Bermuda-based bond insurer Assured Guaranty last night announced first-quarter net income of $125.4 million down 61 percent from the same period a year earlier.The decrease was mainly due to unrealised losses on credit derivatives, an item that does “not have economic significance”, according to a statement from the company.Operating income rocketed to $248.9 million, an increase of 121 percent from the first quarter of 2010.A major development in the first quarter was that the company secured a $1.1 billion payout from Bank of America over the insurance of faulty mortgages.“Reaching an agreement with Bank of America was a major accomplishment and a significant contributor to our financial results for the quarter,” said Assured’s chief executive officer Dominic Frederico.“This agreement, accomplished without litigation, confirms our loan-by-loan approach to our R&W claims and allows us to focus more intently on others who have not fulfilled their contractual obligations. It is also a major accomplishment in our strategy of enhancing our capital position, and puts us in a better position to address any potential changes in rating agency capital requirements.”Assured is a major player in the US municipal bond insurance market and its opportunities for business in this field were limited by a 55 percent decrease in new issuance in the lowest quarter for municipal issuance since 2000.First quarter PVP, a financial measure representing the present value of new business production, decreased 33.4 percent to $52.5 million.Mr Frederico said: “This quarter’s new business production was lower than we like but is a reasonable result given the reduction in issuance in the municipal market and the uncertainty created by Standard & Poor’s Ratings Services’ proposed new bond insurance criteria.“In fact, as a testament to the resiliency of our product, our insured penetration increased month to month during the quarter, from 2.7 percent in January to 4.6 percent in February and 6.7 percent in March and hit 8.9 percent for April.”