- Dubai's Debt Woes Signal New Era for Creditors
- US Treasury Wants Banks to Do More to Ease Mortgages
- Fed Audit Would Hurt Economic Prospects: Bernanke
- Next Week: Cash In Now Or Wait For A Santa Rally?
- Dubai Stock Selloff May Bring Buying Opportunity
- Black Friday Sales Rise by 0.5%: ShopperTrak
- Longer Lines, Fuller Carts This Black Friday
- Big US Banks May Be Forced to Raise Capital: Bove
- Bank of America Amends Pay for Senior Executives
- U.S. Stocks Fall on Dubai Worries
- Black Friday at Best Buy
- Strategists on Dubai: Avoid 'Rash Moves' Now
- Longer Lines, Fuller Carts This Black Friday
- Dubai Stock Market Fear Has 'Legs': Dennis Gartman
- Obama's Emission Reduction Pledge Paints Future for Autos
- Is Super Bowl Halftime Act Too Old?
- Surprising Options Trades in TiVo Shares
- EA Sports Hopes to Pump Up Sales Through Pop-Up Locations
Text Size 
Ambac Financial Group said it would pay $850 million to Citigroup [C
Loading...
()
]to settle potential claims over risky derivatives that it had insured, sending the bond insurer's shares up as much as 61 percent.
 |
"The primary benefit of this agreement is that it eliminates uncertainty with respect to future losses related to this transaction," Chief Executive Michael Callen said in a statement issued by the New York company.
Bond insurers such as Ambac [ABK
Loading...
()
] and larger rival MBIA [MBI
Loading...
()
] have in recent weeks been trying to work out agreements to limit the chance of losses from risky debt they guaranteed.
Shares in MBIA also surged, gaining as much as 25 percent.
Both bond insurers' shares have plummeted this year on concern about losses from insurance they sold on securities linked to risky mortgage-backed debt.
Ambac said it already recorded about $1 billion in mark-to-market losses on the securities, collateralized debt obligations (CDOs) that were once highly rated but have since been downgraded to junk status.
The transaction will boost capital at its main business unit, Ambac Assurance Corp, Ambac said in a statement.
As a result of the transaction, the company will be able to record a positive $150 million mark-to-market adjustment.
Bond insurers are paid a premium in exchange for guaranteeing to meet interest and capital payments in the event of a bond going into default.
Earlier this week, brokerage Merrill Lynch & Co Inc agreed to help bail out another struggling bond insurer, Security Capital Assurance Ltd, by canceling $3.5 billion in credit default swaps and ending litigation.
Ambac shares, which have plummeted 96 percent over the past year, were up $1.03 at $3.55 on the New York Stock Exchange on Friday.
MBIA shares, down 68 percent through Thursday, rose $1.20 to $7.13, and shares in a third bond insurer, Assured Guaranty Ltd , were up 9.6 percent, or $1.10, at $12.56.
Print
Email
- These four sectors will be the next to lead the market.
- Zhu Zhu Pets are this year's must-have toy, fetching $40 or more on eBay.
- From the why-didn’t-I-think-of-that file, we present Jason Sadler, a man whose job is wearing T-shirts.
- It may be the most unusual guide to business you'll read.
- Shopping for a gadget hound? The choices can be baffling. Here are a few that should be a hit.
- "The Who" will be the halftime act for Super Bowl XLIV on Feb. 7 in Miami. Is the NFL behind the times?
Data is a real-time snapshot *Data is delayed at least 15 minutes