Ambac Comments on Statement of Financial Accounting Standards No. 163
27 Mai 2008 - 8:54PM
Business Wire
Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today commented on
the Financial Accounting Standards Board�s recently released
Statement of Financial Accounting Standards No. 163 - �Accounting
for Financial Guarantee Insurance Contracts, an Interpretation of
FASB Statement No. 60� (�FAS 163�). The primary focal points of FAS
163 are premium revenue recognition, claim liability recognition
and disclosures related to each. Ambac is in the process of
analyzing the impact of all aspects of FAS 163 on the financial
statements of Ambac. Please refer to previous disclosures regarding
the expected impact of the Financial Guarantee Exposure Draft and
the FASB�s re-deliberations on the Exposure Draft in Ambac�s Annual
Report on Form 10-K for the fiscal year ended December 31, 2007.
Ambac expects to update this disclosure in its subsequent reports
on Form 10-Q and Form 8-K, which will be available on the Ambac
website at www.ambac.com and at the SEC�s website, www.sec.gov.
Sean Leonard, Senior Vice President and Chief Financial Officer,
commented, �Ambac welcomes this long-awaited statement that will
bring industry-wide consistency to accounting for claim
liabilities. We note that the final statement has been modified
substantially from the exposure draft as the Financial Accounting
Standards Board considered certain points made by industry
participants in its drafting of the final document.� With respect
to loss recognition requirements under the new statement, Mr.
Leonard commented, �While there are certain nuances of the new
statement regarding recognition of claim liabilities that we need
to analyze further, the concept of recognizing such liabilities
upon observing credit deterioration and before an actual default is
consistent with our current loss recognition methodology. Those
that follow our company understand that our active credit reserves,
or ACR, are established for probable and estimable losses due to
credit deterioration on certain adversely classified insured
transactions.� Forward-Looking Statements This release contains
statements 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 changes resulting from our decision to discontinue
writing new business in the financial services area, to
significantly reduce new underwriting 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 unforeseen 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)�changes in 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)�our 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 Part I, 1A of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2007 and
in Part II, Item 1A of our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2008, 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 and
at the SEC�s website, www.sec.gov; and (30)�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 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, Standard & Poor's and
Fitch all maintain a �negative outlook�. Ambac Financial Group,
Inc. common stock is listed on the New York Stock Exchange (ticker
symbol ABK).
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