Syncora Holdings Ltd. Announces Statutory Financial Results for 2015 and Provides Update on Strategic Initiatives

HAMILTON, Bermuda, Feb. 25, 2016 /PRNewswire/ -- Syncora Holdings Ltd. ("SHL" or the "Company") and its wholly owned subsidiaries, Syncora Guarantee Inc. ("SGI") and Syncora Capital Assurance Inc. ("SCAI"), today provided updates on their statutory financial results for the year ended December 31, 2015 and on the Company's strategic initiatives.

During the fourth quarter of 2015, SGI completed certain significant commutations and other related transactions that have resulted in a material improvement to SGI's policyholders' surplus position since the filing of its third quarter 2015 statutory financial statements.  Specifically, SGI completed transactions that commuted and reinsured key structured single risk credits with refinancing, foreign exchange and/or index-linked risks, as well as structured RMBS credits.   The aggregate effect of these commutations reduced SGI's net par outstanding by $1.7 billion and had a positive policyholders' surplus benefit of $116.5 million, as compared to SGI's third quarter 2015 statutory financial statements. These transactions also reduced SGI's forecasted gross claim payments related to its "liquidity mismatch" from $503.1 million to $182.1 million as of December 31, 2015. See the "Significant Risks and Uncertainties" footnote in SGI's recently filed Annual Statement for a description of this "liquidity mismatch".

Commenting on the commutations, Susan Comparato, Chief Executive Officer said, "These commutations are further strong evidence of the Company's successful risk reduction and remediation plans, and efforts to stabilize the insurance companies and move them into a stable run-off."

Because of the continued uncertainty regarding SGI's and SCAI's exposure to Puerto Rico-related credits, including Puerto Rico Electric Power Authority ("PREPA"), SGI and SCAI have provided updated information on their Puerto Rico-related exposures in their fourth quarter 2015 Operating Supplement. Although SCAI and PREPA continue to negotiate in good faith to reach agreement with respect to SCAI's participation in PREPA's recovery plan, no agreement has been, or may ultimately be reached.

The Company also confirmed that it continues to actively pursue its strategic initiatives to increase value for Syncora stakeholders. Claude LeBlanc, Chief Financial Officer and Chief Restructuring Officer, said, "Following the successful completion of the amendment to the Master Transaction Agreement and entry into a new capital support agreement during the third quarter of 2015, the Company continues to actively pursue its strategic plan and has been engaged in discussions with certain stakeholders and the New York Department of Financial Services with the goal of enhancing value for all stakeholders." 

Statutory Financial Results

The Company has posted on its website at www.syncora.com, Statutory Annual Statements for the year ended December 31, 2015 and the fourth quarter 2015 Operating Supplement for its subsidiaries, SGI and SCAI.  The Company also posted supplemental information on its subsidiaries' insured portfolio.  Highlights of SGI's and SCAI's statutory financial results for the year ended December 31, 2015 are below:

SGI

Statutory Balance Sheet

As of December 31, 2015, SGI held cash and invested assets of $1,240.4 million, as compared to $1,204.6 million as of December 31, 2014.  The increase was primarily due to its investment in SCAI as a result of the subsidiary's improved policyholders' surplus position.    

Losses and loss adjustment expenses were a recoverable of $45.4 million as of December 31, 2015, as compared to a loss of $111.8 million as of December 31, 2014. This positive change was primarily driven by the release of reserves related to the commutation transactions executed in December 2015 as discussed above, as well as an increase in salvage recoverable.

Unearned premium revenue decreased by $30.5 million from $141.6 million as of December 31, 2014 to $111.1 million as of December 31, 2015 primarily as a result of management's continued active remediation efforts during the year, as well as from the run-off of the insured portfolio.  As a result of these efforts, SGI's portfolio was $6.6 billion in net par outstanding as of December 31, 2015 as compared to $10.3 billion in net par outstanding as of December 31, 2014.

SGI had policyholders' surplus of $1,087.0 million and claims-paying resources totaling $1,481.0 million as of December 31, 2015.

Statutory Income Statement

SGI's net income was $209.0 million for the year ended December 31, 2015 compared with a net loss of $52.7 million for the year ended December 31, 2014.  The increase in net income for the full year 2015 compared with the prior year was primarily attributable to the benefit related to the commutation transactions executed in December as discussed above, as well as from positive loss developments related to our structured single risk and RMBS credits.

Net premiums earned were $43.3 million for the year ended December 31, 2015, as compared with $49.2 million for the year ended December 31, 2014.  This decrease was primarily due to the orderly run-off of the insured portfolio and the cumulative effect of management's continued active remediation efforts.

Net losses and loss adjustment expenses were a benefit of $141.0 million for the year ended December 31, 2015, as compared with a loss of $118.3 million for the year ended December 31, 2014.  This benefit was also primarily driven by the release of reserves related to the commutation transactions noted above, as well as improved recoveries on loss exposures.

SCAI

Statutory Balance Sheet

As of December 31, 2015, SCAI held cash and invested assets of $462.7 million, as compared to $478.8 million as of December 31, 2014.  The decrease was primarily due to the payment of $12.2 million of interest on its surplus note during 2015. 

Losses and loss adjustment expenses were $40.6 million as of December 31, 2015, as compared to $22.1 million as of December 31, 2014. The increase was primarily due to adverse development during 2015 on exposures related to Puerto Rico.

Unearned premium revenue decreased by $53.2 million from $216.7 million as of December 31, 2014 to $163.5 million as of December 31, 2015.  This decrease was primarily driven by higher refunding volume in municipal finance and management's continued active remediation efforts.  As a result, SCAI's portfolio was $21.7 billion in net par outstanding as of December 31, 2015 as compared to $31.3 billion in net par outstanding as of December 31, 2014.

SCAI had policyholders' surplus of $192.1 million and claims-paying resources totaling $599.2 million as of December 31, 2015. The improvement in policyholders' surplus was primarily due to premium accelerations during 2015 as discussed below and releases of contingency reserves under SCAI's existing permitted practices, partially offset by incurred losses during the year on Puerto Rico exposures.

Statutory Income Statement

SCAI's net income was $4.6 million for the year ended December 31, 2015 compared with a net loss of $74.3 million for the year ended December 31, 2014.

Net premiums earned were $64.9 million for the full year 2015 compared with $53.0 million for the full year 2014.  As discussed above, this increase was primarily driven by higher refunding volume during the year and remediation efforts.  Total premium accelerations for SCAI were $34.6 million for the year ended December 31, 2015 as compared to $12.8 million for the year ended December 31, 2014.

Net losses and loss adjustment expenses were $35.9 million for the year ended December 31, 2015, as compared to $43.9 million for the year ended December 31, 2014.  The decrease was primarily due to a reduction in losses as a result of the Detroit settlement in 2014, partially offset by adverse developments on Puerto Rico exposures during 2015. 

About Syncora Holdings Ltd.

Syncora Holdings Ltd. (OTC: SYCRF) is a Bermuda-domiciled holding company.  Syncora Guarantee Inc. and Syncora Capital Assurance Inc. are wholly owned subsidiaries of Syncora Holdings Ltd. Further information can be found on www.syncora.com.

Contact
Michael Corbally
Syncora Holdings Ltd.
1 212 478 3400
[email protected]

Forward Looking Statements

This release contains statements about future results, plans and events that may constitute "forward-looking" statements.  We caution you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release.  In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek," "comfortable with," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology.  Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's control. These risks and uncertainties include, but are not limited to, the factors described in the Company's historical filings with the New York Department of Financial Services, and in the Company's, Syncora Guarantee Inc.'s and Syncora Capital Assurance Inc.'s GAAP and statutory financial statements posted on its website at www.syncora.com.  Readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made.

SOURCE Syncora Holdings Ltd.

Related Links

http://www.syncora.com