April 24 (Bloomberg) -- Ambac Financial Group Inc., the bond insurer struggling to hold on to its AAA credit rating, has no liquidity issues and the majority of its portfolio is performing well, interim Chief Executive Officer Michael Callen said.

The company's credit ratings ``are solid,'' Callen said in a Bloomberg Television interview from New York today.

The world's second-largest bond insurer, has been ``very aggressive'' in addressing its losses and will likely exceed ratings companies' capital targets by May, Callen said. Ambac in March sold $1.5 billion in stock and equity units after more than $5 billion of charges on its guarantees of mortgage-liked debt.

Ambac and larger competitor MBIA Inc. may need to raise more capital, New York Insurance Department Superintendent Eric Dinallo said in a Bloomberg Television interview earlier today.

``It's not time for a victory lap,'' Dinallo said. ``Mortgage losses and defaults will drive whether capital is ultimately OK.''

Goldman Sachs Group Inc. analyst James Fotheringham estimates New York-based Ambac and Armonk, New York-based MBIA may need to raise $3.4 billion each to fill capital shortfalls.

Ambac tumbled 43 percent in New York Stock Exchange trading yesterday after reporting a first-quarter net loss of $1.66 billion, or $11.69 a share. The company also revised claims estimates higher by $2 billion and said it may be in violation of at least one loan covenant.

Ambac rose 30 cents to $3.76 today. MBIA climbed $1.01 to $9.80 after plunging 34 percent yesterday.

Losses

Ambac's March stock offering was enough to persuade Moody's Investors Service and Standard & Poor's to take the AAA bond insurer rating off review, averting a downgrade that would have crippled the company's ability to guarantee bonds. It also removed the broader threat of losses for the $524 billion of municipal and asset-backed debt the company insures.

Bond insurers have posted record losses after expanding from guarantees on municipal bonds that rarely default to insuring securities tied to mortgages that are now going delinquent at the highest rate since 1985. Ambac's new business slumped 87 percent last quarter after ratings companies threatened to strip the insurer of its AAA status.

To contact the reporter on this story: Margaret Popper in New York at mpopper1@bloomberg.net; Bryan Keogh in New York at bkeogh4@bloomberg.net.

Last Updated: April 24, 2008 16:28 EDT