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AMBAC INC. ANNOUNCES SECOND QUARTER EARNINGS OF $30.7 MILLION; EARNINGS INCREASE 10.4 PERCENT

            AMBAC INC. ANNOUNCES SECOND QUARTER EARNINGS
          OF $30.7 MILLION; EARNINGS INCREASE 10.4 PERCENT
    NEW YORK, July 30 /PRNewswire/ -- AMBAC Inc. (NYSE: ABK) today announced net income of $30.7 million or $0.88 a share for the second quarter of 1992, up 10.4 percent from $27.8 million or $0.80 per share for the same period in 1991.
    The company attributed its improved quarterly earnings to increases in premiums earned, investment income and realized capital gains.  The increased earnings were realized despite higher expenses, primarily interest expense on long-term debt issued in August 1991 in connection with the company's initial capitalization and public offerings.
    In announcing the results, AMBAC Chairman and Chief Executive Officer Phillip B. Lassiter said: "We are pleased with AMBAC's second quarter results.  They come as we celebrate the first anniversary of our initial public offering and are testimony to AMBAC's smooth transition to being 100 percent publicly held.  AMBAC's financial performance this quarter was especially positive given our interest expense on debt which had not yet been issued in the second quarter of 1991.  Market conditions were favorable for AMBAC's business this quarter.  We benefited from a rise in both municipal bond issuance and the portion of those bonds that were insured."
    Gross premiums written in the second quarter increased 32.5 percent to $59.5 million from $44.9 million in the same period last year.  The increase in premiums written is due to growth in municipal bond issuance and in the proportion of that issuance that was insured.  AMBAC insured $6.4 billion in municipal bonds during the second quarter of 1992, compared to $4.8 billion in the second quarter of 1991, an increase of 33.3 percent.  AMBAC's market share in the long-term new issue market totalled 27.7 percent.
    Net premiums earned in the second quarter reached $22.5 million, compared with $20.9 million in 1991, a 7.7 percent increase which is the result of the growth in unearned premiums from business written in prior periods.  Net premiums earned from refundings and calls of AMBAC-insured bonds were $7.8 million for the second quarter of 1992, down slightly from $8.2 million during the same period last year.
    Total revenues for the second quarter were $59.4 million, a 26.1 percent increase over 1991's $47.1 million.  A combination of factors, including growth in net premiums earned, an increase in investment income, higher realized capital gains and increased revenues from the company's information services business led to increased revenues.  The increase in information services revenues was due primarily to the addition of the revenues of Healthcare Knowledge Resources, Inc. (HKR), which was acquired in April 1992 by the company's subsidiary, Health Care Investment Analysts, Inc. (HCIA), a leading provider of healthcare information.
    During the quarter, HCIA's expanded business operated at a modest loss of $0.4 million.  Revenues for the quarter were $5.5 million and expenses were $5.9 million.  Mr. Lassiter commented: "With the addition of HKR, HCIA is positioned as a leader in the healthcare information industry, and the acquisition complements AMBAC Indemnity's healthcare underwriting capability.  We believe HCIA is in a strong position for future success."
    Total company expenses in the second quarter of 1992 were $18.5 million versus $9.4 million for the second quarter of 1991, a 96.8 percent increase due primarily to the addition of HKR's expenses and interest expense on long-term debt.  Losses and loss adjustment expenses during the quarter were $1.5 million, a decrease of 28.6 percent from the comparable period in 1991.
    In the first six months of 1992, net income was $62.3 million, up 7.0 percent from net income of $58.2 million in the first half of 1991. Gross premiums written were $102.2 million, compared to $75.9 million in the first half of 1991, an increase of 34.7 percent.  Net premiums earned were $41.5 million in the first six months of this year, an 8.6 percent increase from $38.2 million in the first half of 1991.
    Total revenues for 1992's first half increased 20.0 percent to $109.6 million compared to revenues of $91.3 million in the first half of 1991, due to growth in net premiums earned, an increase in investment income, higher realized capital gains and increased revenues from AMBAC's information services business.
    Total expenses were $30.0 million in the first six months of 1992, an increase of 89.9 percent from $15.8 million in the same period in 1991.  The increase is due primarily to additional expenses related to the acquisition of HKR, interest expense, and underwriting and operating expenses which include costs associated with the company's secondary offering completed in February.
    AMBAC Inc. is the holding company for AMBAC Indemnity Corporation, a leading insurer of municipal bonds, and Health Care Investment Analysts, Inc., an AMBAC Information Company.
                       AMBAC Inc. and Subsidiaries
                  Consolidated Statements of Operations
                               (Unaudited)
               For The Periods Ended June 30, 1992 and 1991
              (Dollars in Thousands Except Common Share Data)
                               Three Months Ended       Six Months Ended
                                    June 30,                June 30,
                                 1992       1991        1992       1991
    Revenues:
    Gross premiums written     $59,520    $44,882    $102,219   $75,916
    Ceded premiums written      12,091     14,117      19,526    20,880
    Net premiums written        47,429     30,765      82,693    55,036
    Increase in unearned
     premiums                  (24,906)    (9,911)    (41,188)  (16,790)
    Net premiums earned         22,523     20,854      41,505    38,246
    Net investment income       24,911     23,467      49,535    46,531
    Net realized gains           6,133      1,450      11,438     4,519
    Information services
     revenue                     5,498        584       6,501     1,152
    Other income                   325        794         644       816
    Total revenues              59,390     47,149     109,623    91,264
    Expenses:
    Losses and loss
     adjustment expenses         1,488      2,085       1,519     3,191
    Underwriting and
     operating expenses          7,518      6,564      14,148    11,216
    Information services
     expenses                    5,921        672       7,194     1,323
    Interest expense             3,585         34       7,113        68
    Total expenses              18,512      9,355      29,974    15,798
    Income before income
     taxes                      40,878     37,794      79,649    75,466
    Income tax expense:
    Current taxes               10,474     12,023      16,158    16,985
    Deferred taxes                (280)    (2,071)      1,191       232
    Total income taxes          10,194      9,952      17,349    17,217
    Net income                 $30,684    $27,842     $62,300   $58,249
    Net income per common
     share (A)                   $0.88      $0.80       $1.78     $1.66
    Weighted average number
     of common shares
     outstanding            35,031,574 35,000,000  35,015,787 35,000,000 (A)  Per share data is computed using the weighted average number of shares outstanding for the three and six month periods ended June 30, 1992, respectively.  Per share data for the three and six month periods ended June 30, 1991 is computed on the basis of 35 million shares outstanding.
                        AMBAC Inc. and Subsidiaries
                        Consolidated Balance Sheets
                    June 30, 1992 and December 31, 1991
                           (Dollars in Thousands)
                                         June 30,           December 31,
                                          1992                  1991
    ASSETS
    (unaudited)
    Investments:
    Bonds, at amortized cost
     (market value of $979,311
     in 1992 and $959,224 in 1991)       $923,211             $903,350
    Bonds held in trading
     account, at market value
     (amortized cost of $350,268
     in 1992 and $297,867 in 1991)        358,217              318,402
     Short-term investments,
      at cost (approximates market
      value)                               86,569               75,740
    Total investments                   1,367,997            1,297,492
    Cash                                    2,582                3,046
    Premium balances in
     course of collection                   1,590                4,952
    Investment income due and accrued      23,039               22,449
    Deferred acquisition costs             45,166               42,695
    Other assets                          133,085               61,154
    Total assets                       $1,573,459           $1,431,788
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Liabilities:
    Unearned premiums                    $432,304              $391,116
    Losses and loss adjustment
     expenses                              62,548                64,781
    Ceded reinsurance balances payable      4,528                    --
    Deferred income taxes                  17,868                20,957
    Current income taxes payable           32,239                31,275
    Debentures                            149,141               149,119
    Accrued interest payable                5,859                 5,859
    Accounts payable and
     other liabilities                     22,015                18,146
    Payable for securities                 51,457                 3,099
    Total liabilities                     777,959               684,352
    Stockholders' equity:
    Preferred stock, par value $0.01 per share,
     authorized shares - 4,000,000; issued
     and outstanding shares - none             --                    --
    Common stock, Class A shares,
     par value $0.01 pershare; authorized
     shares - 20,000,000; issued and
     outstanding shares - none at June 30, 1992
    and 17,400,000 at December 31, 1991        --                  174
    Common stock, par value $0.01
     per share; authorized  shares
     - 50,000,000; issued and outstanding
     shares - 35,054,974 at June 30, 1992
     and 17,600,000 at December 31, 1991     351                   176
    Additional paid-in capital           464,104               463,035
    Unrealized gains on bonds
     held in trading account,
     net of tax                            5,246               13,553
    Retained earnings                    325,799              270,498
    Total stockholders' equity           795,500              747,436
    Total liabilities and stockholders'
     equity                           $1,573,459           $1,431,788
                         AMBAC Indemnity Corporation
                           Selected Statutory Data
                     June 30, 1992 and December 31, 1991
                     (Dollars in Thousands, Except Ratios)
                                         June 30,     December 31,
                                           1992           1991
                                                      (unaudited)
    Qualified statutory capital           839,432        800,316
    Net insurance in force           $115,312,945   $104,875,460
    Policyholders' leverage
     ratio (A)                              137:1          131:1
    (A) Policyholders' leverage ratio is net insurance in force
      divided by qualified statutory capital.
    -0-                             7/30/92
    /CONTACT: Robert Genader of AMBAC, 212-668-0340/
    (ABK) CO:  AMBAC Inc. ST:  New York IN:  FIN SU:  ERN TM -- NY096 -- 5325 07/30/92 17:32 EDT
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Date:Jul 30, 1992
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