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Primus Guaranty, Ltd. Reports Second Quarter 2013 Results (7/31/13)

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Enterprising Investor Member Level  Wednesday, 07/31/13 10:06:03 PM
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Primus Guaranty, Ltd. Reports Second Quarter 2013 Results (7/31/13)

HAMILTON, Bermuda--(BUSINESS WIRE)--Primus Guaranty, Ltd. (“Primus Guaranty” or “the Company”) (OTC PINK:PRSG) today announced its financial results for the second quarter ended June 30, 2013.

• GAAP net income available to common shares for the second quarter 2013 was $16.4 million, or $0.65 per diluted share, compared with GAAP net income available to common shares of $1.6 million, or $0.05 per diluted share, for the second quarter 2012. GAAP net income available to common shares for the second quarter 2013 substantially resulted from a net unrealized mark-to-market gain of $12.3 million on Primus Financial Products, LLC (“Primus Financial”)’s credit swap portfolio.

• Economic Results for the second quarter 2013 were $4.1 million, or $0.16 per diluted share, compared with Economic Results of $9.2 million, or $0.29 per diluted share, for the second quarter 2012. The primary difference between GAAP net income and Economic Results is that changes in the fair value of Primus Financial’s credit swap portfolio are not included in Economic Results.

• GAAP book value per common share was $10.10 at June 30, 2013, compared with GAAP book value per common share of $8.83 at December 31, 2012.

• Economic Results book value per common share was $10.48 at June 30, 2013, compared with Economic Results book value per common share of $10.19 at December 31, 2012.

• At June 30, 2013, the notional principal of Primus Financial’s consolidated credit swap portfolio totaled $3.4 billion, compared with $4.1 billion at December 31, 2012.

• During the second quarter of 2013, Primus Guaranty purchased 2 million of its common shares at a total cost of approximately $19 million and Primus Financial redeemed the remaining $77.4 million of its preferred securities at par.

• On July 30, 2013, the Company’s Board of Directors authorized an increase in the amount available for the purchase of the Company’s common shares to $25 million. Purchases will be made at management’s discretion.

Additional Information

A copy of this press release, the Company’s financial supplement, summary details of Primus Financial’s consolidated credit swap portfolio as of June 30, 2013, and a letter dated July 31, 2013 to the shareholders from Richard Claiden, Chief Executive Officer, are available in the Investor Relations section of the Company’s Web site at www.primusguaranty.com. Also available on the Web site are the results of the Company’s 2013 Annual General Meeting of Shareholders held on July 30, 2013.

Economic Results

In managing its business and assessing its profitability from a strategic and financial planning perspective, the Company believes it is appropriate to consider both its U.S. GAAP net income (loss) available to common shares as well as certain non-GAAP financial measures called “Economic Results”. We define Economic Results as GAAP net income (loss) available to common shares, adjusted as follows:

• Unrealized gains (losses) on credit swaps sold by Primus Financial are excluded from GAAP net income (loss) available to common shares;

• Realized gains from early termination of credit swaps sold by Primus Financial are excluded from GAAP net income (loss) available to common shares;

• Realized gains from early termination of credit swaps sold by Primus Financial are amortized over the period that would have been the remaining life of the credit swap. The amortized gain is included in Economic Results; and

• A net adjustment in provision for credit default swaps on asset-backed securities (“CDS on ABS”) credit events, upon termination or principal write-down of credit swaps, is included in Economic Results.

The Company believes that quarterly fluctuations in the fair market value of Primus Financial’s consolidated credit swap portfolio have little or no effect on the Company's business operations and that Economic Results provides a useful, alternative view of the Company’s economic performance.

About Primus Guaranty

Primus Guaranty, Ltd. is a Bermuda company with offices in New York. Through its subsidiary, Primus Financial Products, LLC, the Company provides protection against the risk of default on primarily investment grade corporate reference entities. Its common shares trade on the OTC Pink Tier of the OTC market. Investors can find market information for the Company on www.otcmarkets.com.

http://www.businesswire.com/news/home/20130731006614/en/Primus-Guaranty-Ltd.-Reports-Quarter-2013-Results

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