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| Type | Public (NYSE: ABK) |
|---|---|
| Founded | New York City, U.S. (1971) |
| Headquarters | One State Street Plaza, New York City, U.S. |
| Key people | David Wallis, CEO |
| Industry | Financial services |
| Revenue | ▼ US $6.25 billion (2007)[1] |
| Employees | 367 |
| Website | www.ambac.com |
The Ambac Financial Group, Inc., generally known as Ambac, (NYSE: ABK) is an American holding company whose subsidiaries provide financial guarantee products, such as bond insurance and other financial services to clients in both the public and private sectors around the world. Ambac is regulated by the insurance commission of Wisconsin. Through its financial services subsidiaries, the company provides investment agreements, interest rate swaps, investment advisory and cash management services, primarily to states, municipalities and their authorities. It has its headquarters in Lower Manhattan, New York City.[2]
Credit rating
Ambac and other bond guarantors, such as MBIA, were hit hard by the 2007 subprime mortgage financial crisis, and, on January 18, 2008, its Fitch credit rating was lowered from AAA (the highest) to AA when its plans to raise two billion dollars in new capital failed.[3] Moody's and S&P, however, chose to affirm Ambac's AAA with their agencies after it succeeded in raising $1.5 billion in new capital in March 2008.[4] In early 2008, the spectre of the major bond guarantors failing to be able to pay off insurance claims on a trillion dollars of securities back by sub-prime mortgages and other securitized debt led to attempts to shore them up with infusions of capital.[5] On June 19, 2008 Moody's downgraded Ambac's credit rating three notches to Aa3.[6]
Maintaining a high credit rating is critical for bond insurance firms. Companies and governments buy insurance to reduce their borrowing costs by assuming the higher rating of the insurer. Keeping up this rating is thus the basis of the insurer's business model.
References
- ^ Yahoo Finance (2008-05-20). "Full Year 2007 Revenues of -$6.25 Billion,". Press release. http://finance.yahoo.com/q/ks?s=ABK. Retrieved 2008-05-21.
- ^ "Contact Us." Ambac Financial Group. Retrieved on December 11, 2009.
- ^ "Ambac's Insurance Unit Cut to AA From AAA by Fitch Ratings" article by Christine Richard Jan. 19 (Bloomberg)
- ^ "Moody's, S&P confirm Ambac's AAA ratings" article by Alistair Barr March 12, 2008 (MarketWatch)
- ^ "Next on the Worry List: Shaky Insurers of Bonds" article by Vikas Bajaj and Jenny Anderson in The New York Times January 24, 2008
- ^ MarketWatch. "Stocks In Focus For Friday". Fox Business. http://www.foxbusiness.com/story/markets/industries/finance/stocks-focus-friday/-1081423944.
External links
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