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A Bond Insurer Ousts Its Chief After Taking A Big Write-DownThe Ambac Financial Group , the bond insurer, ousted its chief executive Wednesday, cut the dividend 67 percent and said it planned to raise more than $1 billion to preserve its AAA credit rating after announcing the biggest write-down ever taken by a bond insurer. Shares fell 39 percent, closing down $8.17, at $12.97. Ambac said in a statement that it would report a loss after reducing the value of securities it guarantees by $3.5 billion. A director, Michael A. Callen, 67, will become chairman and interim chief executive, succeeding Robert J. Genader, 60, who presided over the first losses in Ambac’s history. Ratings companies are threatening to lower the credit rankings of Ambac and its largest rival, MBIA, after their guarantees of bonds linked to subprime mortgages began plunging in value. Ambac is under pressure to come up with enough capital to satisfy Fitch Ratings, which threatened to cut the company’s AAA rating unless it raised $1 billion. The infusion, which may include the sale of shares and convertible stock, will satisfy Fitch, Ambac said. Ambac said it might also reinsure more of its bonds or sell debt securities. The reduction in the quarterly dividend to 7 cents from 21 cents reverses a commitment made just three weeks ago to retain the payout. Ambac said it would report a net loss of $32.83 a share for the quarter, equating to more than $3 billion based on the 101 million shares outstanding. In another development, the rating agency Standard & Poor’s said Wednesday that it would re-examine the AAA credit ratings of bond insurers including MBIA and Ambac after it decided that the housing slump would cause bigger losses from subprime mortgages than anticipated. S.& P., which completed a review of the bond insurers in December, will rerun a test to ensure the companies have enough capital to withstand reductions in the ratings of securities they guarantee, a spokeswoman, Mimi Barker, said. Tag CloudExternal InformationAdditional InformationNew Japanese Jet Gets Its First Buyer...Nissan and Chrysler Discussing a Pact... Waterline kitchens falls victim to consumer cuts... International Paper Profit Declines... Where Am I?News Main Page - Business - A Bond Insurer Ousts Its Chief After Taking A Big Write-Down |
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