Ambac Postpones Launch Of Muni Bond Venture

NEW YORK (AP) — Ambac Financial Group Inc. said Friday it has indefinitely postponed its launch of a separate unit to handle municipal bond insurance, a decision that sent the bond insurer's already-battered shares tumbling.

Shares of Ambac fell 12 cents, or nearly 10 percent, to $1.13 in afternoon trading.

Ambac has been working for several months to launch Everspan Financial Guarantee Corp. as a standalone business to keep it insulated from Ambac's riskier operations that have triggered losses amid troubled credit markets. The unit was to specialize in public finance, rather than commercial bond insurance.

But Ambac said Friday that it has been unable to raise enough capital to achieve the financial strength ratings it had hoped to achieve for the new business so it could be competitive. Everspan had been seeking to raise money from outside investors in addition to any amounts contributed by Ambac Assurance Corp., Ambac's bond insurance subsidiary.

"Although Ambac engaged in discussions with third parties to raise capital for Everspan, none of these discussions have resulted in a satisfactory outcome," Ambac said.