NEW YORK (Bloomberg) ? Bermuda-based Primus Guaranty Ltd., the only publicly traded company that makes most of its money from credit-default swaps, said fourth-quarter earnings rose eight-fold as it sold its first collateralised loan obligation and entered the asset-backed securities market.

Net income was $25.4 million, or 57 cents a share, compared with $3.1 million, or 7 cents, a year earlier, the company said yesterday in a statement. Revenue more than tripled to $40 million from $12.6 million a year earlier.

Primus oversees a credit-default swap portfolio on $15.3 billion in debt securities. Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company?s ability to repay debt.

Excluding unrealised gains and losses from the contracts, which the company typically hold until maturity, profit was $14.5 million, or 33 cents a share, up from $12.2 million, or 28 cents. On that basis, analysts expected profit of 30 cents a share, according to the average estimate of five analysts surveyed by Bloomberg.

Primus shares rose 2 percent, or 23 cents to $12.03 yesterday in New York Stock Exchange composite trading. They have fallen 6.6 percent during the past year, underperforming the Standard & Poor?s 500 Index, which gained 14 percent during the same period.

Primus has been investing in fewer new credit-default swaps on corporate debt as the contracts continue to pay some of the lowest risk premiums on record. The Dow Jones CDX North America Investment Grade index, which is made up of credit swaps on 125 companies in the US and Canada with investment-grade ratings, has fallen 22 percent to 30.85 from 39.75 on Oct. 2, according to data compiled by CMA Datavision in London. The level of the index means it costs investors an average of $30,850 a year to protect $10 million of bonds for five years.

The ITraxx Europe index of 125 investment-grade companies has fallen 24 percent to 22.98, from 30.16 on October 2, CMA data show.

Primus has entered other areas of the credit markets as its corporate investments have slowed. The company said last month that it sold $400 million in notes as part of its first collateralised loan obligation, which is a pool of loans sliced up according to risk and resold as bonds according to investors? risk preferences.

The company also entered the market for credit-default swaps on asset-backed securities including mortgages.

Credit-default swaps were conceived a decade ago to protect bondholders against default and pay the buyer face value in exchange for the underlying securities should the company fail to adhere to its debt agreements. As of June, outstanding contracts had more than doubled from a year earlier to $26 trillion, the International Swaps and Derivatives Association said in September.

Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates.