text: Ambac shares soar on talk of incoming capital | Crain's New York Business
  January 21, 2008 11:00 PM
  Ambac shares soar on talk of incoming capital
  Ambac Financial Group Inc. reported a record quarterly loss and its first annual loss Tuesday, and said it was considering strategic alternatives and potential partnerships to cope with the nation's ongoing credit crisis.
  The Manhattan-based bond insurer reported a fourth-quarter loss of $3.26 billion, or $31.85 per share, compared with profits of $202.7 million, or $1.88 per share, in the same period a year ago. For the year, the company lost $31.38 billion, compared with profits of $8.15 billion in 2006.
  But promises that Ambac is eyeing strategic alternatives, with a "number of potential parties," boosted investor speculation that Ambac may be headed for a much-needed recovery. Shares of the insurer, which fell 72% in 2007 and are down 76% so far this year, rose as much as 43.9% to $8.92 Tuesday morning.
  In a separate statement, the New York state Insurance Department announced a three-tiered plan aimed at helping beleaguered bond insures. Insurance Superintendent Eric Dinallo said the department will work to attract more capital for the companies, facilitate solutions to current market challenges and develop stronger regulation for the industry as a whole.
  Optimism is a welcome reprieve for Ambac. On Friday, Fitch Ratings downgraded its rating on the company to "AAA" after Ambac abandoned plans to raise $1 billion in capital and slashed its dividend by two-thirds. And earlier this week, a group of shareholders sued the insurer for making false statements to downplay its exposure to the risky mortgage-backed securities market. Moody's Investors Services and Standards & Poor's have also reopened reviews of the company's ratings for a possible downgrade.
  For the fourth quarter, Ambac wrote down $5.2 billion related to the falling value of subprime residential mortgage-backed securities.