Ambac Terminates Transactions With RAM Reinsurance

NEW YORK (AP) — Bond insurer Ambac Financial Group Inc. said Wednesday it has terminated all reinsurance transactions with RAM Reinsurance Co. in an effort to reduce counterparty risk.

Ambac said the termination reflects the recapture of roughly $7 billion of par outstanding, of which about two-thirds is classified as public finance exposure.

The remainder of the portfolio totals roughly $2.4 billion. The settlement payment to Ambac is expected to total about $97 million.

"This transaction confirms Ambac's commitment to reduce outstanding reinsurance exposure," said Chief Risk Officer Greg Raab in a statement. "In so doing, we are reducing counterparty risk, enhancing liquidity and earned premiums, and improving our risk-based capital position."

Ambac shares jumped 12 cents, or 14 percent, to 98 cents in after-hours trading, after gaining 1 cent to 86 cents during the regular session. The stock has traded between 35 cents and $10.08 during the past 52 weeks.