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Syncora Holdings Ltd. Announces Interim GAAP Consolidated Financial Results for the Nine Months Ended September 30, 2017

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HAMILTON, Bermuda, Nov. 13, 2017 (GLOBE NEWSWIRE) -- Syncora Holdings Ltd. ("SHL" or the "Company"), a Bermuda holding company whose subsidiaries primarily provide financial guarantee insurance and reinsurance, today reported financial results for the nine months ended September 30, 2017.                 

 
Syncora Holdings Ltd.
Summary Results of Consolidated Operations
Nine Months Ended September 30, 2017 and 2016
(U.S. dollars in millions, except per share amounts)
              2017     2016
                     
                     
Net premiums earned     $    38.6   $    52.2
Net investment income         34.0       36.1
Net realized losses on investments         (15.8)       (9.6)
Net loss on insurance cash flow certificates         (29.9)       (43.2)
Net earnings (loss) on credit default and other swap contracts         45.6       (52.3)
Net losses (recoveries) and loss adjustment expenses         120.2       (101.4)
Operating expenses         31.6       55.7
(Loss) income from continuing operations         (135.8)       2.6
Income from discontinued operations         10.3       10.4
Net (loss) income attributable to controlling interest     $    (125.7)    $    12.6
GAAP basic and diluted (loss) income per common share     $    (1.45)    $    2.07
GAAP basic and diluted (loss) income from discontinued operations               
per common share     $    0.12   $  0.17
                     
Non-GAAP operating (loss) income (1)     $   (123.5)    $    98.7
Non-GAAP basic and diluted operating (loss) income per common share (1)   $    (1.42)   $    1.60
Basic and diluted weighted average common shares outstanding         86.7       61.7
                     
               As of       As of 
               September 30,       December 31, 
              2017     2016
                     
                     
Adjusted Book Value (1)     $    344.9   $    484.1
Common shares outstanding at end of period         86.8       86.6
Adjusted Book Value per common share (1)     $    3.98   $    5.59
                     
(1) Non-GAAP operating (loss) income and adjusted book value are non-GAAP financial measures that exclude (or include) amounts that are included in (or excluded from) total Syncora Holdings Ltd. net loss and common shareholders' equity, respectively, which are presented in accordance with GAAP. See below for reconciliations between GAAP and Non-GAAP financial measures.
 


Financial Results

Consolidated Statements of Operations

Net premiums earned were $38.6 million for the nine months ended September 30, 2017, as compared to $52.2 million for the nine months ended September 30, 2016.  The decrease was due to lower earned premiums as a result of the continued run-off of our book of business, and higher premium accelerations from refundings in the prior year. Total premium accelerations were $19.9 million for the nine months ended September 30, 2017, as compared to $25.7 million for the nine months ended September 30, 2016.

Net realized losses on investments increased by $6.2 million to $15.8 million for the nine months ended September 30, 2017 from $9.6 million for the nine months ended September 30, 2016.  The increase was primarily due to higher other-than-temporary impairment charges in the current period.

Net loss on insurance cash flow certificates was $29.9 million for the nine months ended September 30, 2017, as compared to $43.2 million for the nine months ended September 30, 2016.  As this represents future cash flow receipts from certain insurance claim payments the Company anticipates making on policies that have been remediated, the decrease was primarily driven by lower positive RMBS developments.

Net earnings (loss) on credit default and other swap contracts was $45.6 million for the nine months ended September 30, 2017, as compared to $(52.3) million for the nine months ended September 30, 2016.  The increase was primarily due to higher non-performance risk spreads.

Net losses (recoveries) and loss adjustment expenses were $120.2 million for the nine months ended September 30, 2017, as compared to $(101.4) million for the nine months ended September 30, 2016.  The increase was primarily due to higher net incurred losses on our Puerto Rico exposures, partially offset by continued positive reserve developments on our RMBS exposures.   

Operating expenses were $31.6 million for the nine months ended September 30, 2017, as compared to $55.7 million for the nine months ended September 30, 2016.  The decrease was primarily due to cost savings associated with headcount reductions.

Income from discontinued operations represents the total revenues and total expenses of American Roads LLC which was $10.3 million for the nine months ended September 30, 2017 and $10.4 million for the same period last year.

Consolidated Balance Sheets

Total assets decreased by $205.5 million from $2,394.4 million as of December 31, 2016 to $2,188.9 million as of September 30, 2017 primarily as a result of Puerto Rico net claim payments, a reduction in expected roundtrip claim payments for remediated RMBS exposures and lower premium receivables as a result of refunding activity and the continued run-off of our book business.  

Total liabilities decreased by $103.7 million from $1,853.2 million as of December 31, 2016 to $1,749.5 million as of September 30, 2017.  The decrease was primarily due to RMBS positive developments, lower unearned premium revenue from the continued run-off of our insured portfolio, lower mark-to-market fair values on our credit default and other swap contracts due to higher non-performance risk spreads and lower accounts payable, accrued expenses and other liabilities due to lower compensation-related expenses as a result of headcount reductions.

Assets and liabilities of entity held-for-sale represent the total assets and total liabilities of American Roads LLC, which met the accounting criteria for held-for-sale during the third quarter. 

 
SYNCORA HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 2017 and 2016
(U.S. dollars in thousands)
                 
          2017     2016
Revenues          
Net premiums earned   $ 38,565   $ 52,224
Net investment income     33,993     36,070
Net realized losses on investments, including other-than-temporary impairment losses of $(37,940) and $(24,740)     (15,809)     (9,571)
Net loss on insurance cash flow certificates, net of amortization of deferred gains of $1,616 and $1,947     (29,932)     (43,238)
Fees and other income     4,367     18,595
Net earnings (loss) on credit default and other swap contracts, net unrealized gains (losses) of $43,042 and          $(55,721) and realized gains and other settlements of $2,545 and $3,451   45,587     (52,270)
Net change in fair value of consolidated variable interest entities   5,862     18,699
Total revenues     82,633     20,509
                 
Expenses          
Net losses (recoveries) and loss adjustment expenses     120,190     (101,416)
Amortization of deferred acquisition costs, net     5,669     5,414
Realized loss on interest rate derivative instrument     50  
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