Ambac Assurance Reaches $1.84 Bln Settlement On All Its Claims Against Bank Of America

(RTTNews) - Ambac Financial Group (AMBC), a financial services holding company whose subsidiaries include Ambac Assurance Corp or AAC, announced Friday that AAC entered into an agreement to settle all of its claims against Bank of America (BAC) and related entities for $1.84 billion.

This settlement materially exceeds the amount of subrogation recovery recorded on Ambac's second quarter 2022 financial statements.

As a result, Ambac estimates that it will record a gain with respect to the settlement of approximately $390 million, net of reinsurance and discount accretion and call premiums on AAC's secured debt. A portion of this gain will be recognized in Ambac's third quarter financial results and the remaining portion will be recognized in Ambac's fourth quarter financial results.

In accordance with its contractual obligations, AAC will repay all outstanding Sitka Notes of approximately $1.21 billion (including the associated call premium) as well as approximately $213 million of Tier 2 Notes.