UPDATE 2-Ambac profit boosted by credit derivative gains - News

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UPDATE 2-Ambac profit boosted by credit derivative gains

By: AFX | 04 Nov 2009 | 10:06 AM ET

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NEW YORK, Nov 4 (Reuters) - Bond insurer Ambac Financial Group posted a quarterly profit of more than $2 billion on accounting gains from credit derivatives, reversing a year-earlier loss and sending its shares up 34 percent. The value of the company's debt fell during the quarter, triggering $2.13 billion in gains from credit derivatives, Ambac reported on Wednesday. Third-quarter profit totaled $2.19 billion, or $7.58 a share, compared with a loss of $2.4 billion, or $8.45 a share, a year earlier. The bond insurer's shares rose 38 cents, or 34 percent, to $1.49 in early trading on the New York Stock Exchange. Ambac, like its larger rival MBIA Inc, has struggled to write new business since losing its top-notch credit rating last year. MBIA is due to report third-quarter results next week. Ambac said net premiums earned in the third quarter dropped 16 percent to $238.4 million. The New York-based company is still battling losses on complex debt securities it insured. Such losses, and loss expenses, totaled $459 million in the third quarter, down from $607 million a year earlier. Net claims paid jumped to $315.1 million from $182.4 million, largely related to residential mortgage-backed securities. In June the bond insurer delayed plans to launch a municipal bond arm called Everspan after having difficulty raising money from outside investors to fund the unit. (Reporting by Elinor Comlay, editing by Gerald E. McCormick and John Wallace) ((elinor.comlay@thomsonreuters.com; +1 646 223 6116)) Keywords: AMBAC/ (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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