Bermuda-based RAM Holdings Ltd. suffered a net loss of $4.6 million for the second quarter of 2009, despite making a $8.7 million gain through its reinsurance division's commutation agreement with Ambac Assurance Corporation.

The net loss available to common shareholders, which was equivalent to 17 cents per share, compared to a net income of $126.3 million or $4.63 per share for the same period in 2008.

In April, RAM Reinsurance Company Ltd. entered into a commutation agreement with Ambac Assurance Corporation and its affiliate Ambac, with RAM Re paying a $97 million settlement payment and $1.3 million of claims payments, via a release to Ambac of securities in Ambac's trust account valued at $97.8 million and a cash payment of $500,000 million, to commute the entire $6.8 billion insured portfolio assumed from Ambac, releasing both companies from all liabilities and obligations under reinsurance agreements between the two parties.

Earned premiums in the quarter of $6.5 million were 67 percent lower than the $19.5 million earned in the second quarter of 2008, with the decline in earned premiums after refundings reflecting the reduction in ongoing earnings due to the commutation of treaties with three of the company's ceding companies during 2008 and 2009.

Net change in fair value of credit derivatives totalled a loss of $9.4 million in the second quarter 2009, which was $163.6 million less than the $154.2 million gain in the second quarter of 2008, while net change in fair value of credit derivatives for the second quarters of 2009 and 2008 were comprised of minus $10.5 million and $151.5 million of unrealised (losses) gains on derivatives, respectively, and $1.1 million and $2.7 million of realised gains, respectively.

Gross unrealised losses on credit derivative policies decreased in the second quarter 2009 primarily due to the narrowing of credit spreads in the market.