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UPDATE: Moody’s,S&P Back Ambac AAA Ratings; Fitch Keeps AA

Last Update: 3/12/2008 5:49:04 PM

DOW JONES NEWSWIRES

Moody’s Investors Service and Standard & Poor’s affirmed the key AAA ratings of
Ambac Financial Group Inc.’s (ABK) insurance subsidiaries, but said the ratings’
tendency over the longer term will be to fall.

Fitch Ratings, which has been more aggressive in its actions against bond
insurers, left the units at AA with a negative outlook and said it would be
difficult for them to regain AAA ratings.

The firms acted after the second-largest bond insurer said Wednesday it completed
its $1.5 billion capital-raising aimed at defending its ratings.

Moody’s said Ambac - which has $15 billion in resources available to cover a
potential $12.1 billion in losses in an extreme case - clears its minimum
capital-ratio hurdle for a AAA rating but falls $700 million short of its target
level. Moody’s, however, noted Ambac is considering other ways to raise capital
in the next three to six months and said the outlook on the insurer ratings could
return to stable in the next six to 12 months as “visibility improves on the
firm’s likely losses from mortgage-related exposures and as the details and
effectiveness of Ambac’s revised business strategy become more apparent.”

S&P said, “In our view, the additional capital raised, plus the capital-enhancing
benefits of Ambac Assurance’s six-month moratorium on new structured finance
business production, provides the company with capital in excess of the minimum
necessary to support its AAA rating, after accounting for our projected stress
case losses.”

S&P removed its rating from watch for possible downgrade but left the outlook as
negative.

Fitch said Ambac would have to limit the downside risk from its structured
finance collateralized debt obligations through reinsurance or other means to
regain AAA insurer ratings.

With the additional capital, Fitch now believes Ambac’s $16 billion in
claims-paying resources fall $4 billion to $5 billion short of its AAA capital
targets.

Ambac said Wednesday that it raised slightly less than $1.16 billion from a
public offering of 171.1 million shares at $6.75 a share and $95 million from a
private placement of 14.1 million shares.

Ambac’s shares were at $6.97, up 10 cents, in after-hours trading.

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