The bond insurers continued their impressive balance-sheet performance in the first half of 1991, with net-income increases averaging more than 65% industry-wide, according to company reports.
Financial Guaranty Insurance Co. had the most dramatic jump in first-half statutory net income, registering a $14.3 million increase over the first six months of 1991. The bond insurer's earnings improved 54.4%, to $40.6 million from $26.3 million.
A FGIC spokesman said the earnings increase was due to "growth in the structured finance business" and continued reduction in the firm's expenses. Structured finance is generally the nonmunicipal line of insuring pools of assets. Premiums tend to be higher, but the activity is more labor-intensive.
AMBAC Indemnity Corp. had a strong 19.5% net-income increase, to $48.7 million from $40.7 million in the first half of 1990. And Municipal Bond Investors Assurance Corp.'s net income also streamed ahead, increasing 12.1%, to $64.49 million from $57.54 million.
Financial Security Assurance Inc.'s net income also jumped. The firm earned 69.6% more in the first half than in the first six months of 1990, or $20.37 million compared with $12.01 million.
Capital Guaranty Insurance Co. registered the most impressive net-income increase, on a percentage basis, by bringing in $6.65 million in the first half of 1991, up 170.3% from $2.46 million in the first half of 1990. Senior officials at the firm late last year said it would be seeking to expand its presence in the market.
Net premiums written, a reflection of the amount of current business showing up as direct revenue to the firms, exhibited strong, steady gains across the board, with the exception of FSA.
That firm's net premiums written fell 25.6%, to $15.75 million from $21.29 million, due to a municipal reinsurance treaty undertaken in 1990, according to a spokesman. He said the treaty's terms included premium cessions for 1991, in addition to 1990.
In fact, FSA's gross premiums indicate a strong flow of business activity. In the first half of 1991, FSA collected $47.1 million of gross premiums, meaning it ceded more than $31.35 million during the period.
The hands-down winner in net premiums written was FGIC, which recorded a 44% increase, or $60.24 million compared with $41.83 million in the first half of 1990. The $18.4 million jump far surpassed the rest of the industry, and was attributable again to the higher premium levels in the structured finance marketplace, as well as to a reduction in cessions through facultative reinsurance, according to a company spokesman.
Capital Guaranty had the second-largest percentage-based increase in net premiums, moving 27.8% higher, to $8.45 million from $6.61 million. AMBAC had a 16.1% increase, to $55.04 million from $47.42 million; and MBIA had a 3% increase, to $94.27 million from $91.54 million.
The qualified statutory capital, or capital base, of the industry also improved steadily, with FSA as the standout competitor. The newest municipal insurer saw its capital base leap 71.1%, to $401.44 million from $234.57 million. The capital base number is used by analysts as a snapshot of firms' immediately available assets. It dies not include unearned premium reserves or loss adjustments.
FGIC and MBIA registered capital base increases of 15.8% and 15.3%, respectively. Capital Guaranty's capital base increased 9.6%, to $112.54 million from $102.7 million, while AMBAC's increased 4.7%, to $771.03 million from $736.73 million.