Ambac Financial Group Inc (AMBC)

[Enterprising Investor]

AAC Releases Statement Regarding RMBS Litigation (3/18/22)

NEW YORK--(BUSINESS WIRE)--Ambac Financial Group, Inc. (NYSE: AMBC) ("Ambac" or "AFG"), a financial services holding company, announces that its legacy financial guaranty insurance subsidiary Ambac Assurance Corporation (“AAC”), released the following statement:

On March 17, 2022, the New York Court of Appeals issued a decision in the case entitled U.S. Bank National Association v. DLJ Mortgage Capital, Inc. relating to Home Equity Asset Trust 2007-1, a residential mortgage-backed securities trust (“HEAT”). While AAC does not insure the HEAT securities and is not a party to the HEAT litigation, the decision is relevant to AAC's breach-of-contract cases relating to its insured RMBS transactions, as previously disclosed in Part I, Item 1A Risk Factors in Ambac’s most recently filed Form 10-K.

The HEAT decision may affect one of the bases upon which AAC seeks recovery with respect to a significant portion of breaching loans in AAC's RMBS cases. However, AAC believes there remain other potential alternative paths to recovery for such breaching loans.

AAC’s management and legal advisors are evaluating the decision and its implications for AAC’s RMBS litigations and plan to issue additional disclosure following such evaluation. Management presently expects the HEAT decision to result in a downward adjustment, which could be material, to AAC’s estimated subrogation recoveries, recorded as of December 31, 2021. However, reported estimated subrogation recoveries do not represent AAC’s view of the ultimate recovery from its RMBS litigations.

As a reminder, AAC records, as a component of its loss reserves, estimated subrogation recoveries related to securitized loans in RMBS transactions with respect to which it is pursuing claims for breaches of representations and warranties. Importantly, AAC does not include potential material recoveries attributed solely to fraudulent inducement claims in our litigations in our estimate of subrogation recoveries. Nor does AAC include potential material recoveries attributable to pre-judgment interest in the estimate of subrogation recoveries.

AAC’s ultimate recoveries in its RMBS litigations may be materially higher or lower than its recorded estimated subrogation recoveries based on a number of factors, including those described in Ambac’s Form 10-K for the fiscal year ended December 31, 2021.

About Ambac

Ambac Financial Group, Inc. (“Ambac” or “AFG”) is a financial services holding company headquartered in New York City. Ambac’s core business is a growing specialty P&C distribution and underwriting platform with a legacy financial guaranty business in run off. Ambac’s common stock trades on the New York Stock Exchange under the symbol “AMBC”. Ambac is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, we use our website to convey information about our businesses, including the anticipated release of quarterly financial results, quarterly financial, statistical and business-related information. For more information, please go to www.ambac.com.

The Amended and Restated Certificate of Incorporation of Ambac contains substantial restrictions on the ability to transfer Ambac’s common stock. Subject to limited exceptions, any attempted transfer of common stock shall be prohibited and void to the extent that, as a result of such transfer (or any series of transfers of which such transfer is a part), any person or group of persons shall become a holder of 5% or more of Ambac’s common stock or a holder of 5% or more of Ambac’s common stock increases its ownership interest.

https://www.businesswire.com/news/home/20220317006037/en/AAC-Releases-Statement-Regarding-RMBS-Litigation