Exhibit 99.2
Quarterly
Operating
Supplement
September 30, 2004
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
QUARTERLY OPERATING SUPPLEMENT
Third Quarter 2004
Table of Contents
Financial Security Assurance Holdings Ltd. (the Company), through its wholly owned subsidiary, Financial Security Assurance Inc. (FSA), provides Aaa/AAA/AAA financial guaranty insurance for obligations in the municipal, infrastructure, asset-backed and structured finance markets worldwide. FSA’s financial strength is rated Triple-A by Fitch Ratings, Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services (S&P) and Rating and Investment Information, Inc. (R&I). The Company is a member of the Dexia group, a leading European banking group with four core business lines: financial services to the local public sector, retail financial services, investment management services, and treasury and financial markets.
Financial Security Assurance Holdings Ltd.
Highlights
Financial Key Lines
| | 3rd Qtr.
2004 | | Year-to-date
2004 | | Full Year
2003 | |
| | | | | | | |
Net Income (Millions) | | $ | 91.8 | | $ | 259.1 | | $ | 290.6 | |
Stockholders’ Equity (Millions) | | 2,428.6 | | 2,428.6 | | 2,168.4 | |
Return on Average Equity | | 15.6 | % | 15.1 | % | 14.5 | % |
GAAP: (1) | | | | | | | |
Loss Ratio(2) | | (4.1 | ) | 3.6 | | 9.5 | |
Expense Ratio(2) | | 27.3 | | 28.8 | | 31.8 | |
Combined Ratio(2) | | 23.2 | | 32.4 | | 41.3 | |
Effective Tax Rates: | | | | | | | |
Net Investment Income | | 9.4 | | 9.5 | | 9.4 | |
Underwriting and Other Income | | 36.8 | | 33.7 | | 34.2 | |
Total Income | | 27.3 | | 24.8 | | 24.1 | |
| | | | | | | | | | |
Reconciliation of Net Income to Operating Earnings(3)
(dollars in millions) | | 3rd Qtr.
2004 | | Year-to-date
2004 | | Full Year
2003 | |
| | | | | | | |
Net Income | | $ | 91.8 | | $ | 259.1 | | $ | 290.6 | |
Less Fair-Value Adjustments for Insured CDS, net of taxes(4) | | 13.1 | | 26.7 | | 23.4 | |
Operating Earnings | | $ | 78.7 | | $ | 232.4 | | $ | 267.2 | |
Reconciliation of Book Value to Adjusted Book Value(3)
(dollars in millions) | | September 30,
2004 | | December 31,
2003 | |
| | | | | |
Shareholders’ Equity (Book Value)(5) | | $ | 2,431.9 | | $ | 2,168.4 | |
After-Tax Value of: | | | | | |
Net Deferred Premium Revenue less DAC and goodwill | | 641.3 | | 572.8 | |
Present Value of Future Net Installment Premiums and Present Value of Future Net Interest Margin(6) | | 485.2 | | 424.1 | |
Less Fair-Value Adjustments for Insured CDS | | (19.3 | ) | 6.5 | |
Adjusted Book Value(7) | | $ | 3,539.1 | | $ | 3,171.8 | |
(1) Accounting principles generally accepted in the United States of America (GAAP)
(2) Relates solely to FSA.
(3) Operating earnings and adjusted book value are not promulgated in accordance with GAAP and are not substitutes for net income or book value. See Review of Operations for additional discussions.
(4) This item pertains to SFAS No. 133 adjustments for FSA-insured credit default swaps (CDS) that have investment-grade underlying credit quality. They are excluded from operating earnings because they are expected to sum to zero over the lives of the relevant transactions.
(5) Includes the effect of after-tax unrealized gains in the investment portfolio, which was $157.7 million at September 30, 2004 and $147.4 million at December 31, 2003.
(6) The discount rate varies according to the year of origination. For each year’s originations, the Company calculates the discount rate as the average pre-tax yield on its investment portfolio for the previous three years. The rate was 5.62% in 2004 and 5.91% in 2003.
(7) The Company began to exclude fair-value adjustments for insured CDS from ABV in the third quarter of 2004. The December 31, 2003 amount is restated accordingly.
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FSA HOLDINGS THIRD QUARTER 2004 RESULTS
NET INCOME
$92 Million in Q3 04 (+39% vs. Q3 03)
$259 Million in 9M 04 (+30% vs. 9M 03)
ORIGINATIONS (PRESENT VALUE)
$253 Million in Q3 04 (-3% vs. Q3 03)
$710 Million in 9M 04 (+3% vs. 9M 03)
New York, New York, November 4, 2004 — Financial Security Assurance Holdings Ltd. (the Company), the holding company for bond insurer Financial Security Assurance Inc. (FSA), announced third quarter 2004 net income of $91.8 million, 39.0% higher than in the prior year.
NET INCOME AND RECONCILIATION TO NON-GAAP OPERATING EARNINGS
(Dollars in millions)
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Net Income | | $ | 91.8 | | $ | 66.1 | | $ | 259.1 | | $ | 200.0 | |
Less fair-value adjustments for insured credit default swaps, net of taxes [1] | | 13.1 | | 3.1 | | 26.7 | | 5.9 | |
Operating Earnings [1] | | $ | 78.7 | | $ | 63.0 | | $ | 232.4 | | $ | 194.1 | |
[1] For definitions, see below, “Analysis of Financial Results – Operating Earnings.”Also see “Non-GAAP Terms,” below, for a discussion of measures not promulgated in accordance with accounting principles generally accepted in the United States of America (GAAP).
The Company increased operating earnings 24.8% for the third quarter and 19.7% for nine months, compared with results in the same periods last year. See “Analysis of Financial Results,” below, for further discussion of earnings results.
Shareholders’ equity (book value) was $2.4 billion and non-GAAP adjusted book value (ABV) was $3.5 billion at September 30, 2004. Over the past 12 months, ABV grew 16.7% excluding realized and unrealized capital gains and losses in the investment portfolio and 16.3% including such gains and losses. The Company’s management considers ABV to be a reasonable proxy for the intrinsic value of the Company, exclusive of franchise value, because it captures deferred income from business already generated. In the third quarter of 2004, the Company amended the definition of ABV to exclude fair-value adjustments for insured credit default swaps (CDS). See “Non-GAAP Terms,” below, for more discussion of ABV and a reconciliation to book value.
Third-quarter present value (PV) originations were $252.7 million, 2.5% lower than in that period last year. Year-to-date, however, PV originations reached $709.9 million, 2.6% higher than in the first nine months of 2003.
Robert P. Cochran, chairman and chief executive officer of the Company and FSA, said: “Business production for the first nine months was very solid, surpassing last year’s results for the same period and producing a strong earnings profile.
“While the U.S. municipal market has maintained considerable strength, our U.S. municipal originations decreased significantly in the third quarter as we maintained underwriting and pricing discipline in the face of declining new-issue volume and intensifying competition.
“Conversely, FSA’s U.S. asset-backed business made a very strong showing, as we found opportunities across a range of high-quality transactions. We also had a steady contribution from our international business, although we have reduced our full-year expectations because a number of significant public infrastructure transactions have been delayed. These results once again underscore the value of a diversified business approach across three distinct markets,” he added.
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BUSINESS PRODUCTION
TOTAL NEW ORIGINATIONS
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Gross par insured (dollars in billions) | | $ | 44.6 | | $ | 27.5 | | $ | 86.7 | | $ | 64.2 | |
PV originations (dollars in millions) [1] | | 252.7 | | 259.3 | | 709.9 | | 692.0 | |
| | | | | | | | | | | | | |
[1] The sum of (a) the present value of gross premiums originated (PV premiums), defined as estimated future installment premiums, measured as of the policy effectiveness date, discounted to their present value plus upfront premiums, and (b) the present value of estimated future net interest margin (PVNIM) generated in the financial products segment. The discount rate, calculated based on the trailing three-year average pre-tax yield on the investment portfolio, was 5.62% in 2004 and 5.91% in 2003 for all originations. PV premiums, PVNIM and PV originations are non-GAAP measures. For further discussion and a reconciliation of total PV originations to gross premiums written, see below, “Analysis of Financial Results – Premiums.”
Unless otherwise noted, percentage changes mentioned in this release compare the period named with the comparable period of the prior year.
U.S. MUNICIPAL NEW ORIGINATIONS
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Gross par insured (dollars in billions) | | $ | 13.1 | | $ | 17.5 | | $ | 36.6 | | $ | 44.2 | |
PV premiums (dollars in millions) | | 97.5 | | 160.0 | | 322.9 | | 368.6 | |
| | | | | | | | | | | | | |
Year-to-date, new-issue volume in the U.S. municipal bond market reached $267.4 billion, an 8.2% decline. Insurance penetration was approximately 55%, compared with 52% for nine months of last year. In this environment, FSA insured approximately 24% of the par amount of insured new issues sold year-to-date.
Including both primary and secondary U.S. municipal obligations with closing dates in the third quarter, the par amount insured by FSA decreased 25.5%, and PV premiums decreased 39.1%. New-issue market volume declined, and insurance pricing was highly competitive. In this environment, FSA adhered to its underwriting and pricing discipline. For the first nine months, FSA’s U.S. municipal par originated declined 17.1%, and PV premiums declined 12.4%.
U.S. ASSET-BACKED NEW ORIGINATIONS
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Gross par insured (dollars in billions) | | $ | 28.3 | | $ | 5.3 | | $ | 41.6 | | $ | 11.8 | |
PV premiums (dollars in millions) | | 100.6 | | 51.1 | | 185.4 | | 138.2 | |
| | | | | | | | | | | | | |
The Company insured more than five times as much U.S. asset-backed par in the third quarter of 2004 than in that of 2003, with the strongest activity in the pooled corporate and residential mortgage sectors. The associated PV premiums, which increased 96.9%, did not grow as much as par insured because all of the growth in par volume came from transactions of Triple-A underlying credit quality. Such high-quality transactions tend to have relatively low premium rates but tend to achieve good returns on equity. This business was also the main driver of U.S. asset-backed growth for the nine-month period, in which par insured more than tripled and PV premiums increased 34.2%.
INTERNATIONAL NEW ORIGINATIONS
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Gross par insured (dollars in billions) | | $ | 3.2 | | $ | 4.7 | | $ | 8.5 | | $ | 8.2 | |
PV premiums (dollars in millions) | | 34.7 | | 35.1 | | 149.0 | | 153.8 | |
| | | | | | | | | | | | | |
FSA’s international business was driven primarily by pooled corporate and public infrastructure transactions during the third quarter. International par insured decreased 32.1% for the quarter, and the related PV premiums were
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relatively flat. The decline in par volume came primarily in the residential mortgage sector, where two large, Triple-A synthetic transactions with relatively low premium rates were executed in the third quarter of 2003. For the first nine months, international par insured increased 3.5%, and international PV premiums decreased 3.1%.
FINANCIAL PRODUCTS NEW ORIGINATIONS
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Gross PVNIM (dollars in millions) | | $ | 19.9 | | $ | 13.1 | | $ | 52.6 | | $ | 31.4 | |
| | | | | | | | | | | | | |
PVNIM generated in the financial products segment rose 51.9% for the third quarter and 67.5% for the nine-month period. The third-quarter growth reflects increased activity in both municipal and structured guaranteed investment contracts (GICs). As previously disclosed, GIC activity in the first half of 2003 was constrained until the Company received an exemption from the Investment Company Act of 1940 in April of that year.
ANALYSIS OF FINANCIAL RESULTS
NET INCOME. Third-quarter net income rose 39.0% to $91.8 million from $66.1 million in the third quarter of 2003. The following table provides the after-tax amounts of certain income and expense items that management believes are useful in analyzing net income:
NOTEWORTHY ITEMS INCLUDED IN NET INCOME
(All items shown net of taxes. Dollars in millions)
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Refundings, calls or other accelerations [1] | | $ | 5.2 | | $ | 5.2 | | $ | 17.8 | | $ | 11.2 | |
Realized gains (losses), net | | 0.8 | | 0.1 | | (0.8 | ) | 3.0 | |
Equity-based compensation [2] | | (8.7 | ) | (4.9 | ) | (23.0 | ) | (18.1 | ) |
Equity in earnings and impairment of goodwill of SPS [3] | | (7.5 | ) | (11.0 | ) | (7.2 | ) | (9.3 | ) |
Equity in earnings of XLFA [4] | | (10.0 | ) | 5.1 | | 3.2 | | 11.6 | |
Fair-value adjustments for insured CDS [5] | | 13.1 | | 3.1 | | 26.7 | | 5.9 | |
| | | | | | | | | | | | | |
[1] Net of deferred acquisition cost amortization.
[2] The Company has always included in net income the currently vested future-value payout cost of its performance share program, which is the Company’s only equity-based compensation program.
[3] SPS Holding Corp. (SPS) is a mortgage servicing holding company in which the Company owns a minority interest. At September 30, 2004, the Company’s interest in SPS had a book value of $49.6 million. In the third quarter of 2004, the Company recorded in equity in earnings an impairment of $7.6 million of unamortized goodwill related to SPS because of challenges encountered by SPS in acquiring new business, despite a servicer rating of “average.” SPS was named Fairbanks Capital Holding Corp. until June 30, 2004.
[4] XL Financial Assurance Ltd (XLFA) is a financial guaranty insurance company in which the Company owns a minority interest. XLFA reinsures business originated by FSA and other financial guarantors. The Company recently refined the method for estimating the carrying amount of this investment. As a result, the Company charged equity in earnings $11.7 million in the third quarter and reduced its carrying value in this investment from $68.1 million to $56.4 million as of September 30, 2004.
[5] This item is excluded from operating earnings.
OPERATING EARNINGS. The Company defines operating earnings (a non-GAAP measure) as net income before the effects of fair-value adjustments for FSA-insured CDS that have investment-grade underlying credit quality and must be marked to fair value under Statement of Financial Accounting Standards No. 133 (SFAS No. 133). Because CDS contracts are generally non-cancelable prior to maturity, the Company views insured CDS risks as comparable to other insured risks. Because the SFAS No. 133 adjustments for each guaranteed CDS are expected to sum to zero over the life of the transaction, the Company considers operating earnings a key measure of normal operating results.
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Third-quarter operating earnings of $78.7 million were lower than net income because they exclude positive fair-value adjustments totaling $19.4 million ($13.1 million after taxes). The fair-value adjustments primarily reflect tightening of market credit spreads. The comparable fair-value adjustments in the third quarter of 2003 were gains totaling $4.5 million ($3.1 million after taxes).
Nine-month operating earnings of $232.4 million were lower than net income because they exclude positive fair-value adjustments totaling $39.4 million ($26.7 million after taxes). The comparable fair-value adjustments in the first nine months of 2003 were gains totaling $8.6 million ($5.9 million after taxes).
PREMIUMS. The following tables reconcile gross premiums written to PV originations and summarize net earned and written premiums. PV premiums, PVNIM and PV originations are non-GAAP measures that the Company employs as indicators of a given period’s origination activity because a substantial portion of the Company’s premium and net interest margin revenue is collected in installments. In contrast, gross premiums written captures premiums collected in the period, whether collected for business originated in the period or in installments for business originated in prior periods.
RECONCILIATION OF GROSS PREMIUMS WRITTEN TO PV ORIGINATIONS
(Dollars in millions)
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Gross premiums written | | $ | 198.2 | | $ | 262.1 | | $ | 623.8 | | $ | 686.5 | |
Gross installment premiums received | | (83.0 | ) | (82.4 | ) | (253.4 | ) | (252.6 | ) |
Gross upfront premiums originated | | 115.2 | | 179.7 | | 370.4 | | 433.9 | |
PV estimated installment premiums originated | | 117.6 | | 66.5 | | 286.9 | | 226.7 | |
PVNIM originated | | 19.9 | | 13.1 | | 52.6 | | 31.4 | |
PV originations | | $ | 252.7 | | $ | 259.3 | | $ | 709.9 | | $ | 692.0 | |
NET EARNED AND WRITTEN PREMIUMS
(Dollars in millions)
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Premiums written, net of reinsurance | | $ | 148.8 | | $ | 182.9 | | $ | 431.9 | | $ | 463.0 | |
Premiums earned, net of reinsurance | | 100.6 | | 95.5 | | 294.5 | | 263.7 | |
Net premiums earned excluding effect of refundings and prepayments | | 90.6 | | 84.8 | | 262.2 | | 241.1 | |
| | | | | | | | | | | | | |
Third-quarter gross premiums written of $198.2 million and net premiums written of $148.8 million represent decreases of 24.4% and 18.6%, respectively. The declines reflect reductions in upfront premiums originated in the international and U.S. municipal sectors. Third-quarter net premiums written include $10.6 million of previously ceded business, which FSA had the right to reassume because the reinsurer had been downgraded. For the first nine months, gross premiums written of $623.8 million and net premiums written of $431.9 million represent decreases of 9.1% and 6.7%, respectively.
For the third quarter, net premiums earned totaled $100.6 million, a 5.4% increase. This includes $10.0 million of net premiums earned from refundings and prepayments, which were $10.7 million in the third quarter of 2003. Excluding premiums from refundings and prepayments, third-quarter net premiums earned increased 6.9%.
For the first nine months, net premiums earned totaled $294.5 million, an 11.7% increase. This includes $32.3 million of net premiums earned from refundings and prepayments, compared with $22.6 million in the same period last year. Excluding premiums from refundings and prepayments, nine-month net premiums earned increased 8.8%.
NET INTEREST MARGIN. Third-quarter net interest margin for the financial products segment was $7.6 million in 2004, compared with a $0.5 million loss a year ago. Nine-month net interest margin increased to $16.5 million in 2004 from $2.9 million in nine months of 2003. The increases in net interest margin are primarily due to a larger book of GIC business and adverse SFAS No. 133 adjustments in 2003. Prior-year balances have been reclassified to conform to the 2004 presentation.
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INVESTMENT PORTFOLIO. Third-quarter net investment income was $43.7 million, an increase of 11.4%. The increase primarily reflects higher invested balances. Third-quarter net realized gains were $1.2 million, compared with $0.2 million a year ago. The Company’s effective tax rate on investment income (excluding the effects of realized gains and losses and variable interest entities) for the third quarter was 9.4%, versus 9.7% for last year’s third quarter.
Nine-month net investment income was $126.3 million, compared with $113.5 million a year ago. Nine-month net realized losses were $1.3 million in 2004, compared with net realized gains of $4.0 million in nine months of 2003.
EXPENSES AND RESERVES. For the third quarter, policy acquisition and other operating expenses increased to $31.4 million, $3.2 million higher than in last year’s third quarter. The Company also recorded a net recovery of losses and loss adjustment expenses totaling $4.3 million ($2.4 million after taxes). FSA exercised its rights to have the collateral of a defaulted collateralized bond obligation liquidated at a public sale, in which the Company offered the highest bid and acquired the collateral in order to gain control of the portfolio in order to mitigate potential losses. The previously established case reserve was drawn down to reflect the excess of the purchase amount over the fair value of the collateral. The $9.5 million balance of the case reserve was returned to the general reserve. After reevaluating its requirements for the collateralized debt obligation (CDO) portion of the general reserve, the Company then reduced the general reserve by $9.5 million, which was partially offset by normal additions to reserves. Adjustments to reserves represent management’s estimate of the amount required to cover the present value of the net cost of claims, based on statistical provisions for new originations and a separate review of the insured CDO portfolio.
During the third quarter, a net amount of $1.4 million was transferred from case reserves to the general reserve, primarily reflecting the transfer described above, partially offset by a transfer to case reserves for a municipal utility transaction. The CDO portfolio continues to perform within the expectations reflected in previously recorded provisions for CDOs. Transfers between general and case reserves represent a reallocation of existing loss reserves and have no impact on earnings. At September 30, 2004, case and general reserves in aggregate totaled $133.2 million, compared with $174.2 million at December 31, 2003. As previously disclosed, the primary reason for the net reduction in reserves was that FSA exercised its right to have a large CDO transaction redeemed in full during the second quarter of 2004.
NON-GAAP TERMS
Management and investors consider the measures identified in this release as non-GAAP measures to be important in analyzing the financial results of the Company. However, none of these measures are promulgated in accordance with accounting principles generally accepted in the United States of America and should not be considered as substitutes for such GAAP measures as shareholders’ equity, net income, revenues, expenses and gross premiums written.
Non-GAAP measures used in this release are ABV, operating earnings and PV originations (including its components PV premiums and PVNIM). Operating earnings and PV originations are reconciled above to net income and gross premiums written, respectively, and ABV is reconciled to book value in the table below. ABV consists of book value plus the estimated present value of future income from business the Company has already originated, less fair-value adjustments for insured CDS. The estimated present value of future income is substantial because premiums are earned over the life of each insured transaction. The Company uses ABV and operating earnings to calculate a portion of compensation paid to its employees.
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RECONCILIATION OF SHAREHOLDERS’ EQUITY TO
NON-GAAP ADJUSTED BOOK VALUE
(Dollars in millions)
| | September 30,
2004 | | December 31,
2003 | |
Shareholders’ Equity (Book Value) [1] | | $ | 2,431.9 | | $ | 2,168.4 | |
After-tax value of: | | | | | |
Net deferred premium revenue less deferred acquisition cost and goodwill | | 641.3 | | 572.8 | |
Present value of future net installment premiums and present value of future net interest margin [2] | | 485.2 | | 424.1 | |
Less fair-value adjustments for insured CDS | | (19.3 | ) | 6.5 | |
Adjusted Book Value [3] | | $ | 3,539.1 | | $ | 3,171.8 | |
[1] Includes the effect of after-tax unrealized gains in the investment portfolio, which was $157.7 million at September 30, 2004 and $147.4 million at December 31, 2003.
[2] The discount rate varies according to the year of origination. For each year’s originations, the Company calculates the discount rate as the average pre-tax yield on its investment portfolio for the previous three years. The rate was 5.62% in 2004 and 5.91% in 2003.
[3] The Company began to exclude fair-value adjustments for insured CDS from ABV in the third quarter of 2004. ABV for December 31, 2003 is restated accordingly.
This release also contains certain other non-GAAP measures that are based on statutory accounting principles applicable to insurance companies. Management uses such measures because the measures are required by regulators and used by rating agencies to assess the capital adequacy of the Company. The following table presents statutory information for FSA.
CLAIMS-PAYING RESOURCES (STATUTORY BASIS)
FINANCIAL SECURITY ASSURANCE INC. AND SUBSIDIARIES
(Dollars in thousands)
| | September 30,
2004 | | December 31,
2003 | |
Contingency Reserve | | $ | 1,185,565 | | $ | 936,761 | |
Capital and Surplus | | 1,070,368 | | 1,167,496 | |
Qualified Statutory Capital | | 2,255,933 | | 2,104,257 | |
Net Unearned Premium Reserve | | 1,561,771 | | 1,356,385 | |
Loss and Loss Adjustment Expenses | | 40,676 | | 64,936 | |
Policyholder Capital and Reserves | | 3,858,380 | | 3,525,578 | |
Net Present Value of Installment Premiums | | 705,866 | | 607,092 | |
Third-Party Capital Support | | 525,000 | | 525,000 | |
Total Claims-Paying Resources | | $ | 5,089,246 | | $ | 4,657,670 | |
| | | | | |
Net Insurance in Force (principal & interest) | | $ | 459,422,216 | | $ | 409,476,253 | |
Capital Ratio [1] | | 204:1 | | 195:1 | |
Claims-Paying Ratio [2] | | 90:1 | | 88:1 | |
[1] Capital ratio is net insurance in force divided by qualified statutory capital.
[2] Claims-paying ratio is net insurance in force divided by claims-paying resources.
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ADDITIONAL INFORMATION
The Company will post its current Operating Supplement to its website, www.fsa.com, today. The Operating Supplement contains additional information about results for the period covered in this release. On the Investor Presentations page of its website, the Company will also post updated information about its insured securitization program with AmeriCredit Corp.
FORWARD-LOOKING STATEMENTS
The Company relies on the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. This safe harbor requires that the Company specify important factors that could cause actual results to differ materially from those contained in forward-looking statements made by or on behalf of the Company. Accordingly, forward-looking statements by the Company and its affiliates are qualified by reference to the following cautionary statements.
In its filings with the SEC, reports to shareholders, press releases and other written and oral communications, the Company from time to time makes forward-looking statements. Such forward-looking statements include, but are not limited to, (i) projections of revenues, income (or loss), earnings (or loss) per share, dividends, market share or other financial forecasts; (ii) statements of plans, objectives or goals of the Company or its management, including those related to growth in adjusted book value per share or return on equity; and (iii) expected losses on, and adequacy of loss reserves for, insured transactions. Words such as “believes,” “anticipates,” “expects,” “intends” and “plans” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
The Company cautions that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in forward-looking statements made by the Company. These factors include: (i) changes in capital requirements or other criteria of securities rating agencies applicable to financial guaranty insurers in general or to FSA specifically; (ii) competitive forces, including the conduct of other financial guaranty insurers in general; (iii) changes in domestic or foreign laws or regulations applicable to the Company, its competitors or its clients; (iv) changes in accounting principles or practices that may result in a decline in securitization transactions; (v) an economic downturn or other economic conditions (such as a rising interest-rate environment) adversely affecting transactions insured by FSA or its investment portfolio; (vi) inadequacy of reserves established by the Company for losses and loss adjustment expenses; (vii) temporary or permanent disruptions in cash flow on FSA-insured structured transactions attributable to legal challenges to such structures; (viii) downgrade or default of one or more of FSA’s reinsurers; (ix) the amount and nature of business opportunities that may be presented to the Company; (x) market conditions, including the credit quality and market pricing of securities issued; (xi) capacity limitations that may impair investor appetite for FSA-insured obligations; (xii) market spreads and pricing on insured credit default swap exposures, which may result in gain or loss due to mark-to-market accounting requirements; (xiii) prepayment speeds on FSA-insured asset-backed securities and other factors that may influence the amount of installment premiums paid to FSA; (xiv) changes in the value or performance of strategic investments made by the Company; and (xv) other factors, most of which are beyond the Company’s control. The Company cautions that the foregoing list of important factors is not exhaustive. In any event, such forward-looking statements made by the Company speak only as of the date on which they are made, and the Company does not undertake any obligation to update or revise such statements as a result of new information, future events or otherwise.
THE COMPANY
Financial Security Assurance Holdings Ltd. (FSA Holdings) is a New York-headquartered holding company whose subsidiaries provide financial guarantees in both the public and private sectors around the world. Its principal operating subsidiary, Financial Security Assurance Inc. (FSA), is a leading guarantor of municipal bonds, infrastructure financings and asset-backed securities. FSA has earned Triple-A ratings, the highest ratings available, from Fitch Ratings, Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services and Rating and Investment Information, Inc. FSA Holdings is a member of the Dexia group. For additional information, visit www.fsa.com.
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FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income
(in thousands)
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Revenues: | | | | | | | | | |
Net premiums written | | $ | 148,831 | | $ | 182,946 | | $ | 431,906 | | $ | 463,015 | |
| | | | | | | | | |
Net premiums earned | | 100,585 | | 95,460 | | 294,514 | | 263,708 | |
Net investment income | | 43,684 | | 39,218 | | 126,315 | | 113,527 | |
Net realized gains (losses) | | 1,158 | | 151 | | (1,262 | ) | 4,044 | |
Net interest income from financial products segment and variable interest entities | | 44,126 | | 17,041 | | 102,120 | | 36,947 | |
Financial products net realized gains (losses) | | 2,099 | | | | 2,217 | | (1,096 | ) |
Net realized and unrealized gains on derivative instruments | | 17,853 | | 8,259 | | 40,382 | | 10,399 | |
Other income | | 2,488 | | 290 | | 6,081 | | 1,917 | |
TOTAL REVENUES | | 211,993 | | 160,419 | | 570,367 | | 429,446 | |
Expenses: | | | | | | | | | |
Losses and loss adjustment (benefit) expenses | | (4,263 | ) | 14,638 | | 11,103 | | 27,533 | |
Interest expense | | 6,748 | | 11,750 | | 20,245 | | 25,921 | |
Policy acquisition costs | | 15,989 | | 16,349 | | 44,608 | | 43,285 | |
Net interest expense from financial products segment and variable interest entities | | 35,446 | | 15,060 | | 88,309 | | 29,289 | |
Other operating expenses | | 15,411 | | 11,872 | | 51,034 | | 44,811 | |
TOTAL EXPENSES | | 69,331 | | 69,669 | | 215,299 | | 170,839 | |
Minority interest | | 2,871 | | (3,025 | ) | (7,017 | ) | (7,745 | ) |
Equity in earnings of unconsolidated affiliates | | (19,133 | ) | (5,874 | ) | (3,415 | ) | 3,512 | |
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE | | 126,400 | | 81,851 | | 344,636 | | 254,374 | |
Provision for income taxes | | (34,565 | ) | (20,570 | ) | (85,550 | ) | (59,179 | ) |
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE | | 91,835 | | 61,281 | | 259,086 | | 195,195 | |
Cumulative effect of accounting change, net of income taxes of $2,598 | | | | 4,800 | | | | 4,800 | |
NET INCOME | | 91,835 | | 66,081 | | 259,086 | | 199,995 | |
Other comprehensive income (loss), net of tax: | | | | | | | | | |
Unrealized gains (losses) on securities: | | | | | | | | | |
Holding gains (losses) arising during period | | 67,209 | | (27,218 | ) | 11,377 | | 14,180 | |
Less: reclassification adjustment for gains included in net income | | 2,537 | | 229 | | 1,108 | | 2,707 | |
Other comprehensive income (loss) | | 64,672 | | (27,447 | ) | 10,269 | | 11,473 | |
COMPREHENSIVE INCOME | | $ | 156,507 | | $ | 38,634 | | $ | 269,355 | | $ | 211,468 | |
10
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. AND SUBSIDIARIES
(in thousands, except share data)
| | September 30,
2004 | | December 31,
2003 | |
ASSETS | | | | | |
Bonds at fair value (amortized cost of $3,796,212 and $3,275,310) | | $ | 4,036,905 | | $ | 3,508,649 | |
Equity securities at fair value (cost of $13,919) | | 13,051 | | | |
Short-term investments | | 228,472 | | 224,429 | |
Variable interest entities’ bonds at fair value (amortized cost of $1,353,682 and $1,423,657) | | 1,353,960 | | 1,422,538 | |
Variable interest entities’ short-term investment portfolio | | 22,126 | | 11,102 | |
Financial products bond portfolio at fair value (amortized cost of $6,105,082 and $4,033,979) | | 6,103,857 | | 4,031,263 | |
Financial products bond portfolio pledged as collateral at fair value (amortized cost of $18,476 and $70,358) | | 18,331 | | 66,423 | |
Financial products short-term investment portfolio | | 1,005,696 | | 228,812 | |
Total investment portfolio | | 12,782,398 | | 9,493,216 | |
Cash | | 20,463 | | 19,460 | |
Securitized loans | | 388,806 | | 440,611 | |
Deferred acquisition costs | | 300,359 | | 273,646 | |
Prepaid reinsurance premiums | | 735,595 | | 695,398 | |
Investment in unconsolidated affiliates | | 105,969 | | 110,863 | |
Reinsurance recoverable on unpaid losses | | 46,845 | | 59,235 | |
Other assets | | 1,244,211 | | 1,282,241 | |
| | | | | |
TOTAL ASSETS | | $ | 15,624,646 | | $ | 12,374,670 | |
| | | | | |
LIABILITIES AND MINORITY INTEREST AND SHAREHOLDERS’ EQUITY | | | | | |
Deferred premium revenue | | $ | 2,022,581 | | $ | 1,861,960 | |
Losses and loss adjustment expenses | | 180,030 | | 233,408 | |
Guaranteed investment contracts and variable interest entities’ debt | | 9,327,191 | | 6,809,771 | |
Deferred federal income taxes | | 204,087 | | 152,646 | |
Notes payable | | 430,000 | | 430,000 | |
Accrued expenses and other liabilities | | 1,028,853 | | 718,449 | |
| | | | | |
TOTAL LIABILITIES AND MINORITY INTEREST | | 13,192,742 | | 10,206,234 | |
| | | | | |
Common stock (200,000,000 shares authorized; 33,517,995 issued; par value of $.01 per share) | | $ | 335 | | $ | 335 | |
Additional paid-in capital | | 899,311 | | 900,224 | |
Accumulated other comprehensive income (net of deferred income taxes of $80,817 and $76,041) | | 157,702 | | 147,433 | |
Accumulated earnings | | 1,374,556 | | 1,120,444 | |
Deferred equity compensation | | 23,528 | | 23,445 | |
Less treasury stock at cost (297,276 and 297,658 shares held) | | (23,528 | ) | (23,445 | ) |
| | | | | |
TOTAL SHAREHOLDERS’ EQUITY | | 2,431,904 | | 2,168,436 | |
| | | | | |
TOTAL LIABILITIES AND MINORITY INTEREST AND SHAREHOLDERS’ EQUITY | | $ | 15,624,646 | | $ | 12,374,670 | |
11
Operating Expense Analysis
(dollars in thousands)
2004 | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | | | Year-to-Date | |
| | | | | | | | | | | |
Amortization of previously deferred underwriting expenses and reinsurance commissions | | $ | 14,798 | | $ | 13,821 | | $ | 15,989 | | | | $ | 44,608 | |
| | | | | | | | | | | | | | | |
Gross underwriting and operating expenses | | 52,798 | | 54,299 | | 67,972 | | | | 175,069 | |
Underwriting expenses deferred | | (38,098 | ) | (36,786 | ) | (47,382 | ) | | | (122,266 | ) |
Financial products other operating expenses | | 1,774 | | 1,637 | | 2,389 | | | | 5,800 | |
Reinsurance commissions received, net | | (19,245 | ) | (18,309 | ) | (13,391 | ) | | | (50,945 | ) |
Reinsurance commissions deferred, net | | 19,245 | | 18,309 | | 13,391 | | | | 50,945 | |
Other operating expenses | | 16,474 | | 19,150 | | 22,979 | | | | 58,603 | |
| | | | | | | | | | | |
Total expenses | | $ | 31,272 | | $ | 32,971 | | $ | 38,968 | | | | $ | 103,211 | |
2003 | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | | Year | |
| | | | | | | | | | | |
Amortization of previously deferred underwriting expenses and reinsurance commissions | | $ | 13,399 | | $ | 13,537 | | $ | 16,349 | | $ | 15,107 | | $ | 58,392 | |
| | | | | | | | | | | |
Gross underwriting and operating expenses | | 45,014 | | 53,908 | | 45,419 | | 64,784 | | 209,125 | |
Underwriting expenses deferred | | (31,849 | ) | (39,561 | ) | (34,816 | ) | (45,978 | ) | (152,204 | ) |
Financial products other operating expenses | | 2,435 | | 2,992 | | 1,269 | | 3,323 | | 10,019 | |
Reinsurance commissions received, net | | (9,083 | ) | (27,920 | ) | (20,996 | ) | (15,945 | ) | (73,944 | ) |
Reinsurance commissions deferred, net | | 9,083 | | 27,920 | | 20,996 | | 15,945 | | 73,944 | |
Other operating expenses | | 15,600 | | 17,339 | | 11,872 | | 22,129 | | 66,940 | |
| | | | | | | | | | | |
Total expenses | | $ | 28,999 | | $ | 30,876 | | $ | 28,221 | | $ | 37,236 | | $ | 125,332 | |
12
Effect of Insured Bond Refundings
(dollars in thousands)
2004 | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | | | Year-to-Date | |
Earned Premium Recognized | | $ | 7,745 | | $ | 14,539 | | $ | 9,998 | | | | $ | 32,282 | |
Less: | | | | | | | | | | | |
Deferred Acquisition Costs Recognized | | 1,458 | | 1,521 | | 1,988 | | | | 4,967 | |
Net Effect Before Taxes | | 6,287 | | 13,018 | | 8,010 | | | | 27,315 | |
Tax Provision | | 2,200 | | 4,556 | | 2,804 | | | | 9,560 | |
Net Income Effect | | 4,087 | | 8,462 | | 5,206 | | | | 17,755 | |
| | | | | | | | | | | | | | | |
2003 | | 1st Qtr. | | 2nd Qtr. | | 3rd Qtr. | | 4th Qtr. | | Year | |
Earned Premium Recognized | | $ | 4,397 | | $ | 7,493 | | $ | 10,729 | | $ | 8,905 | | $ | 31,524 | |
Less: | | | | | | | | | | | |
Deferred Acquisition Costs Recognized | | 1,220 | | 1,376 | | 2,789 | | 2,099 | | 7,484 | |
Net Effect Before Taxes | | 3,177 | | 6,117 | | 7,940 | | 6,806 | | 24,040 | |
Tax Provision | | 1,112 | | 2,141 | | 2,779 | | 2,382 | | 8,414 | |
Net Income Effect | | 2,065 | | 3,976 | | 5,161 | | 4,424 | | 15,626 | |
| | | | | | | | | | | | | | | | |
13
Annual Financial and Statistical Data
(dollars in thousands, except per share data)
| | Years Ended December 31, | |
| | 2003 | | 2002 | | 2001 | | 2000 | | 1999 | |
Income Statement | | | | | | | | | | | |
Gross premiums written | | $ | 895,826 | | $ | 803,701 | | $ | 485,570 | | $ | 372,325 | | $ | 362,671 | |
Net premiums written | | 614,284 | | 532,747 | | 319,638 | | 218,138 | | 230,435 | |
Net premiums earned | | 356,373 | | 314,880 | | 230,999 | | 192,149 | | 174,959 | |
Net investment income | | 154,048 | | 139,120 | | 128,921 | | 121,144 | | 94,723 | |
Losses and loss adjustment expenses | | 34,486 | | 65,613 | | 12,497 | | 9,403 | | 8,829 | |
Income before income taxes and cumulative effect of accounting change | | 376,373 | | 216,179 | | 269,477 | | 67,401 | (2) | 163,978 | |
Net income | | 290,586 | | 181,075 | | 209,496 | | 63,283 | (2) | 125,405 | |
Selected Financial Statistics | | | | | | | | | | | |
GAAP Basis(1) | | | | | | | | | | | |
Loss ratio (%) | | 9.5 | % | 20.6 | % | 5.4 | % | 4.9 | % | 5.0 | % |
Expense ratio (%) | | 31.8 | | 31.6 | | 34.6 | | 54.5 | | 38.3 | |
Combined ratio (%) | | 41.3 | | 52.2 | | 40.0 | | 59.4 | | 43.3 | |
SAP Basis(1) | | | | | | | | | | | |
Loss ratio (%) | | 3.7 | | 15.1 | | 4.0 | | (0.5 | ) | 3.0 | |
Expense ratio (%) | | 21.3 | | 20.9 | | 37.1 | | 59.1 | | 18.9 | |
Combined ratio (%) | | 25.0 | | 36.0 | | 41.1 | | 58.6 | | 21.9 | |
Balance Sheet | | | | | | | | | | | |
Total investments | | $ | 9,581,239 | | $ | 5,037,395 | | $ | 3,214,097 | | $ | 2,234,851 | | $ | 2,140,022 | |
Prepaid reinsurance premiums | | 695,398 | | 557,659 | | 420,798 | | 354,117 | | 285,105 | |
Total assets | | 12,304,515 | | 7,027,483 | | 4,308,854 | | 3,148,694 | | 2,905,644 | |
Deferred premium revenue | | 1,861,960 | | 1,450,211 | | 1,090,332 | | 936,826 | | 844,146 | |
Notes payable | | 430,000 | | 430,000 | | 330,000 | | 230,000 | | 230,000 | |
Total liabilities and minority interest | | 10,136,079 | | 5,159,113 | | 2,672,896 | | 1,682,961 | | 1,652,960 | |
Shareholders’ equity | | 2,168,436 | | 1,868,370 | | 1,635,958 | | 1,465,733 | | 1,251,984 | |
Selected Financial Statistics(3) | | | | | | | | | | | |
Gross insurance in force | | $ | 565,371,437 | | $ | 512,232,953 | | $ | 422,296,318 | | $ | 321,753,871 | | $ | 271,964,391 | |
Net insurance in force | | 409,476,253 | | 365,256,111 | | 300,637,067 | | 225,426,403 | | 195,571,240 | |
Qualified statutory capital | | 2,104,257 | | 1,876,117 | | 1,593,570 | | 1,436,681 | | 1,320,082 | |
Capital ratio | | 195:1 | | 195:1 | | 189:1 | | 157:1 | | 148:1 | |
(1) These ratios and statistics relate solely to FSA. The GAAP loss ratio is losses and loss adjustment expenses incurred (inclusive of additions to the General Reserve) divided by net premiums earned. The SAP loss ratio is losses and loss adjustment expenses incurred (exclusive of additions to the General Reserve) divided by net premiums earned. The GAAP expense ratio is underwriting and operating expenses divided by net premiums earned. The SAP expense ratio is underwriting and operating expenses divided by net premiums written. The combined ratio on both a GAAP and SAP basis is the sum of the applicable loss and expense ratios.
(2) Includes $105,541 of merger related costs.
(3) Amounts are statutory data for FSA as a separate company and therefore include amounts relating to FSA-insured GICs issued by the GIC Subsidiaries, FSA Global investments insured by FSA and Canadian Global debt insured by FSA.
14
Statutory Analytics & Investment Portfolio
September 30, 2004
(dollars in thousands)
Statutory Analytics | | 3rd Qtr.
2004 | | Year-to-date
2004 | | Full Year
2003 | |
| | | | | | | |
Loss Ratio(1) | | (1.3 | )% | 6.1 | % | 3.7 | % |
Expense Ratio(1) | | 33.7 | | 27.2 | | 21.3 | |
Combined Ratio(1) | | 32.4 | | 33.3 | | 25.0 | |
| | | | 9/30/04 | | 12/31/03 | |
Contingency Reserve | | | | $ | 1,185,565 | | $ | 936,761 | |
Capital and Surplus | | | | 1,070,368 | | 1,167,496 | |
Qualified Statutory Capital | | | | 2,255,933 | | 2,104,257 | |
Unearned Premium Reserve | | | | 1,561,771 | | 1,356,385 | |
Loss and Loss Adjustment Expenses | | | | 40,676 | | 64,936 | |
Policyholder Capital and Reserves | | | | 3,858,380 | | 3,525,578 | |
Net Present Value of Installment Premiums | | | | 705,866 | | 607,092 | |
Third-Party Capital Support | | | | 525,000 | | 525,000 | |
Total Claims-Paying Resources | | | | $ | 5,089,246 | | $ | 4,657,670 | |
| | | | | | | | | |
Net Insurance in Force (principal & interest) | | | | $ | 459,422,216 | | $ | 409,476,253 | |
Capital Ratio(2) | | | | 204:1 | | 195:1 | |
Claims-Paying Ratio(3) | | | | 90:1 | | 88:1 | |
(1) Underwriting expense ratio is based on net premium earned for GAAP and net premiums written for statutory.
(2) Capital ratio is net insurance in force divided by qualified statutory capital.
(3) Claims-paying ratio is net insurance in force divided by claims-paying resources.
Investment Portfolio(1)
Type of Security | | Amortized
Cost | | Market
Value | | % of
Amortized
Cost | | Yield(2) | | Annualized
Income(3) | |
| | | | | | | | | | | |
Long-term bonds: | | | | | | | | | | | |
Tax-exempt | | $ | 2,801,442 | | $ | 3,017,973 | | 69.6 | % | 5.00 | % | $ | 140,063 | |
Taxable | | 994,770 | | 1,018,932 | | 24.7 | | 5.29 | | 52,590 | |
Short-term | | 228,472 | | 228,472 | | 5.7 | | 1.07 | | 1,610 | |
| | | | | | | | | | | |
Total(4) | | $ | 4,024,684 | | $ | 4,265,377 | | 100.0 | % | 4.92 | % | $ | 194,263 | |
Maturity | | Amortized
Cost | | % of
Amortized
Cost | | | | Quality Distribution
of Long-Term Fixed
Income Investments | |
| | | | | | | | | |
Within 1 Year | | $ | 283,977 | | 7.1 | % | | | AAA | | 73.0 | % |
1 to 5 Years | | 609,362 | | 15.1 | | | | AA | | 19.2 | |
5 to 10 Years | | 655,055 | | 16.3 | | | | A | | 2.6 | |
10 or more Years | | 2,157,379 | | 53.6 | | | | NIG (5) | | 4.8 | |
Mortgage-backed Securities | | 256,909 | | 1.5 | | | | NR (5) | | 0.5 | |
Asset-backed Securities | | 62,002 | | 6.4 | | | | | | 100.0 | % |
| | | | | | | | | | | |
Total | | $ | 4,024,684 | | 100.0 | % | | | | | | |
(1) Excludes portfolio related to the financial products and variable interest entities bond portfolios.
(2) Estimated yield on assets at end of reporting quarter; short-term investments includes taxable and tax-exempt securities but excludes cash equivalents of $78.3 million.
(3) Before taxes if applicable; based on indicated yields.
(4) Excludes stocks of $13.1 million.
(5) Includes investments purchased in a refinancing of an FSA-insured transaction.
15
Municipal New-Issue Market Data(1)
(dollars in billions)
| | Par Value | | Percent
Insured | | FSA Market Share(2) | |
| | Issued | | Insured | | | Amount | | Percent | |
| | | | | | | | | | | |
3rd Qtr. 2004 | | $ | 77.2 | | $ | 46.0 | | 59.6 | % | $ | 10.9 | | 23.7 | % |
2nd | | 104.2 | | 61.3 | | 59.4 | | 12.9 | | 21.0 | |
1st | | 86.0 | | 39.9 | | 46.7 | | 11.6 | | 29.1 | |
| | | | | | | | | | | |
4th Qtr. 2003 | | 92.3 | | 38.0 | | 41.2 | | 10.1 | | 26.6 | |
3rd | | 85.4 | | 45.8 | | 53.6 | | 13.3 | | 29.0 | |
2nd | | 120.2 | | 59.9 | | 49.8 | | 15.7 | | 26.2 | |
1st | | 85.6 | | 46.7 | | 54.6 | | 13.1 | | 28.1 | |
| | | | | | | | | | | |
2003 | | 383.5 | | 190.4 | | 49.6 | | 52.2 | | 27.4 | |
2002 | | 358.8 | | 178.9 | | 49.9 | | 47.5 | | 26.6 | |
2001 | | 288.2 | | 134.3 | | 46.6 | | 36.3 | | 27.0 | |
2000 | | 200.7 | | 79.3 | | 39.5 | | 19.5 | | 24.6 | |
1999 | | 227.6 | | 105.6 | | 46.4 | | 24.2 | | 22.9 | |
1998 | | 286.7 | | 145.5 | | 50.8 | | 32.0 | | 22.0 | |
1997 | | 220.7 | | 107.5 | | 48.7 | | 16.2 | | 15.1 | |
1996 | | 185.2 | | 85.7 | | 46.3 | | 11.2 | | 13.1 | |
1995 | | 160.4 | | 68.6 | | 42.8 | | 3.3 | | 4.8 | |
1994 | | 165.1 | | 61.5 | | 37.3 | | 2.7 | | 4.4 | |
1993 | | 292.2 | | 107.9 | | 36.9 | | 7.5 | | 7.0 | |
1992 | | 234.7 | | 80.8 | | 34.4 | | 4.8 | | 5.9 | |
1991 | | 172.4 | | 51.9 | | 30.1 | | 2.8 | | 5.4 | |
| | | | | | | | | | | | | | |
(1) FSA estimates based on industry sources, including The Bond Buyer and Securities Data Company. Data is subject to revision as additional information becomes available.
(2) Share of insured bond market. FSA volume for 1993 through 2004 is based on sales dates, not closing dates, and will not reconcile with other data in this Supplement. Excludes secondary-market and non-U.S. transactions.
16
Gross Par Value and Present Value Originated by FSA(1)
(dollars in millions)
| | 3rd Quarter | | Year-to-Date | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Municipal (U.S. and International) | | | | | | | | | |
Gross Par Insured | | $ | 13,331 | | $ | 18,083 | | $ | 38,561 | | $ | 46,155 | |
Gross Premiums Written | | | | | | | | | |
Up-Front | | 105.5 | | 178.0 | | 359.9 | | 418.9 | |
Installments(2) | | 6.4 | | 8.1 | | 22.4 | | 35.9 | |
Total Gross Premiums | | 111.9 | | 186.1 | | 382.3 | | 454.8 | |
| | | | | | | | | |
Gross Present Value of Premiums Written(3) | | 109.7 | | 180.6 | | 419.6 | | 473.5 | |
| | | | | | | | | |
Asset-Backed (U.S. and International) | | | | | | | | | |
Gross Par Insured | | 31,243 | | 9,411 | | 48,146 | | 17,998 | |
Gross Premiums Written | | | | | | | | | |
Up-Front | | 9.7 | | 3.5 | | 10.4 | | 16.9 | |
Installments(2) | | 89.5 | | 73.6 | | 253.2 | | 215.9 | |
Total Gross Premiums | | 99.2 | | 77.1 | | 263.6 | | 232.8 | |
| | | | | | | | | |
Gross Present Value of Premiums Written(3) | | 123.1 | | 65.6 | | 237.7 | | 187.1 | |
| | | | | | | | | |
Financial Products | | | | | | | | | |
Gross Par Value Insured(4) | | 1,689 | | 1,185 | | 3,960 | | 2,144 | |
| | | | | | | | | |
Gross Present Value of Net Interest Margin(5) | | 19.9 | | 13.1 | | 52.6 | | 31.4 | |
| | | | | | | | | |
Total Originations Written | | | | | | | | | |
Gross Par Insured | | 46,263 | | 28,679 | | 90,667 | | 66,297 | |
Gross Originations Written | | | | | | | | | |
Up-Front | | 115.2 | | 181.5 | | 370.3 | | 435.8 | |
Installments | | 95.9 | | 83.6 | | 275.6 | | 256.6 | |
Total Gross Originations | | 211.1 | | 265.1 | | 645.9 | | 692.4 | |
| | | | | | | | | |
Gross Present Value Originations | | 252.7 | | 259.3 | | 709.9 | | 692.0 | |
| | | | | | | | | | | | | |
(1) Amounts are statutory data for FSA as a separate company and therefore include amounts relating to FSA-insured GICs issued by the GIC Subsidiaries, FSA Global investments insured by FSA and Canadian Global debt insured by FSA.
(2) Installments are the periodic premium payments received by FSA for business written in current and prior years.
(3) The Company evaluates its insurance business production for a given period by its gross present value (PV) of premiums written. Gross PV premiums written for a particular period includes both (i) the amount of premiums received in such period under all insurance policies in which premiums are payable up front and (ii) the amount of all future premiums estimated to be payable under the Company’s installment-based policies issued during such period, discounted to present value. The discount rate for business written in 2004 is 5.62% per annum and in 2003 is 5.91% per annum, equal to the average pre-tax yield on the Company’s investment portfolio for the previous three calendar years. Management uses its best estimate of the life of each insurance policy for which premiums are payable in installments when calculating gross PV premiums written. However, the actual period over which installment-based premiums are paid and the total amount paid will vary from management’s estimate if the insured obligation remains outstanding for a period that is different from that estimated by management. If the life of an insured obligation is shorter than that estimated, the related gross PV premiums outstanding will be reduced. Conversely, if the life of an insured obligation is longer than that estimated, the related gross PV premiums outstanding will be increased.
(4) Relates only to FSA-insured GICs issued by the Company’s GIC subsidiaries (FSA Capital Markets Services LLC and FSA Capital Management Services LLC), which are consolidated in the Company’s financial statements. For these transactions, the outstanding par amounts are reflected as insurance exposure in FSA’s financial statements but as GIC liabilities in those of the Company. As a result, the total outstanding exposures reported by FSA and the Company differ.
(5) The present value of the net interest margin represents the present value of the difference between the estimated interest to be received on the GIC investments and the estimated interest to be paid on the GIC liabilities over the estimated life of each transaction, giving effect to swaps and other derivatives which convert fixed rate assets and liabilities to floating rates. The discount rate is the same as used for premiums (see footnote 3).
17
FSA Insured Portfolio Profile
Par Value
(dollars in millions)
| | Insured in 2004 | | Outstanding as of
September 30, 2004 | |
| | Gross
Amount | | | | Net
Amount | | | | Net
Amount | | | |
| | | % | | | % | | | % | |
Municipal Obligations | | | | | | | | | | | | | |
Domestic | | | | | | | | | | | | | |
General obligation bonds | | $ | 16,657 | | 43.2 | % | $ | 12,383 | | 45.7 | % | $ | 73,324 | | 38.8 | % |
Tax-supported bonds | | 6,399 | | 16.6 | | 4,451 | | 16.4 | | 36,249 | | 19.2 | |
Municipal utility revenue bonds | | 4,351 | | 11.3 | | 3,150 | | 11.6 | | 32,347 | | 17.1 | |
Health care revenue bonds | | 3,475 | | 9.0 | | 1,999 | | 7.4 | | 8,878 | | 4.7 | |
Housing revenue bonds | | 1,398 | | 3.6 | | 1,054 | | 3.9 | | 7,397 | | 3.9 | |
Transportation revenue bonds | | 2,398 | | 6.2 | | 1,606 | | 5.9 | | 12,350 | | 6.5 | |
Other municipal bonds | | 1,943 | | 5.1 | | 1,527 | | 5.7 | | 11,148 | | 5.9 | |
Subtotal | | 36,621 | | 95.0 | | 26,170 | | 96.6 | | 181,693 | | 96.1 | |
International | | 1,940 | | 5.0 | | 927 | | 3.4 | | 7,440 | | 3.9 | |
Total municipal obligations | | $ | 38,561 | | 100.0 | % | $ | 27,097 | | 100.0 | % | $ | 189,133 | | 100.0 | % |
| | | | | | | | | | | | | |
Geographic Distribution | | | | | | | | | | | | | |
California | | $ | 4,643 | | 12.0 | % | $ | 3,808 | | 14.0 | % | $ | 26,291 | | 13.9 | % |
New York | | 2,945 | | 7.6 | | 2,051 | | 7.6 | | 17,020 | | 9.0 | |
Texas | | 2,154 | | 5.6 | | 1,694 | | 6.2 | | 13,062 | | 6.9 | |
Pennsylvania | | 2,385 | | 6.2 | | 1,876 | | 6.9 | | 11,890 | | 6.3 | |
Florida | | 1,801 | | 4.7 | | 1,283 | | 4.7 | | 10,932 | | 5.8 | |
Illinois | | 2,106 | | 5.5 | | 1,598 | | 5.9 | | 9,160 | | 4.8 | |
New Jersey | | 910 | | 2.4 | | 532 | | 2.0 | | 8,911 | | 4.7 | |
Washington | | 1,623 | | 4.2 | | 977 | | 3.6 | | 7,015 | | 3.7 | |
Michigan | | 1,139 | | 2.9 | | 777 | | 2.9 | | 5,684 | | 3.0 | |
Massachusetts | | 689 | | 1.8 | | 478 | | 1.8 | | 5,031 | | 2.7 | |
Wisconsin | | 1,028 | | 2.7 | | 891 | | 3.3 | | 4,664 | | 2.5 | |
Ohio | | 962 | | 2.5 | | 622 | | 2.3 | | 4,344 | | 2.3 | |
Georgia | | 1,701 | | 4.4 | | 1,128 | | 4.2 | | 3,807 | | 2.0 | |
All Other U.S. Jurisdictions | | 12,535 | | 32.5 | | 8,455 | | 31.2 | | 53,882 | | 28.5 | |
International | | 1,940 | | 5.0 | | 927 | | 3.4 | | 7,440 | | 3.9 | |
Total municipal obligations | | $ | 38,561 | | 100.0 | % | $ | 27,097 | | 100.0 | % | $ | 189,133 | | 100.0 | % |
| | | | | | | | | | | | | |
Asset-Backed Obligations | | | | | | | | | | | | | |
Domestic | | | | | | | | | | | | | |
Residential mortgages | | $ | 25,282 | | 48.5 | % | $ | 22,572 | | 48.0 | % | $ | 29,166 | | 19.9 | % |
Consumer receivables | | 1,693 | | 3.2 | | 1,248 | | 2.7 | | 9,668 | | 6.6 | |
Pooled corporate obligations | | 12,227 | | 23.5 | | 11,120 | | 23.6 | | 54,603 | | 37.3 | |
Investor-owned utility obligations | | — | | 0.0 | | — | | 0.0 | | 334 | | 0.2 | |
Other asset-backed obligations(1) | | 6,392 | | 12.3 | | 6,136 | | 13.0 | | 12,826 | | 8.8 | |
Subtotal | | 45,594 | | 87.5 | | 41,076 | | 87.3 | | 106,597 | | 72.8 | |
International | | 6,512 | | 12.5 | | 5,963 | | 12.7 | | 39,752 | | 27.2 | |
Total asset-backed obligations(1) | | $ | 52,106 | | 100.0 | % | $ | 47,039 | | 100.0 | % | $ | 146,349 | | 100.0 | % |
Total Portfolio | | $ | 90,667 | | | | $ | 74,136 | | | | $ | 335,482 | | | |
Distribution of Insured Portfolio by Rating as of September 30, 2004
| | | | Rating(2) | | | | Percent of Portfolio | |
| | | | AAA | | | | 29.5 | % |
| | | | AA | | | | 26.3 | |
| | | | A | | | | 33.2 | |
| | | | BBB | | | | 10.5 | |
| | | | Other | | | | 0.5 | |
| | | | | | | | 100.0 | % |
(1) Includes amounts related to FSA-insured GICs.
(2) Based upon internal FSA ratings.
18
50 Largest Municipal Exposures
as of September 30, 2004
(dollars in millions)
Obligor | | Net Par Outstanding | | % of Total
Net Par Outstanding | |
California Housing Finance Agency Single-Family Mortgage Revenue Bonds | | $ | 1,172 | | .35 | % |
Clark County School District, NV, G.O. | | 1,007 | | .30 | |
Atlanta, GA, Water and Sewer Revenue | | 1,002 | | .30 | |
Commonwealth of Massachusetts G.O. | | 992 | | .30 | |
Long Island Power Authority, NY | | 907 | | .27 | |
State of Washington G.O. | | 887 | | .26 | |
New York City, NY, G.O. | | 885 | | .26 | |
State of Hawaii G.O. | | 826 | | .25 | |
New York State Thruway Authority, Highway and Bridge Trust Fund | | 825 | | .25 | |
Port Authority of New York and New Jersey, Consolidated Bonds | | 799 | | .24 | |
State of Illinois G.O. | | 786 | | .23 | |
New Jersey Transportation Trust Fund Authority | | 786 | | .23 | |
Metropolitan Transit Authority, NY | | 779 | | .23 | |
State of California G.O. | | 764 | | .23 | |
New Jersey Turnpike Authority Revenue Bonds | | 741 | | .22 | |
New York Local Government Assistance Corp | | 717 | | .21 | |
State of Connecticut Special Tax | | 709 | | .21 | |
Seattle, WA, Light and Power | | 698 | | .21 | |
Philadelphia, PA, School District G.O. | | 698 | | .21 | |
New York City, NY, Municipal Water Finance Authority | | 671 | | .20 | |
Los Angeles USD, CA, G.O. | | 666 | | .20 | |
South Carolina Public Service Authority, Santee Cooper | | 659 | | .20 | |
Detroit, MI, Sewage Disposal System Revenue Bonds | | 651 | | .19 | |
Metropolitan Transit Authority, NY Dedicated Tax | | 646 | | .19 | |
Kentucky State Property and Buildings Commission Revenue Bonds | | 643 | | .19 | |
NYS Dormitory Authority - Mental Health Services | | 628 | | .19 | |
Chicago, Illinois G.O. | | 628 | | .19 | |
Florida Public Education (Gross Receipts) | | 610 | | .18 | |
Puerto Rico Electric Power Authority | | 603 | | .18 | |
Massachusetts Water Resources Authority, General Revenue | | 602 | | .18 | |
Houston, TX Airport System | | 600 | | .18 | |
Commonwealth of Pennsylvania G.O. | | 589 | | .18 | |
Los Angeles MTA, CA, Sales Tax Revenue Bonds | | 585 | | .17 | |
District of Columbia, G.O. | | 573 | | .17 | |
Energy Northwest Electric Revenue | | 545 | | .16 | |
Michigan State Building Authority | | 544 | | .16 | |
Metropolitan Washington Airport Authority | | 538 | | .16 | |
Hydro-Quebec - Province of Quebec Guaranteed | | 536 | | .16 | |
New Jersey Economic Development Authority State Pension Funding | | 533 | | .16 | |
NJHMFA Multi-Family Housing Revenue Bonds | | 530 | | .16 | |
Miami-Dade County, FL, Aviation Revenue Miami Int’l Airport | | 524 | | .16 | |
Kansas DFA State Appropriation Bonds | | 513 | | .15 | |
Commonwealth of Puerto Rico G.O. | | 501 | | .15 | |
State of California Department of Water Resources Power Supply | | 499 | | .15 | |
New York City, NY, Health and Hospital Corp | | 493 | | .15 | |
State of Connecticut G.O. | | 459 | | .14 | |
Philadelphia, PA, G.O. | | 456 | | .14 | |
Sacramento Municipal Utility District, CA, Electric Revenue | | 454 | | .14 | |
Maine Health and Higher Educational Facilities Authority | | 454 | | .14 | |
Total | | $ | 33,515 | | 9.99 | % |
19
25 Largest Asset-Backed Exposures
as of September 30, 2004
(dollars in millions)
Obligor | | Net Par
Outstanding | | % of Total
Net Par Outstanding | |
| | | | | |
International Super AAA Synthetic Residential MBS | | $ | 2,899 | | .86 | % |
International Super AAA Synthetic CDO | | 2,776 | | .83 | |
International Synthetic CDO | | 1,886 | | .56 | |
International Super AAA Synthetic CDO | | 1,852 | | .55 | |
Ameriquest Mortgage 2004-R8 | | 1,772 | | .53 | |
LBMLT Mortgage 2004-1 | | 1,769 | | .53 | |
International Super AAA Synthetic Residential MBS | | 1,645 | | .49 | |
International Synthetic CDO | | 1,576 | | .47 | |
U.S. AAA Synthetic CDO | | 1,484 | | .44 | |
U.S. AAA Synthetic CDO | | 1,476 | | .44 | |
US Super AAA Synthetic CDO | | 1,466 | | .44 | |
International Super AAA Synthetic CDO | | 1,441 | | .43 | |
International Super AAA Synthetic CDO | | 1,425 | | .43 | |
International Synthetic CDO | | 1,404 | | .42 | |
International Super AAA Synthetic CDO | | 1,356 | | .40 | |
US Super AAA Synthetic CDO | | 1,312 | | .39 | |
Ameriquest Mortgage 2004-R7 | | 1,296 | | .39 | |
International Super AAA Synthetic CDO | | 1,262 | | .38 | |
Long Beach Mortgage 2004-4 | | 1,246 | | .37 | |
International Super AAA Synthetic CDO | | 1,236 | | .37 | |
US Super AAA Synthetic CDO | | 1,211 | | .36 | |
International Synthetic CDO | | 1,126 | | .34 | |
International Super AAA Synthetic CDO | | 1,120 | | .33 | |
CWL Mortgage 2004-1 | | 1,092 | | .33 | |
International Super AAA Synthetic CDO | | 1,090 | | .33 | |
Total | | $ | 38,218 | | 11.39 | % |
“International” denotes a transaction with 20% or greater non-US collateral. “Super AAA” means the level of first-loss protection exceeds 1.3x the level required for an Aaa/AAA rating. Where indicated, ratings are current FSA internal ratings expressed in industry terms.
20
FSA Asset-Backed Debt Service and Premiums (1) (2)
(dollars in millions)
Debt Service
(Principal and Interest)
| | Insured Debt Service | | Portfolio
Run Off(2) | | Ending Net
Outstanding | |
| | Gross | | Ceded | | Net | | | |
| | | | | | | | | | | |
3rd Qtr. 2004 | | $ | 32,180 | | $ | 3,819 | | $ | 28,361 | | $ | (8,640 | ) | $ | 157,035 | |
2nd | | 9,459 | | 460 | | 8,999 | | (4,705 | ) | 137,314 | |
1st | | 7,707 | | 786 | | 6,921 | | (7,641 | ) | 133,020 | |
| | | | | | | | | | | |
4th Qtr. 2003 | | 5,503 | | 619 | | 4,884 | | (6,056 | ) | 133,740 | |
3rd | | 8,822 | | 1,340 | | 7,482 | | (6,923 | ) | 134,912 | |
2nd | | 6,279 | | 1,444 | | 4,835 | | (8,761 | ) | 134,353 | |
1st | | 4,501 | | 1,150 | | 3,351 | | (6,757 | ) | 138,279 | |
| | | | | | | | | | | |
2003 | | 25,105 | | 4,553 | | 20,552 | | (28,497 | ) | 133,740 | |
2002 | | 54,129 | | 10,582 | | 43,547 | | (29,166 | ) | 141,685 | |
2001 | | 75,404 | | 10,681 | | 64,723 | | (19,807 | ) | 127,304 | |
2000 | | 44,714 | | 8,181 | | 36,533 | | (19,031 | ) | 82,388 | |
1999 | | 41,694 | | 8,904 | | 32,790 | | (15,574 | ) | 64,886 | |
| | | | | | | | | | | | | | | | |
Premiums (GAAP Basis)
| | | | | | | | Ending Net
Unearned
Premium | | Ending
Net PV
Premium(3) | | | |
| | Premium Written | | | | | |
| | Gross | | Ceded | | Net | | | | Total | |
| | | | | | | | | | | | | |
3rd Qtr. 2004 | | $ | 86.3 | | $ | 23.3 | | $ | 63.0 | | $ | 87.4 | | $ | 602.8 | | $ | 690.2 | |
2nd | | 86.3 | | 27.4 | | 58.9 | | 85.9 | | 527.7 | | 613.6 | |
1st | | 68.8 | | 18.6 | | 50.2 | | 87.2 | | 528.4 | | 615.6 | |
| | | | | | | | | | | | | |
4th Qtr. 2003 | | 80.6 | | 22.3 | | 58.3 | | 91.3 | | 518.4 | | 609.7 | |
3rd | | 78.8 | | 22.3 | | 56.5 | | 92.2 | | 511.8 | | 604.0 | |
2nd | | 91.3 | | 26.7 | | 64.6 | | 95.7 | | 507.6 | | 603.3 | |
1st | | 67.5 | | 20.0 | | 47.5 | | 88.6 | | 522.6 | | 611.2 | |
| | | | | | | | | | | | | |
2003 | | 318.2 | | 91.3 | | 226.9 | | 91.3 | | 518.4 | | 609.7 | |
2002 | | 298.0 | | 82.3 | | 215.7 | | 93.5 | | 520.1 | | 613.6 | |
2001 | | 254.8 | | 86.8 | | 168.0 | | 105.2 | | 510.2 | | 615.4 | |
2000 | | 202.6 | | 68.0 | | 134.6 | | 98.4 | | 352.3 | | 450.7 | |
1999 | | 160.9 | | 45.0 | | 115.9 | | 93.4 | | 301.7 | | 395.1 | |
| | | | | | | | | | | | | | | | | | | |
(1) Excludes the effect of FSA Global Funding Limited and Canadian Global Funding Corporation.
(2) Includes decreases due to prepayments and increases due to accretions or higher outstanding under variable programs.
(3) This is a non-GAAP term.
21
FSA Municipal Debt Service and Premiums
(dollars in millions)
Debt Service
(Principal and Interest)
| | Insured Debt Service | | Portfolio
Run Off(1) | | Ending Net Outstanding | |
| | Gross | | Ceded | | Net | | | |
| | | | | | | | | | | |
3rd Qtr. 2004 | | $ | 22,921 | | $ | 6,816 | | $ | 16,105 | | $ | (5,021 | ) | $ | 302,387 | |
2nd | | 23,817 | | 7,810 | | 16,007 | | (6,409 | ) | 291,303 | |
1st | | 18,493 | | 5,657 | | 12,836 | | (6,867 | ) | 281,705 | |
| | | | | | | | | | | |
4th Qtr. 2003 | | 19,165 | | 5,049 | | 14,116 | | (4,512 | ) | 275,736 | |
3rd | | 29,620 | | 6,115 | | 23,505 | | (8,210 | ) | 266,132 | |
2nd | | 28,389 | | 8,004 | | 20,385 | | (3,258 | ) | 250,837 | |
1st | | 18,477 | | 3,277 | | 15,200 | | (5,061 | ) | 233,710 | |
| | | | | | | | | | | |
2003 | | 95,651 | | 22,445 | | 73,206 | | (21,041 | ) | 275,736 | |
2002 | | 92,952 | | 27,048 | | 65,904 | | (15,666 | ) | 223,571 | |
2001 | | 64,821 | | 20,431 | | 44,390 | | (14,095 | ) | 173,333 | |
2000 | | 40,542 | | 16,456 | | 24,086 | | (11,733 | ) | 143,038 | |
1999 | | 45,749 | | 15,088 | | 30,661 | | (12,301 | ) | 130,685 | |
| | | | | | | | | | | | | | | | |
Premiums (GAAP Basis)
| | | | | | | | Ending Net
Unearned
Premium | | Ending
Net PV
Premium(2) | | Total | |
| | Premium Written | | | | |
| | Gross | | Ceded | | Net | | | | |
| | | | | | | | | | | | | |
3rd Qtr. 2004 | | $ | 111.9 | | $ | 26.1 | | $ | 85.8 | | $ | 1,199.6 | | $ | 103.1 | | $ | 1,302.7 | |
2nd | | 149.8 | | 42.1 | | 107.7 | | 1,169.8 | | 102.0 | | 1,271.8 | |
1st | | 120.7 | | 54.4 | | 66.3 | | 1,103.6 | | 88.0 | | 1,191.6 | |
| | | | | | | | | | | | | |
4th Qtr. 2003 | | 133.1 | | 35.8 | | 97.3 | | 1,075.3 | | 88.7 | | 1,164.0 | |
3rd | | 186.2 | | 56.8 | | 129.4 | | 1,006.5 | | 84.3 | | 1,090.8 | |
2nd | | 206.4 | | 80.2 | | 126.2 | | 914.8 | | 88.9 | | 1,003.7 | |
1st | | 62.1 | | 17.4 | | 44.7 | | 816.1 | | 79.0 | | 895.1 | |
| | | | | | | | | | | | | |
2003 | | 587.8 | | 190.2 | | 397.6 | | 1,075.3 | | 88.7 | | 1,164.0 | |
2002 | | 508.9 | | 188.6 | | 320.3 | | 799.0 | | 69.6 | | 868.6 | |
2001 | | 230.8 | | 79.2 | | 151.6 | | 564.3 | | 46.2 | | 610.5 | |
2000 | | 169.7 | | 86.2 | | 83.5 | | 484.3 | | 42.0 | | 526.3 | |
1999 | | 201.8 | | 87.3 | | 114.5 | | 465.7 | | 38.0 | | 503.7 | |
| | | | | | | | | | | | | | | | | | | |
(1) Includes decreases due to prepayments and increases due to accretions or higher outstanding under variable programs.
(2) This is a non-GAAP term.
22
FSA Asset-Backed Net Debt Service and Net Premiums
Amortization and Ending Balances (1)
(dollars in millions)
Net Debt Service
| | Scheduled
Amortization | | | | Outstanding | |
| | | | | | | |
3rd Qtr. 2004 | | — | | | | $ | 157,035 | |
4th | | $ | 8,496 | | | | 148,539 | |
| | | | | | | |
2005 | | 33,042 | | | | 115,497 | |
2006 | | 35,901 | | | | 78,596 | |
2007 | | 20,713 | | | | 58,813 | |
2008 | | 16,638 | | | | 42,245 | |
| | | | | | | |
2009-2013 | | 35,281 | | | | 6,964 | |
2014-2018 | | 3,987 | | | | 2,977 | |
2019-2023 | | 1,447 | | | | 1,530 | |
2024+ | | 1,530 | | | | | |
Total | | $ | 157,035 | | | | | |
| | | | | | | | | |
Net Premiums
| | | | Scheduled Premium Earnings | |
| | Unearned
Premiums | | From
Unearned
Premium
Amortization | | From
Installments | | Total | |
| | | | | | | | | |
3rd Qtr. 2004 | | $ | 87.4 | | — | | — | | — | |
4th | | 63.6 | | $ | 23.8 | | $ | 29.5 | | $ | 53.3 | |
| | | | | | | | | |
2005 | | 51.2 | | 12.4 | | 170.8 | | 183.2 | |
2006 | | 42.3 | | 8.9 | | 125.2 | | 134.1 | |
2007 | | 34.6 | | 7.7 | | 80.4 | | 88.1 | |
2008 | | 27.3 | | 7.3 | | 59.6 | | 66.9 | |
| | | | | | | | | |
2009-2013 | | 8.3 | | 19.0 | | 124.1 | | 143.1 | |
2014-2018 | | 4.4 | | 3.9 | | 33.4 | | 37.3 | |
2019-2023 | | 2.8 | | 1.6 | | 17.4 | | 19.0 | |
2024 + | | | | 2.8 | | 21.8 | | 24.6 | |
Total | | | | $ | 87.4 | | $ | 662.2 | | $ | 749.6 | |
| | | | | | | | | | | | | |
(1) Excludes the effect of FSA Global Funding Limited and Canadian Global Funding Corporation.
23
FSA Municipal Net Debt Service and Net Premiums
Amortization and Ending Balances
(dollars in millions)
Net Debt Service
| | Scheduled
Amortization | | | | Outstanding | |
| | | | | | | |
3rd Qtr. 2004 | | — | | | | $ | 302,387 | |
4th | | $ | 4,029 | | | | 298,358 | |
| | | | | | | |
2005 | | 16,299 | | | | 282,059 | |
2006 | | 16,048 | | | | 266,011 | |
2007 | | 16,429 | | | | 249,582 | |
2008 | | 16,640 | | | | 232,942 | |
| | | | | | | |
2009-2013 | | 78,546 | | | | 154,396 | |
2014-2018 | | 63,333 | | | | 91,063 | |
2019-2023 | | 45,683 | | | | 45,380 | |
2024+ | | 45,380 | | | | | |
Total | | $ | 302,387 | | | | | |
| | | | | | | | | |
Net Premiums
| | | | Scheduled Premium Earnings | |
| | Unearned
Premiums | | From
Unearned
Premium
Amortization | | From
Installments | | Total | |
| | | | | | | | | |
3rd Qtr. 2004 | | $ | 1,199.6 | | — | | — | | — | |
4th | | 1,167.5 | | $ | 32.1 | | $ | 0.6 | | $ | 32.7 | |
| | | | | | | | | |
2005 | | 1,055.7 | | 111.8 | | 9.9 | | 121.7 | |
2006 | | 955.7 | | 100.0 | | 10.9 | | 110.9 | |
2007 | | 863.8 | | 91.9 | | 10.4 | | 102.3 | |
2008 | | 779.4 | | 84.4 | | 10.1 | | 94.5 | |
| | | | | | | | | |
2009-2013 | | 446.7 | | 332.7 | | 45.4 | | 378.1 | |
2014-2018 | | 230.1 | | 216.6 | | 36.6 | | 253.2 | |
2019-2023 | | 101.7 | | 128.4 | | 24.0 | | 152.4 | |
2024+ | | | | 101.7 | | 24.5 | | 126.2 | |
| | | | | | | | | |
Total | | | | $ | 1,199.6 | | $ | 172.4 | | $ | 1,372.0 | |
| | | | | | | | | | | | | |
24
Corporate Headquarters
Financial Security Assurance Holdings Ltd.
350 Park Avenue
New York, New York 10022
(1)(212) 826-0100
Investor Relations Contact
Robert S. Tucker
Managing Director
(1)(212) 339-0861
rtucker@fsa.com
Corporate Communications Contact
Betsy Castenir
Managing Director
(1)(212) 339-3424
bcastenir@fsa.com
Internet
This Quarterly Operating Supplement and other information are
available on the World Wide Web at www.fsa.com.
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
Quarterly Operating Supplement
September 30, 2004
