UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
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For the Quarterly Period Ended September 30, 2002 | ||
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
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Commission File Number: 1-10777 | ||
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| Ambac Financial Group, Inc. | |||
| (Exact name of Registrant as specified in its charter) | |||
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| Delaware |
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13-3621676 | |
| (State of incorporation) |
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(I.R.S. employer identification no.) | |
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| One State Street Plaza |
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10004 | |
| (Address of principal executive offices) |
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(Zip code) | |
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| (212) 668-0340 | |||
| (Registrant’s telephone number, including area code) | |||
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Yes |
x |
No |
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As of October 31, 2002, 105,977,949 shares of Common Stock, par value $0.01 per share, (net of 233,518 treasury shares) of the Registrant were outstanding.
Ambac Financial Group, Inc. and Subsidiaries
INDEX
2
PART I -
FINANCIAL INFORMATION
Item 1 -
Financial Statements of Ambac Financial Group, Inc. and Subsidiaries
Ambac Financial Group, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2002 and December 31, 2001
(Dollars in Thousands)
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September 30, 2002 |
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December 31, 2001 |
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(unaudited) |
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| Assets |
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| Investments: |
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Fixed income securities, at fair value (amortized cost of $10,163,780 in 2002 and $8,355,596 in 2001) |
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$ |
10,710,694 |
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$ |
8,469,157 |
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Fixed income securities pledged as collateral, at fair value (amortized cost of $809,274 in 2002 and $1,393,193 in 2001) |
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815,742 |
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1,401,528 |
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Short-term investments, at cost (approximates fair value) |
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137,369 |
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415,002 |
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Other |
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2,159 |
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2,163 |
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Total investments |
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11,665,964 |
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10,287,850 |
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| Cash |
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32,342 |
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76,580 |
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| Securities purchased under agreements to resell |
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24,504 |
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11,200 |
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| Receivable for investment agreements |
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21,369 |
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4,101 |
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| Receivable for securities sold |
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508,156 |
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8,922 |
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| Investment income due and accrued |
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127,961 |
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144,463 |
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| Reinsurance recoverable |
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2,195 |
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2,259 |
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| Prepaid reinsurance |
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273,931 |
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267,655 |
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| Deferred acquisition costs |
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172,718 |
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163,477 |
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| Loans |
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848,399 |
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901,194 |
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| Derivative product assets |
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961,250 |
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383,959 |
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| Other assets |
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49,290 |
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100,460 |
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Total assets |
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$ |
14,688,079 |
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$ |
12,352,120 |
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| Liabilities and Stockholders’ Equity |
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| Liabilities: |
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Unearned premiums |
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$ |
1,926,789 |
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$ |
1,780,272 |
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Losses and loss adjustment expense reserve |
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167,045 |
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152,352 |
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Ceded reinsurance balances payable |
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11,248 |
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10,146 |
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Obligations under investment and payment agreements |
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5,246,902 |
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4,089,777 |
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Obligations under investment repurchase agreements |
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1,085,946 |
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1,422,151 |
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Securities sold under agreement to repurchase |
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460,495 |
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425,000 |
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Deferred income taxes |
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270,930 |
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123,077 |
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Current income taxes |
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36,675 |
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98,145 |
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Debentures |
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612,717 |
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619,315 |
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Accrued interest payable |
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70,278 |
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84,225 |
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Derivative product assets |
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799,719 |
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325,922 |
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Other liabilities |
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138,175 |
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175,135 |
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Payable for securities purchased |
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241,036 |
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62,915 |
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Total liabilities |
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11,067,955 |
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9,368,432 |
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| Stockholders’ equity: |
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Preferred stock |
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— |
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— |
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Common stock |
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1,062 |
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1,060 |
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Additional paid-in capital |
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548,823 |
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538,135 |
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Accumulated other comprehensive income |
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319,793 |
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62,476 |
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Retained earnings |
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2,772,509 |
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2,403,473 |
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Common stock held in treasury at cost |
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(22,063 |
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(21,456 |
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Total stockholders’ equity |
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3,620,124 |
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2,983,688 |
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Total liabilities and stockholders’ equity |
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$ |
14,688,079 |
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$ |
12,352,120 |
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See accompanying Notes to Consolidated Financial Statements
3
Ambac Financial Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
For the Periods Ended September 30, 2002 and 2001
(Dollars in Thousands Except Share Data)
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Three Months Ended |
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Nine Months Ended |
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2002 |
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2001 |
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2002 |
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2001 |
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| Revenues: |
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Financial Guarantee: |
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Gross premiums written |
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$ |
205,110 |
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$ |
152,918 |
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$ |
550,154 |
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$ |
499,253 |
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Ceded premiums written |
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(26,854 |
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(35,874 |
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(71,108 |
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(72,342 |
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Net premiums written |
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$ |
178,256 |
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$ |
117,044 |
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$ |
479,046 |
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$ |
426,911 |
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Net premiums earned |
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$ |
122,396 |
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$ |
98,019 |
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$ |
339,680 |
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$ |
276,547 |
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Other credit enhancement fees |
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7,307 |
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5,876 |
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20,171 |
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15,524 |
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Net premiums earned and other credit enhancement fees |
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129,703 |
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103,895 |
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359,851 |
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292,071 |
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Net investment income |
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75,895 |
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67,318 |
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222,035 |
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196,852 |
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Net securities (losses) gains |
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(1,500 |
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3,578 |
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(10,581 |
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(10 |
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Other income |
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472 |
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502 |
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2,586 |
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3,918 |
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Financial Services: |
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Revenue |
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13,582 |
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10,231 |
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41,139 |
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36,457 |
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Net securities gains (losses) |
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1,402 |
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(3,589 |
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2,168 |
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(3,151 |
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Other: |
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Revenue |
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974 |
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786 |
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2,659 |
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3,093 |
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Net securities losses |
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(127 |
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(1,383 |
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(571 |
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(1,383 |
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Total revenues |
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220,401 |
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181,338 |
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619,286 |
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527,847 |
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| Expenses: |
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Financial Guarantee: |
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Losses and loss adjustment expenses |
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6,100 |
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5,100 |
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17,700 |
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14,500 |
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Underwriting and operating expenses |
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18,467 |
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16,602 |
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55,631 |
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50,671 |
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Financial Services |
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5,380 |
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5,023 |
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16,215 |
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16,627 |
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Interest |
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10,774 |
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9,370 |
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32,256 |
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28,338 |
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Other |
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1,884 |
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921 |
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5,365 |
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4,372 |
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Total expenses |
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42,605 |
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37,016 |
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127,167 |
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114,508 |
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| Income before income taxes |
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177,796 |
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144,322 |
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492,119 |
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413,339 |
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| Provision for income taxes |
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46,105 |
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