This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Ambac Misstates Financials to Meet Minimums

NEW YORK ( TheStreet) -- Ambac Financial's (ABK) bond-insurance unit fell short of capital requirements in Wisconsin for the second quarter and relied on misstated transactions to meet them, based on filings with the state's insurance regulator.

The subsidiary, Ambac Assurance, counted $520 million from transactions completed in the fourth quarter toward its third-quarter capital and surplus. Excluding that amount, its excess capital would have been $154.4 million as of Sept. 30, barely more than the $99.4 million minimum required by the Wisconsin Insurance Commissioner's Office.

Ambac Financial had raised the possibility that the subsidiary wouldn't meet minimum capital and surplus requirements. The company missed Monday's deadline to file the unit's financial statements and delayed submitting paperwork about its capital levels.

It became clear on Wednesday that Ambac Assurance had only $27.2 million in capital and surplus in June. The difference between the reported $305.6 million and the new figure is a $278.4 million understatement of credit default swap obligations, according to third-quarter filings with the state.

Ambac said in an 8-K filing on Wednesday it had reached a $520 million settlement of approximately $5 billion in terminated collateral debt obligations, which it included in its third-quarter results. However, these transactions weren't completed until the fourth quarter, according to regulatory filings.

That means the company overstated the $855.6 million of capital and surplus it said it had as of Sept. 30. Calls to Ambac weren't returned Wednesday.

Without these transactions, the company would have reported a capital and surplus amount of $336 million, which reflects a one-time $311 million recovery. Still, the insurer expects to receive $440 million in back-dated tax refunds, a measure approved Friday that will increase the capital and surplus.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7870 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs