Ambac Financial Group this morning reported a fourth quarter net loss of $2.34 billion in 2008, which compares to a $3.27 billion fourth quarter net loss in 2007.

Ambac said the net loss reflected a $594.4 million net change in the fair value of derivatives, in addition to an increase in the deferred tax asset valuation allowance, increased loss provisions related to RMBS, and mark-to-market and realized losses on terminations related to derivative products within the financial services segment.

Ambac recorded a net loss of $5.6 billion in 2008 compared to a net loss of $3.2 billion in 2007.

“While our financial results continue to be affected by the disappointing housing market and other economic conditions, I am encouraged by the progress made in relation to some of our strategic initiatives. We continue to place significant emphasis on de-risking our portfolio,” Ambac chief executive officer and president David Wallis said. “The successful commutation of $3.5 billion of CDO of ABS exposures, including two CDO-squared deals, was constructive and we will continue to pursue this de-risking approach. Equally encouraging have been the remediation efforts on our mortgage exposure which continues to reveal opportunities to recover losses in that portfolio.”

Ambac also said it is working with rating agencies and regulators as it prepares to launch muni-only insurer Everspan Financial Guaranty Corp., the old Connie Lee Insurance Co. It plans to begin writing new business during the second quarter.

“Our experienced management team is in place, our Board is largely identified and we have an established infrastructure that allows us to start up operations immediately upon receipt of capital and ratings.” Everspan chief executive officer Douglas Renfield-Miller said. “There are no current plans for Everspan to assume any of Ambac’s legacy public finance or other exposures. We believe Everspan’s capacity is best utilized for new business and that the market will value a clean entity.”

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