Bond insurer Ambac reported fourth-quarter losses of more than $3.26 billion primarily on its exposure to losses in the credit derivative market.

The New York-based company said it had losses of $5.2 billion on credit derivative exposures caused by changes in fair value of the exposures during the quarter.

The company's management said it is working on a plan to increase capital to cover any shortfalls.

During a conference call today after release of the company's financial report, Michael Callen, chairman and interim chief executive officer, said the company is working to shore up its capital position and keep its "triple-A" rating.

"Our future is triple-A," he said, adding that the insurer is in discussions with parties to raise the capital ratings companies indicated the company needs to cover shortfalls.

The comments came after the company was hit recently by rating agency announcements that they are reviewing the insurer's financial strength rating. Fitch dropped the firm's rating to "double-A." The move came after Ambac pulled its plan to raise $1 billion through capital markets in light of rating agency comments and other market conditions.

Moody's has placed the company's "Aaa" rating on review for possible downgrade.

Ambac said it has $14.5 billion to cover claims, something Mr. Callen said in a statement the markets and rating agencies are ignoring.

During the call, executives said they are working closely with rating agencies to do what needs to be done to preserve the company's rating but were circumspect on specifics.

The company reported loss of net income of $3.26 billion, or loss of $31.85 a share for the fourth quarter, compared to net income of $203 million, or $1.88 a share, for the same period for 2006. Total revenues showed a loss of $4.76 billion in the quarter compared to net of $454 million in 2006.

For the year net income was a loss of $3.23 billion, or loss of $31.38 a share, compared to net income of $876 million, or $8.15 a share for 2006. Total revenues for the year stood at a loss of $4.19 billion compared to net of $1.83 billion in 2006.

When asked about the sudden departure of Chairman, President and Chief Executive Officer Robert J. Genader on Jan. 16, Mr. Callen said Mr. Genader quit over a dispute with the board over the plan to raise capital from the capital markets. He said he remains in touch with Mr. Genader seeking advice on company strategy.

Special Reports /

Ambac Works To Add Capital After $3B Loss

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