Earnings Preview: Ambac Financial

| About: Ambac Financial (AMBC)

Ambac Financial Group (ABK) is expected to report Q2 earnings before market open Wednesday, Aug. 6, with a conference call scheduled for 8:30 am ET.


Analysts are looking for EPS of (65c) on revenue of $446.1M. The consensus range for EPS is ($1.17) to (21c), according to First Call. Only one analyst has posted a revenue estimate for the company.

Analyst Views

Ambac recently agreed to pay Citigroup (NYSE:C) $850M to settle a potential lawsuit by the investment bank related to high-risk derivatives insured by Ambac. Michael Callen, the bond insurer's CEO, said the settlement "eliminates uncertainty with respect to future losses related to this transaction." On July 7, Callen said that Ambac had "ample liquidity to manage (its) commitments going forward." The company added that actions by the ratings agencies in June increased its collateral posting requirements by $506M, while causing investment agreement terminations of $270M. In recent weeks, two ratings agencies issued statements about Ambac.

On June 19, Moody's downgraded Ambac to Aa3 from Aaa. The firm wrote that the downgrade reflected "the company's significantly constrained new business prospects, its impaired financial flexibility and increased expected and stress loss projections among its mortgage-related risk exposures relative to previous estimates." Later in June, Fitch withdrew all of its outstanding ratings on Ambac, citing the company's decision to cease providing non-public information to Fitch and to cease communicating with the ratings agency's analysts.