Ambac Comments on Standard and Poor’s Rating Action
EW YORK.- Ambac Financial Group, Inc. (NYSE:ABK) (Ambac) issued the following statement in response to today’s rating actions by Standard & Poor’s Rating Services (S&P):
We disagree with and are disappointed by the actions taken by S&P. Our frustration stems, in part, from the ever-changing criteria for AAA financial strength ratings. Less than three months ago, S&P affirmed our AAA rating and removed Ambac from Credit Watch Negative, citing our successful capital raise and moratorium on new structured finance business production. At that time, Ambac had claims paying ability greater than $700 million in excess of S&P’s stated requirements. S&P stated today that it is no longer basing our rating on claims paying ability, but rather on the diminished flow of new public finance and structured finance business we are experiencing. We are in the midst of the most challenging market environment in our 37-year history, and we are fully focused on stabilizing our business and regaining our market position.
Prior to the rating agency announcements this week, Ambac had been accelerating its efforts to launch a new AAA-rated financial guarantor utilizing Connie Lee, a fully-licensed financial guarantee subsidiary of Ambac Assurance Corporation. Connie Lee would be recapitalized with surplus capital from Ambac Assurance and, potentially, from one or more third parties. Ambac Assurance currently has substantial excess capital available under both Moody’s and S&P’s capital models.
Michael Callen, Chairman and CEO of Ambac, commented, “We believe there would be strong demand for a stable AAA financial guarantor focused solely on guaranteeing the obligations of both municipal and global public finance. We also believe that, based on its proposed capitalization and business plan, the new Connie Lee will receive regulatory approval and will attract stable AAA ratings. Ambac remains committed to working closely with S&P and other rating agencies not only to further explain the details of our insured portfolio and the results of our active portfolio remediation efforts, but also to explore all strategic options available to us.”
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