NU Online News Service, Nov. 10, 1:05 p.m.EST

Two major bond insurers hobbled by the financial meltdown in thecredit markets report mixed third-quarter results today.

N.Y.-based MBIA reports third quarter net income of $444million, or $2.26 a share, compared to a net loss of $213 million,or $1.06 a share a year ago. Revenues stood at $1.12 billioncompared to the previous year's loss of $191 million.

For the first nine months of the year, the company reports a netloss of $693 million, or $3.50 a share, compared to net loss of$398 million, or $1.96 a share in 2010.

New York-based Ambac records a net loss of $76 million, or 25cents a share for the third quarter, compared to net income of $76million or 25 cents a share for the previous year's third quarter.Revenues fell to $26 million in the quarter from $361 million in2010.

For the first nine months of this year, Ambac's net lossincreased to $997 million, or $3.30 a share, from $672 million, or$2.29 a share. Revenues increased from $243 million in 2010 to $377million this year.

During a conference call with financial analyst, MBIA's ChiefExecutive Officer Joseph Brown Jr. says that the results show thepositive effects of its commutation agreements with insureds overcredit default obligations that reduced the company's “volatility”to those financial instruments.

Chuck Chaplin, president and chief financial officer, says theimpact of the commutation agreements “is the reason that we feelpretty good about our results in the third quarter.”

He says the number of plaintiffs contesting the company's splitinto two separate insurance entities through an Article 78 hearingis continuing to drop, leaving only eight left.

The insureds are contesting a decision by New York StateInsurance Department that allowed the company to split itsportfolio of health municipal bonds into a separate company in2009, named National Public Finance Guarantee. MBIA kept its bookof troubled structured-finance polices.

The plaintiffs argue that the split of the company put theirpolicies at risk because it put the structured finance portion indanger of insolvency.

Brown says that as time passes the company's performance showstheir suit has no merit and he continues to predict MBIA willeventually prevail.

On its own fraud suit against a number of banks that hadpolicies covering those structured-finance instruments, Brown saysthe company believes it will ultimately prevail and collect the“vast majority” of its losses from those institutions.

Regarding the announcement yesterday that Jefferson County inAlabama would file for bankruptcy on about $4 billion of debt,executives say they have about $91 million of exposure that hasbeen reserved for and they expect no surprises.

For its part, Ambac did not hold a conference call. The company,which is in Chapter 11 bankruptcy, says its declines are in partthe result of its inability to write new business and runoff.

One bright spot was a 17 percent increase in investment incomeof $12 million to $82 million.