Ambac - American Municipal Bonds Corp.

  • 17 Ambac filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code on 8 November 2010

2011 11 - IAIS - Insurance and Financial Stability - 47p

  • 1984 0707 - NYT - Baldwin to Sell Ambac Indemnity - [link]
  • 2008 0201 - NYT - 8 Banks in Talks to Rescue Bond Insurer, By Vikas Bajaj and Julie Creswell - 
  • 2008 0202 - NYT - 8 Banks Discuss Aid for Bond Insurer - [link]
  • 2010 0325 - NYT - An A.I.G. Lesson From Wisconsin - [link]
  • 2010 0325 - Financial Times - Regulators move in on troubled Ambac - [link]
  • 2010 0326 - Financial Times - It’s official: Ambac’s CDS triggered - [link]
  • 2010 1014 - FCIC - Kim Shaul Interview - Wisconsin OIC - mp3
  • ambacpolicyholders.com/_B.style/
  • 2011 11 - IAIS - Insurance and Financial Stability - 47p
  • (p785-787) - A more significant matter was the right of national banks to engage through their subsidiaries in underwriting of municipal bond guaranty insurance. Such underwriting not only raised the substantive issue of banking and insurance but also raised a controversial jurisdictional issue between the Comptroller and the Board.
    • In January 1985, Citibank., a national bank and subsidiary of the BHC Citicorp, in a letter to the OCC proposed the establishment of a new operating subsidiary,281 American Municipal Bond Assurance Corporation (AMBAC) for the purpose of issuing "standby letters of credit" for municipal bonds.
    • Municipalities issuing bonds would apply for AMBAC insurance and, if there were a default thereon, the bondholders would apply to AMBAC for payment of interest and principal due.
      • The Citibank reasoned in its proposal that this activity was not insurance but standby letters of credit, a long standing permissible banking activity.
      • In May 1985, the Comptroller approved Citibank's proposal, agreeing that this was not insurance.282
  • In immediate response to this bombshell, the American Insurance Association (AIA) filed suit in the D.C. District Court.
    • The AIA raised several issues including the contention that the proposed activity was insurance and, furthermore, that this activity was prohibited under the BHCA as amended by the Garn-St Germain Act.283
    • The court granted summary judgment in favor of the Comptroller, holding that the guarantee insurance offered by AMBAC was not insurance but the functional equivalent to providing standby letters of credit.284
  • In American Insurance Association v. Clarke,286 in which the AIA appealed the decision, the D.C. Circuit Court in effect overturned the Comptroller and the district court.
    • The court did agree with the OCC that the guarantee insurance was analogous to standby letters of credit and, as such, permissible under the National Bank Act.
    • However...

1992 - LR - Banking and Insurance - Should Ever the Twain Meet?, by Emeric Fischer - 101p

  • This conclusion is based on an analysis of Federal Reserve Board orders involving applications by Citicorp 16 and Merchants National Corp. 17 to engage in insurance activities through state-chartered banks, as well as from an overview of the District of Columbia Circuit Court of Appeal's AMBAC decision and the Federal Reserve Board's proposed regulatory response.19

1990 - LR - Dual Banking and State Bank Insurance Powers: Diversifying Financial Services Through the Back Door, by Michael E. Schrader - 21p

  • 2008 0202 - NYT - 8 Banks Discuss Aid for Bond Insurer - [link]
    • The insurers’ problems also raise questions about how closely the companies were supervised in recent years when they insured tens of billions of dollars of complex investments tied to risky mortgages and consumer loans.
    • Ambac is in more dire financial straits than its larger rival, MBIA, which has raised $1.5 billion in recent weeks.
    • MBIA and Financial Guaranty are regulated in New York by Mr. Dinallo’s office.
    • Ambac is regulated in Wisconsin.
      • The insurance commissioner for that state, Sean Dilweg, said on Friday that he was confident that the company was in sound financial health but was working with the company “as it develops and implements its business plan in response to the current market conditions.”
      • “For the protection of policyholders, Wisconsin has substantial financial requirements pertaining to municipal bond insurers,” he said in a statement. “Ambac meets and exceeds all these statutory requirements.”
  • 2010 0325 - Financial Times - Regulators move in on troubled Ambac - [link]
    • Sean Dilweg, the Wisconsin Insurance Commissioner, said Ambac had suspended payments on policies guaranteeing $35bn of mortgage-backed securities such as CDOs, including $120m of payments that were due in March.
      • He said that in 2009 Ambac made payments worth $1.4bn on soured mortgage-backed debts, highlighting that many investors were still relying on the bond insurer’s payments in spite of its fragile finances.
      • “When I determined that Ambac was financially hazardous I was unable to allow policyholders to receive 100 cents on the dollar,” Mr Dilweg said.
        • He added that Ambac has $230bn of insured assets in the public finance markets and these policyholders would have continued coverage.
  •  
  • Ambac v Countrywide and Bank of America -
    • BRIEF OF AMICUS CURIAE THE SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION IN SUPPORT OF DEFENDANTS-RESPONDENTS’ CROSS-APPEAL - 47p
    • BRIEF OF THE CHAMBER OF COMMERCE OF THE UNITED STATES AND THE ASSOCIATION OF CORPORATE COUNSEL AS AMICI CURIAE IN SUPPORT.OF DEFENDANT-RESPONDENT - 23p
  •  1972 0117 - Time Magazine - Insurance: Karl the Magic Man - [link
    • By now, too, Karl has expanded far beyond his original business; in the past five years he has started subsidiaries that insure commercial leases for small businessmen and municipal bonds issued by small communities.
    • AMBAC, MGIC

Wikipedia -  MGIC_Investment_Corporation - [link] - Snippets

  • 1957, the company was founded in Milwaukee by Max H. Karl, a real estate attorney
  • 1982, Karl sold the company to Baldwin United for $1.2 billion.
    • 1985 MGIC was liquidated and its assets sold to Northwestern Mutual for $775 million.[6]
  • That same year, Karl and others set up a new company with the same name.[2]
    • In 1987, Bill Lacy was appointed chairman and chief executive officer of the company. Lacy died in 2016.[7]
    • In 1995, the founder of the company, Max H. Karl, died.[2]
  • In 1985, Citibank (the principal subsidiary of Citicorp) acquired majority control of Ambac Inc., parent company of AMBAC.
    • Other investors, including Xerox Corp., Ambac management, and Stephens Inc., an investment banking firm, held the remaining equity.