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ACA Capital Reports Financial and Economic Results for the Second Quarter and Six Months Ended June 30, 2007
· ACA Capitals Board of Directors authorizes $20.0 million stock repurchase
· ACA Financial Guarantys qualified statutory capital increases to $406.9 million and claims paying resources exceed $1.0 billion
NEW YORK July 31, 2007 ACA Capital Holdings, Inc. (NYSE: ACA) today announced a second quarter 2007 net loss of ($93.3) million, or ($2.55) per diluted share. The net loss was primarily a result of impairment losses on bonds in certain consolidated CDOs and net unrealized mark-to-market losses on the Companys portfolio of Structured Credit transactions. These losses were directly attributable to the deterioration of second-lien and sub-prime residential mortgage-backed securities occurring during the quarter. Included in the net loss are ($30.5) million of after tax impairments on bonds in consolidated CDOs in excess of the Companys economic investments. For the six months ended June 30, 2007, ACA Capital reported a net loss of ($81.9) million, or ($2.24) per diluted share.
Net income and net income per diluted share are computed in accordance with accounting principles generally accepted in the United States of America (GAAP). Additionally, to assist investors in their understanding of the Companys quarterly results and their measurement of the Companys growth and profitability, ACA Capital provides other non-GAAP information, including net economic income (loss) and base economic income (loss).
The net economic loss for the second quarter of 2007 was ($13.2) million, or ($0.36) per diluted share as compared with second quarter 2006 net economic income of $14.9 million or $0.49 per diluted share. Net economic income for the first six months of 2007 was $2.5 million, or $0.07 per diluted share as compared with $26.0 million or $0.87 per diluted share for the same period in 2006.
The base economic loss for the second quarter of 2007 was ($15.3) million, or ($0.42) per diluted share as compared with second quarter 2006 base economic income of $12.1 million or $0.40 per diluted share. The base economic income for the first six months of 2007 was $0.1 million, or $0.01 per diluted share as compared with base economic income of $23.0 million or $0.77 per diluted share for the same period in 2006.
Alan S. Roseman, ACA Capitals President and Chief Executive Officer, said ACA Capital remains extremely well capitalized relative to its risk exposure and is very much open for business. We have every reason to believe that the A rating of our insurance subsidiary, ACA Financial Guaranty, will remain intact. In fact, the qualified statutory capital of ACA FG, increased $18.6 million during the second quarter to $406.9 million and its claims paying resources topped $1.0 billion. The risk exposure in our Structured Credit business is 99.8% super-AAA and is not exposed to liquidity risk associated with mark-to-market volatility. While we are very disappointed that our profitability in 2007 will be less than originally planned, this earnings disappointment does not affect the financial strength of ACA Capital or ACA FG. ACA Capitals franchise rests upon our unique and established position in the structured finance and public finance markets. Our continued, long-term commitment to our investors, insured bondholders and counterparties is steadfast and remains our priority.
The following information was filed by Aca Capital Holdings Inc on Wednesday, August 1, 2007 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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