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Syncora Holdings Ltd. Announces Interim GAAP Consolidated Financial Results for the Six Months Ended June 30, 2018

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HAMILTON, Bermuda, Aug. 14, 2018 (GLOBE NEWSWIRE) -- Syncora Holdings Ltd. ("Syncora" or the "Company"), a Bermuda holding company whose wholly-owned subsidiary provides financial guarantee insurance and reinsurance, today reported financial results for the six months ended June 30, 2018.

       
Syncora Holdings Ltd.
Summary of Consolidated Financial Results
Six Months Ended June 30, 2018 and 2017
(U.S. dollars in millions, except per share amounts)
       
  2018   2017
       
 
Premiums earned, net of reinsurance ceded $   23.1     $   27.4  
Net investment income     21.4         23.5  
Net unrealized and realized gains (losses) on investments     3.5         (9.8 )
Net earnings (loss) on insurance cash flow certificates     30.1         (16.7 )
Net (loss) earnings on credit default and other swap contracts     (24.7 )       3.1  
Losses and loss adjustment expenses, net of reinsurance ceded     14.6         41.9  
Loss on debt prepayment     91.4         -   
Operating expenses     28.5         21.4  
Loss from continuing operations     (118.1 )       (75.3 )
Income from discontinued operations     10.8         6.0  
Net loss attributable to controlling interest $   (107.5 )   $   (69.5 )
Basic and diluted income from discontinued operations       
per common share $   0.12     $   0.07  
Basic and diluted loss per common share $   (1.24 )   $   (0.80 )
       
Non-GAAP operating loss (1) $   (45.3 )   $   (39.1 )
Non-GAAP basic and diluted operating loss per common share (1) $   (0.52 )   $   (0.45 )
Basic and diluted weighted average common shares outstanding     86.9         86.7  
       
       
  As of   As of
  June 30,    December 31, 
  2018   2017
       
       
Adjusted Book Value (1) $   428.8     $   609.3  
Common shares outstanding at end of period     87.0         86.8  
Adjusted Book Value per common share (1) $   4.93     $   7.02  
       
 
(1) Non-GAAP operating income (loss) 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 (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 $23.1 million for the six months ended June 30, 2018, as compared to $27.4 million for the six months ended June 30, 2017.  The decrease was due to $3.3 million of premiums ceded to Assured Guaranty Corp. ("Assured") under the reinsurance agreement effective June 1, 2018 and as a result of lower earned premiums from the continued run-off of the Company's book of business.  Total premium accelerations decreased slightly to $13.8 million for the six months ended June 30, 2018, from $13.9 million for the six months ended June 30, 2017.

Net investment income decreased by $2.1 million from $23.5 million for the six months ended June 30, 2017 to $21.4 million for the six months ended June 30, 2018.  The decrease was primarily due to lower income on remediation bonds as compared to the prior period. 

Net unrealized and realized gains on investments increased by $13.3 million to $3.5 million for the six months ended June 30, 2018 from a net realized loss of $9.8 million for the six months ended June 30, 2017.  The change was primarily due to lower other-than-temporary impairment charges and foreign exchange gains on the sale of certain Euro-denominated remediation bonds in the current period.

Net earnings on insurance cash flow certificates was $30.1 million for the six months ended June 30, 2018, as compared to a loss of $16.7 million for the six months ended June 30, 2017.  The increase was a result of a reduction to reimbursements owed to third party UCF holders as a result of the receipt of cash from the GreenPoint litigation settlement.

Fees and other income were $14.3 million for the six months ended June 30, 2018, as compared to $3.2 million for the same period last year.  The increase was primarily due to the sale of a real estate development option.

Net loss on credit default and other swap contracts was $24.7 million for the six months ended June 30, 2018, as compared to earnings of $3.1 million for the six months ended June 30, 2017.  The decrease was primarily due to lower non-performance risk spreads during the current period.

Net losses and loss adjustment expenses were $14.6 million for the six months ended June 30, 2018, as compared to $41.9 million for the six months ended June 30, 2017.  The decrease was primarily due to public finance positive developments, partially offset by RMBS adverse developments and additional loss adjustment expenses related to the sale of American Roads LLC.  

Loss on debt prepayment was $91.4 million for the six months ended June 30, 2018, as a result of the payment made on the long-term notes which have not yet been fully accreted to par.  On June 27, 2018, Syncora Guarantee Inc. made a net payment of $400 million on its long-term and short-term surplus notes. 

Operating expenses were $28.5 million for the six months ended June 30, 2018, as compared to $21.4 million for the same period last year.  The increase was primarily due to expenses incurred in connection with the reinsurance agreement.

Income from discontinued operations represents the total revenues and total expenses of American Roads LLC, which was $10.8 million for the six months ended June 30, 2018 and $6.0 million for the same period last year.

Consolidated Balance Sheets

Total assets decreased by $444.1 million from $2,385.5 million as of December 31, 2017 to $1,941.4 million as of June 30, 2018 primarily as a result of the $400.0 million note payment.

Total liabilities decreased by $317.9 million from $1,683.5 million as of December 31, 2017 to $1,365.6 million as of June 30, 2018.  The decrease was primarily due to lower notes payable and accrued interest balances as a result of the $400.0 million note payment made, RMBS and public finance positive developments, lower unearned premium revenue from the continued run-off of the Company's insured portfolio, lower liabilities of variable interest entities as a result of the deconsolidation of two variable interest entities and lower accounts payable, accrued expenses and other liabilities due to lower compensation-related expenses as a result of headcount reductions.  These amounts were

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