Wisconsin’s insurance commissioner gained a state court judge’s approval of cash payments to Ambac Assurance Corp. policyholders who have filed more than $3 billion in claims.
Commissioner Theodore Nickel’s office undertook rehabilitation of a segregated portfolio of Ambac policies covering as much as $50 billion in mortgage-backed securities and other corporate liabilities two years ago, winning court approval in 2011 to pay claimants 25 percent of their losses in cash and the balance by 2020.
Judge William Johnston in Dane County yesterday granted Nickel’s request, filed last month, to start making those payments.
Payment could begin in the third quarter of this year, Michael Fitzgerald, a spokesman for corporate parent Ambac Financial Group Inc. (ABKFQ:US), said in a telephone interview today.
Ambac Assurance was the second-biggest U.S. bond insurer before the 2008 financial crisis, after which mounting claims spurred by mortgage defaults swamped the company with claims and threatened its viability.
The insurer was paying out as much as $150 million a month, exceeding its revenue, Nickel’s predecessor, Sean Dilweg, had said.
The case is In re The Rehabilitation of Segregated Account of Ambac Assurance Corp., 2010-cv-001576, Dane County, Wisconsin, Circuit Court (Madison).
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