Ambac Financial Group Inc.ABK

Morningstar Rating

Stock Research and Analysis

by Jim Ryan

Rising mortgage delinquencies and an insured portfolio dependent on a housing recovery spell impending doom at Ambac. We think Ambac may not recover from mounting claims and continued rating agency downgrades.

As the first of the bond insurers, Ambac Read more

Bulls Say

The long maturities of Ambac's insured bonds bestow recurring revenue. If Ambac made no sales during the next decade, revenue would still be enough to pay operating expenses.

Ambac's stated adjusted book value is deeply understated because of derivative accounting. When the mark-to-market derivatives reverse, book value will skyrocket higher. Read more

Bears Say

The rating agencies have unleashed the hounds on Ambac with ratings downgrades on the insurance operations. Ambac won't be writing any new business soon, maybe never.

Ambac has the largest exposure to CDOs among all of the financial guarantors. An unexpected large loss could be brewing.

Ambac's growth may wane even in a booming economy as investor demand for credit-enhancement products falls, which would be the result of reduced risk perceptions. Read more

Strategy

Ambac has circled the wagons and is managing the business to stay afloat. The only possible bright spot on the horizon is revenue that may be generated by Everspan, Ambac's newly formed municipal bond Read more

Management

Ambac's board has replaced Robert Genader with Michael A. Callen as the new chairman, and David Wallis is the new president and CEO. Callen has been a presiding director and member of the board's audit and risk assessment, compensation, and governance Read more

Profile

Ambac is the second-largest financial guaranty insurer. Its insurance guarantees timely principal and interest repayment on credit securities including bonds, asset-backed Read more

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