EXHIBIT 99.15 Ambac Financial Group, Inc. One State Street Plaza New York, NY 10004 212.668.0340 | ||||||
News Release For Immediate Release |
Investor/Media Contact: Peter R. Poillon
(212) 208-3333
ppoillon@ambac.com
Web site: www.ambac.com
AMBAC FINANCIAL GROUP, INC. ANNOUNCES
FOURTH QUARTER NET INCOME OF $64.2 MILLION, DOWN 45%
Fourth Quarter Net Income Per Diluted Share of $0.59, down 45%,
Fourth Quarter Adjusted Gross Premiums Written(1)$505.3 million, up 54%
NEW YORK, January 23, 2003—Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today announced fourth quarter 2002 net income of $64.2 million, or $0.59 per diluted share. This represents a 45% decrease from fourth quarter 2001 net income of $116.7 million, or $1.07 per diluted share. The fourth quarter 2002 results reflect the impact of net realized investment losses totaling $66.0 million on an after-tax basis, or $0.60 per diluted share. These net investment losses include the previously announced write down in the financial services investment portfolio.
Net Income Per Diluted Share
Ambac presents net income and net income per diluted share. These measures are computed in accordance with accounting principles generally accepted in the United States of America (GAAP). However, the Research Analysts have not adjusted their reporting of earnings to a strictly GAAP basis. In order to assist investors in their understanding of quarterly results, Ambac will provide other useful information.
Earnings measures reported by Research Analysts typically exclude net gains and losses from sales of investment securities and mark-to-market gains and losses on credit derivative contracts and derivative hedge contracts (“net security gains and losses”). Other Research Analysts further exclude the impact of accelerated premiums earned on guaranteed obligations that have been refunded (“refundings”). During the fourth quarter 2002, net security gains and losses, including the write down discussed above, had a net income effect of ($72.4) million, ($0.66) on a per diluted share basis. Refundings had a net income effect of $10.2 million, or $0.09 per diluted share for the
Ambac Fourth Quarter 2002 Earnings/2
fourth quarter 2002. Table I, below, provides fourth quarter and full year comparisons for the years 2002 and 2001.
Table I
Fourth Quarter | Full Year | |||||||||||||||||||||
2002 | 2001 | % Change | 2002 | 2001 | % Change | |||||||||||||||||
| Net income per diluted share | $ | 0.59 | $ | 1.07 | -45 | % | $ | 3.97 | $ | 3.97 | 0 | % | ||||||||||
| Effect of net security losses | $ | 0.66 | $ | 0.01 | n.a. | $ | 0.71 | $ | 0.03 | n.a. | ||||||||||||
Sub-total excluding effect of net security losses* | $ | 1.25 | $ | 1.08 | +16 | % | $ | 4.68 | $ | 4.00 | +17 | % | ||||||||||
| Effect of refundings | ($ | 0.09 | ) | ($ | 0.06 | ) | n.a. | ($ | 0.27 | ) | ($ | 0.20 | ) | n.a. | ||||||||
| Total excluding items | $ | 1.16 | $ | 1.02 | +14 | % | $ | 4.41 | $ | 3.80 | +16 | % | ||||||||||
| * | Consensus earnings that are reported by earnings estimate services, such as First Call are on this basis, which exclude net security gains and losses. |
Commenting on the overall results, Ambac Chairman and CEO Phillip B. Lassiter noted, “We wrapped up the year with an extraordinary quarter of business production. All sectors evidenced vibrant business activity at attractive pricing levels. We enter the new year with significant momentum and an apparent abundance of attractive opportunities.”
Revenues
Total revenues in the fourth quarter of 2002, excluding net securities gains and losses, were $232.7 million, an increase of 18% from $197.6 million in revenues for the fourth quarter of 2001.
Highlights
Adjusted gross premiums written(1) in the fourth quarter of 2002 were $505.3 million, up 54% from the fourth quarter of 2001 of $328.2 million. Strong premium growth was achieved in all of Ambac’s business lines—public, structured and international finance.
In public finance, Ambac continues to benefit from the significant increase in new issuance of municipal bonds. Transactions guaranteed during the quarter included significant writings in the utility, municipal lease and transportation sectors of the market. Structured finance growth resulted from strong activity in the investor-owned utility market. Additionally, there was strong demand for both commercial and consumer asset-backed transactions. In international finance, Ambac saw healthy writings in pooled debt obligations, future flow and other commercial asset-backed financings.
--MORE--
Ambac Fourth Quarter 2002 Earnings/3
A breakdown of adjusted gross premiums written by market sector is included below as Table II.
Table II
Adjusted Gross Premiums Written
Fourth Quarter | Full Year | |||||||||||||||||
$-millions | 2002 | 2001 | % Change | 2002 | 2001 | % Change | ||||||||||||
| Public Finance | $ | 217.1 | $ | 117.4 | +85 | % | $ | 552.8 | $ | 366.9 | +51 | % | ||||||
| Structured Finance | 174.6 | 105.9 | +65 | % | 441.2 | 318.5 | +39 | % | ||||||||||
| International | 113.6 | 104.9 | +8 | % | 305.5 | 288.9 | +6 | % | ||||||||||
| Total | $ | 505.3 | $ | 328.2 | +54 | % | $ | 1,299.5 | $ | 974.3 | +33 | % | ||||||
| • | Net premiums written in the fourth quarter of 2002 of $311.4 million were 94% higher than net premiums written of $160.9 million in the same period of 2001. Gross premiums written for the fourth quarter of 2002 were offset by $42.4 million in ceded premiums. Ceded premiums written in the fourth quarter of 2002 was reduced by $4.1 million in return premiums from the cancellation of reinsurance contracts. In the fourth quarter of 2001, ceded premiums were $23.2 million. Ceded premiums as a percentage of gross premiums written were 12.0% and 12.6% for the fourth quarter of 2002 and 2001, respectively. |
| • | Net premiums written for the full year 2002 of $790.5 million were 34% higher than net premiums written of $587.8 million in 2001. |
| • | Net premiums earned and other credit enhancement fees for the fourth quarter of 2002 were $140.4 million, which represented a 30% increase from the $108.3 million earned in the fourth quarter of 2001. Net premiums earned increased for all market segments. Public finance earned premium growth resulted from increased activity in that market over the past several quarters, enhanced by the company’s continued focus on structured and innovative municipal obligations. Earned premium growth for structured finance continues to be driven by strong writings in consumer asset-backed transactions and other structured transactions. The growth was partially offset by the continued high level of pay-downs of the existing mortgage-backed book. International net earned premium and other credit enhancement fees growth also accelerated during the quarter, primarily as a result of strong activity in pooled debt obligations, future flow and other asset-backed transactions guaranteed. |
Net premiums earned include accelerated premiums, which result from refundings and calls recognized during the quarter.Accelerated premiums were $17.8 million in the fourth quarter of 2002 (which had a net income per diluted share effect of $0.09), up 56% from $11.4 million ($0.06 per diluted share) in accelerated premiums in the fourth quarter of 2001. The current low interest rate environment has prompted the relatively high level of accelerated earnings. When interest rates rise in the future, accelerated earnings should decline.
--MORE--
Ambac Fourth Quarter 2002 Earnings/4
Net premiums earned and other credit enhancement fees for the full year 2002 were $500.3 million, representing a 25% increase from the $400.4 million earned in 2001. Accelerated premiums were $52.0 million for the full year 2002 ($0.27 per diluted share), up 35% from $38.6 million ($0.20 per diluted share) in accelerated premiums in 2001.
A breakdown of net premiums earned and other credit enhancement fees by market sector are included below as Table III. Normal net premiums earned exclude accelerated premiums that result from refundings and calls.
Table III
Net Premiums Earned and Other Credit Enhancement Fees
Fourth Quarter | Full Year | |||||||||||||||||
$-millions | 2002 | 2001 | % Change | 2002 | 2001 | % Change | ||||||||||||
| Public Finance | $ | 42.0 | $ | 35.8 | +17 | % | $ | 156.3 | $ | 137.2 | +14 | % | ||||||
| Structured Finance | 48.1 | 39.3 | +22 | % | 178.4 | 148.3 | +20 | % | ||||||||||
| International | 32.5 | 21.8 | +49 | % | 113.6 | 76.3 | +49 | % | ||||||||||
| Total Normal Premiums/Fees | 122.6 | 96.9 | +27 | % | 448.3 | 361.8 | +24 | % | ||||||||||
| Accelerated Premiums | 17.8 | 11.4 | +56 | % | 52.0 | 38.6 | +35 | % | ||||||||||
| Total | $ | 140.4 | $ | 108.3 | +30 | % | $ | 500.3 | $ | 400.4 | +25 | % | ||||||
| • | Net investment income for the fourth quarter of 2002 was $75.3 million, representing an increase of 6% from $71.0 million in the comparable period of 2001. This increase was due primarily to the growth in the investment portfolio from ongoing operations, partially offset by a lower reinvestment rate stemming from the current interest rate environment. Additionally, this growth was partially offset by the allocation of a larger portion of the portfolio to tax- exempt securities. |
| • | Net investment income for the full year 2002 was $297.3 million, representing an increase of 11% from $267.8 million in 2001. |
| • | Financial services revenues,excluding net securities gains and losses, were $13.1 million in the fourth quarter of 2002, down 17% from $15.8 million in revenues for the fourth quarter of 2001. Financial services revenues include revenues from swaps, investment agreements and cash management. Investment agreement revenue decreased 8% on lower interest spreads partially offset by increased volume. Interest spreads in the fourth quarter were adversely impacted by $2.4 million due to accelerated premium amortization caused by prepayments on certain mortgage-backed investments. Swap revenues declined 25% on lower volume. Money management revenues were relatively flat during the quarter. |
--MORE--
Ambac Fourth Quarter 2002 Earnings/5
Net securities losses in the financial services division amounted to $137.1 million in the fourth quarter of 2002, resulting primarily from the previously reported write down of a security in the investment agreement portfolio during the period. The security, backed by healthcare receivables, has been written down to 20% of par value. This write down amounted to approximately $140 million on a pre-tax basis and $91 million on an after-tax basis. In the fourth quarter of 2001 the financial services division reported net securities gains of $0.1 million.
Financial services revenues,excluding net securities gains and losses, were $54.3 million in the full year 2002, up 4% from the $52.2 million of revenues in 2001.
Expenses
Highlights
| • | Financial guarantee expensesof $29.9 million for the fourth quarter of 2002 increased by 31% over the $22.8 million of expenses for the same quarter of 2001. This increase was primarily due to additions to the general loss provision commensurate to the level of business written during the period and higher compensation expense. |
Financial guarantee expensesof $103.2 million for the full year 2002 increased by 17% over the $88.0 million of expenses in 2001.
| • | Financial services expenses for the fourth quarter of 2002 of $6.0 million increased by 15% from $5.2 million in expenses for the fourth quarter of 2001. |
Financial services expenses for the full year 2002 of $22.2 million increased by 2% from $21.8 million in expenses in 2001.
Other Items
| • | Total net securities gains/(losses)for the fourth quarter of 2002 were ($111.4) million, or ($0.66) per diluted share, consisting of net realized losses on investment securities of ($101.5) million (including the write down of the security in the financial services investment portfolio, noted above) and net mark-to-market losses on credit derivatives of ($8.9) million and derivative hedge contracts of ($1.0) million. For the fourth quarter of 2001 net securities gains/(losses) were ($0.5) million, or ($0.01) per diluted share, consisting of net realized gains on investment securities of $0.1 million and net mark-to-market losses on credit derivatives of ($0.6) million. |
Total net securities gains/(losses)for the full year 2002 were ($120.4) million, or ($0.71) per diluted share, consisting of net realized losses on investment securities of ($91.7) million and mark-to-market losses on credit derivatives of ($27.9) million and derivative hedge contracts of ($0.8) million. For the full year 2001, net securities gains/(losses) were ($5.1) million, or
--MORE--
Ambac Fourth Quarter 2002 Earnings/6
($0.03) per diluted share, consisting of net realized losses on investment securities of ($1.5) million and mark-to-market losses on credit derivatives of ($3.6) million.
| • | Interest expense for the fourth quarter of 2002 was $11.5 million, down 5% from $12.1 million for the fourth quarter of 2001. The decrease is attributable to lower bank fees associated with capital facilities. |
Balance Sheet
Highlights
| • | Total assets as of December 31, 2002 were $15.36 billion, up 24% from total assets of $12.34 billion at December 31, 2001. This increase was due primarily to cash generated from business written during the period and increased volume in the investment agreement business. As of December 31, 2002, stockholders’ equity was $3.63 billion, a 22% increase from year-end 2001 stockholders’ equity of $2.98 billion. The increase stemmed primarily from net income during the period and an increase in the fair market value of the investment portfolio due to a decline in interest rates during the period. |
2003 Earnings Guidance
Ambac management’s guidance for 2003 remains its long stated target of 15% average growth in the underlying earnings of the business. This target excludes net securities gains/losses, refundings and the impact of expensing stock options. Net income will be impacted by the level of refundings, the principal determinant being interest rates. Refundings tend to rise and fall conversely with the rise and fall of interest rates. Management cannot forecast market factors such as interest rates and credit spreads with sufficient accuracy to make such forecasts useful. As previously announced, expensing stock options will commence in the first quarter of 2003. Management estimates that stock option expense will lower earnings per diluted share by $0.04 to $0.06 in 2003.
Cash Dividend Declared
At its January 2003 Board meeting, the Board of Directors of Ambac Financial Group, Inc. approved the regular quarterly cash dividend of $0.10 per share of common stock. The dividend is payable on March 5, 2003 to stockholders of record on February 10, 2003.
Annual Meeting of Stockholders
The Board of Directors also set the 2003 Annual Meeting of Stockholders for Tuesday, May 6, 2003, at 11:30 a.m. in New York City. The record date for determining stockholders entitled to notice of, and to vote at, the annual meeting will be the close of business, March 11, 2003.
--MORE--
Ambac Fourth Quarter 2002 Earnings/7
Forward-Looking Statements
This release, in particular the Chairman’s remarks and the section titled “2003 Earnings Guidance”, contains statements about our future results that may be considered “forward-looking statements” under the Private Securities Litigation Reform Act 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 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 and abroad; (2) the level of activity within the national and worldwide debt markets; (3) competitive conditions and pricing levels; (4) legislative and regulatory 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, except as required by law.
*******************
Ambac Financial Group, Inc., headquartered in New York City, 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, Ambac Assurance Corporation, a leading guarantor of public finance and structured finance obligations, has earned triple-A ratings, the highest ratings available from Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services, Fitch, Inc. and Rating and Investment Information, Inc. Ambac Financial Group, Inc. common stock is listed on the New York Stock Exchange (ticker symbol ABK).
********************
Footnotes
| (1) | Adjusted gross premiums written, which is not promulgated 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 premiums written plus the present value of estimated installment premiums written on insurance policies and structured credit derivatives issued in the period. 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. |
--MORE--
Ambac Financial Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
For the Periods Ended December 31, 2002 and 2001
(Dollars in Thousands Except Share Data)
Three Months Ended December 31 | Years Ended December 31 | |||||||||||||||
2002 | 2001 | 2002 | 2001 | |||||||||||||
| Revenues: | ||||||||||||||||
| Financial Guarantee: | ||||||||||||||||
| Gross premiums written | $ | 353,878 | $ | 184,043 | $ | 904,032 | $ | 683,296 | ||||||||
| Ceded premiums written | (42,434 | ) | (23,192 | ) | (113,542 | ) | (95,534 | ) | ||||||||
| Net premiums written | $ | 311,444 | $ | 160,851 | $ | 790,490 | $ | 587,762 | ||||||||
| Net premiums earned | $ | 131,854 | $ | 102,187 | $ | 471,534 | $ | 378,734 | ||||||||
| Other credit enhancement fees | 8,604 | 6,137 | 28,775 | 21,661 | ||||||||||||
| Net premiums earned and other credit enhancement fees | 140,458 | 108,324 | 500,309 | 400,395 | ||||||||||||
| Net investment income | 75,262 | 70,995 | 297,297 | 267,847 | ||||||||||||
| Net realized investment gains (losses) | 32,538 | (885 | ) | 40,918 | 2,124 | |||||||||||
| Net unrealized losses on credit derivative contracts | (8,916 | ) | (569 | ) | (27,877 | ) | (3,588 | ) | ||||||||
| Other income | 2,945 | 1,262 | 5,531 | 5,180 | ||||||||||||
| Financial Services: | ||||||||||||||||
| Revenue | 13,114 | 15,768 | 54,253 | 52,225 | ||||||||||||
| Net realized investment (losses) gains | (136,080 | ) | 125 | (134,097 | ) | (3,026 | ) | |||||||||
| Net unrealized losses on derivative hedge contracts | (1,024 | ) | — | (839 | ) | — | ||||||||||
| Other: | ||||||||||||||||
| Revenue | 878 | 1,234 | 3,537 | 4,327 | ||||||||||||
| Net realized investment gains (losses) | 2,053 | 819 | 1,482 | (564 | ) | |||||||||||
| Total revenues | 121,228 | 197,073 | 740,514 | 724,920 | ||||||||||||
| Expenses: | ||||||||||||||||
| Financial Guarantee: | ||||||||||||||||
| Losses and loss adjustment expenses | 9,000 | 5,500 | 26,700 | 20,000 | ||||||||||||
| Underwriting and operating expenses | 20,917 | 17,318 | 76,548 | 67,989 | ||||||||||||
| Financial Services | 5,967 | 5,188 | 22,182 | 21,815 | ||||||||||||
| Interest | 11,468 | 12,104 | 43,724 | 40,442 | ||||||||||||
| Other | 1,805 | 1,575 | 7,170 | 5,947 | ||||||||||||
| Total expenses | 49,157 | 41,685 | 176,324 | 156,193 | ||||||||||||
| Income before income taxes | 72,071 | 155,388 | 564,190 | 568,727 | ||||||||||||
| Provision for income taxes | 7,881 | 38,642 | 131,596 | 135,821 | ||||||||||||
| Net income | $ | 64,190 | $ | 116,746 | $ | 432,594 | $ | 432,906 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.61 | $ | 1.11 | $ | 4.08 | $ | 4.10 | ||||||||
| Diluted | $ | 0.59 | $ | 1.07 | $ | 3.97 | $ | 3.97 | ||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 105,984,429 | 105,562,868 | 105,951,603 | 105,705,957 | ||||||||||||
| Diluted | 109,019,868 | 108,710,853 | 109,066,046 | 108,948,133 | ||||||||||||
Ambac Financial Group, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2002 and December 31, 2001
(Dollars in Thousands Except Share Data)
December 31, 2002 | December 31, 2001 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
| Investments | ||||||||
| Fixed income securities, at fair value (amortized cost of $11,133,313 in 2002 and $8,355,596 in 2001) | $ | 11,597,623 | $ | 8,469,157 | ||||
| Fixed income securities pledged as collateral, at fair value (amortized cost of $537,711 in 2002 and $1,393,193 in 2001) | 543,572 | 1,401,528 | ||||||
| Short-term investments, at cost (approximates fair value) | 395,761 | 415,002 | ||||||
| Other | 2,354 | 2,163 | ||||||
| Total investments | 12,539,310 | 10,287,850 | ||||||
| Cash | 25,816 | 76,580 | ||||||
| Securities purchased under agreements to resell | 260,818 | 11,200 | ||||||
| Receivable for investment agreements | 169 | 4,101 | ||||||
| Receivable for securities sold | 6,936 | 8,922 | ||||||
| Investment income due and accrued | 142,406 | 157,408 | ||||||
| Reinsurance recoverable on paid and unpaid losses | 5,773 | 2,259 | ||||||
| Prepaid reinsurance | 296,126 | 267,655 | ||||||
| Deferred acquisition costs | 174,055 | 163,477 | ||||||
| Loans | 843,809 | 901,194 | ||||||
| Derivative product assets | 1,010,081 | 383,959 | ||||||
| Other assets | 51,170 | 76,176 | ||||||
| Total assets | $ | 15,356,469 | $ | 12,340,781 | ||||
Liabilities and Stockholders’ Equity | ||||||||
| Liabilities | ||||||||
| Unearned premiums | $ | 2,128,847 | $ | 1,780,272 | ||||
| Losses and loss adjustment expense reserve | 173,068 | 152,352 | ||||||
| Ceded reinsurance balances payable | 16,930 | 10,146 | ||||||
| Obligations under investment and payment agreements | 6,183,963 | 4,089,777 | ||||||
| Obligations under investment repurchase agreements | 848,358 | 1,422,151 | ||||||
| Securities sold under agreement to repurchase | 132,235 | 425,000 | ||||||
| Deferred income taxes | 185,641 | 123,077 | ||||||
| Current income taxes | 44,807 | 98,145 | ||||||
| Debentures | 616,715 | 619,315 | ||||||
| Accrued interest payable | 81,252 | 84,225 | ||||||
| Derivative product liabilities | 836,146 | 314,583 | ||||||
| Other liabilities | 405,174 | 175,135 | ||||||
| Payable for securities purchased | 78,154 | 62,915 | ||||||
| Total liabilities | 11,731,290 | 9,357,093 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 1,062 | 1,060 | ||||||
| Additional paid-in capital | 550,289 | 538,135 | ||||||
| Accumulated other comprehensive income | 265,427 | 62,476 | ||||||
| Retained earnings | 2,820,281 | 2,403,473 | ||||||
| Common stock held in treasury at cost | (11,880 | ) | (21,456 | ) | ||||
| Total stockholders’ equity | 3,625,179 | 2,983,688 | ||||||
| Total liabilities and stockholders’ equity | $ | 15,356,469 | $ | 12,340,781 | ||||
| Number of shares outstanding (net of treasury shares) | 105,990,591 | 105,584,049 | ||||||
| Book value per share | $ | 34.20 | $ | 28.26 | ||||
Ambac Financial Group, Inc. and Subsidiaries
Supplemental Analytical Data: Components of Adjusted Book Value Per Share(1)
December 31, 2002 and December 31, 2001
December 31, 2002 | December 31, 2001 | |||||||
| Book value | $ | 34.20 | $ | 28.26 | ||||
| After-tax value of: | ||||||||
| Net unearned premium reserve less deferred acquisition costs | 10.17 | 8.31 | ||||||
| Present value of future installment premiums | 8.23 | 6.07 | ||||||
| Unrealized loss on investment agreement liabilities | (2.76 | ) | (0.61 | ) | ||||
| Adjusted book value | $ | 49.84 | $ | 42.03 | ||||
| (1) | Adjusted book value (ABV), which is not promulgated in accordance with accounting principles generally accepted in the United States of America (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)
December 31, 2002 and December 31, 2001
(Dollars in Thousands, Except Ratios)
December 31, 2002 | December 31, 2001 | |||||
| Capital and Claim-Paying Resources: | ||||||
| Contingency reserve | $ | 1,508,898 | $ | 1,265,652 | ||
| Capital and surplus | 2,227,438 | 1,996,284 | ||||
| Qualified statutory capital | 3,736,336 | 3,261,936 | ||||
| Unearned premiums | 2,209,514 | 1,860,090 | ||||
| Losses and loss adjustment expenses | 52,061 | 27,835 | ||||
| Policyholders’ reserves | 5,997,911 | 5,149,861 | ||||
| Third party capital support (2) | 800,000 | 800,000 | ||||
| Present value of future installment premiums (3) | 1,342,246 | 986,760 | ||||
| Total claims paying resources | $ | 8,140,157 | $ | 6,936,621 | ||
| Net financial guarantees in force | $ | 557,422,197 | $ | 476,189,690 | ||
| Capital ratio (4) | 149:1 | 146:1 | ||||
| Financial resources ratio (5) | 68:1 | 69:1 | ||||
| (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 December 31, 2002 and December 31, 2001 are $3.703 billion and $3.240 billion, respectively. |
| (2) | Third party capital support at December 31, 2002 represents pre-funded capital which provides for the unconditional ability to issue up to $800 million of preferred stock to high quality asset-backed trusts. |
| (3) | Includes the present value of future credit enhancement fees from structured credit derivatives. |
| (4) | Capital ratio is net financial guarantees in force divided by qualified statutory capital. |
| (5) | Financial resources ratio is net financial guarantees in force divided by total claims paying resources. |
Ambac Assurance Corporation and Subsidiaries
Capitalization Table—GAAP
December 31, 2002 and December 31, 2001
(Dollars in Millions)
The following table sets forth Ambac Assurance's consolidated capitalization as of December 31, 2002 and December 31, 2001, respectively, on the basis of accounting principles generally accepted in the United States of America.
December 31, 2002 | December 31, 2001 | |||||
(unaudited) | ||||||
| Unearned premiums | $ | 2,137 | $ | 1,790 | ||
| Other liabilities | 1,977 | 973 | ||||
| Total liabilities | 4,114 | 2,763 | ||||
| Stockholder’s equity: | ||||||
| Common stock | 82 | 82 | ||||
| Additional paid-in capital | 920 | 928 | ||||
| Accumulated other comprehensive income | 231 | 81 | ||||
| Retained earnings | 2,849 | 2,386 | ||||
| Total stockholder’s equity | 4,082 | 3,477 | ||||
| Total liabilities and stockholder’s equity | $ | 8,196 | $ | 6,240 | ||