NEW YORK (Bloomberg) — Bermuda-based bond insurer Assured Guaranty Ltd., which is backed by billionaire Wilbur Ross, reported net income for the second quarter of $203.5 million, reversing a year-earlier loss.

Net income climbed to $1.08 cents a share, from a net loss of $170 million, or $1.82 cents a share, a year earlier.

Operating income was 91 cents per share, compared with the average estimate of eight analysts in a Bloomberg survey who predicted 70 cents.

The results were welcomed by the market as Assured Guaranty gained nearly nine percent in after-hours trading.

The profit was driven by the company's acquisition last year of competitor Financial Security Assurance Holdings Inc. Assured Guaranty is the only company left offering municipal-bond insurance after market leaders including MBIA Inc. and Ambac Financial Group Inc. had their credit ratings slashed on losses linked to mortgages.

Berkshire Hathaway Inc., which entered the municipal bond insurance company in late 2007, has backed off after chairman Warren Buffett told investors that insuring municipal bonds appeared to have become "a dangerous business".

"Our operating earnings this quarter are the highest we have achieved since our initial public offering, reflecting the embedded earnings power of the combined Assured Guaranty Municipal Corp., Assured Guaranty Corp. and Assured Guaranty Re Ltd. subsidiaries, as well as improved performance on our insured US residential mortgage-backed exposures," said Dominic Frederico, Assured's president and chief executive officer.

"During the quarter, we made progress in building our US municipal market franchise and benefited from an accelerated rate of defective mortgage loan repurchases by originators, having reached agreement on or received $71 million for loan put-backs.

"Early stage mortgage delinquencies on our portfolio also continued to improve, resulting in our decision not to extend the conditional default rate loss curve on our insured residential mortgage exposures."

Assured Guaranty rose 29 cents, or 1.8 percent, to $16.10 in New York Stock Exchange composite trading before the release of earnings.

The shares have lost 26 percent this year.