Exhibit 99.05
Ambac Financial Group, Inc.
One State Street Plaza
New York, NY 10004
212.668.0340
News Release
For Immediate Release
Investor/Media Contact: Brian S. Moore
(212) 208-3333
bmoore@ambac.com
Website: www.ambac.com
Ambac AMBAC RELEASES ADDITONAL INFORMATION RELATED TO WORLD TRADE
CENTER TRAGEDY
NEW YORK, September 18, 2001--Ambac Financial Group, Inc. (NYSE: ABK)
(Ambac) today provided additional information regarding indirect
exposure to the World Trade Center tragedy.
First, Ambac reiterated that its net par exposure to the Port
Authority of New York and New Jersey and other credits related to real
estate located in the World Trade Center area, as detailed in a press
release dated September 13, 2001, is approximately $357 million. Ambac
does not expect any material claims resulting from this exposure.
Second, Ambac has approximately $530 million in net par exposure in
enhanced equipment trust certificate transactions for three U.S.
airlines. These transactions financed, and are secured by, modern
Boeing and Airbus aircraft. In these transactions, Ambac would pay a
claim only if the airline defaults on its payment obligations or
rejects the lease in bankruptcy, and the aircraft cannot be liquidated
at a price sufficient to redeem the insured certificates. The
structure of these transactions insulates Ambac from declines in
aircraft valuations in excess of 40%. Additionally, each transaction
has liquidity support from a highly-rated provider to cover 18 months
of interest payments as needed. Ambac does not currently expect
material losses on these obligations.
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Third, the tragedy has caused credit derivative spreads to widen significantly.
This spread widening will result in an unrealized mark-to-market loss on Ambac's
credit derivative exposure. This exposure relates to structured collateralized
debt obligations (CDO's) where other parties provide first loss protection.
Although Ambac does not expect to pay any claims related to the insured
obligations, accounting rules require mark-to-market charges based upon fair
market values. This unrealized loss is expected to be between $6 million and $10
million or $0.04 to $0.06 per diluted share and will vary with any additional
changes in credit spreads. Based on the unrealized nature of this line item,
Ambac will exclude any impact from reported Operating and Core Earnings.
Lastly, we have provided additional information regarding exposure to
transportation and airport issues on our Web site. Ambac does not currently
expect any material exposure to losses with respect to airport credits.
In the event that any Ambac-insured transaction defaults in the payment of
principal or interest, Ambac will make payments in accordance with the relevant
policy.
Forward-Looking Statements
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This release contains statements about our future results that may be considered
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995. These statements are based on current expectations and the current
economic environment. We caution you that these statements are not guarantees
of future performance. They involve a number of risks and uncertainties that
are difficult to predict. Our actual results could differ materially from those
expressed or implied in the forward-looking statements. Among the factors that
could cause actual results to differ materially are (1) changes in the economic,
credit, or interest rate environment in the United States and abroad; (2) the
level of activity within the national and worldwide debt markets; (3)
competitive conditions and pricing levels; (4) legislative and regulatory
developments; (5) changes in tax laws; (6) the policies and actions of the
United States and other governments; and (7) other risks and uncertainties that
have not been identified at this time. We undertake no obligation to publicly
correct or update any forward-looking statement if we later become aware that it
is not likely to be achieved.
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Ambac Financial Group, Inc., headquartered in New York City, is a holding
company whose affiliates provide financial guarantees and financial services to
clients in both the public and private sectors around the world. Ambac's
principal operating subsidiary, Ambac Assurance Corporation, is a leading
guarantor of municipal and structured finance obligations. It has earned triple-
A ratings, the highest ratings available, from Moody's Investors Service, Inc.,
Standard & Poor's Ratings Services, Fitch, Inc. and Rating and Investment
Information, Inc. Ambac Financial Group, Inc. common stock is listed on the New
York Stock Exchange (ticker symbol ABK).
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