Notice from the Rehabilitator

MADISON, WI, May 10, 2011 – The Rehabilitator of the Segregated Account is continuing to evaluate the implications of current information regarding claims development and potential tax consequences for the implementation of the Plan of Rehabilitation that was confirmed by the Wisconsin Circuit Court on January 24, 2011. The Rehabilitator is assessing the best course of action for policyholders and will provide more specific information regarding the status of the present Plan, including possible changes, as soon as appropriate.

Notice from the Rehabilitator Regarding Implementation of the Plan of Rehabilitation

MADISON, WI, April 22, 2011 – The Segregated Account will not begin paying claims pursuant to the confirmed Plan of Rehabilitation starting in May 2011, as previously anticipated. The Rehabilitator is not satisfied that the conditions necessary for the Plan to become effective have all been satisfied, and believes that this decision is in the best interest of the policyholders. The Rehabilitator is not currently in a position to comment further on the timing of implementation, but information about the Plan will continue to be posted on this site when, and as, appropriate.

Wisconsin Court Confirms the Plan to Rehabilitate the Segregated Account of Ambac Assurance Corp.

Madison, WI, January 25, 2011 — The Wisconsin Office of the Commissioner of Insurance (OCI) today obtained confirmation of its Plan of Rehabilitation for the Segregated Account of Ambac Assurance Corporation (“Segregated Account”) in Dane County Circuit Court in Wisconsin.

“We look forward to implementing the Plan for the benefit of all policyholders,” said Commissioner Ted Nickel.

The Plan maximizes claims-paying resources, limits damage to policyholders and provides a clear framework to address claims in an orderly and reasonable fashion. Absent further orders by this or other courts, the Segregated Account expects to promptly begin processing Allowed Claims under the terms of the Plan of Rehabilitation upon satisfaction of certain conditions in the Plan.

“When we started reviewing Ambac Assurance Corporation’s (AAC) financial condition almost three years ago, we were concerned the Company wouldn’t have sufficient reserves to pay all valid claims,” said Roger Peterson, Deputy Administrator in OCI’s Division of Regulation and Enforcement. “Confirmation of the plan has mitigated that risk.”

Once the Plan takes effect, holders of permitted policy claims will receive 25% of their permitted claims in cash and 75% in surplus notes bearing interest at the rate of 5.1% per year with a scheduled maturity on June 7, 2020. Commissioner Nickel said that the decision to adopt a 25/75 split was guided by the need to preserve sufficient cash to pay all valid policy claims, including those that exist today and those that may arise in the future. The cash/note ratio may be adjusted in conjunction with a yearly assessment of liabilities and claims-paying resources.

Substantially all claims-paying resources of AAC will be available to pay claims of policyholders whose policies have been allocated to the Segregated Account.

In confirming the Plan, the Honorable William D. Johnston found that the Plan satisfied all applicable requirements of Wisconsin law. Judge Johnston also found that the Plan is more favorable to policyholders, creditors and the public than any of the alternative regulatory options.

The Segregated Account was established by AAC on March 24, 2010, to segregate certain liabilities that presented serious financial hazards to the Company and all of its policyholders. As of October 2010, approximately 700 in-force policies covering a net par outstanding amount of approximately $50 billion were held in the Segregated Account.

OCI has closely monitored AAC’s capital position and financial health since the subprime mortgage crisis began resonating through the national economy almost three years ago. The economic downturn, combined with AAC’s substantial investment in, and insurance of, mortgage-related exposures particularly damaged AAC’s business and financial position.

AAC is domiciled in Wisconsin and regulated by OCI. AAC’s parent company, Ambac Financial Group Inc., headquartered in New York, is not regulated by OCI and is not subject to the terms of the Plan.

A notice will be posted on www.ambacpolicyholders.com advising of the effective date of the Plan.

The Plan of Rehabilitation, related Disclosure Statement and supporting exhibits provide extensive additional information and are available at www.ambacpolicyholders.com, where policyholders will find legal documentation and answers to frequently asked questions.

Please direct additional queries as follows:
Policyholders:
www.ambacpolicyholders.com/ask-a-question
877-301-2046 (from within the U.S.)
212-660-6373 (from outside the U.S.)

• Plan Maximizes Resources, Limits Damage to Policyholders
• Provides Clear Framework to Address Claims
• Permitted Policy Claims to Be Paid with Combination of Cash (25%) and Surplus Notes (75%)
• Plan Requires Wisconsin Court Approval

Madison, WI, October 8, 2010, —The Wisconsin Office of the Commissioner of Insurance (OCI) today filed a Plan of Rehabilitation for the Segregated Account of Ambac Assurance Corporation (“Segregated Account") in the Dane County Circuit Court in Wisconsin.

“Our plan provides clarity and ensures that policyholders will be compensated fairly for claims now and in the future,” said Commissioner Sean Dilweg. "This tailored approach benefits policyholders and the public."

Commissioner Dilweg said that the Plan of Rehabilitation (“the Plan”) maximizes claims-paying resources, limits damage to policyholders and provides a clear framework to address claims in an orderly and reasonable manner.

The Segregated Account was established on March 24, 2010, to segregate certain liabilities of Ambac Assurance Corp. (AAC) that presented serious financial hazards to AAC and all of its policyholders. At this time, approximately 700 in-force policies covering a net par outstanding amount of approximately $50 billion are allocated to the Segregated Account.

OCI has closely monitored AAC’s capital position and financial health since the mortgage crisis began resonating through the economy more than 2 ½ years ago. The economic downturn, combined with AAC’s investment in, and insurance of, mortgage-related exposures damaged AAC’s business and financial position. The Plan addresses these financial hazards and seeks to treat policyholders fairly.

AAC is domiciled in Wisconsin and is regulated by the OCI. AAC’s parent company, Ambac Financial Group Inc., headquartered in New York, is not regulated by the OCI and is not subject to the terms of the Plan.

Before it can become effective, the Plan must be confirmed by the Honorable William D. Johnston in the Wisconsin Circuit Court for Dane County. OCI anticipates that the court will schedule a hearing shortly to consider confirmation of the Plan. Information regarding the schedule set by the court for confirmation proceedings will be posted on www.ambacpolicyholders.com.

“This plan achieves my stated goal of providing a durable solution for all of AAC’s policyholders and is, in our view, the best possible solution,” said Commissioner Dilweg.

Once the Plan is effective, holders of permitted policy claims will receive 25% of their permitted claims in cash and 75% in surplus notes with a scheduled maturity of June 7, 2020, and bearing an interest rate of 5.1%. Commissioner Dilweg said that the decision to adopt a 25%/75% split was guided by the need to preserve sufficient cash to pay all valid policy claims, including those that exist today and those that may arise in the future. The cash percentage may be increased in conjunction with a yearly assessment of liabilities and claims-paying resources.

All claims-paying resources of AAC will be available to pay claims of policyholders whose policies have been allocated to the Segregated Account, subject to the maintenance of $100 million of surplus in Ambac’s General Account.

The Rehabilitator will post a notice on www.ambacpolicyholders.com advising of the effective date of the Plan.

Commissioner Dilweg and Deputy Commissioner Kimberly Shaul, or their successors, will remain the appointed Rehabilitator and Special Deputy Commissioner, respectively, of the Segregated Account.

AAC will continue to manage the Segregated Account pursuant to previously agreed-upon contracts and subject to the oversight of the Rehabilitator and the Special Deputy Commissioner, as outlined in the Plan. The Rehabilitator retains ultimate responsibility for resolving claims on Segregated Account policies in accordance with the Plan.

OCI will make a brief online presentation to outline the Plan, available at www.ambacpolicyholders.com.

The Plan itself, the Disclosure Statement and supporting exhibits include extensive additional information and are also available at www.ambacpolicyholders.com, where policyholders can find related legal documentation and answers to frequently asked questions.

Please direct additional queries as follows:

Policyholders:
www.ambacpolicyholders.com/ask-a-question
877-301-2046 (from within the U.S.)
212-660-6373 (from outside the U.S.)

Madison, WI – June 28, 2010 - Sean Dilweg, Commissioner of Insurance for the State of Wisconsin, announced today the formation of an Advisors Council to assist in the process of rehabilitating the Segregated Account of Ambac Assurance Corporation.

The Council, composed of nine members with extensive experience in all aspects of the insurance industry, will advise the Commissioner and the Special Deputy Commissioner on a variety of issues in connection with the rehabilitation.

A subsidiary of Ambac Financial Group, Inc., AAC is domiciled in Wisconsin and subject to regulatory oversight by Commissioner Dilweg.

On March 24, 2010, Wisconsin Circuit Court in Lafayette County granted Commissioner Dilweg’s petition to formally take control of the Segregated Account of Ambac Assurance Corporation (AAC), in order to find a durable solution for policyholders, creditors and the public. The petition followed Ambac’s move to create a separate legal entity, known as the Segregated Account, where a portion of AAC’s policies were transferred.

The Office of the Commissioner of Insurance is expected to file a Plan of Rehabilitation with the Circuit Court later this year. During this process, Commissioner Dilweg expects to call on and benefit from advice of members of the new Ambac Rehabilitation Advisor Council. The members are:

• Sean Dilweg, Commissioner of Insurance, State of Wisconsin, Rehabilitator and Council Chair;
• Kimberly Shaul, Deputy Commissioner of Insurance, State of Wisconsin, Special Deputy Rehabilitator;
• Jeff Post, President and Chief Executive Officer, Cuna Mutual Group;
• Steve Callahan, Senior Consultant and Practice Development Director at Robert E. Nolan Company;
• David Walsh, Foley & Lardner, LLP. Counsel to the Rehabilitator;
• Walter Harris, President and Chief Executive Officer of Tanenbaum-Harber Co., Inc.;
• Kenneth Gibbs, President of Municipal Securities, Jefferies Group, Inc.;
• Thomas Gybel, PNMAC Mortgage Opportunity Fund, LLC, Board and Special Advisor to Galileo Weather Risk Management Advisors, LLC;
• Karl Case, Professor of Economics, Wellesley College;
• Patricia Hopkins, Senior Executive Vice President & CFO, Independent Community Bankers of America;
• Chris Evangel, Managing Director, Securities Valuation Office/NAIC.

“The expert and experienced advice these advisors will provide with respect to the rehabilitation of the Segregated Account is crucial to our success,” Dilweg said. “Their participation provides a valuable resource for the Rehabilitation of Ambac Assurance Corporation.”

Madison, WI—March 25—The Wisconsin Office of the Commissioner of Insurance (OCI) today filed a petition to take control of and to rehabilitate the Segregated Account of Ambac Assurance Corporation (Segregated Account). The Segregated Account was established in order to segregate certain liabilities of Ambac Assurance Corporation (AAC).

In order to provide a durable solution for all policyholders, the OCI filed the petition for rehabilitation with the Honorable William D. Johnston of the Lafayette County Circuit Court in Wisconsin. AAC is domiciled in Wisconsin. AAC’s parent company, Ambac Financial Group Inc. (NYSE: ABK) is headquartered in New York and is not regulated by the OCI and isn’t directly included in the OCI’s plan for rehabilitation.

Commissioner Dilweg, as Rehabilitator, received court approval to impose a temporary moratorium on further claim payments to Segregated Account policyholders pending approval of a plan of rehabilitation.

Policies that are not transferred to the Segregated Account will remain in AAC. Under Wisconsin law, the Segregated Account is treated as a separate insurer from AAC for purposes of rehabilitation. As a result, the rehabilitation of the Segregated Account does not require a rehabilitation of AAC as a whole.

“I am taking action to protect policyholders, including investors in thousands of state and local municipal bond issues and other public finance securities, who rely on AAC’s guaranty,” said Wisconsin Insurance Commissioner Sean Dilweg. “I have a concrete plan for rehabilitation, and details will be reviewed in court over the coming weeks.”

The OCI has been closely monitoring AAC’s capital position and financial health since the subprime mortgage crisis began resonating through the economy more than two years ago. The economic downturn, combined with AAC’s substantial investment in, and insurance of, mortgage-related exposures damaged AAC’s business and financial position and reduced its claims-paying resources.

These events created a potential financial hazard to policyholders, creditors, and the public. There also has been a steady, significant increase in AAC’s projected loss impairments.

“I am implementing a durable solution for all policyholders while maximizing AAC’s resources, pursuant to OCI’s regulatory authority,” said Commissioner Dilweg. “For nearly two years, I have worked closely with AAC’s board and management, and outside advisors, to address the pressing challenges facing the Company.”

In connection with the filing, the Court appointed Kimberly Shaul Special Deputy Rehabilitator for the Rehabilitation of the Segregated Account. Ms. Shaul presently is the Deputy Commissioner of the Wisconsin Office of the Commissioner of Insurance, a position she has held since early 2007.

“My goal at every step along the way has been and will continue to provide a durable solution for all AAC’s policyholders,” said Commissioner Dilweg.