RAM Holdings is warning its third quarter results, due out next Monday, will be affected by a mark-to-market loss of around $28.4 million and as a result the company expects to report a net loss.

The loss is in respect of its credit derivatives portfolio and represents $1.04 per basic and diluted share, according to the company.

In a statement RAM said: "These unrealized losses are the result of widening credit spreads in the market and do not reflect actual claims. The unrealized mark-to-market losses do not impact operating earnings."

The company is, however, preidcting a rise in premiums written for the three months of $50.7 million this year compared to $37.3 million in the same period during 2006.

"The significant widening of credit spreads in the market has led to the unrealised loss in our credit derivatives portfolio for this quarter," said Vernon Endo, RAM's president and chief executive officer.

"The company reinsures credit default swaps that function like financial guaranty policies, providing protection against payment defaults. These policies are intended to be held to maturity and the net gain or loss on the credit derivative will amortise to zero by the maturity date if no default occurs.

"The credit derivatives we reinsure are highly-rated and comprise $9.9 billion of our total insured portfolio. The unrealised losses are not indicative of future losses on these policies based on our review."

Mr. Endo added: "We believe the widening of credit spreads has also led to increased demand and generally improved pricing and terms for financial guaranty insurance. Our adjusted premiums written for the quarter were higher than expected, partly due to the addition of two new treaties this year, and we are pleased with the quality of the business we assumed during the quarter."