AMBAC Announces Fourth Quarter Net Income of $52.0 Million, Up 9%; Fourth Quarter Core Earnings Up 17%, Operating Earnings Up 10%.NEW YORK--(BUSINESS WIRE)--Jan. 30, 1997--AMBAC Inc. (NYSE NYSE See: New York Stock Exchange : ABK ABK Abkuerzung (German: Abbreviation) ABK Anybody Killa (musician) ABK Ahli Bank of Kuwait ABK American Bank of Kosovo ABK Aphakic Bullous Keratopathy (ophthalmology) ) today announced fourth quarter 1996 net income of $52.0 million, or $1.49 per share, an increase of 9% from $47.8 million, or $1.36 per share in the fourth quarter of 1995. The increase in net income was the result of increased financial guarantee insurance operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. partially offset by lower financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. operating income. The fourth quarter 1996 increase over the comparable prior period also reflects the Company's equity in the loss of an affiliate (HCIA HCIA Hungarian Chemical Industry Association HCIA Hazardous Chemicals Information Act HCIA Hague Convention on Intercountry Adoption Inc.) of $3.1 million in the fourth quarter of 1995. Net income for full year 1996 was $276.3 million, or $7.90 per share, an increase of 65% from $167.6 million, or $4.78 per share for full year 1995. The increase in net income in 1996 was largely due to the second quarter realized gain Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. of $155.6 million (which had a net income per common share effect of $2.88) from the sale of the Company's remaining holdings of HCIA Inc., a former affiliate of the Company. In the third quarter of 1995 the Company had recognized a realized gain of $19.1 million (which had a net income per common share effect of $0.34) from the sale of 1.1 million shares of HCIA Inc. Excluding the effects of the respective gains from the sales of HCIA Inc. stock in both 1996 and 1995, net income for full year 1996 increased 13% over full year 1995. This increase in net income is primarily the result of higher financial guarantee insurance and financial services operating income. Commenting on the results, AMBAC AMBAC American Municipal Bond Assurance Corporation AMBAC Active Mass Balance Auto-Control (Gundam anime) Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , Phillip Phillip is a variant of the name Philip. It may refer to: Given name:
adv. 1. In an easy manner. 2. In a convenient manner. Adv. 1. handily - in a convenient manner; "the switch was conveniently located" conveniently 2. surpassed our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. financial targets. AMBAC is well positioned for the future and our business prospects continue to appear very attractive as we begin to move through the new year." Core earnings(1) for the fourth quarter of 1996 were $44.8 million, an increase of 17% from $38.1 million in the fourth quarter of 1995. The increase in core earnings was primarily the result of continued growth in net insurance premiums earned from the underlying book of business and net investment income from financial guarantee insurance operations. Core earnings for the full year 1996 were $170.5 million, an increase of 17% from $145.5 million in 1995. Core earnings, which the Company reports as analytical analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. data, exclude the effect on consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: net income from net realized gains and losses, net insurance premiums earned from refundings and calls and certain non-recurring items. Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before (1) for the fourth quarter of 1996 were $48.3 million, an increase of 10% from $44.0 million in the fourth quarter of 1995. Operating earnings for the full year 1996 were $188.3 million, an increase of 19% from $158.2 million in 1995. The Company defines operating earnings as net income, less the effect of net realized gains and losses and certain non- non- word element [L.]not . non- pref. Not: noninvasive. recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. items. The Company also announced that it completed its acquisition of substantially all of the assets of Cadre Financial Services, Inc. (Cadre) on December December: see month. 31, 1996, for approximately $20.0 million in Company stock and cash. Cadre, based in Ronkonkoma, New York Ronkonkoma is a census-designated place (CDP) in Suffolk County, New York, United States. The population was 20,029 at the 2000 census. Ronkonkoma is a community in the Town of Islip. , is a provider of cash management and investment advisory services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal to local school districts, hospitals and health care organizations and municipalities. As a result of this acquisition, AMBAC has decided to close its Westport, Connecticut Westport is a coastal town in Fairfield County, Connecticut, in the United States. The 2004 population estimate was 26,644. The town is as affluent as other expensive Fairfield County towns, boasting a per capita income of more than $70,000. office and plans to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. its financial services businesses in Ronkonkoma Ronkonkoma may be
The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. in the first quarter of 1997 which is not expected to exceed $4 million. Lassiter stated, "This acquisition goes a long way toward building the desired critical mass for our municipal investment services business." Financial Guarantee Insurance The Company provides financial guarantee insurance through its principal operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , AMBAC Indemnity Recompense for loss, damage, or injuries; restitution or reimbursement. An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. Corporation (AMBAC Indemnity), which is a leading insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. of municipal and structured finance obligations. Financial guarantee insurance operating income for the fourth quarter of 1996 was $68.3 million, an increase of 1% from $67.5 million in the fourth quarter of 1995, primarily due to increased premiums earned and higher net investment income for the period, partially offset by lower net realized gains on sales of securities. Financial guarantee insurance operating income for full year 1996 was $225.3 million, an increase of 7% from $210.8 million in full year 1995, primarily due to increased premiums earned and higher net investment income, partially offset by net realized losses Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. on sales of securities and higher expenses. AMBAC Indemnity insured $13.0 billion in par value bonds during the fourth quarter of 1996, an increase of 27% from the $10.2 billion insured in the fourth quarter of 1995. Par value written for the fourth quarter of 1996 comprised $8.2 billion from municipal bond insurance Municipal bond insurance An insurance policy which guarantees payment on municipal bonds in the event of default . municipal bond insurance A guarantee from a third party that principal and interest will be paid to a bondholder. and $4.8 billion from structured finance insurance, versus $7.1 billion and $3.1 billion, respectively, in the fourth quarter of 1995. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. estimates based on industry sources, AMBAC Indemnity's new issue municipal market share for the fourth quarter of 1996 was approximately 26%, versus approximately 24% in the fourth quarter of 1995. AMBAC Indemnity's new issue municipal market share for the full year 1996 was approximately 29% as compared to approximately 25% in 1995. Gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. for the fourth quarter of 1996 were $71.2 million, a decrease of 3% from the $73.2 million written in the fourth quarter of 1995. This decrease was primarily due to a decrease in structured finance premiums written of $11.2 million in the fourth quarter of 1996, which was partially offset by an increase of $10.3 million in new issue municipal bond premiums written. Gross premiums written for the full year 1996 were $247.2 million, an increase of 28% from the $193.3 million written in 1995. This increase was driven by a $57.7 million increase in new issue municipal bond premiums written. While most of AMBAC Indemnity's premiums written are collected up-front up-front or up·front Informal adj. 1. Straightforward; frank. 2. Paid or due in advance: up-front cash. adv. at policy issuance, a growing portion of premiums are collected on an installment basis. The net present value of estimated future installment premiums written in the fourth quarter of 1996 was $27.7 million, an increase of 24% from the $22.4 million written in the fourth quarter of 1995. The aggregate net present value of estimated future installment premiums written was $157.7 million and $110.0 million as of December 31, 1996 and 1995, respectively. AMBAC Indemnity reported adjusted gross premiums written, which are defined as up-front premiums plus the present value of estimated future installment premiums, of $90.6 million in the fourth quarter of 1996, essentially flat from the $90.7 million written in the comparable prior period. Adjusted gross premiums written for the full year 1996 were $296.4 million, a 34% improvement from the $221.3 million written in 1995. Ceded premiums written for the fourth quarter of 1996 were $8.5 million, versus the $24.3 million written in the fourth quarter of 1995. The 65% decrease in ceded premiums written is primarily due to a decrease in premiums ceded under facultative facultative /fac·ul·ta·tive/ (fak´ul-ta?tiv) not obligatory; pertaining to the ability to adjust to particular circumstances or to assume a particular role. fac·ul·ta·tive adj. 1. reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. agreements during the fourth quarter of 1996. Ceded premiums written for the full year 1996 were $37.8 million, versus $28.6 million written in 1995. Ceded premiums written in 1995 were reduced by $18.1 million in return premiums from the cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. of reinsurance contracts in the second quarter of 1995. Excluding the 1995 return premiums, ceded premiums written in 1996 decreased 19% from 1995, primarily due to less premiums ceded under facultative reinsurance agreements in 1996. Net premiums written for the fourth quarter of 1996 were $62.7 million, an increase of 28% from the $48.9 million written in the fourth quarter of 1995. Net premiums written for the full year 1996 were $209.4 million, versus $164.7 million written in 1995, a 27% increase. Net premiums earned for the fourth quarter of 1996 were $35.0 million, an increase of 4% from the $33.5 million earned in the fourth quarter of 1995. This increase was primarily the result of the growth in premiums earned from the underlying book of business during the period, partially offset by lower premiums earned from refundings and calls in the fourth quarter of 1996. Net premiums earned in the fourth quarter of 1996 included $6.2 million from refundings, calls and other accelerations (which had a net income per common share effect of $0.10) compared to the fourth quarter of 1995, which included $10.4 million of net premiums earned from refundings, calls and other accelerations (which had a net income per common share effect of $0.17). Net premiums earned for the full year 1996 were $136.6 million, an increase of 22% from the $111.8 million earned in 1995. Net investment income for the fourth quarter of 1996 was $37.7 million, an increase of 12% from $33.8 million in the fourth quarter of 1995. The increase was primarily due to the growth of the investment portfolio partially offset by lower yields. Net investment income for the full year 1996 was $144.9 million, an increase of 11% from $131.0 million in 1995. AMBAC Indemnity's investments in tax-exempt securities Tax-exempt security An obligation whose interest is tax-exempt, often called a municipal bond, offered by a country, state, town, or any political district. were 79% of the total market value of the portfolio as of December 31, 1996, as compared to 69% at December 31, 1995. Underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the fourth quarter of 1996 were $9.4 million, an increase of 3% from $9.1 million in the fourth quarter of 1995. This increase was primarily the result of higher gross underwriting expenses. Underwriting and operating expenses for the full year 1996 were $37.2 million, an increase of 8% from $34.5 million in 1995. Financial Services Through its financial services subsidiaries, the Company provides investment contracts, interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. and investment management principally to states, municipalities and municipal authorities. Financial services operating income for the fourth quarter of 1996 was $2.2 million, versus $3.5 million in the fourth quarter of 1995. Financial services revenues for the fourth quarter of 1996 were $6.1 million, versus $5.8 million in the fourth quarter of 1995. The increase was primarily due to higher net interest income related to municipal investment contracts, partially offset by lower revenues on interest rate swaps during the fourth quarter of 1996. Financial services expenses for the fourth quarter of 1996 were $3.9 million versus $2.3 million in the fourth quarter of 1995. The increased expenses resulted primarily from higher operating and acquisition- related expenses for the investment management business. Financial services operating income for the full year 1996 was $10.9 million on revenues of $22.1 million and expenses of $11.2 million, as compared to operating income of $5.2 million on revenues of $13.0 million and expenses of $7.8 million for the full year 1995. Corporate Items Interest expense for the fourth quarter of 1996 was $5.3 million, flat compared to the fourth quarter of 1995. Income taxes for the fourth quarter of 1996 were at an effective rate of 21.3%, versus 23.6% in 1995. The effective income tax rate for the full year 1996 was 26.4%, compared to 21.7% for the full year 1995. This increase in the effective tax rate for the year was primarily due to the realized gain from the sale of HCIA stock in the second quarter of 1996. Balance Sheet Analysis Total assets as of December 31, 1996 were $5.88 billion, an increase of 11% over $5.31 billion at December 31, 1995. This increase was primarily due to continued growth of the Company's financial guarantee insurance and financial services operations and the sale of HCIA in the second quarter of 1996, partially offset by a decline in market value of investments resulting from the increase in interest rates during 1996. As of December 31, 1996, the Company's stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. was $1.62 billion, an increase of 15% over year end 1995. This increase was primarily due to the Company's 1996 operating results, including the sale of HCIA, partially offset by the decline in market value of investments. Book value per common share Book Value Per Common Share A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Formula: increased 15% to $46.02 at December 31, 1996, from $40.04 at December 31, 1995. Adjusted book value (ABV ABV Above ABV Alcohol By Volume ABV Abuja, Nigeria (airport code) ABV Assault Breacher Vehicle ABV Accredited Business Valuation specialist ABV Auxiliary Building Ventilation ABV Annual Buy Value ABV Air Bleed Valve )(2) per common share increased 11% to $62.50 at December 31, 1996, from $56.47 at December 31, 1995. Regular Quarterly Cash Dividend Declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. The Board of Directors of AMBAC Inc. declared the regular quarterly cash dividend of $0.165 per share of common stock. The dividend is payable on March 5, 1997 to stockholders of record on February February: see month. 10, 1997. Annual Meeting of Stockholders The Board of Directors also set the 1997 Annual Meeting of Stockholders for Wednesday Wednesday: see week. , May 14, 1997, at 11:30 a.m. in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . The record date for determining stockholders entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to notice of, and to vote at, the Annual Meeting will be the close of business, March 21, 1997. AMBAC Inc., headquartered in New York City, is a holding company that provides through its affiliates financial guarantee insurance and financial services to clients in both the public and private sectors. The Company's principal operating subsidiary, AMBAC Indemnity Corporation, a leading insurer of municipal and structured finance obligations, has been assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. triple-A claims-paying ability ratings from Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. , Inc., Standard & Poors Ratings Group, Fitch Investors Service Fitch Investors Service A financial services company best known for the bond ratings it provides investors. , L.P. and Nippon Nippon (nĭp`ŏn, nĭpŏn`), name for Japan, derived from Dai Nippon, meaning Great Japan. The expression comes from the Chinese ideograph for the place where the sun comes from, or Land of the Rising Sun. Investors Service, Inc. (1) Core earnings and operating earnings are not substitutes for net income computed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) but are important measures used by management, equity analysts and investors to measure the financial results of the Company. (2) Adjusted book value (ABV), which is not promulgated prom·ul·gate tr.v. prom·ul·gat·ed, prom·ul·gat·ing, prom·ul·gates 1. To make known (a decree, for example) by public declaration; announce officially. See Synonyms at announce. 2. under GAAP, is used by management, equity analysts and investors as a measurement of the Company's intrinsic value Intrinsic Value 1. The value of a company or an asset based on an underlying perception of the value. 2. For call options, this is the difference between the underlying stock's price and the strike price. with no benefit given for ongoing business activity. Management derives adjusted book value by beginning with stockholders' equity (book value) and adding or subtracting the after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. value of: the net unearned premium reserve; deferred acquisition costs; the present value of estimated net future installment premiums; the unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on the investment in HCIA (prior to sale on May 6, 1996); and the unrealized gain or loss on investment contract liabilities. The definition of ABV used by the Company may differ from definitions of ABV used by other public holding companies of financial guarantee insurers. The adjustments described above will not be realized until future periods and may differ materially from the amounts used in determining ABV. -0-
AMBAC Inc. and Subsidiaries
Consolidated Statements of Operations
For The Periods Ended December 31, 1996 and 1995
(Dollars in Thousands Except Common Share Data)
Three Months Ended Years Ended
December 31, December 31,
--------------------- --------------------
1996 1995 1996 1995
--------------------- --------------------
Financial guarantee
insurance operations:
Gross prems. written $71,193 $73,197 $247,208 $193,326
Ceded prems. written (8,532) (24,292) (37,793) (28,606)
------- ------- -------- -------
Net prems. written 62,661 48,905 209,415 164,720
Incr. in unearned prem. (27,615) (15,382) (72,786) (52,900)
------- ------- ------- -------
Net prems. earned 35,046 33,523 136,629 111,820
Net investment income 37,729 33,810 144,941 131,049
Net rlzed. gains (losses) 4,594 9,508 (20,531) 177
Other income 328 893 5,261 5,580
------- ------- ------- -------
Tot fin. guar. ins. rev. 77,697 77,734 266,300 248,626
------- ------- ------- -------
Losses & loss
adjustment expenses (33) 1,167 3,778 3,377
Underwriting & oprtg. exp. 9,437 9,067 37,182 34,450
------- ------- ------- -------
Tot fin. guar. ins. exp. 9,404 10,234 40,960 37,827
------- ------- ------- -------
Financial guarantee
ins. operating income 68,293 67,500 225,340 210,799
Financial services
operating income 2,198 3,506 10,943 5,216
Equity in income (loss) of
of affiliate - (3,146) 627 (185)
Interest expense (5,252) (5,309) (20,925) (20,934)
Other inc. (deductions),net 98 66 3,208 175
Other net realized gains 700 - 156,313 19,103
------- ------- ------- -------
Income bef. inc. taxes 66,037 62,617 375,506 214,174
------- ------- ------- -------
Income tax expense:
Current taxes 16,757 8,701 106,664 33,286
Deferred taxes (2,709) 6,092 (7,475) 13,293
------- ------- ------- -------
Total income taxes 14,048 14,793 99,189 46,579
------- ------- ------- -------
Net income $51,989 $47,824 $276,317 $167,595
======== ======= ======== ========
Per share amounts -
Net income per common share $1.49 $1.36 $7.90 $4.78
===== ===== ===== =====
Weighted average no. of
common shs. outstanding 34,984,340 35,113,691 34,964,814 35,100,881
========== ========== ========== ==========
AMBAC Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 1996 and December 31, 1995
(Dollars in Thousands Except Common Share Data)
December 31, December 31,
1996 1995
------------ ------------
ASSETS
Investments:
Bonds, at fair value
(amortized cost of $4,979,017 in 1996
and $4,082,791 in 1995) $5,088,031 $4,264,904
Short-term investments, at cost
(approximates fair value) 112,511 176,689
----------- -----------
Total investments 5,200,542 4,441,593
Cash 7,734 12,167
Sec. purchased under agreements to resell 201,169 240,280
Receivable for municipal investment contracts 33,299 204,797
Receivable for securities 18,467 14,523
Investment income due and accrued 65,920 56,370
Investment in affiliate - 45,019
Deferred acquisition costs 94,212 82,620
Prepaid reinsurance 168,786 153,372
Other assets 85,836 58,538
----------- -----------
Total assets $5,875,965 $5,309,279
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unearned premiums $991,224 $903,026
Losses and loss adjustment expenses 60,220 65,996
Ceded reinsurance balances payable 7,438 14,654
Obligations under municipal investment
contracts 2,417,817 2,185,746
Obligations under municipal investment
repurchase contracts 336,773 241,112
Deferred income taxes 67,815 103,697
Current income taxes 18,809 5,125
Debentures 223,798 223,732
Accrued interest payable 29,958 25,494
Accounts payable and other liabilities 57,689 44,578
Payable for securities 49,408 92,131
----------- -----------
Total liabilities 4,260,949 3,905,291
----------- -----------
Stockholders' equity:
Preferred stock - -
Common stock, Class A - -
Common stock 353 353
Additional paid-in capital 498,401 492,495
Unrealized gains on investments, net of tax 58,911 102,470
Retained earnings 1,072,418 819,479
Common stock held in treasury at cost (15,067) (10,809)
----------- -----------
Total stockholders' equity 1,615,016 1,403,988
----------- -----------
Total liabilities and stockholders' equity $5,875,965 $5,309,279
=========== ===========
Number of common shares outstanding
(net of treasury shares) 35,090,385 35,063,573
=========== ===========
Book value per common share $46.02 $40.04
=========== ===========
Adjusted book value per common share $62.50 $56.47
=========== ===========
AMBAC Inc. and Subsidiaries
Components of Core Earnings
For The Periods Ended December 31, 1996 and 1995
Three Months Ended Years Ended
December 31, December 31,
------------------ ------------------
1996 1995 1996 1995
------------------ ------------------
Net income $51,989 $47,824 $276,317 $167,595
Adjustments:
Net realized (gains) losses (3,730) (6,239) (88,066) (11,890)
Non-recurring items - 2,456 - 2,456
------- ------- ------- --------
Operating earnings 48,259 44,041 188,251 158,161
Refundings, calls and
other accelerations (3,506) (5,926) (17,770) (12,677)
------- ------- ------- --------
Core earnings $44,753 $38,115 $170,481 $145,484
======= ======= ======= ========
AMBAC Inc. and Subsidiaries
Components of Adjusted Book Value Per Share (1)
December 31, 1996 and December 31, 1995
December 31, December 31,
1996 1995
------------ ------------
Book value (2) $46.02 $40.04
After-tax value of:
Net unearned premium reserve less
deferred acquisition costs 13.51 12.35
Present value of installment premiums 2.91 2.05
Unrealized gain on investment in HCIA - 2.77
Unrealized gain (loss) on investment
contract liabilities 0.06 (0.74)
------ ------
Adjusted book value (2) $62.50 $56.47
====== ======
(1) Numbers may not add due to rounding.
(2) Includes unrealized gains on investments, net of tax of $1.68
and $2.92 as of December 31, 1996 and December 31, 1995,
respectively.
AMBAC Indemnity Corporation
Selected Statutory Data
December 31, 1996 and December 31, 1995
(Dollars in Thousands, Except Ratios)
December 31, December 31,
1996 1995
------------ ------------
Capital and Claim-Paying Resources:
Contingency reserve $567,537 $495,793
Capital and surplus 886,751 862,976
---------- ----------
Qualified statutory capital 1,454,288 1,358,769
Unearned premium reserve 1,003,510 904,873
Losses and loss adjustment
expenses 21,623 39,249
---------- ----------
Policyholders' reserves 2,479,421 2,302,891
Present value of installment premiums 157,689 110,000
Third party capital support (1) 350,000 300,000
---------- ----------
Total $2,987,110 $2,712,891
========== ==========
Net insurance in force $227,234,512 $199,078,405
Capital ratio (2) 156:1 147:1
Financial resources ratio (3) 76:1 73:1
(1) Third party capital support represents a limited recourse
irrevocable line of credit with a group of AAA/Aaa-rated banks,
as agents.
(2) Capital ratio is net insurance in force divided by qualified
statutory capital.
(3) Financial resources ratio is net insurance in force divided by
the aggregate of total policyholders' reserves, third party
capital support and net present value of installment premiums.
CONTACT: AMBAC Inc. Frank J. Bivona, 212/208-3236 Website: http://www.ambac.com |
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