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Assured Guaranty Posts 1Q Loss On Derivatives Impact

05/10/2012 | 06:42pm US/Eastern

Assured Guaranty Ltd. (>> Assured Guaranty Ltd.) swung to a first-quarter loss as derivatives losses widened and income from premiums slid, though the insurer's operating earnings still topped expectations.

The company separately disclosed the resignation of director Donald Layton, the former chief executive of online brokerage E*Trade Financial Corp. (ETFC) who is slated to move to the helm of mortgage giant Freddie Mac (FMCC). American International Group Inc. (>> American International Group, Inc.) on Thursday said Layton is also stepping down from its board.

Assured Guaranty sells insurance on a variety of debt obligations, including variable-interest entities that allow financial firms to keep assets such as mortgage-backed securities off their balance sheets. Losses tied to such entities had mostly eased in recent quarters, bolstering the company's bottom line.

Earnings suffered in the latest quarter, however, as the net value of the derivatives declined by $690.6 million, compared with a $236.2 million loss a year earlier.

Overall, the company reported a loss of $483 million, or $2.65 a share, compared with a year-earlier profit of $139.3 million, or 74 cents a share. Operating income, which excludes investment gains and losses, dropped to 38 cents a share from $1.32. Analysts polled by Thomson Reuters were looking for 36 cents.

Assured's reported revenue was negative $357.4 million due to the derivatives impact, compared with $278.9 million of revenue a year earlier. Net premiums earned fell 24% to $193.7 million.

Shares were off 1.4% at $12.90 after hours. The stock had declined 18% over the past year through Thursday's close.

-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; andrew.fitzgerald@dowjones.com

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