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		<title>Ambac Management Should Read Blogs More Often</title>
		<description>Discuss Ambac Management Should Read Blogs More Often</description>
		<link>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often</link>
		<lastBuildDate>Mon, 21 Sep 2026 04:58:29 +0000</lastBuildDate>
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			<title>RE: Ambac Management Should Read Blogs More Often</title>
			<link>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11851</link>
			<description><![CDATA[If the markets have taught anything over the last year, it is that. This is my http://boombustblog.com/component/option,com_myblog/show,Moodys-Affirms-Ratings-of-Ambac-and-MBIA-amp-Loses-any-Credibilty-They-May-Have-Had-Left.html/Itemid,0/ (post on the reinsurance deal with Ambac:) : "Ambac buys reinsurance from Assured Guarantee, a company in the same business as Ambac taking very similar losses, and it gets to retain its AAA rating??? Doesn't anyone see concentration risk and an uncomfortable amount of correlation here, or is it just me? Assured Guaranty reported a net loss of $115.0 million, or $1.70 per diluted share, for the quarter ended September 30, 2007 compared to net income of $37.9 million, or $0.51 per diluted share, for the third quarter of 2006. The decline in net income was primarily due to an after-tax unrealized mark-to-market loss on derivatives (hey, isn't that what Ambac and MBIA said as well?) that was announced by the Company on October 22, 2007 of $162.9 million, or $2.40 per diluted share, on financial guaranties written in credit default swap ("CDS") contract form. As of November 30th (38 days later), it reported that it has after tax mark to market losses of $220 million. They are averaging one and a half million dollars per day in value loss, with this rate bound to accelerate in the very near future (they only had $1.6 million in 9/06 - that's a 200x increase). The macro conditions that brought upon the CDS (paper) loss are getting much worse, not better as the trend clearly indicates. About 70% of the unrealized CDS loss stems from RMBS and CMBS swaps. Well, you know how I feel about the residential market. Here is how I feel about the commercial market. Things are about to get much worse. Despite all of this, AGO now accepts $29 billion of additional ceded risk from one of the most dangerous monoline portfolios in the business. I am appalled! I hear a lot of people crooning about this being only paper losses, and not actual claims until payment is defaulted or missed or principal is actually and materially impaired before maturity. Well, it is happening now, and in droves. AGO's management laments on how they have minimal exposure and losses to direct subprime liabilities, which appears to be true with a casual glance at their reporting, but the devil is again, in the details. Aside from 75% of AGO's mortgage portfolio being in the most toxic vintages of 2006 and 2007 (which most likely will lead to problems down the line), they have a strong correlation in product mix with Ambac, the company they just reinsured $29 billion of exposure. Ambac's loss exposure is stemming primarily from their structure product and consumer finance guarantees, not their residential mortgages, per se. Structured finance in particular is what got them in trouble. There is no real loss history on this stuff, because it is brand new and the losses that are being witnessed now are tremendous. Well, hazard a guess as to where the majority of Assured's earned premium comes from? That's right, structured finance. As of 9/30/07, it was 58%. Now, with the acquisition of Ambac's risk, and of course depending on exactly what it was that was actually reinsured (we don't really know yet, do we?) it will/can definitely shoot upwards, significantly upwards. No matter which way you look at it, there is a VERY high concentration of risk, especially in an area with no real discernible loss history and the only real discernible losses being significant. Compare and contrast to the actuarial loss histories used in life, vanilla P&C, and health lines - we're talking multiples of decades (like 50 - 60 years ), not just a few years as in CDOs. That is REAL insurance. This new fangled, financially (not so)engineered, structured product guarantee business is gambling with shareholders capital, pure and simple - slot machines - Vegas style! AGO used capital to buy back shares in lieu of reserving for future losses through '06 and announced a new buy back program going forward last month in November to buy back more shares. Hey, why provision for losses when we can buy back shares... Just a few weeks ago, Assured then announces its intention to sell $300 million in shares to shore up its capital in its reinsurance division to go huntin' for new business. Like Moody's, these guys are a fickle bunch. So, my astute readers should ask, why didn't they just take the money that they used to buy back the stock and simply reinvest it in their business to begin with??? Hmmm! Good question. Could it be that management did not have the foresight to see this opportunity coming just last month. If so, what else did they "not see"? I would suggest you look into the risk profile of their newest addition to their portfolio." I haven't ran through the numbers on AGO, but my gut tells me they are suspect, highly suspect.]]></description>
			<dc:creator>Reggie Middleton</dc:creator>
			<pubDate>Thu, 17 Jan 2008 17:41:32 +0000</pubDate>
			<guid>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11851</guid>
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			<title>RE: Ambac Management Should Read Blogs More Often</title>
			<link>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11850</link>
			<description><![CDATA[The information that I have seen suggests that Assured Guaranty and FSA were the two financial guarantors that avoided the really risky stuff (mainly ABS CDOs) that the rest of the market wrote. If the entire bond insurance market collapses, then Assured and FSA obviously become casualties (though there is probably some value in the runoff of their books). If the market persists in some form or another, the most likely "winners" will be Berkshire, FSA, and Assured Guaranty. If anyone else can share intelligent comments on Assured's situation, they will be greatly appreciated.]]></description>
			<dc:creator>Mark Edmunds</dc:creator>
			<pubDate>Thu, 17 Jan 2008 16:42:27 +0000</pubDate>
			<guid>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11850</guid>
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			<title>RE: Ambac Management Should Read Blogs More Often</title>
			<link>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11849</link>
			<description><![CDATA[I thought about AGO, but I am spread too thin as it is. Sooner or later, the reinsurers will get my attention, but things are moving fast. Remember, 2.5 months ago, Ambac was over $60. GGP is a VERY conservative estimate, and I feel made a good short it is just that the market is moving very quickly these days. It is down a lot.]]></description>
			<dc:creator>Reggie Middleton</dc:creator>
			<pubDate>Thu, 17 Jan 2008 04:29:30 +0000</pubDate>
			<guid>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11849</guid>
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			<title>RE: Ambac Management Should Read Blogs More Often</title>
			<link>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11848</link>
			<description><![CDATA[Oh and you got me all excited about AGO in your earlier blog post. Are you gonna dig into their world too since they are directly tied to Ambac (and have a lot more meat on their bones!) thanks again]]></description>
			<dc:creator>Jon Pearlstone</dc:creator>
			<pubDate>Thu, 17 Jan 2008 04:22:42 +0000</pubDate>
			<guid>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11848</guid>
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			<title>RE: Ambac Management Should Read Blogs More Often</title>
			<link>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11847</link>
			<description><![CDATA[Well I have always respected the gospels of Matthew, Mark, Luke and John Now I am officially adding the gospel of REGGIE! So glad you started blogging, you are the place to go to find what's really out there! Now figure out a way to get your GGP projections to a lower share price so I can dive in short!]]></description>
			<dc:creator>Jon Pearlstone</dc:creator>
			<pubDate>Thu, 17 Jan 2008 04:20:23 +0000</pubDate>
			<guid>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11847</guid>
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			<title>RE: Ambac Management Should Read Blogs More Often</title>
			<link>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11846</link>
			<description><![CDATA[Nice call! Pain is pleasure. CEO resigned IMMEDIATELY, this after 20 years of employment. OUCH!]]></description>
			<dc:creator>M M</dc:creator>
			<pubDate>Thu, 17 Jan 2008 02:21:08 +0000</pubDate>
			<guid>https://boombustblog.com/blog/item/110-ambac-management-should-read-blogs-more-often#comment-11846</guid>
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