UPDATE 2-Ambac again postpones launch of municipal bond arm

* Unit CEO steps down

* Ambac to continue working on new businesses

* Shares down 16 percent (Recasts, adds company executive comment, background on Everspan plan)

NEW YORK, June 19 (Reuters) - Bond insurer Ambac Financial Group (ABK.N) said it has again postponed the launch of its municipal bond arm Everspan after struggling to raise money from outside investors to fund the unit.

Ambac and other bond insurers had been pinning hopes for a revival of their business on launching municipal-focused units, after ratings agencies stripped the insurers of their "triple A" ratings following heavy credit losses from a foray into guaranteeing repackaged debt.

Everspan's chief executive, Douglas Renfield-Miller, had been discussing raising capital with third parties, but in a statement Ambac said the talks had failed to raise the funds and Renfield-Miller had decided to step down.

Investors were looking for higher returns than a municipals-only financial guarantor would be able to produce, said Peter Poillon, a managing director in Ambac investor relations.

"It just wasn't attractive enough," he said. "Eventually, the markets will come back down to earth and we'll market it again."

Ambac will most likely approach potential investors for Everspan again next year, he said.

Ambac shares were down 20 cents to $1.05 in early-afternoon trade on the New York Stock Exchange.

SECOND POSTPONEMENT

Last month, reporting a first-quarter loss, the insurer said it was delaying Everspan's planned second-quarter launch because rating agencies had pushed it to raise capital from outside investors. At that time, Ambac said it was in discussions with a number of potential investors.

Renfield-Miller, who was also an executive vice president of Ambac and Ambac Assurance Corp, will retire on Jan. 1, 2010, and will work as a consultant to the company until then, the company said.

Ambac will continue to consider new businesses and work to reduce losses in its portfolios, it said.

Rival bond insurer MBIA Inc (MBI.N), which has struggled like Ambac with losses from mortgage-related securities, is also setting up a municipal bond arm, in hopes it will be able to rebuild its market share in this less risky part of the bond insurance market. The plan, however, has angered investors, banks and counterparties who are concerned it may strip the parent company of its best assets.

Bond insurers depend on high ratings to win new business. Buyers of the insurance can use the insurer's own rating to boost the perceived creditworthiness of their bonds, and thereby lower financing costs. (Reporting by Elinor Comlay; editing by John Wallace)