Reduces the risk Ambac

 

Thursday, Apr 09,2009, 2:17:11 PM   Click:

Copyright: Business Wire
Source: Business Wire
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NEW YORK - (BUSINESS WIRE) - Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today confirmed it has put an end to all reinsurance transactions with RAM Reinsurance Company Ltd. ( "RAM Re") in force April 8, 2009. The cancellation reflects the recovery of approximately $ 7 billion outstanding of which approximately two thirds is classified as the exposure of public finances. The rest of the portfolio, about $ 2.4 billion, is composed of structured finance, including exposure of about U.S. $ 500 million RMBS. The economic result will be a payment to Ambac Ram Re for about $ 97 million. The present value of future premium payments associated with this business is approximately $ 60 million.

Greg Raab, Chief Risk Officer, commented that, "This transaction confirms the commitment of Ambac to reduce outstanding reinsurance exposure. In so doing, we reduce the risk, liquidity and improving the earned premiums, and improving our risk-based capital position. In addition, the recovery of reinsurance of lower rated counterparties positive overall has an impact on the capital of credit rating agencies, which is increasingly heavy haircuts to reinsurance BBB / Baa or least nominal reinsurers.

Forward-Looking Statements

This press release contains forward-May constitute "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any or all of management's forward-looking statements here or in other publications of May to be false and Ambac are based on management's current belief or opinions. May Ambac's actual results to differ materially, and there are no guarantees about the performance of securities of Ambac. Among events, risks, uncertainties or factors that could cause actual results to differ materially are: (1) difficult economic conditions, which in May did not improve in the near future, and adverse changes in economic, credit , currency or interest rate environment in the United States and abroad (2) the actions of the government of the United States, the Federal Reserve and other regulators and stabilize financial markets , (3) the risk that the impact of market risks of the assets of our portfolio investments or the value of our assets as security in respect of investment agreements and interest rate swap and transaction currency swap (4) changes in Ambac and / or Ambac Assurance credit or credit ratings; (5) risks related to the revitalization of Connie Lee Everspan Financial Guaranty Corp. (6) competitive conditions , prices and reduced demand for financial security; (7) credit and liquidity risks due to unpredictable and unanticipated withdrawals on investment agreements; (8) the inadequacy of reserves established for losses expenses and losses (9) changes in capital requirements resulting from the decline in our insured portfolio or changes in rating agencies rating criteria or other reasons; (10) the risk May be we need to raise capital, which could have a dilutive effect on our outstanding share capital and / or future earnings (11) our ability or inability to raise additional capital, including risks as other regulatory approvals or any plan to raise capital are not obtained or that various conditions such a plan, either imposed by third parties or by Ambac or its Board of Directors, are not met and thus potentially necessary capital transactions do not occur, or the risk for other reasons the Company can not accomplish any necessary capital transactions (12) credit risk in our business, including the risk of credit related to the residence of securities backed by mortgages and obligations of the secured debt ( "CDOs") and large single exposures to reinsurers; (13) spreads and market prices on the insured CDOs and derivatives other insured or issued by Ambac; (14) the risk that holders of debt securities or counterparties to credit default swaps or other similar agreements seek to declare events of default or seek judicial relief or bring claims alleging violation or breach of terms by Ambac or one of its subsidiaries; (15) default by one or more of Ambac Assurance portfolio investments, insured issuers, counterparties or reinsurers; (16) of Ambac's financial condition and lack of financial flexibility, resulting mainly from the uncertainty of Ambac Assurance's ability to pay dividends to Ambac without the consent of the office of the Commissioner of Insurance of the State of Wisconsin (17) the legislative and regulatory developments, including the Troubled Asset Relief Program and other programs under the Act on the emergency economic stabilization and other similar programs (18) changes of accounting principles or practices relating to the financial guarantee industry or May of the impact Ambac reported financial results (19) changes in expectations regarding future realization of gross assets of Deferred tax (20) the risk of volatility in income and earnings, including volatility due to the application of fair value accounting required under SFAS 133, the portion of our credit enhancement that is executed in the form of credit derivatives (21) the risk that our underwriting and risk management policies and practices do not anticipate certain risks and / or the magnitude of potential loss due to unforeseen risks (22 ) operational risks, including with respect to internal processes, risk models, systems and employees (23) May factors influence the amount of installment premiums paid to Ambac; (24) the risk of litigation and inquiries and regulatory investigations, and the risk of poor performance in this regard, which could have a material adverse effect on our business, operations, financial position, profitability or cash flows (25 ) changes in tax laws, (26) other factors described in the Risk Factors section in Part I, Item 1A of our Annual Report on Form 10-K for the year ended 31 December 2008, and also revealed from time to time by Ambac in its subsequent reports on Form 10-Q and Form 8-K, which are or will be available on the website at www. ambac.com Ambac and the website of the SEC, www.sec.gov, and (27) other risks and uncertainties that have not been identified at this time. Readers are cautioned that forward-looking statements speak only as of the date they are made and that Ambac does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made. You are therefore advised to consult other information that we make on related subjects in Ambac reports to the SEC.


Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose subsidiaries provide financial guarantees and financial services to clients in both public and private sectors around the world. Ambac main operating subsidiary of, Ambac Assurance Corporation, a guarantor of public finance and structured finance obligations, has earned a rating Baa1 (on review of the decline) by Moody's Investors Service, Inc. and a notation A (negative outlook) by Standard & Poor's Ratings Services. Ambac Financial Group, Inc. is publicly traded on the New York Stock Exchange (ticker symbol ABK).





Ambac Financial Group, Inc.

Investor / Media:

Vandana Sharma, 212-208-3333

vsharma@ambac.com

or

Fixed Income:

Peter Poillon, 212-208-3222

ppoillon@ambac.com

Source: Ambac Financial Group, Inc.