Assured Guaranty Ltd., the only active U.S. municipal bond insurer, said operating income fell 71 percent because of Greece’s sovereign-debt default.
Operating income, a measure of profitability that excludes some items, fell to $71.2 million in the first quarter, compared with $247.4 million a year earlier, the Hamilton, Bermuda-based company said in a regulatory filing today. Taking into account changing credit spreads, the company reported a net loss of $483 million, or $2.65 a share.
The drop in income was primarily due to losses on insured Greek debt, Assured Guaranty said. The company expects to lose $231.9 million due to the country’s default, net of reinsurance and the value of exchanged securities.
Demand for bond insurance was hurt by “rating uncertainty” in the quarter, according to the company, which Moody’s Investor’s Service has on review for a downgrade.
The insurer said Deutsche Bank AG agreed to pay $165.6 million in cash to settle a lawsuit over losses on securities backed by home loans. The Frankfurt-based bank also agreed to share losses on certain securities.
(The company will hold a conference call tomorrow at 7 a.m. New York time. To listen, dial +1-877-317-6789.)