Ambac Financial Group announced today it is delaying its planned launch of muni-only bond insurer Everspan Financial Guaranty Corp.
Everspan, which is a subsidiary of Ambac Assurance Corp., was seeking to raise capital to achieve the ratings needed to compete in the business.
Citing a difficult market environment, Ambac said none of the discussions about raising capital have resulted in a satisfactory outcome.
Everspan was seeking to raise third-party capital of approximately $200 million, according to managing director of investor relations Peter Poillon. Ambac would have provided an additional $650 million to the $150 million it had already put into the business for a total of $1 billion.
Ambac did not give a deadline date for the postponement. It says it will continue to focus on ongoing loss-mitigation efforts and other new business initiatives.
Postponing this strategic initiative was a difficult decision, Ambac president and chief executive officer David Wallis said in a statement. We will closely monitor the capital markets and will revisit this opportunity when the economic environment has stabilized.
Ambac also announced that Everspan chief executive officer and Ambac executive vice president Douglas Renfield-Miller will retire effective Jan. 1, 2010.
Ambac is also instituting about 30 staffing cuts, reducing headcount by about 10%, Poillon said. The cuts are across the business and some Everspan employees may be absorbed back into Ambac.
Doug has been a significant contributor to Ambac since joining us in 2000 and I wish him well in his retirement, Wallis said.
Ambac in early 2008 began looking create a new municipal-only insurer using a company it bought more than a decade ago, Connie Lee. Later last year, it was renamed Everspan.