AMBAC INC. ANNOUNCES SECOND QUARTER CORE EARNINGS OF $35.5 MILLION, UP 8%; SECOND QUARTER NET INCOME UP 5%, OPERATING EARNINGS UP 5%.NEW YORK--(BUSINESS WIRE)--July 26, 1995--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 second quarter 1995 core earnings of $35.5 million, or $1.01 per share, an increase of 8% from $33.0 million, or $0.94 per share in the second quarter of 1994. Core earnings 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 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. and losses, net insurance premiums earned from refundings and calls and certain non-recurring items. The increase in core earnings was primarily the result of the continued growth in net premiums earned and net investment income from financial guarantee insurance operations and increased information services See Information Systems. 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 a net loss from 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. operations. Core earnings for the first six months of 1995 were $70.0 million, or $2.00 per share, an increase of 10% from $63.4 million, or $1.80 per share in the first six months of 1994. Net income for the second quarter of 1995 was $37.0 million, or $1.05 per share, an increase of 5% from $35.3 million, or $1.00 per share in the second quarter of 1994. The increased net income was primarily the result of the continued growth in net premiums earned and net investment income from financial guarantee insurance opera- tions, partially offset by a net loss from financial services operations. Net income for the first six months of 1995 was $70.3 million, or $2.00 per share, a decrease of 4% from $73.2 million, or $2.08 per share in the first six months of 1994. 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 for the second quarter of 1995 were $38.5 million, or $1.10 per share, an increase of 5% from $36.8 million, or $1.05 per share in the second quarter of 1994. Operating earnings is defined as net income, less the effect of realized gains and losses. Operating earnings for the first six months of 1995 were $74.9 million, or $2.14 per share, a decrease of 2% from $76.2 million, or $2.16 per share in the first six months of 1994. AMBAC AMBAC American Municipal Bond Assurance Corporation AMBAC Active Mass Balance Auto-Control (Gundam anime) Chairman, President and Chief Executive Officer Phillip Phillip is a variant of the name Philip. It may refer to: Given name:
insured n. volumes more than doubled as a result of increased insured penetration The successful unauthorized breach of a security perimeter. See penetration test. . AMBAC's business activity in structured finance insurance and information services continued to be robust during the quarter. I am encouraged by the improving tone and activity in the markets we serve." Regarding the Orange County situation, Mr. Lassiter said: "Although we are encouraged by the attempts of Orange County to identify avail- able revenue sources as part of a recovery plan whose objective is the payment of all lawful Licit; legally warranted or authorized. The terms lawful and legal differ in that the former contemplates the substance of law, whereas the latter alludes to the form of law. A lawful act is authorized, sanctioned, or not forbidden by law. obligations, the implementation of any such plan faces a number of significant hurdles, including, but not limited to, state legislative approval of certain of its key components. We will continue to monitor closely the progress of the recovery plan, with a particular focus on its impact on AMBAC-insured exposure." 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 transactions. AMBAC Indemnity insured $4.5 billion in par value bonds during the second quarter of 1995, a decrease of 20% from $5.6 billion in the second quarter of 1994. 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. industry sources, AMBAC Indemnity's new-issue municipal market share for the second quarter of 1995 was 23.9% versus 25.2% in the second quarter of 1994. 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 second quarter of 1995 were $36.4 million, a decrease of 21% from $46.0 million in the second quarter of 1994. This decrease was primarily due to lower new issue municipal volume and market share. Gross premiums written for the first six months of 1995 were $76.6 million, a decrease of 21% from $96.6 million in the first six months of 1994. Ceded premiums written for the second quarter of 1995 were ($6.5) million, versus $8.8 million in the second quarter of 1994. Ceded pre- pre- word element [L.], before (in time or space). pre- pref. 1. Earlier; before; prior to: prenatal. 2. miums written in the second quarter of 1995 included the collection of $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 reinsur- ance contracts, of which $15.7 million was deferred in unearned premiums. Excluding these return premiums, ceded premiums written in the second quarter of 1995 increased by 32% compared to the second quarter of 1994. The increase was due to the higher amount of 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 in the second quarter of 1995. Ceded premiums written for the first six months of 1995 were ($3.1) million, versus $16.8 million in the first six months of 1994. Net premiums written for the second quarter of 1995 were $42.9 million, an increase of 15% from $37.3 million in the second quarter of 1994. The increase was the result of the return premiums from the cancellation of reinsurance contracts, partially offset by the effect of lower gross premiums written. Net premiums written for the first six months of 1995 were $79.7 million, versus $79.8 million in the first six months of 1994. Net premiums earned for the second quarter of 1995 were $27.8 million, an increase of 4% from $26.8 million in the second quarter of 1994. This increase was primarily the result of the growth in unearned premiums during the year, partially offset by lower premiums earned from refundings and calls in the second quarter of 1995. Net premiums earned for the second quarter of 1995 included $5.4 million from refundings, calls and other accelerations (which had a net income per common share effect of $0.08) compared to the second quarter of 1994, which included $6.5 million of net premiums earned from refundings, calls and other accelerations (which had a net income per common share effect of $0.11). Net premiums earned for the first six months of 1995 were $52.1 million, a decrease of 16% from $62.3 million in the first six months of 1994. Net investment income for the second quarter of 1995 was $32.3 million, an increase of 11% from $29.0 million in the second quarter of 1994. The increase was primarily due to the growth of the investment portfolio and higher yields. Net investment income for the first six months of 1995 was $64.0 million, an increase of 12% from $57.3 million in the first six months of 1994. 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 78% of the total market value of the portfolio as of June June: see month. 30, 1995, which was unchanged from June 30, 1994. Other income for the second quarter of 1995 was $1.6 million, versus $0.8 million in 1994. The increase was primarily due to income related to certain real estate interests. Other income for the first six months of 1995 was $3.2 million, versus $1.1 million in the first six months of 1994. 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 second quarter of 1995 were $9.1 million, an increase of 14% from $8.0 million in the second quarter of 1994. This increase was primarily the result of increased amortization of deferred acquisition costs. Underwriting and operating expenses for the first six months of 1995 were $17.2 million, an increase of 3% from $16.7 million in the first six months of 1994. Financial Services The Company's financial services, which it provides through its affiliates, include municipal investment contracts and municipal 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. . Financial services operating income (loss) for the second quarter of 1995 was ($0.8) million, versus $2.1 million in the second quarter of 1994. Financial services revenues, including net realized gains and losses, for the second quarter of 1995 were $1.1 million, versus $3.6 million in the second quarter of 1994. This decrease was primarily due to (i) the recognition of net unrealized mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. losses in the Company's portfolio of municipal interest rate swaps, and (ii) lower net interest income related to municipal investment contracts because of lower interest spreads, partially offset by an increase in municipal investment contract volume. Financial services expenses for the second quarter of 1995 were $1.8 million, versus $1.5 million in the second quarter of 1994. Financial services operating income for the first six months of 1995 was $0.8 million, versus $5.7 million in the first six months of 1994. Information Services Information services represents the operations of the Company's 70%-owned, Baltimore-based subsidiary, HCIA HCIA Hungarian Chemical Industry Association HCIA Hazardous Chemicals Information Act HCIA Hague Convention on Intercountry Adoption Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :HCIA), a leading health care information company. Information services operating income in the second quarter of 1995 was $1.9 million, versus $0.5 million in 1994. Information ser- vices revenues for the second quarter of 1995 were $12.3 million, versus $7.7 million in 1994. Information services expenses for the second quarter of 1995 were $10.4 million, versus $7.2 million in 1994. The increase in both revenues and expenses primarily reflects the con- con- pref. Variant of com-. con- Latin, with, together tinued growth of HCIA's core business lines, and was also impacted by the April 1995 acquisition of Datis DATIS Digital Airborne Topographical Imaging System DATIS Digital Automatic Terminal Information Service DATIS Digital Airport Terminal Information System Corporation, a health care infor- mation company. Information services operating income for the first six months of 1995 was $2.1 million, versus $0.4 million in the first six months of 1994. Corporate Items Interest expense for the second quarter of 1995 was $5.2 million, an increase of 13% from $4.6 million in the second quarter of 1994, due to higher interest rates. Income taxes for the second quarter of 1995 were at an effective rate of 19.2%, versus 20.6% in 1994. The decrease in the effective income tax rate in the second quarter of 1995 was primarily the result of tax-exempt income Tax-exempt income Dividends and interest not subject to federal and, in some cases, state and local income taxes. accounting for a greater percentage of overall income. Balance Sheet Analysis Total assets as of June 30, 1995 were $4.8 billion, an increase of 12% from $4.3 billion at December December: see month. 31, 1994. This increase was primarily due to an increase in the market value of the Company's investment portfolio, growth of the Company's financial services operations and continuing growth of the Company's financial guarantee insurance operations. As of June 30, 1995, 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 $1.23 billion, an increase of 19% from year end 1994. This increase was primarily the result of an increase in the net unrealized gains 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. in the Company's investment portfolio due to the decrease in interest rates during the first six months of 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. today declared the regular quarterly cash dividend of $0.135 per share of common stock. The dividend is payable on September September: see month. 6, 1995 to stockholders of record on August 10, 1995. AMBAC Inc. is a holding company that provides financial guarantee insurance, financial services, and health care information services to both public and private clients, through its affiliates. AMBAC Indemnity Corporation, AMBAC Inc.'s principal operating subsidiary, is a leading financial guarantee insurance company with 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 & Poor's Corporation and Fitch Investors Service Fitch Investors Service A financial services company best known for the bond ratings it provides investors. , Inc.
AMBAC Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
For The Periods Ended June 30, 1995 and 1994
(Dollars in Thousands Except Common Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ------------------
1995 1994 1995 1994
--------------------- ------------------
Financial guarantee
insurance operations:
Gross prems. written $36,402 $46,044 $76,598 $96,585
Ceded prems. written 6,514 (8,785) 3,055 (16,760)
------- ------- ------- -------
Net prems. written 42,916 37,259 79,653 79,825
Incr. in unearned prems. (15,069) (10,428) (27,589) (17,541)
------- ------- ------- -------
Net prems. earned 27,847 26,831 52,064 62,284
Net investment income 32,292 29,033 64,047 57,332
Net realized gains (losses) (2,202) (2,130) (6,876) (5,169)
Other income 1,628 777 3,189 1,114
------- ------- ------- -------
59,565 54,511 112,424 115,561
------- ------- ------- -------
Losses & loss adjstmnt exp. 341 198 1,369 2,533
Underwriting & oprtg. exp. 9,130 8,000 17,175 16,654
------- ------- ------- -------
9,471 8,198 18,544 19,187
------- ------- ------- -------
Financial guarantee
insurance operating income 50,094 46,313 93,880 96,374
Financial services
operating income (loss) (752) 2,069 775 5,687
Information services
operating income 1,867 498 2,093 384
Interest expense (5,221) (4,583) (10,208) (8,993)
Other income (deductions), net (209) 168 (436) 364
------- ------- ------- -------
Income bef. inc. taxes 45,779 44,465 86,104 93,816
------- ------- ------- -------
Income tax expense:
Current taxes 5,789 8,002 11,230 15,901
Deferred taxes 3,005 1,140 4,588 4,712
------- ------- ------- -------
Total income taxes 8,794 9,142 15,818 20,613
------- ------- ------- -------
Net income $36,985 $35,323 $70,286 $73,203
======= ======= ======= =======
Per share amounts -
Net income per common share $1.05 $1.00 $2.00 $2.08
===== ===== ===== =====
Weighted average no. of
common shs. outstanding 35,091,221 35,232,123 35,090,641 35,278,024
========== ========== ========== ==========
AMBAC Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, 1995 and December 31, 1994
(Dollars in Thousands)
June 30, December 31,
1995 1994
--------- ------------
(unaudited)
ASSETS
Investments:
Bonds held in available-for-sale account,
at fair value (amortized cost of
$4,047,969 in 1995 and $3,802,538 in 1994) $4,097,679 $3,626,179
Short-term investments, at cost
(approximates fair value) 91,353 137,975
----------- -----------
Total investments 4,189,032 3,764,154
Cash 7,301 4,441
Sec. purchased under agreements to resell 97,403 88,011
Receivable for municipal investment contracts 66,878 -
Receivable for securities 13,739 21,508
Investment income due and accrued 53,326 49,905
Deferred acquisition costs 81,140 71,774
Deferred income taxes - 44,798
Current income taxes 7,830 10,588
Prepaid reinsurance 131,133 139,855
Other assets 129,349 98,255
----------- -----------
Total assets $4,777,131 $4,293,289
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities:
Unearned premiums $855,476 $836,608
Losses and loss adjustment expenses 65,707 65,662
Ceded reinsurance balances payable 486 908
Obligations under municipal investment
contracts 1,974,446 1,959,919
Obligations under municipal investment
repurchase contracts 234,741 65,369
Deferred income taxes 40,750 -
Debentures 223,699 223,667
Accrued interest payable 26,183 23,826
Accounts payable and other liabilities 90,601 57,108
Payable for securities 37,779 26,735
----------- -----------
Total liabilities 3,549,868 3,259,802
----------- -----------
Stockholders' equity:
Preferred stock - -
Common stock, Class A - -
Common stock 353 353
Additional paid-in capital 477,671 477,467
Unrealized gains (losses) on investments,
net of tax 24,424 (106,264)
Retained earnings 733,416 673,129
Common stock held in treasury at cost (8,601) (11,198)
----------- -----------
Total stockholders' equity 1,227,263 1,033,487
----------- -----------
Total liabilities and stockholders' equity $4,777,131 $4,293,289
=========== ===========
Book value per common share $34.96 $29.50
=========== ===========
AMBAC Indemnity Corporation
Selected Statutory Data
June 30, 1995 and December 31, 1994
(Dollars in Thousands, Except Ratios)
June 30, Dec. 31,
1995 1994
--------- --------
(unaudited)
Balance Sheet:
Contingency reserve $454,893 $436,432
Capital and surplus 805,102 781,772
---------- ----------
Qualified statutory capital 1,259,995 1,218,204
Unearned premium reserve 868,476 823,792
Losses and loss adjustment
expenses 38,270 38,974
---------- ----------
Policyholders' reserves 2,166,741 2,080,970
Third party capital support (1) 225,000 225,000
---------- ----------
Total policyholders' reserves and
third party capital support $2,391,741 $2,305,970
========== ==========
Net insurance in force $186,031,642 $171,678,348 Capital ratio (2) 148:1 141:1 Financial resources ratio (3) 78:1 74:1
(1) Third party capital support represents a limited recourse
irrevocable line of credit with AAA/Aaa-rated Deutsche Bank,
individually and as Agent, and various other banks.
(2) Capital ratio is net insurance in force divided by qualified
statutory capital.
(3) Financial resources ratio is net insurance in force divided by
total policyholders' reserves and third party capital support.
CONTACT: Investor Contact: Gayle Gayle is a variant of the female name Gail, or the surname of several famous people. It may also refer to a number of places. You may be looking for: Computers:
212/208-3357 Media Contact: John M. Cathey Cathey is a surname, of Scottish origins. It may derive from Clan Macfie. The spelling in English before members migrated to America was probably "Cathie" or "Cathy". 212/208-3490 |
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