Moodys Investors Service yesterday downgraded to 'Aa3' from 'Aaa' the insurance financial strength ratings of Ambac Assurance Corp., Ambac Assurance U.K. and the debt ratings of Ambac Financial Group and related financing trusts. The rating actions come after a review for possible downgrade that was initiated by the agency on June 4.
According to Moodys, the action reflects the Ambac's significantly constrained new business prospects, its impaired financial flexibility and increased expected and stress loss projections. The outlook for the ratings is negative, reflecting uncertainties regarding the companys strategic plans. As a result, the Ambac-wrapped securities rated by Moodys are also downgraded to 'Aa3' except for those with higher public underlying ratings.