Southwest Corp Retains 90% Ambac Reliance
The $10 billion Southwest Corporate FCU joined Corporate One FCU in deciding not to take any additional OTTI related to the Wisconsin insurance regulator's March 25 action against monoline insurer Ambac Assurance Corp.
In its March 2010 financial reports, the Dallas based corporate said it had previously reduced Ambac's payment reliance to 90% based on input from Moody's. Because Ambac's rehabilitation plan and CDO settlements are still ongoing, revisions to repayment expectations are not yet warranted, wrote Chief Investment Officer Bruce Fox and Chief Financial Officer Melissa Wardell.
In addition to the rehabilitation plan, Ambac announced a non-binding agreement to settle substantially all of its CDO exposures at an advantageous price, which enhances Ambac's claims paying ability, the corporate said.
Southwest Corporate also cited a comment made by Wisconsin Insurance Commissioner Sean Dilweg in court filings, in which he said "full payment to policyholders remains possible even in spite of Ambac's presently troubled financial condition."
Should Ambac payment reliance fall to 0%, the resulting OTTIs could number $43 million.