Ambac Moratorium Could Bring More Corporate OTTIs
Monoline insurer Ambac Assurance Corporation announced it restructured its residential mortgage backed securities guarantees into a separate "segregated account" after the Wisconsin Insurance Commissioner successfully petitioned to take control of the fund.
In addition, Commissioner Sean Dilweg has received approval to temporarily suspend payments on claims pending approval of a rehabilitation plan.
The $8 billion Members United Corporate Federal Credit Union announced to members the move could prompt new OTTIs, and could lead to further depletion of member capital.
President/CEO Joseph Herbst also told members in a March 25 letter, posted on the corporate's Web site (www.membersunited.org), that the Ambac development could further delay 2009 annual reports, previously expected in April.
Ambac is Members United's second largest monoline insurer, backing about 38% of its insured securities. The $8.5 billion Southwest Corporate Federal Credit Union reported as of Jan. 31 that
Ambac policies represent approximately 42% of its insured securities. Ambac backs 25% of U.S. Central's insured securities; the Kansas City-based corporate reported Ambac's inability to pay on 100% of claims was partly responsible for its 4th quarter OTTI.