Moody's says that although the creditors "could influence the insurance subsidiaries' operations,” but a planned prepackaged bankruptcy of the holding company is "unlikely to have a direct material effect on the group’s operating subsidiaries and their policyholders."said.
In its most recent quarterly filing, Ambac warned again that bankruptcy is likely. The company has been saying bankruptcy could be a possibility since 2009.
Ambac reported a second-quarter net loss of $57.6 million, compared with a net loss of $2.4 billion for the same period a year ago. Results were affected by commutation settlements on credit default obligations of asset-backed securities and claim payments on residential mortgage-backed securities and investment losses related to securities.
Moody’s said it rates Ambac senior debt “C,” meaning there is a high likelihood of default. “AFG is in a very weak liquidity position with no access to insurance company resources and about $122 million of debt due in August 2011,” Moody’s said.
Ambac in June exchanged $20 million of the August 2011 debt for 13.6 million shares. It is also looking to raise additional capital.
As of June 30, Ambac had about $56.7 million in cash and equivalents.