Ambac says may go bankrupt this year

Ambac Financial Group Inc (ABK.N), which was the second-largest U.S. bond insurer before suffering huge losses on risky mortgages, said it may file for bankruptcy protection as soon as this year after skipping a bond interest payment.

Ambac shares slid as much as 59.8 percent on Monday.

The announcement is the latest setback for Ambac, which has struggled to stay solvent after the housing market collapse. Ambac had pursued higher profit by expanding beyond municipal bond insurance and starting to insure riskier debt. That move backfired as credit tightened and more borrowers defaulted.

In a regulatory filing, Ambac said it has been unable to raise capital to avoid bankruptcy and is in talks with a group of senior bondholders to pursue a bankruptcy filing that would preserve a $7 billion tax benefit.

Read Full Article from Reuters

- Posted: 2010-11-01 13:24:46

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