ABK Ambac Financial Grp. Common Stock

Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today commented on the February 29 release by Moody�s Investors Service regarding the conclusion of its analysis of the residential mortgage and mortgage-related CDO exposures, in connection with its ongoing review of Ambac�s Aaa rating. Moody�s announced, in its release, that Ambac�s capital �exceeds the �minimum� Aaa standard, [and that] Ambac is actively pursuing capital strengthening activities that, if successful, are expected to result in the Company meeting Moody�s current estimate of the Aaa target level.� In completing this phase of its review, Moody�s also noted that it �believes Ambac is better-positioned relative to certain less-established competitors with respect to business franchise, prospective profitability and financial flexibility.� Michael Callen, Chairman and CEO of Ambac Financial Group, commented that, �We are pleased with this acknowledgment by Moody�s of the strength of our capital position and our franchise� and he confirmed that �we are actively pursuing a plan to further augment our capital resources in order to achieve Moody�s� Aaa target.� Mr. Callen added, �We are undertaking important steps to strengthen our company and support our ratings. Ambac will reduce its quarterly dividend from $.07 to $.01 per share and suspend all new structured finance business for the next six months. Suspending structured finance writings for six months is expected to free up approximately $600 million in capital.� �In conjunction with this suspension,� said Mr. Callen, �we will discontinue writing business in a number of sectors in the global structured finance markets where the risk dynamics are not aligned with our vision of the future of Ambac. Furthermore, we are discontinuing writing new financial services businesses, including investment agreements and swaps, except where we are hedging existing exposures; and we will no longer execute financial guarantees using credit default swaps. These actions will allow us to focus our structured and international businesses on low volatility sectors, where we can generate good risk-adjusted returns.� �Finally,� he said, �we have implemented changes to our underwriting and risk management guidelines and are reviewing our underwriting criteria, net retention limits and single risk concentrations.� Mr. Callen concluded, �We are optimistic about the business opportunities ahead for Ambac, both in municipal finance and in selected structured finance and international markets, when we resume that business. We appreciate the support of our policyholders, shareholders, clients and staff, as well as the many other parties, both public and private, who have provided support throughout this period of examination and business review.� Forward-Looking Statements This release, in particular the remarks of Mr. Callen, contains statements about our future results that may constitute �forward-looking statements� within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any or all of management�s forward-looking statements here or in other publications may turn out to be wrong and are based on Ambac�s management current belief or opinions. Ambac�s actual results may vary materially, and there are no guarantees about the performance of Ambac�s securities. Among events, risks, uncertainties or factors that could cause actual results to differ materially are: (1)�changes in the economic, credit, foreign currency or interest rate environment in the United States and abroad; (2)�the level of activity within the national and worldwide credit markets; (3)�competitive conditions and pricing levels; (4)�legislative and regulatory developments; (5)�changes in tax laws; (6)�changes in our business plan, including our decision to discontinue writing new business in the financial services area, to significantly reduce new underwritings of structured finance business and to discontinue all new underwritings of structured finance business for six months; (7) the policies and actions of the United States and other governments; (8)�changes in capital requirements whether resulting from downgrades in our insured portfolio or changes in rating agencies� rating criteria or other reasons; (9)�changes in Ambac�s and/or Ambac Assurance�s credit or financial strength ratings; (10) changes in accounting principles or practices relating to the financial guarantee industry or that may impact Ambac�s reported financial results; (11)�inadequacy of reserves established for losses and loss expenses; (12)�default by one or more of Ambac Assurance�s�portfolio investments, insured issuers, counterparties or reinsurers; (13) credit risk throughout our business, including large single exposures to reinsurers; (14) market spreads and pricing on insured collateralized debt obligations (�CDOs�) and other derivative products insured or issued by Ambac; (15)�credit risk related to residential mortgage securities and CDOs; (16) the risk that holders of debt securities or counterparties on credit default swaps or other similar agreements seek to declare events of default or seek judicial relief or bring claims alleging violation or breach of covenants by Ambac or one of its subsidiaries; (17) the risk that our underwriting and risk management policies and practices do not anticipate certain risks and/or the magnitude of potential for loss as a result of foreseen risks; (18) the risk of volatility in income and earnings, including volatility due to the application of fair value accounting, or FAS 133, to the portion of our credit enhancement business which is executed in credit derivative form; (19) operational risks, including with respect to internal processes, risk models, systems and employees; (20) the risk of decline in market position; (21) the risk that market risks impact assets in our investment portfolio; (22) the risk of credit and liquidity risk due to unscheduled and unanticipated withdrawals on Investment Agreements; (23) prepayment speeds on insured asset-backed securities; (24) factors that may influence the amount of installment premiums paid to Ambac; (25) the risk that we may be required to raise additional capital, which could have a dilutive effect on our outstanding equity capital and/or future earnings; (26) ability or inability to raise additional capital, including the risks that regulatory or other approvals for any plan to raise capital are not obtained, or that various conditions to such a plan, either imposed by third parties or imposed by Ambac or its Board of Directors, are not satisfied and thus potentially necessary capital raising transactions do not occur, or the risk that for other reasons the Company cannot accomplish any potentially necessary capital raising transactions; (27) the risk that Ambac�s holding company structure and certain regulatory and other constraints, including adverse business performance, affect Ambac�s ability to pay dividends and make other payments; (28) the risk of litigation and regulatory inquiries or investigations, and the risk of adverse outcomes in connection therewith, which could have a material adverse effect on our business, operations, financial position, profitability or cash flows; (29) other factors described in the Risk Factors section in the Annual Report on Form 10-K for the year ended December 31, 2007 and also disclosed from time to time by Ambac in its subsequent reports on Form 10-Q and Form 8-K, which are or will be available on the Ambac website at www.ambac.com at the SEC�s website www.sec.gov; and (29)�other risks and uncertainties that have not been identified at this time. Readers are cautioned that forward-looking statements speak only as of the date they are made and that Ambac does not undertake to update forward-looking statements to reflect circumstances or events that arise after the date the statements are made. You are therefore advised to consult any further disclosures we make on related subjects in Ambac�s reports to the SEC. Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provide financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac�s principal operating subsidiary, Ambac Assurance Corporation, a leading guarantor of public finance and structured finance obligations, has earned triple-A ratings from Moody�s Investors Service, Inc. and Standard & Poor�s Ratings Services; and a double-A rating from Fitch, Inc. Moody�s has placed Ambac�s triple-A rating on review for possible downgrade. Standard & Poor�s has placed Ambac�s triple-A rating on �credit watch negative.� Fitch has placed Ambac's double-A rating on �rating watch negative.� Ambac Financial Group, Inc. common stock is listed on the New York Stock Exchange (ticker symbol ABK).