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Syncora Holdings Ltd. Announces 2017 Year End GAAP Consolidated Financial Results

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HAMILTON, Bermuda, March 27, 2018 (GLOBE NEWSWIRE) -- Syncora Holdings Ltd. ("SHL" or the "Company"), a Bermuda holding company whose wholly-owned subsidiary provides financial guarantee insurance and reinsurance, today reported financial results for the year ended December 31, 2017.               

 
Syncora Holdings Ltd.
Summary of Consolidated Financial Results
December 31, 2017 and 2016
(U.S. dollars in millions, except per share amounts)
       
  Years Ended
  2017
  2016
       
       
Net premiums earned $   51.1     $   77.2  
Net investment income     45.3         48.8  
Net realized losses on investments     (17.7 )       (19.8 )
Net loss on insurance cash flow certificates     (120.1 )       (110.6 )
Net earnings (loss) on credit default and other swap contracts     59.7         (56.4 )
Net recoveries on losses and loss adjustment expenses     (197.7 )       (179.3 )
Operating expenses     47.0         74.3  
Income from continuing operations     121.4         20.2  
Income from discontinued operations     12.5         13.0  
Net income attributable to controlling interest $   133.5     $   32.7  
Basic and diluted income per common share $   1.54     $   2.18 (2)
Basic and diluted income from discontinued operations      
per common share $   0.14     $   0.19  
       
Non-GAAP operating income (1) $   148.3     $   150.9  
Non-GAAP basic and diluted operating income per common share (1) $   1.71     $   2.22  
Basic and diluted weighted average common shares outstanding     86.7         67.9  
       
       
   As of Year-End
  2017
  2016
       
       
Adjusted Book Value (1) $   609.3     $   484.1  
Common shares outstanding at end of period     86.8         86.6  
Adjusted Book Value per common share (1) $   7.02     $   5.59  

(1)  Non-GAAP operating 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 income and common shareholders' equity, respectively, which are presented in accordance with GAAP. See below for reconciliations between GAAP and Non-GAAP financial measures.
(2)  For purposes of our earnings per share calculation, $115.2 million is included for 2016, which is related to the extinguishment of the Series A perpetual non-cumulative preference shares.

Financial Results

Consolidated Statements of Operations

Net premiums earned were $51.1 million for the year 2017, as compared to $77.2 million for the year 2016.  The decrease was due to lower earned premiums as a result of the continued run-off of the Company's book of business, and lower premium accelerations from refundings in the current year.  Total premium accelerations were $24.8 million for the year 2017, as compared to $43.2 million for the year 2016.

Net investment income decreased slightly by $3.5 million from $48.8 million for the year 2016 to $45.3 million for the year 2017.  The decrease was primarily due to lower invested assets as a result of claims payment activity during the year.

Net realized losses on investments decreased by $2.1 million to $17.7 million for the year 2017 from $19.8 million for the year 2016.  The decrease was primarily due to higher realized gains on sales, partially offset by higher other-than-temporary impairment charges in the current period.

Net loss on insurance cash flow certificates was $120.1 million for the year 2017, as compared to $110.6 million for the year 2016.  As this represents future cash flow receipts from certain insurance claim payments the Company anticipates making on policies that have been remediated, offset by reimbursements assigned to UCF holders, the increase was a result of positive RMBS developments and the effects of the GreenPoint litigation settlement.

Net earnings (loss) on credit default and other swap contracts was $59.7 million for the year 2017, as compared to $(56.4) million for the year 2016.  The increase was primarily due to higher non-performance risk spreads primarily as a result of Puerto Rico adverse developments.

Net recoveries on losses and loss adjustment expenses were $197.7 million for the year 2017, as compared to $179.3 million for the year 2016.  The increase was primarily due to higher recoveries as a result of the GreenPoint litigation settlement and other RMBS positive developments, partially offset by net incurred losses on our Puerto Rico exposures.   

Operating expenses were $47.0 million for the year 2017, as compared to $74.3 million for the year 2016.  The decrease was primarily due to cost savings associated with headcount reductions and removal of restructuring transaction-related costs.

Income from discontinued operations represents the total revenues and total expenses of American Roads LLC, which was $12.5 million for the year 2017 and $13.0 million for the year 2016.

Consolidated Balance Sheets

Total assets decreased by $8.9 million from $2,394.4 million as of year-end 2016 to $2,385.5 million as of year-end 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 the Company's book of business, partially offset by higher salvage and subrogation recoverable as a result of the GreenPoint settlement.  

Total liabilities decreased by $169.7 million from $1,853.2 million as of year-end 2016 to $1,683.5 million as of year-end 2017.  The decrease was primarily due to RMBS positive developments, lower unearned premium revenue from the continued run-off of the Company's 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 of 2017. 

     
  Syncora Holdings Ltd.  
  Consolidated Statements of Operations  
  Years Ended December 31, 2017 and 2016  
  (U.S. dollars in thousands)  
                                 
                        2017
    2016
 
  Revenues            
  Net premiums earned               $ 51,081     $ 77,154    
  Net investment income                 45,313       48,843    
  Net realized losses on investments, including other-than-temporary impairment losses          
  of $(41,453) and $(39,829)               (17,735 )     (19,789 )  
  Net loss on insurance cash flow certificates, net of amortization of deferred gains              
  of $2,227 and $2,464                 (120,103 )     (110,595 )  
  Fees and other income                 6,282
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