Financial Security Assurance Holdings Ltd. said that third-quarter net income rose to $18.5 million, or 71 cents per share, from $8.9 million, or 39 cents per share, a year earlier.
For the first nine months, FSA reported net income of $52.7 million, or $2.03 per share, compared with a net loss of $78.4 million, or $3.43 per share, for the same period last year.
FSA's results last year were hurt by costs stemming from a restructuring of its troubled commercial real estate portfolio. The restructuring helped pave the way for FSA's initial public offering of stock in May.
FSA's core earnings, which exclude the effects of refundings, also posted strong gains for the third quarter and first nine months of the year. Core profits rose 18.5% to $14.3 million in the third quarter, and gained 15.4% to reach $42.3 million in the nine-month period.
As with the entire bond insurance industry, FSA's volume of business in the municipal market is down this year, affecting such key measures of performance as net premiums written, which are premium dollars received for new business minus those ceded to reinsurers.
In the third quarter, FSA reported net premiums written of $12.2 billion, down 52.5% from $25.7 billion in the third quarter of last year. Net premiums written fell 21.8% in the first nine months of the year to $53.3 billion from $68.2 billion in the first nine months of last year.
FSA officials attributed the decline in net premiums written to a slowdown in overall municipal issuance and the firm's resistance to the resulting low premium rate environment.
"In this lower-volume environment, premium pricing has been particularly aggressive. FSA has exercised restraint, and will continue to do so, by requiring acceptable average premium rates and return on equity for capital deployed," said Robert P. Cochran, the firm's president and chief executive officer. "As a consequence, we have not put as much capital to work as we would have liked. However, there will be other years and other markets."
The firm's qualified statutory capital base stood at $484.9 million at Sept. 30, up from $454.0 million at the end of last year.
Financial Security Assurance Holdings is the holding company for Financial Security Assurance Inc., a bond insurer.
