Ambac Financial Group, Inc. Announces Third Quarter Net Income of $111.0 Million, Up 22%.Business EditorsNEW YORK--(BUSINESS WIRE)--Oct. 17, 2001 Third Quarter 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 Per Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. Share (1) up 18%, Core Earnings Per Diluted Share (1) Up 14% Third Quarter Adjusted 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. (2) Increase 1% Ambac Financial Group Ambac Financial Group (NYSE: ABK) is an American Insurer of bonds, including municipal bonds. Ambac Financial Group, Inc. (NYSE: ABK) is a holding company whose subsidiaries provide financial guarantee products and other financial services to clients in both , 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) ) (Ambac) today announced third quarter 2001 net income of $111.0 million or $1.02 per diluted share. This represents a 22% increase from third quarter 2000 net income of $90.9 million and a 21% increase in net income per diluted share from $0.84 in the third quarter 2000. Commenting on the results, Ambac 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:
adj. Causing horror; terrifying. [Latin horrificus : horr  re, to tremble + -ficus, -fic. events of September September: see month. 11th only a few
blocks from our offices tested this organization. I am unabashedly un·a·bashed adj. 1. Not disconcerted or embarrassed; poised. 2. Not concealed or disguised; obvious: unabashed disgust. proud of how our people responded. Most important of all, they are safe and sound. The operating impact on Ambac was fortunately minimal, although several large transactions scheduled to close within the quarter were postponed to the fourth quarter." "We have completed our risk portfolio review and, as previously reported, continue to believe that we will not encounter material claims as a result of the tragic event, although I do expect that we will see some ratings downgrades on underlying exposures. The impact of ratings migration and wider credit spreads creates opportunities for Ambac, both from the standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the of additional candidates for insurance as well as higher premiums, since our product value tracks credit spreads. Our business prospects remain quite attractive in all of our markets, both domestic and foreign." Earnings Per Diluted Share In addition to net income, Ambac presents operating earnings and core earnings, as discussed in Footnote Text that appears at the bottom of a page that adds explanation. It is often used to give credit to the source of information. When accumulated and printed at the end of a document, they are called "endnotes." 1. These measures, though not substitutes for net income, are useful for analysis in that they eliminate certain items, such as 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, unrealized mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. gains and losses in the structured credit derivatives Credit Derivative Privately held negotiable bilateral contracts that allow users to manage their exposure to credit risk. Credit derivatives are financial assets like forward contracts, swaps, and options for which the price is driven by the credit risk of economic agents (private business, the effect of refundings and calls and certain non-recurring items, to highlight the more consistent elements of earnings. For the third quarter of 2001, operating earnings were $111.9 million, up 20% from the $93.4 million in operating earnings for the third quarter of 2000. Core earnings for the third quarter of 2001 were $105.9 million, an increase of 16% from $91.5 million in core earnings for the third quarter of 2000. The following table shows net income, operating earnings and core earnings, all per diluted share:
Table I
Third Quarter Nine Months
% %
2001 2000 Change 2001 2000 Change
Net income per diluted $1.02 $0.84 +21% $2.90 $2.51 +16%
share
Operating earnings per $1.03 $0.87 +18% $2.93 $2.59 +13%
diluted share
Core earnings per $0.97 $0.85 +14% $2.79 $2.49 +12%
diluted share
Revenues Total revenues in the third quarter of 2001 were $181.3 million, an increase of 18% from $153.7 million in revenues for the third quarter of 2000. Highlights Adjusted gross premiums written(2) in the third quarter of 2001 were $180.6 million, up 1% from $179.3 million in the third quarter of 2000. An increase in municipal and international finance adjusted gross premiums written was offset by a decline in structured finance adjusted gross premiums written. On the municipal side, Ambac benefited from increased municipal volume and insured The person who obtains or is otherwise covered by insurance on his or her health, life, or property. The insured in a policy is not limited to the insured named in the policy but applies to anyone who is insured under the policy. insured n. penetration The successful unauthorized breach of a security perimeter. See penetration test. , partially offset by lower market share. The structured business was negatively impacted by the tragic events of September 11th, with several large transactions postponed. The international business was dominated dom·i·nate v. dom·i·nat·ed, dom·i·nat·ing, dom·i·nates v.tr. 1. To control, govern, or rule by superior authority or power: by structured transactions, including a large health care securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. in the UK. A breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. of adjusted gross premiums written by market sector is included below as Table II.
Table II
Adjusted Gross Premiums Written (a)
$-millions Third Quarter Nine Months
% %
2001 2000 Change 2001 2000 Change
Municipal Finance $98.8 $ 89.6 +10% $292.2 $159.0 +84%
Structured Finance 27.6 53.6 -49% 160.9 176.3 -9%
International 54.2 36.1 +50% 193.0 178.7 +8%
Total $180.6 $179.3 +1% $646.1 $514.0 +26%
(a) The definition of adjusted gross premiums has been revised and the
prior period has been restated. See Note 2.
Net premiums written in the third quarter of 2001 of $117.0 million were 9% lower than net premiums written of $127.9 million in the same period of 2000. The decrease in the quarter stemmed stemmed adj. 1. Having the stems removed. 2. Provided with a stem or a specific type of stem. Often used in combination: stemmed goblets; long-stemmed roses. largely from higher cessions of municipal premiums written pursuant to a reinsurance treaty Reinsurance Treaty (June 18, 1887) Secret agreement between Germany and Russia. Arranged by Otto von Bismarck after the collapse of the Three Emperors' League, it provided that each party would remain neutral if either became involved in a war with a third nation, and that that Ambac put into place earlier this year. The treaty is designed to limit single risk exposures. Gross premiums written for the third quarter of 2001 were offset by $35.9 million in ceded premiums. In the third quarter of 2000, ceded premiums were $20.1 million. Net premiums written for the nine months of 2001 of $426.9 million were 54% higher than net premiums written of $276.5 million in the same period of 2000. Net premiums earned for the third quarter of 2001 were $98.0 million, which represented a 25% increase from the $78.7 million earned in the third quarter of 2000. Net premiums earned increased for all market segments. Municipal earned premium Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. growth accelerated due to increased activity in that market. The growth rate for structured earned premiums slowed during the quarter, partially due to higher levels of prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. in insured mortgage-backed Mortgage-backed may refer to:
Net premiums earned include accelerated premiums, which result from refundings and calls recognized during the quarter. Accelerated premiums were $10.5 million in the third quarter of 2001 (which had a net income per diluted share effect of $0.05), up 218% from $3.3 million ($0.02 per diluted share) in accelerated premiums in the third quarter of 2000. Net premiums earned for the nine months of 2001 were $276.5 million, which represented a 20% increase from the $230.8 million earned in the first nine months of 2000. Accelerated premiums were $27.2 million for the first nine months of 2001 (which had a net income per diluted share effect of $0.14), up 49% from $18.2 million ($0.10 per diluted share) in accelerated premiums for the first nine months of 2000. A breakdown of normal net premiums earned by market sector is included below as Table III. Normal net premiums earned exclude accelerated premiums that result from refundings and calls.
Table III
Normal Net Premiums Earned
$-millions Third Quarter Nine Months
% %
2001 2000 Change 2001 2000 Change
Municipal Finance $38.3 $33.7 +14% $110.3 $101.2 +9%
Structured Finance 32.5 28.3 +15% 94.5 77.0 +23%
International 16.7 13.4 +25% 44.5 34.4 +29%
Total $87.5 $75.4 +16% $249.3 $212.6 +17%
Net fees and other premiums earned which includes revenues from structured credit derivative transactions, were $3.3 million in the third quarter 2001, down 41% from the $5.6 million for the third quarter of 2000. Income related to structured credit derivatives was partially offset by a $3.1 million unrealized mark-to-market loss in the third quarter 2001 and a $0.7 million unrealized mark-to-market loss in the third quarter of 2000. These amounts were eliminated in the calculation of Ambac's presentation of operating and core earnings. Net fees and other premiums earned were $16.4 million in the first nine months of 2001, up 53% from the $10.7 million in the first nine months of 2000. Net investment income for the third quarter of 2001 was $67.3 million, representing an increase of 10% from $61.1 million in the comparable period of 2000. This increase was due primarily to the growth in the investment portfolio from ongoing operations, partially offset by a lower reinvestment rate Reinvestment Rate The rate at which cash flows from fixed-income securities may be reinvested. Notes: Because of the additional interest income, bondholders can make larger investment returns if they reinvest received coupon payments. due to the current interest rate environment. Net investment income for the first nine months of 2001 was $196.9 million, representing an increase of 11% from $177.6 million in the comparable period of 2000. 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. revenues, excluding realized gains and losses, were $10.2 million in the third quarter of 2001, down 6% from the $10.9 million in revenues for the third quarter of 2000. An increase in municipal swap revenues was more than offset by a decline in investment agreement revenue. Investment agreement revenue has declined due to lower interest rate spreads. Financial services revenues, excluding realized gains and losses, were $36.5 million in the first nine months of 2001, down 21% from the $46.4 million in revenues for the first nine months of 2000. Expenses Highlights Financial guarantee expenses of $21.7 million for the third quarter of 2001 increased by 27% over the $17.1 million of expenses for the same quarter of 2000. This increase was due to higher compensation costs and increased loss and loss adjustment expenses. In addition, the amortization of deferred costs increased due to the increase in refunding Reimbursing funds in restitution or repayment. The process of refinancing or borrowing money, ordinarily through the sale of bonds, to pay off an existing debt with the proceeds derived therefrom. activity. Financial guarantee expenses of $65.2 million for the first nine months of 2001 increased by 27% over the $51.3 million of expenses for the same period of 2000. Financial services expenses for the third quarter of 2001 of $5.0 million declined by 14% from $5.8 million in expenses for the third quarter of 2000. Financial services expenses for the first nine months of 2001 of $16.6 million decreased by 11% from $18.6 million in expenses for the first nine months of 2000. Other Items Total net realized gains for the third quarter of 2001 were $1.7 million. For the third quarter of 2000 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. were $3.1 million. Interest expense for the third quarter of 2001 was $9.4 million, relatively flat from 2000. Balance Sheet Highlights Total assets as of September 30, 2001 were $11.41 billion, up 13% from total assets of $10.12 billion at December December: see month. 31, 2000. This increase was due primarily to cash generated from business during the period and higher volume in the guaranteed investment contract Guaranteed investment contract (GIC) A pure investment product in which a life company agrees, for a single premium, to pay at a maturity date the principal amount of a predetermined annual crediting (interest) rate over the life of the investment. business. As of September 30, 2001, 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 $2.96 billion, a 14% increase from year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2000 stockholders' equity of $2.60 billion. The increase stemmed primarily from net income during the period. 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. At its October October: see month. 2001 Board meeting, the Board of Directors of Ambac Financial Group Inc. approved the regular quarterly cash dividend of $0.09 per share of common stock. The dividend is payable on December 5, 2001 to stockholders of record on November November: see month. 12, 2001. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. In his remarks, the Chairman made statements about our future results that may be considered "forward-looking statements" under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on current expectations and the current economic environment. We caution you that these statements are not guarantees of future performance. They involve a number of risks and uncertainties that are difficult to predict. Our actual results could differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in the forward-looking statements. Among the factors that could cause actual results to differ materially are (1) changes in the economic, credit, or interest rate environment in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and abroad; (2) the level of activity within the national and worldwide debt markets; (3) competitive conditions and pricing levels; (4) legislative and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. developments; (5) changes in tax laws; (6) the policies and actions of the United States and other governments; and (7) other risks and uncertainties that have not been identified at this time. We undertake no obligation to publicly correct or update any forward- looking statement if we later become aware that it is not likely to be achieved. Ambac Financial Group, Inc., headquartered 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. , is a holding company whose affiliates provide financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac's 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 Assurance Corporation Ambac Assurance Corporation A subsidiary of publicly traded Ambac Financial Group that provides financial guarantees for municipal borrowers and for asset-backed and structured issues. , a leading guarantor guarantor n. a person or entity that agrees to be responsible for another's debt or performance under a contract, if the other fails to pay or perform. (See: guarantee) GUARANTOR, contracts. He who makes a guaranty. 2. of municipal and structured finance obligations, has earned triple-A ratings, the highest ratings available 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 Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. , Fitch fitch: see polecat. , Inc. and Rating and Investment Information, Inc. Ambac Financial Group, Inc. common stock is listed on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. (ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors ABK). Footnotes Note: Common stock data has been retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin adjusted to reflect the three-for-two stock split effective December 12, 2000. (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 accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, (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 Ambac's financial results. The Company defines operating earnings as net income, less the effect of realized gains and losses, unrealized mark-to-market gains and losses in the Company's structured credit derivatives business and certain non-recurring items. Core earnings, which Ambac 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, is defined as operating earnings less net insurance premiums earned from refundings and calls. The definitions of operating earnings and core earnings used by Ambac may differ from definitions of operating earnings and core earnings used by other public holding companies of financial guarantors. (2) Adjusted gross premiums written, 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 to measure Ambac's financial results. Adjusted gross premiums written, which Ambac reports as analytical data, are defined as gross (direct and assumed) up-front up-front or up·front Informal adj. 1. Straightforward; frank. 2. Paid or due in advance: up-front cash. adv. premiums written plus the present value of estimated installment Regular, partial portion of the same debt, paid at successive periods as agreed by a debtor and creditor. An installment loan is designed to be repaid in certain specified, ordinarily equal amounts over a designated period, such as a year or a number of months. premiums written on insurance policies and structured credit derivatives issued in the period. Previously, adjusted gross premiums written was net of premiums related to international deals that were ceded to MBIA MBIA Montana Building Industry Association MBIA Municipal Bond Insurance Association MBIA Michigan Boating Industries Association MBIA Municipal Bond Investors Assurance MBIA Massachusetts Brain Injury Association MBIA Maryland Business Incubation Association Insurance Corporation pursuant to a joint venture that ceased during 2000. Prior period amounts have been restated. The definition of adjusted gross premiums written used by Ambac may differ from definitions of adjusted gross premiums written used by other public holding companies of financial guarantors.
Ambac Financial Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
For The Periods Ended September 30, 2001 and 2000
(Dollars in Thousands Except Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
2001 2000 2001 2000
--------------------- --------------------
Revenues:
Financial Guarantee:
Gross prems. written $152,918 $147,949 $499,253 $338,956
Ceded prems. written (35,874) (20,077) (72,342) (62,451)
-------- -------- -------- --------
Net prems. written $117,044 $127,872 $426,911 $276,505
-----------------------------------------
Net prems. earned $98,019 $78,695 $276,547 $230,774
Net fees and other
premiums earned 3,323 5,645 16,423 10,693
Net investment income 67,318 61,090 196,852 177,623
Net rlzd. gns. (losses) 6,633 (2,535) 3,009 (2,103)
Financial Services:
Revenue 10,231 10,856 36,457 46,425
Net realized losses (3,589) (600) (2,524) (7,871)
Other:
Revenue 786 517 3,093 1,522
Net realized losses (1,383) - (1,383) -
-------- ------- -------- --------
Total revenues 181,338 153,668 528,474 457,063
-------- ------- -------- --------
Expenses:
Financial Guarantee:
Losses & loss adj. exp. 5,100 3,908 14,500 10,757
Und. & oprtg. exp. 16,602 13,208 50,671 40,562
Financial Services 5,023 5,808 16,627 18,563
Interest 9,370 9,394 28,338 28,153
Other 921 2,010 4,372 5,424
-------- ------- -------- --------
Total expenses 37,016 34,328 114,508 103,459
-------- ------- -------- --------
Income before income taxes 144,322 119,340 413,966 353,604
Provision for income taxes 33,314 28,432 97,398 84,418
-------- ------- -------- --------
Income before acctg change 111,008 90,908 316,568 269,186
Cumulative effect of acctg
chg (net of income taxes
of $219) - - (408) -
-------- ------- -------- --------
Net income $111,008 $90,908 $316,160 $269,186
======== ======= ======== ========
Net income per share $1.05 $0.86 $2.99 $2.57
===== ===== ===== =====
Net income per diluted share $1.02 $0.84 $2.90 $2.51
===== ===== ===== =====
Weighted average no. of
shs. outstanding 105,781,745 105,111,708 105,753,654 104,882,927
=========== =========== =========== ===========
Weighted average no. of
diluted shs. outstd. 109,077,058 107,732,178 108,980,936 107,051,811
=========== =========== =========== ===========
Ambac Financial Group, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2001 and December 31, 2000
(Dollars in Thousands Except Share Data)
September 30, December 31,
2001 2000
------------ -----------
(unaudited)
ASSETS
Investments:
Fixed income securities, at fair value
(amortized cost of $7,643,798 in
2001 and $6,743,450 in 2000) $7,866,192 $6,825,152
Fixed income securities pledged as
collateral, at fair value (amortized
cost of $1,067,256 in 2001 and $1,238,401
in 2000 1,083,593 1,239,349
Short-term investments, at cost
(approximates fair value) 184,809 253,519
Other 1,933 5,852
----------- -----------
Total investments 9,136,527 8,323,872
Cash 99,585 20,493
Cash pledged as collateral 11,842 24,935
Sec. purchased under agreements to resell 361,100 255,786
Receivable for investment agreements 67,518 6,663
Receivable for securities sold 5,381 1,926
Investment income due and accrued 119,456 130,692
Reinsurance recoverable 1,919 1,091
Prepaid reinsurance 265,811 242,604
Deferred acquisition costs 160,765 153,424
Loans 720,327 695,251
Other assets 460,272 263,563
----------- -----------
Total assets $11,410,503 $10,120,300
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Unearned premiums $1,719,890 $1,546,290
Losses and loss adjustment expense reserve 146,613 132,445
Ceded reinsurance balances payable 20,159 10,892
Obligations under investment and
payment agreements 3,653,081 3,509,049
Obligations under investment
repurchase agreements 1,527,055 1,383,882
Deferred income taxes 167,183 106,035
Current income taxes 60,206 25,628
Debentures 416,633 424,061
Accrued interest payable 75,280 90,575
Other liabilities 500,138 291,394
Payable for securities purchased 160,323 3,935
----------- -----------
Total liabilities 8,446,561 7,524,186
----------- -----------
Stockholders' equity:
Preferred stock - -
Common stock 1,060 1,060
Additional paid-in capital 544,519 533,558
Accumulated other comprehensive income 136,651 45,154
Retained earnings 2,303,313 2,035,209
Common stock held in treasury at cost (21,601) (18,867)
----------- -----------
Total stockholders' equity 2,963,942 2,596,114
----------- -----------
Total liabilities and stockholders' equity $11,410,503 $10,120,300
=========== ===========
Number of shares outstanding
(net of treasury shares) 105,592,743 105,550,605
=========== ===========
Book value per share $28.07 $24.60
=========== ===========
Ambac Financial Group, Inc. and Subsidiaries
Supplemental Analytical Data: Components of Core Earnings (1)
For The Periods Ended September 30, 2001 and 2000
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2001 2000 2001 2000
------------------- -------------------
Net income $111,008 $90,908 $316,160 $269,186
Adjustments:
Net realized (gns) lsses (1,080) 2,038 583 6,483
Unrlz mark-to-market lsses 1,986 444 1,962 1,250
Non-recurring item - - 408 -
-------- ------- -------- --------
Operating earnings 111,914 93,390 319,113 276,919
Refundings, calls and
other accelerations (5,995) (1,857) (15,524) (10,387)
-------- ------- -------- --------
Core earnings $105,919 $91,533 $303,589 $266,532
======== ======= ======== ========
Ambac Financial Group, Inc. and Subsidiaries
Supplemental Analytical Data: Components of Adjusted Book Value
Per Share (2)
September 30, 2001 and December 31, 2000
September 30, December 31,
2001 2000
------------ ------------
Book value $28.07 $24.60
After-tax value of:
Net unearned premium reserve less
deferred acquisition costs 7.97 7.07
Present value of future installment
premiums 5.35 4.71
Unrealized loss on investment
agreement liabilities (0.92) (0.03)
------ ------
Adjusted book value $40.47 $36.35
====== ======
(1) See footnote (1) in October 17, 2001 press release.
(2) Adjusted book value (ABV), which is not promulgated under GAAP, is
used by management, equity analysts and investors as a measurement
of the Company's intrinsic value with no benefit given for ongoing
business activity. Management derives ABV by beginning with
stockholders' equity (book value) and adding or subtracting the
after-tax value of: the net unearned premium reserve; deferred
acquisition costs; the present value of estimated net future
installment premiums; and the unrealized gain or loss on
investment agreement liabilities. These adjustments will not be
realized until future periods and may differ materially from the
amounts used in determining ABV. The definition of ABV used by the
Company may differ from definitions of ABV used by other public
holding companies of financial guarantee insurers.
Ambac Assurance Corporation
Statutory Accounting, Financial and Capital Information (1)
September 30, 2001 and December 31, 2000
(Dollars in Thousands, Except Ratios)
September 30, December 31,
2001 2000
------------ ------------
Capital and Claims-Paying Resources:
Contingency reserve $1,213,016 $1,080,748
Capital and surplus 1,771,305 1,655,151
---------- ----------
Qualified statutory capital 2,984,321 2,735,899
Unearned premiums 1,791,723 1,615,422
Losses and loss adjustment
expenses 36,875 31,034
---------- ----------
Policyholders' reserves 4,812,919 4,382,355
Third party capital support (2) 800,000 800,000
Present value of future install prem. 868,599 763,882
---------- ----------
Total claims-paying resources $6,481,518 $5,946,237
========== ==========
Net financial guarantees in force $454,105,978 $418,385,960
Capital ratio (3) 152:1 153:1
Financial resources ratio (4) 70:1 70:1
(1) Statutory accounting information for Ambac Assurance Corporation
and Connie Lee Insurance Company are combined for purposes of this
schedule. Qualified statutory capital for Ambac Assurance, on a
stand alone basis, as of September 30, 2001 and December 31, 2000
are $2.963 billion and $2.716 billion, respectively.
(2) Third party capital support represents a limited recourse
irrevocable line of credit with a group of high quality banks.
(3) Capital ratio is net financial guarantees in force divided by
qualified statutory capital.
(4) Financial resources ratio is net financial guarantees in force
divided by total claims-paying resources.
Ambac Assurance Corporation and Subsidiaries
Capitalization Table - GAAP
September 30, 2001 and December 31, 2000
(Dollars in Millions)
The following table sets forth Ambac Assurance's consolidated
capitalization as of September 30, 2001 and December 31, 2000,
respectively, on the basis of accounting principles generally accepted
in the United States of America.
September 30, December 31,
2001 2000
------------ ------------
(unaudited)
Unearned premiums $1,730 $1,556
Other liabilities 954 581
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Total liabilities 2,684 2,137
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Stockholder's equity:
Common stock 82 82
Additional paid-in capital 760 760
Accumulated other comprehensive income 135 82
Retained earnings 2,271 2,002
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Total stockholder's equity 3,248 2,926
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Total liabilities and stockholder's equity $5,932 $5,063
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