Bermuda bond insurer Assured Guaranty last night reported a net loss of $260.1 million for the fourth quarter of 2007.

The company blamed a reduction in the market value of credit-market-related derivatives that it guarantees for the $3.77 per share quarterly loss, which compared with a net income of $42.4 million, or 58 cents per share, for the same three months in 2006.

The after-tax unrealised losses on derivatives amounted to $297.5 million. That included a loss of $302.9 million in financial guaranties written in credit-default swap form.

Operating income fell to $37 million, compared to $41.5 million in the same three months in 2006.

For the full year, Assured reported a net loss of $303.3 million, compared to a net income of $159.7 million for 2006.

Like all its rival bond insurers, Assured Guaranty has seen its bottom line hit hard by the sub-prime mortgage crisis, as some of the mortgage-linked securities it insures have lost value as a wave of delinquencies has swept the US.

Assured, however, is weathering the crisis better than some others, because its all-important AAA credit rating has been maintained by all three credit agencies, Standard & Poor's, Fitch and Moody's.

Others, such as Bermuda rival Security Capital Assurance, have seen their ability to write new business severely hampered by rating downgrades.

Because Assured is one of only two bond insurers on the US market with three AAA ratings — compared to seven a few months ago — its share of new business has been rising rapidly over recent months.

Gross premiums written in the fourth quarter totalled $255.2 million, up from $85.2 million. For the full year, gross premiums written rose 55 percent to $505.9 million, from $325.7 million in 2006.

"Our franchise continues to build, particularly in the US public finance market," chief executive officer Dominic Frederico said.

"We produced record new business volume in both fourth-quarter and full-year 2007 consistent with our strategy of growing our financial guaranty direct franchise and maintaining our position as the leading financial guaranty reinsurer.

"Our commitment to underwriting quality continues to be a key focus and has been instrumental in establishing our current favourable market position, as Assured Guaranty Corp. is one of only two financial guaranty companies with triple-A stable ratings from the three major credit rating agencies."

Assured guaranty

4Q REPORT CARD

Net income: Loss of $260.1 million compared to net income of $42.4 million in 2006.

Gross premiums written: $255.2 million compared to $85.2 million in 2006.