(Reuters) - Bond insurer Ambac Financial Group Inc (AMBC.O) said it was “aggressively pursuing” loss mitigation strategies in debt-laden Puerto Rico.
Ambac’s plan announced in its quarterly earnings report on Wednesday comes a week after Puerto Rico said it would restructure its public debt, touching off what may be the biggest bankruptcy ever in the $3.8 trillion U.S. municipal bond market.
Loss and loss expenses in Ambac’s domestic public finance portfolio surged about 85 percent to $169.4 million in the first quarter, from the fourth, mostly related to Puerto Rico. However, they were down from a year earlier.
Fellow bond insurer MBIA Inc (MBI.N), with about $3.6 billion of exposure to Puerto Rico, said loss adjustment expenses in its U.S. public finance insurance segment jumped 22 percent due to additions for certain Puerto Rico credits.
Big U.S. bond insurers, including MBIA, Ambac and Assured Guaranty Ltd (AGO.N), have sued Puerto Rico and its financial oversight board, objecting to a fiscal turnaround plan approved by the board in March.
The plan forecasts the island having only $800 million a year to service debt, auguring major haircuts for bondholders.
Ambac, which insures about $2.2 billion of Puerto Rican bonds, on Wednesday reported a quarterly loss, compared with a year-earlier profit, while MBIA posted a narrower quarterly loss.
Shares of Ambac were down 1.8 percent at $17.77 in thin after-hours trading, while that of MBIA were little changed.
Ambac reported a net loss of $125.44 million, or $2.77 per share, for the first quarter. The company posted a profit of $9.42 million, or 21 cents per share, a year earlier.
Purchase, New York-based MBIA’s net loss narrowed to $72 million, or 55 cents per share, in the first quarter ended March 31, from $78 million, or 58 cents per share, a year earlier.
Reporting by Sruthi Shankar in Bengaluru; Editing by Maju Samuel