Bermuda insurer Assured Guaranty Ltd. last night reported an 11 percent increase in fourth-quarter earnings — but its full-year earnings were 15 percent down on the previous year.

Net income for the last three months of last year was $42.4 million, or $0.58 per share, compared with $38.2 million, $0.51 per share for the fourth quarter of 2005.

In a statement after the close of the markets yesterday, Assured said its net income for the full year 2006 totalled $159.7 million, or $2.15 per share, compared to last year’s profit of $188.4 million, or $2.53 per diluted share.

“2006 was another strong year for Assured Guaranty and represented further progress in attaining our strategic vision,” Dominic Frederico, Assured’s president and chief executive officer said.

“In the year we had outstanding production growth, received a ratings outlook upgrade from Moody’s, made our capital structure more efficient and maintained our strict underwriting discipline.”

Revenue for the final quarter increased 20 percent to $88.4 million from $73.5 million a year before. Wall Street expected quarterly revenue of $81 million.

Fourth-quarter operating income rose 20 percent to $41.5 million, $0.56 per diluted share, from $34.6 million, or $0.46 per diluted share reported for the same period in 2005.

But full-year operating income for 2006 was $157.2 million, or $2.12 per share, a decrease of 17 percent from $190.0 million, or $2.55 per diluted share for 2005.

The decrease in 2006 net income and operating income was principally due to after-tax income of $47.7 million ($73.4 million pre-tax) in loss recoveries in 2005 versus only $8.8 million ($13.5 million pre-tax) in 2006.

These loss recoveries were related to losses paid prior to Assured’s April 2004 IPO.