Ambac posts $1.66bn loss as new business declines 38%

by Gill Montia

Story link: Ambac posts $1.66bn loss as new business declines 38%

US bonds insurer, Ambac, recorded a first-quarter 2008 net loss of $1.66 billion, or $11.69 a share, compared with net income of $213.3 million, or $2.02 a share in the same period of 2007.

The company, which insures against loss of interest and capital on the bonds it underwrites, wrote down $2.7 billion against risks on mortgage bonds.

It has also allocated $1 billion to cover future claims on mortgage bonds.

During the three months, net premiums written fell 38%, to $135.7 million.

Along with its competitors, MBIA and FGIC, Ambac has been struggling to maintain its credit rating and raise new capital.

The firm insures around $556 billion of government and mortgage bonds and last month, analysts speculated that it could face claims of between $3 billion and $8 billion, as a result of the high level of defaults on US sub-prime mortgages.

Ambac’s shares have fallen 95% since peaking in May 2007.