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I.
Corporate Fund Financial Statement Results -
Third Quarter 2006
DIF
- DIF’s
comprehensive income rose by $428 million in the third quarter of 2006,
up from $350 million for the same quarter last year. This $78 million
increase is largely attributable to higher earnings on U.S. Treasury
obligations of $115 million (interest income plus unrealized losses
on AFS securities) offset by lower negative provision for insurance
losses of $15 million. .
- For the first nine months
of 2006, DIF’s comprehensive
income totaled $1.4 billion compared to $866 million last year,
an increase of 61 percent. Excluding the recognition of exit fees earned
of $345
million (a one-time adjustment), comprehensive income rose by $184
million from a year ago. This year-over-year increase is primarily
due to an
increase in interest earned on U.S. Treasury obligations of $97
million and a decrease in the unrealized loss on AFS securities of
$134 million,
which were slightly offset by a $40 million decrease in the negative
provision for insurance losses.
- As noted
above, DIF reported a 6 percent ($97 million) increase in interest
income and a 47 percent ($134 million) decline in unrealized losses
in the first nine months of 2006 compared to same period last year.
The increase in interest income resulted from a larger average investment
portfolio during the current period being invested at generally higher
interest rates. The lower unrealized loss stemmed from a combination
of a smaller total market value of AFS securities invested during the
period and a lower duration for the AFS securities held in the DIF’s
investment portfolio. .
FRF
- FRF’s net income was $6 million for the first nine months
of the year, compared to a $322 million loss for the same period last year.
This change is primarily due to: 1) payments for Goodwill settlements of $195
million in 2006 vs. $391 million a year ago, 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, and 3) a $44
million increase in interest income on U.S. Treasury obligations.
- During the third quarter of 2006, FRF paid a Goodwill settlement
of $16 million and a Guarini judgment of $6 million. For the year,
FRF has paid a total of approximately $370 million in Goodwill and Guarini
judgments/settlements ($195 million and $175 million, respectively).
The FRF payments for the Goodwill settlements were funded by the
U.S.
Treasury through a separate, indefinite appropriation; however,
the FRF funds the Guarini litigation payments.
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