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Ambac CEO Comments on Moody’s Announcement Regarding its Continuing Review of Ambac’s Triple-A Ratings


WEBWIRE

NEW YORK.- Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today commented on the February 29 release by Moody’s Investors Service regarding the conclusion of its analysis of the residential mortgage and mortgage-related CDO exposures, in connection with its ongoing review of Ambac’s Aaa rating. Moody’s announced, in its release, that Ambac’s capital “exceeds the ‘minimum’ Aaa standard, [and that] Ambac is actively pursuing capital strengthening activities that, if successful, are expected to result in the Company meeting Moody’s current estimate of the Aaa target level.” In completing this phase of its review, Moody’s also noted that it “believes Ambac is better-positioned relative to certain less-established competitors with respect to business franchise, prospective profitability and financial flexibility.”

Michael Callen, Chairman and CEO of Ambac Financial Group, commented that, “We are pleased with this acknowledgment by Moody’s of the strength of our capital position and our franchise” and he confirmed that “we are actively pursuing a plan to further augment our capital resources in order to achieve Moody’s’ Aaa target.”

Mr. Callen added, “We are undertaking important steps to strengthen our company and support our ratings. Ambac will reduce its quarterly dividend from $.07 to $.01 per share and suspend all new structured finance business for the next six months. Suspending structured finance writings for six months is expected to free up approximately $600 million in capital.”

“In conjunction with this suspension,” said Mr. Callen, “we will discontinue writing business in a number of sectors in the global structured finance markets where the risk dynamics are not aligned with our vision of the future of Ambac. Furthermore, we are discontinuing writing new financial services businesses, including investment agreements and swaps, except where we are hedging existing exposures; and we will no longer execute financial guarantees using credit default swaps. These actions will allow us to focus our structured and international businesses on low volatility sectors, where we can generate good risk-adjusted returns.” “Finally,” he said, “we have implemented changes to our underwriting and risk management guidelines and are reviewing our underwriting criteria, net retention limits and single risk concentrations.”

Mr. Callen concluded, “We are optimistic about the business opportunities ahead for Ambac, both in municipal finance and in selected structured finance and international markets, when we resume that business. We appreciate the support of our policyholders, shareholders, clients and staff, as well as the many other parties, both public and private, who have provided support throughout this period of examination and business review.”



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