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I.
Corporate Fund Financial Statement Results -
Second Quarter 2006
DIF
- The DIF
reported comprehensive income of $967 million for the first half
of 2006 compared to $518 million for the same period in 2005.
This increase
of $449 million is primarily due to the recognition of exit fees
earned of $346 million and a decrease in the unrealized loss
on AFS securities
of $105 million. Total expenses and losses increased nominally
by $7 million primarily as a result of a $20 million decrease
in operating expenses offset by a $24 million increase in provision
for insurance
losses.
- The DIF fund
balance as of June 30, 2006 increased by approximately 2 percent to
$49.6 billion
from year-end 2005.
- DIF reported
an unrealized loss on AFS securities of $134 million for the
first half of 2006 compared to $239 million for the same period last
year.
This significantly lower unrealized loss resulted from a smaller
average increase in AFS portfolios’ market yields during the first half
of 2006, a smaller total market value of AFS securities for the first
half of 2006, and a lower average duration for the AFS securities during
the first half of 2006.
FRF
- FRF’s comprehensive loss was $53 million for the first half
of 2006, compared to a $335 million loss for the same period last year. This
decrease in the loss is primarily due to: 1) FRF payments for the Goodwill
settlements of $382 million in the first half of 2005 vs. $179 million in
the first half of 2006, and 2) the net effect of a $99 million payment for
a Guarini litigation settlement and the reversal of a $154 million loss reserve
in the second quarter of 2006 for this same case.
- During the second quarter of 2006, FRF paid a Goodwill settlement
of $110 thousand and two Guarini judgments/settlements totaling
$169 million. For the past six quarters, FRF has paid a total of approximately
$1 billion in Goodwill and Guarini judgments/settlements ($804
million
and $246 million, respectively). The FRF payments for the Goodwill
settlements were funded by the U.S. Treasury through a separate, indefinite
appropriation;
however, the FRF does fund the Guarini litigation payments.
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