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AMBAC Indemnity Corp. Addresses Orange County Bankruptcy Concerns

Strategic Insights

— 1 min read

As a leading bond insurer, AMBAC Indemnity Corp. has committed to ensuring timely payment of principal and interest to its policyholders in the event of a default by Orange County, California, which recently filed for bankruptcy. According to Phillip B. Lassiter, chairman, president, and CEO of AMBAC Indemnity Corp., the company has sufficient resources to cover potential eventualities, with direct exposure to the county totaling approximately $17 million in annual debt service payments.

Key Takeaways:

  • AMBAC Indemnity Corp. has assured its policyholders that they will receive timely payment of principal and interest in the event of a default by Orange County, California, regardless of the outcome.
  • The company has more than sufficient resources to cover any and all eventualities for bonds directly or indirectly impacted by the Orange County bankruptcy.
  • AMBAC's direct exposure to the county is approximately $17 million in annual debt service payments for certificates of participation (leases) for essential facilities.
  • The company believes that Orange County has the capacity to meet its financial obligations and expects the State of California to be supportive in resolving the issues.
  • AMBAC has access to dedicated revenue streams backing most of the issues, which does not appear to be problematic at this time.
  • The company continues to believe that, with the orderly liquidation of the fund, all participants will fulfill their financial obligations.
  • AMBAC policyholders can rest assured that their AMBAC bonds will be paid, regardless of the outcome of the Orange County bankruptcy.
  • The filing by Orange County further underscores the value of bond insurance as protection for events impacting bonds that were previously viewed as high quality.

Statistics:

  • AMBAC has insured certificates of participation (leases) for essential facilities that require annual debt service payments of approximately $17 million per year.
  • AMBAC has a triple-A claims-paying ability rating from each of Moody's Investors Service Inc., Standard & Poor's Corp., and Fitch Investors Services Inc.

Sources:

  • BUSINESS WIRE, "AMBAC Indemnity Corp. Statement on Orange County Bankruptcy" (December 7, 1994)
  • AMBAC Inc. press release, "Statement on Orange County Bankruptcy" (December 7, 1994)

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