Ambac Responds to Moody's Action

NEW YORK--(Business Wire)--
Ambac Financial Group, Inc. (NYSE: ABK) (Ambac) today responded to
Moody's decision to downgrade the insurance financial strength ratings
of Ambac Assurance Corporation and Ambac Assurance UK with the
following statement:

We are disappointed with Moody's decision to downgrade us to Aa3
with a negative outlook designation. More importantly, we disagree
with the negative outlook designation. The Company's strong capital
base, even under Moody's stress-case scenarios, will allow it to
manage through the current credit crisis. Moreover, we are actively
managing our portfolio and expect to see concrete positive results
from our remediation efforts.

Ambac separately confirmed that the downgrade does not have any
material impact on its obligations to collateralize its guaranteed
investment contracts and the swaps in its financial services segment.
Ambac also confirmed that the Moody's action did not, in any way,
impair the Company's ability to proceed with its plans related to the
capitalization of Connie Lee Insurance Company. As stated in Moody's
announcement, Ambac plans to use Connie Lee Insurance to capitalize on
its 37-year track record in the public finance market.

Forward-Looking Statements

This release contains statements that may constitute
"forward-looking statements" within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Any or all of management's forward-looking statements here or in other
publications may turn out to be wrong and are based on Ambac's
management current belief or opinions. Ambac's actual results may vary
materially, and there are no guarantees about the performance of
Ambac's securities. Among events, risks, uncertainties or factors that
could cause actual results to differ materially are: (1) changes in
the economic, credit, foreign currency or interest rate environment in
the United States and abroad; (2) the level of activity within the
national and worldwide credit markets; (3) competitive conditions and
pricing levels; (4) legislative and regulatory developments;
(5) changes in tax laws; (6) changes in our business plan, including
changes resulting from our decision to discontinue writing new
business in the financial services area, to significantly reduce new
underwriting of structured finance business and to discontinue all new
underwritings of structured finance business for six months; (7) the
policies and actions of the United States and other governments;
(8) changes in capital requirements whether resulting from downgrades
in our insured portfolio or changes in rating agencies' rating
criteria or other reasons; (9) changes in Ambac's and/or Ambac
Assurance's credit or financial strength ratings; (10) changes in
accounting principles or practices relating to the financial guarantee
industry or that may impact Ambac's reported financial results;
(11) inadequacy of reserves established for losses and loss expenses;
(12) default by one or more of Ambac Assurance's portfolio
investments, insured issuers, counterparties or reinsurers;
(13) credit risk throughout our business, including large single
exposures to reinsurers; (14) market spreads and pricing on insured
collateralized debt obligations ("CDOs") and other derivative products
insured or issued by Ambac; (15) credit risk related to residential
mortgage securities and CDOs; (16) the risk that holders of debt
securities or counterparties on credit default swaps or other similar
agreements seek to declare events of default or seek judicial relief
or bring claims alleging violation or breach of covenants by Ambac or
one of its subsidiaries; (17) the risk that our underwriting and risk
management policies and practices do not anticipate certain risks
and/or the magnitude of potential for loss as a result of unforeseen
risks; (18) the risk of volatility in income and earnings, including
volatility due to the application of fair value accounting, or FAS
133, to the portion of our credit enhancement business which is
executed in credit derivative form; (19) operational risks, including
with respect to internal processes, risk models, systems and
employees; (20) the risk of decline in market position; (21) the risk
that market risks impact assets in our investment portfolio; (22) the
risk of credit and liquidity risk due to unscheduled and unanticipated
withdrawals on investment agreements; (23) changes in prepayment
speeds on insured asset-backed securities; (24) factors that may
influence the amount of installment premiums paid to Ambac; (25) the
risk that we may be required to raise additional capital, which could
have a dilutive effect on our outstanding equity capital and/or future
earnings; (26) our ability or inability to raise additional capital,
including the risks that regulatory or other approvals for any plan to
raise capital are not obtained, or that various conditions to such a
plan, either imposed by third parties or imposed by Ambac or its Board
of Directors, are not satisfied and thus potentially necessary capital
raising transactions do not occur, or the risk that for other reasons
the Company cannot accomplish any potentially necessary capital
raising transactions; (27) the risk that Ambac's holding company
structure and certain regulatory and other constraints, including
adverse business performance, affect Ambac's ability to pay dividends
and make other payments; (28) the risk of litigation and regulatory
inquiries or investigations, and the risk of adverse outcomes in
connection therewith, which could have a material adverse effect on
our business, operations, financial position, profitability or cash
flows; (29) other factors described in the Risk Factors section in
Part I, 1A of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2007 and in Part II, Item 1A of our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2008, and also disclosed
from time to time by Ambac in its subsequent reports on Form 10-Q and
Form 8-K, which are or will be available on the Ambac website at
www.ambac.com and at the SEC's website, www.sec.gov; and (30) other
risks and uncertainties that have not been identified at this time.
Readers are cautioned that forward-looking statements speak only as of
the date they are made and that Ambac does not undertake to update
forward-looking statements to reflect circumstances or events that
arise after the date the statements are made. You are therefore
advised to consult any further disclosures we make on related subjects
in Ambac's reports to the SEC.

Ambac Financial Group, Inc., headquartered in New York City, is a
holding company whose affiliates provide financial guarantees and
financial services to clients in both the public and private sectors
around the world. Ambac's principal operating subsidiary, Ambac
Assurance Corporation, a guarantor of public finance and structured
finance obligations, has earned a Aa3 rating from Moody's Investors
Service, Inc. and a double-A rating from Standard & Poor's Ratings
Services; Standard & Poor's maintains a credit watch negative while
Moody's rating is on negative outlook. Ambac Financial Group, Inc.
common stock is listed on the New York Stock Exchange (ticker symbol
ABK).

Investor/Media:
Vandana Sharma, 212-208-3333
vsharma@ambac.com
or
Fixed Income:
Peter Poillon, 212-208-3222
ppoillon@ambac.com

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