Guaranty insurer Ambac Financial Group Inc. said it will stop paying a regular quarterly dividend in a move the company said would save $11.5 million a year.
The New York-based insurer made the announcement Wednesday, saying it would eliminate the payments that were recently set at 1 cent per share. Ambac said it made the move “to support the company’s goal of preserving parent company liquidity.”
Ambac has struggled in the face of the growing economic crisis to reduce its collateralized debt exposure. The company has terminated a number of obligations to cut its exposure, but rating agencies have been unfazed by the moves, downgrading the carrier on several occasions.
Ambac was critical of the move made by one rating agency, saying of a Moody’s downgrade that it was “surprised and disappointed,” and believed that the action only caused confusion in the marketplace.
Moody’s dropped the company’s insurance financial strength rating from “Aa3″ to “Baa1.”