Ambac announced on August 9 2010 that it plans to file for prepacked bankruptcy.
Ambac shares have more than tripled, as insurance regulators unveiled a plan to seize part of Ambac's main insurance business, Ambac Assurance, to protect hundreds of billions of dollars in guarantees on municipal bonds. The plan is to remove Ambac's toxic exposures and leave it with roughly $300 billion in less risky, municipal guarantees. Whether this intervention is enough for Ambac to turn things around remains to be seen.
A class action lawsuit brought by a number of large banks and insurance companies against Ambac's largest competitor (MBIA) was not dismissed by a Federal judge, meaning the lawsuit will progress. The lawsuit was against MBIA's new business segment, similar to one that Ambac had planned to start as well, but ultimately decided against.
ABK reports that its capital surplus nearly triples between the second and third quarters of 2009. This eased concerns of ABK runniing out of liquidity in the short term.
On November 10, 2009, Ambac issued a warning to its shareholders that it might not have enough cash to meet payments as early as the second quarter of 2011.
Due to a beneficial $1.5 billion accounting gain related to its fair value of derivatives, Ambac narrowed its loss in Q1. Its net loss for the quarter was $392.2 million.
Ambac disclosed in regulatory filings that the company paid its chairman, Michael Callen, and Chief Executive, David Wallis, $975,000 and $500,000 bonuses, respectively.
Ambac lobbied with regulators to receive $1.5 billlion from the TARP in exchange for preferred equity
ABK commutes about $3.5 BIllion in debt obligation for $1 Billion in cash.
The explicit AAA guarantee of Ambac's insurance is no more. S&P has downgraded the insurance unit of Ambac to AA. All of the securities insured by Ambac assumed to be AAA will now be revalued to AA unless the underlying credit is a AAA.
Moody's has announced a review of the company's Aaa rating on the prospects of slowing new business and increases in mortgage-related losses.
The company is being replaced in the index by Loews Corp's pending spinoff, Lorillard Tobacco Company
ABK announced a much larger than expected loss of $1.66 billion. However I think the primary reason for the 43% one day drop in price is the realization that ABK is no longer a going concern. Sure the company has a stream of cash flows from the insurance it has already written, but the question is whether it will write any more. I think the best case scenario is somebody buys the company for these cash flows but I certainly wouldn't buy the stock because all stock prices are is a discount of expected higher earnings.
Ambac cut its dividend and said it would try to raise capital to shore up its credit rating. Some analysts thought the company would have a hard time raising money.
ABK announced a $743 million writedown on some of the credit default obligations on its books and lowered guidance. Afraid of further writedowns, investors punish the stock