Ambac Chief Financial Officer Sean Leonard resigns

AP News
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Posted: Nov 24, 2009 3:10 PM

Embattled bond insurer Ambac Financial Group Inc. announced Tuesday the resignation of its chief financial officer.

The company, based in New York, said Sean Leonard left "to pursue other interests." The resignation is effective immediately.

The departure comes just weeks after Ambac said it may be forced to file for bankruptcy protection. In a filing with the Securities and Exchange Commission Nov. 9, the company said it believes it has enough liquidity to get through the second quarter of 2011, but warned it could run out of money sooner.

Ambac for years had backed municipal bonds that rarely defaulted and paid steady dividends. In recent years, however, the company invested in complex new bonds that were comprised of risky mortgages amid the housing bubble.

The new bonds were an opportunity for Ambac to generate outsize returns. But as the housing bubble burst and mortgage defaults spiked, the likelihood of issuer default and claims on bond insurance rose.

In the filing with the SEC earlier this month, Ambac said it may not be able to generate enough cash to pay operating expenses and debt obligations over the long term. Given the tight credit markets, the company said it also may not be able to access alternate sources of capital.

"No assurances can be given that Ambac will be successful in executing any or all of its strategies," the company said in the filing.

Ambac Financial is considering a restructuring of its debt through a prepackaged bankruptcy proceeding. But if it can't bolster its capital position, the company said it may file for bankruptcy without a lender agreement in place.

Leonard joined Ambac in 2005, according to the company. Those who worked under Leonard will report to CEO David Wallis until a replacement is found, Ambac said.

An Ambac representative did not immediately return a call for further comment.

Shares of Ambac fell 9 cents, or 10 percent, to 81 cents in afternoon trading. In the past year, shares have traded between 35 cents and $2.09. In November of last year, shares were as high as $3.40.