MADISON, Wis., Oct. 8 /PRNewswire/ -- The Wisconsin Office of the Commissioner of Insurance (OCI) today filed a Plan of Rehabilitation for the Segregated Account of Ambac Assurance Corporation ("Segregated Account") in the Dane County Circuit Court in Wisconsin.
"Our plan provides clarity and ensures that policyholders will be compensated fairly for claims now and in the future," said Commissioner Sean Dilweg. "This tailored approach benefits policyholders and the public."
Commissioner Dilweg said that the Plan of Rehabilitation ("the Plan") maximizes claims-paying resources, limits damage to policyholders and provides a clear framework to address claims in an orderly and reasonable manner.
The Segregated Account was established on March 24, 2010, to segregate certain liabilities of Ambac Assurance Corp. (AAC) that presented serious financial hazards to AAC and all of its policyholders. At this time, approximately 700 in-force policies covering a net par outstanding amount of approximately $50 billion are allocated to the Segregated Account.
OCI has closely monitored AAC's capital position and financial health since the mortgage crisis began resonating through the economy more than 2-1/2 years ago. The economic downturn, combined with AAC's investment in, and insurance of, mortgage-related exposures damaged AAC's business and financial position. The Plan addresses these financial hazards and seeks to treat policyholders fairly.
AAC is domiciled in Wisconsin and is regulated by the OCI. AAC's parent company, Ambac Financial Group Inc. headquartered in New York, is not regulated by the OCI and is not subject to the terms of the Plan.
Before it can become effective, the Plan must be confirmed by the Honorable William D. Johnston in the Wisconsin Circuit Court for Dane County. OCI anticipates that the court will schedule a hearing shortly to consider confirmation of the Plan. Information regarding the schedule set by the court for confirmation proceedings will be posted on www.ambacpolicyholders.com.
"This plan achieves my stated goal of providing a durable solution for all of AAC's policyholders and is, in our view, the best possible solution," said Commissioner Dilweg.
Once the Plan is effective, holders of permitted policy claims will receive 25% of their permitted claims in cash and 75% in surplus notes with a scheduled maturity of June 7, 2020, and bearing an interest rate of 5.1%. Commissioner Dilweg said that the decision to adopt a 25%/75% split was guided by the need to preserve sufficient cash to pay all valid policy claims, including those that exist today and those that may arise in the future. The cash percentage may be increased in conjunction with a yearly assessment of liabilities and claims-paying resources.
All claims-paying resources of AAC will be available to pay claims of policyholders whose policies have been allocated to the Segregated Account, subject to the maintenance of $100 million of surplus in Ambac's General Account.
The Rehabilitator will post a notice on www.ambacpolicyholders.com advising of the effective date of the Plan.
Commissioner Dilweg and Deputy Commissioner Kimberly Shaul, or their successors, will remain the appointed Rehabilitator and Special Deputy Commissioner, respectively, of the Segregated Account.
AAC will continue to manage the Segregated Account pursuant to previously agreed-upon contracts and subject to the oversight of the Rehabilitator and the Special Deputy Commissioner, as outlined in the Plan. The Rehabilitator retains ultimate responsibility for resolving claims on Segregated Account policies in accordance with the Plan.
OCI will make a brief online presentation to outline the Plan, available at www.ambacpolicyholders.com.
The Plan itself, the Disclosure Statement and supporting exhibits include extensive additional information and are also available at www.ambacpolicyholders.com, where policyholders can find related legal documentation and answers to frequently asked questions.
Please direct additional queries as follows:
877-301-2046 (from within the U.S.)
212-660-6373 (from outside the U.S.)
SOURCE Commissioner Sean Dilweg