarter of 2008. Net income in the first quarter of 2009 was primarily driven by $1.6 billion in pre-tax unrealized net gains (mark-to-market) on insured credit derivatives.

The Company’s first quarter results include $693.7 million in pre-tax loss and loss adjustment expenses on insured exposures, primarily on second-lien mortgage exposures and $169.0 million in pre-tax realized losses in the Company’s Asset-Liability Management (ALM) asset portfolio reflecting the continued deterioration and stress in the credit markets.


Because of accounting complications, one needs to read through to figure out the details. A profit is not what one thinks of generally as a profit; similarly, a loss is not what it seems. It seems the situation is still deteriorating, which shouldn't be news to anyone following the markets.

If I get some time, I'll read through them in more detail and post something.

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