Ambac Financial Group Inc. (ABKFQ), the bond insurer that stopped paying some claims and accepting new business, reported a net loss of $57.6 million on a rise in expected claims.
The loss, equal to 20 cents a share, compares with a net loss of $2.37 billion, or $8.24, in the year-earlier period, the New York-based company said today in a filing with the U.S. Securities and Exchange Commission. Ambac said it increased its expectations during the second quarter for claims on asset- backed securities and on bonds used to fund a transportation project.
Ambac, unable to take dividends out of its Ambac Assurance division, has said it may file a pre-packaged bankruptcy. The unit, which is regulated in Wisconsin, was stripped of its top credit rating two years ago as claims on securities linked to home loans surged.
Wisconsin Insurance Commissioner Sean Dilweg said in March he was taking over Ambac’s policies on residential mortgage- backed securities and halting some payments to preserve capital to back the policies of municipal bondholders. Claims set for payment to mortgage investors threatened to deplete Ambac’s reserves and leave a thinner cushion for municipal-bond clients whose coverage extends decades into the future, Dilweg said.
In a prepackaged bankruptcy, a firm reaches an agreement on a restructuring with many of its creditors before it seeks court protection.
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