After Citicorp last year sold a 50% stake in AMBAC Inc. to the public, Phillip B. Lassiter left the bank to head up the municipal bond insurer. Since then, the firm -- consistently the second most active participant in the municipal guarantee market -- has become 100% publicly owned.

With the legal ties to Citibank now sundered, AMBAC has been exploring new products, such as asset securitization. Financial Security Assurance Inc., Financial Guaranty Insurance Co., and Municipal Bond Investors Assurance Corp., the most active insurer, all focus on this market sector. One of Mr. Lassiter's charges is to remain faithful to AMBAC Idemnity Corp.'s "pure" municipal philosophy of its Citibank days, while integrating higher-margin products.

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