Ambac Provides First Quarter 2008 Business Activity Update

Business Wire,  May 6, 2008  

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We are expanding our surveillance process for the multi-seller bank programs that Ambac supports with program-wide enhancement. We believe that the value of our unique third-party surveillance will continue to be recognized by investors and bank regulators going forward. This, in turn, will further differentiate the Ambac-enhanced, multi-seller conduits from unenhanced vehicles.

Secondary Markets

Ambac is gaining significant momentum and restoring investor confidence in the secondary markets, focusing for the present on the public finance markets. While the number of transactions we have completed to date in 2008 remains below our 2007 volume, secondary market transactions with Ambac insurance are steadily increasing. Over the past few weeks, Ambac has qualified more than 50 competitive new issue transactions and provided insurance on approximately 13% of those deals, which is only slightly below last year's success rate. Week-on-week volume of secondary market transactions is also growing rapidly, as new business production during the first two weeks of April was equivalent to our entire secondary markets production in the first quarter of 2008.

The Secondary Markets desk is targeting the development of opportunities in those structured finance sectors in which Ambac has committed to remain active. As a result, we have received inquiries on both wrapped and unwrapped structured finance paper. The majority of these inquiries have been for wrapped deals where investors seek to restore triple-A ratings on paper insured by monolines that have suffered ratings downgrades. Additionally, the Secondary Markets group has been working with bankers that are holding and looking to manage unwrapped exposures that were previously expected to be taken out via capital markets executions this year.

The Secondary Markets group is increasing our marketing efforts with established relationships in the bank, broker and dealer community while seeking new opportunities with fixed income investors. Going forward, the Secondary Markets group expects to benefit from the reduced number of competitors in the marketplace.

In summary, Ambac is diligently working to restore market confidence. While conditions remain challenging, we are committed to achieving stable ratings and to meeting the financing needs of our clients.