Assured Guaranty Ltd. saw its highest quarterly new business production in the financial guaranty direct segment since it began planning for an Initial Public Offering last year.

The Bermuda-based holding company with operating subsidiaries that provide credit enhancement to the US and international public finance, structured finance and mortgage markets, announced net income of $48.3 million, or 64 cents per share, for the fourth quarter ended December 31, 2004 compared with $44.5 million or $0.59 per diluted share, for the third quarter ended September 30, 2004.

The company had net income of $97.2 million, or $1.30 per diluted share, earned in the fourth quarter of 2003.

The company used third quarter 2004 results for comparison purposes because of a change in strategy associated with Assured Guaranty?s April 2004 initial public offering.

Numerous resulting changes in the company?s lines of business, underwriting focus, expense base and capital structure affected financial results and made comparisons with pre-IPO reporting periods less meaningful than comparisons with our post-IPO reporting periods.

Operating income was $35.9 million in the fourth quarter of 2004, an increase of 7 percent from $33.6 million in the third quarter of 2004 and an increase of 6 percent from $33.9 million in the fourth quarter of 2003.

Operating income on a per diluted share basis was 48 cents in the fourth quarter of 2004, a 7 percent increase from 45 cents reported in both the third quarter of 2004 and the fourth quarter of 2003. Investors, analysts and others, including management, use operating income to evaluate our results of operations, as this measure highlights the underlying profitability of our business.

Dominic Frederico, president and chief executive officer of Assured Guaranty Ltd. said: ?2004 was a year of major accomplishments for Assured Guaranty.

During the year, we restructured the company, completed our initial public offering, acquired key new licences, centralised our reinsurance business in Bermuda and expanded our global direct financial guaranty business.

Net written premiums were $61.4 million in the fourth quarter of 2004, up 11 percent over $55.1 million in the third quarter of 2004 and down 61 percent compared with $158.4 million in the fourth quarter of 2003.

The figure includes $99.5 million of premiums from Assured Guaranty?s other segment which includes businesses sold or discontinued as part of the IPO and has not generated net written or earned premiums since the second quarter of 2004.

Net written premium growth over the third quarter of 2004 reflects a 47 percent increase in financial guaranty direct premiums.

The company saw a consolidated underwriting gain of $23.1 million in the quarter, up 16 percent from the third quarter of 2004 and up 255 percent from the fourth quarter of 2003.

Excluding the other segment, the company?s financial guaranty underwriting gain was $22.7 million in the quarter, up 14 percent from the third quarter of 2004 and up 73 percent from the fourth quarter of 2003.

The improved underwriting results compared to the third quarter of 2004 and fourth quarter of 2003 reflect the increase in the company?s financial guaranty net earned premiums and a reduction in the company?s incurred losses.

Excluding the other segment, Assured Guaranty?s combined ratio in the fourth quarter was 60.3 percent, an improvement over the 62.7 percent reported in the third quarter of 2004 and the 71.7 percent reported in the fourth quarter of 2003.

The fourth quarter of 2003 included the establishment of $21.1 million in pre-tax case loss reserves ($16.4 million after-tax) in the reinsurance segment. No significant case loss activity occurred in the fourth quarter of 2004 in any of our segments.

The company?s year-end book value per share was $20.19. During the quarter, the company repurchased $6.0 million of stock at an average cost of $18.61 per share. $19.0 million remains authorised under the company?s share repurchase programme.