NEW YORK (Reuters) - Ambac Financial Group Inc <ABK.N> said it has enough funds to meet obligations, but if its ratings are cut too far below current levels, it may have to use assets from a regulated subsidiary to pay off its obligations.
"We have ample liquidity to manage our commitments going forward," Chairman and Chief Executive Officer Michael Callen said in a statement.
Ambac's main insurance unit lost its top credit ratings last month, which forced the insurer to post $506 million of additional collateral and end $270 million of investment agreements.
If the insurance unit is downgraded more than two steps by Standard & Poor's or more than one step by Moody's, Ambac would need at least $1 billion to post additional collateral and close out obligations, the company said. It would not have enough assets in its investment agreement asset portfolio to cover that $1 billion
Ambac said it does not expect these downgrades, but said it is talking to the Wisconsin insurance regulator about how to use assets from its regulated subsidiary to pay back obligations if it is downgraded below these levels. Ambac believes regulators will approve its plans.
(Reporting by Dan Wilchins; Editing by Gary Hill)
