Ambac makes desperate flurry of changes

17 January 2008

Amid forecasts of a loss in excess of $3 billion, Ambac has ousted its chief executive, slashed its dividend and announced that it needs to raise $1 billion to keep its triple-A rating from being harmed.

Yet it could be too little too late for the world's biggest bond insurer, as Moody's has announced that it is placing Ambac's rating under review.

Issuing a profits warning, Ambac wrote down the value of its credit derivative portfolio by $3.5 billion, mostly directly due to the sub-prime mortgage crash.

Chief executive and chairman Robert Genader has stepped down immediately with board member Michael Callen taking over in the interim.

Ambac has also cut its shareholder dividend by two thirds from 21 cents per share to seven cents.

The bond insurer now needs a $1 billion cash injection to preserve its triple-A credit rating and has announced it expects over $3 billion to be lost for the fourth-quarter.

The news led to a 25 per cent nosedive in Ambac's shares, with a further drop expected on the back of the news that Moody's may downgrade the insurer's credit rating.

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