Bermuda-based financial guaranty reinsurer RAM Holdings Ltd. suffered a fourth-quarter loss of more than $150 million, mainly due to an increase in fair value losses on credit derivatives of $149.4 million.

The company, which works in the US and international public finance and structured finance transactions sector, reported a $152.9 million net loss for the fourth quarter 2007 or minus $5.61 per diluted share compared to net income of $10 million or 37 cents per diluted share for the same period in 2006.

Credit spreads continued to widen substantially during last year's fourth quarter, and this, as well as deterioration in residential mortgage-backed securities (RMBS) collateral underlying collateralised debt obligations (CDOs), resulted in a substantial increase in losses on the credit derivatives that RAM reinsures in the fourth quarter of 2007.

For the fourth quarter, $44.4 million of the losses on credit derivatives reflected credit impairments the company expects to incur in the future, representing the net present value estimate of probable and estimable losses on credit derivatives, primarily credit default swaps on CDOs of asset back securities ABS.

The balance of the losses on credit derivatives, in the absence of further credit impairments, are expected to net to zero over the remaining life of the insured credit derivatives. In addition, RAM recorded a fair value gain of $35.3 million on its $50 million committed preferred securities facility.

"We are certainly disappointed with our operating results for the quarter, which were caused by the unprecedented deterioration in the performance of US residential mortgage backed securities and the continuing widening of credit spreads generally," said Vernon Endo, RAM's president and CEO.