Ambac's AA Rating Affirmed by S&P
Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today announced
that Standard & Poor's Ratings Services (S&P) affirmed the 'AA'
financial strength rating on Ambac Assurance Corporation (AAC) and
removed it from CreditWatch Negative.
S&P stated that the rating affirmation reflects its assessment of
Ambac's:
Satisfactory capital position, measured against conservative
projections of potential losses;
Successful ongoing efforts to remediate the outstanding
mortgage-related exposure; and
Broad refocusing of the business and risk management to position the
company to take advantage of any new business opportunities and to
meaningfully participate in the credit enhancement industry as quickly
as possible, including retaining the necessary management and staff to
support these initiatives.
The rating is on negative outlook, reflecting Ambac's exposure to
domestic nonprime mortgages and related exposures to collateralized debt
obligations of asset-backed securities (CDO of ABS) and its impact on
Ambac’s future business prospects.
Michael Callen, Chairman and CEO, stated, "Ambac’s
remediation and commutation efforts will continue to address S&P’s
concerns related to our RMBS and CDO of ABS exposures. Moreover, we are
diligently working to rebuild our franchise and are pleased with the
progress we are achieving in support of establishing a new subsidiary
focused on the municipal and public purpose financing markets.” Forward-Looking Statements
This release contains statements that 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 may turn out to be wrong and are based on Ambac’s
management current belief or opinions. Ambac’s
actual results may vary materially, and there are no guarantees about
the performance of Ambac’s securities. Among
events, risks, uncertainties or factors that could cause actual results
to differ materially are: (1) changes in the economic, credit, foreign
currency or interest rate environment in the United States and abroad;
(2) the level of activity within the national and worldwide credit
markets; (3) competitive conditions and pricing levels; (4) legislative
and regulatory developments; (5) changes in tax laws; (6) changes in our
business plan, our decision to discontinue writing new business in the
financial services area, to significantly reduce new underwriting of
structured finance business and to discontinue all new underwritings of
structured finance business for six months from March 6, 2008; (7) the
policies and actions of the United States and other governments;
(8) changes in capital requirements whether resulting from downgrades in
our insured portfolio or changes in rating agencies’
rating criteria or other reasons; (9) changes in Ambac’s
and/or Ambac Assurance’s credit or financial
strength ratings; (10) changes in accounting principles or practices
relating to the financial guarantee industry or that may impact Ambac’s
reported financial results; (11) inadequacy of reserves established for
losses and loss expenses; (12) default by one or more of Ambac Assurance’s portfolio
investments, insured issuers, counterparties or reinsurers; (13) credit
risk throughout our business, including large single exposures to
reinsurers; (14) market spreads and pricing on insured collateralized
debt obligations ("CDOs”)
and other derivative products insured or issued by Ambac; (15) credit
risk related to residential mortgage securities and CDOs; (16) the risk
that holders of debt securities or counterparties on 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
covenants by Ambac or one of its subsidiaries; (17) the risk that our
underwriting and risk management policies and practices do not
anticipate certain risks and/or the magnitude of potential for loss as a
result of unforeseen risks; (18) the risk of volatility in income and
earnings, including volatility due to the application of fair value
accounting, or FAS 133, to the portion of our credit enhancement
business which is executed in credit derivative form; (19) operational
risks, including with respect to internal processes, risk models,
systems and employees; (20) the risk of decline in market position;
(21) the risk that market risks impact assets in our investment
portfolio; (22) the risk of credit and liquidity risk due to unscheduled
and unanticipated withdrawals on investment agreements; (23) changes in
prepayment speeds on insured asset-backed securities; (24) factors that
may influence the amount of installment premiums paid to Ambac; (25) the
risk that we may be required to raise additional capital, which could
have a dilutive effect on our outstanding equity capital and/or future
earnings; (26) our ability or inability to raise additional capital,
including the risks that regulatory or other approvals for any plan to
raise capital are not obtained, or that various conditions to such a
plan, either imposed by third parties or imposed by Ambac or its Board
of Directors, are not satisfied and thus potentially necessary capital
raising transactions do not occur, or the risk that for other reasons
the Company cannot accomplish any potentially necessary capital raising
transactions; (27) the risk that Ambac’s
holding company structure and certain regulatory and other constraints,
including adverse business performance, affect Ambac’s
ability to pay dividends and make other payments; (28) the risk of
litigation and regulatory inquiries or investigations, and the risk of
adverse outcomes in connection therewith, which could have a material
adverse effect on our business, operations, financial position,
profitability or cash flows; (29) changes in expectations regarding
future realization of gross deferred tax assets; (30) other factors
described in the Risk Factors section in Part I, 1A of our Annual Report
on Form 10-K for the fiscal year ended December 31, 2007 and in Part II,
Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March
31, 2008, and also disclosed 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 Ambac website at www.ambac.com
and at the SEC’s website, www.sec.gov;
and (31) 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 arise after the date the statements are made. You are therefore
advised to consult any further disclosures we make on related subjects
in Ambac’s reports to the SEC.
Ambac Financial Group, Inc., headquartered in New York City, is a
holding company whose affiliates provide financial guarantees and
financial services to clients in both the public and private sectors
around the world. Ambac's principal operating subsidiary, Ambac
Assurance Corporation, a guarantor of public finance and structured
finance obligations, has earned a Aa3 rating from Moody's Investors
Service, Inc. and a AA rating from Standard & Poor's Ratings Services;
Moody’s rating is on negative outlook while
Standard & Poor's maintains a credit watch negative. Ambac Financial
Group, Inc. common stock is listed on the New York Stock Exchange
(ticker symbol ABK).
