Ambac Financial Group Inc.'s chief executive said it may be open to a capital injection from the Treasury, citing the bond insurer's "systemic significance" in helping improve financial markets.
"I could see some preference share injection or something like that" in Ambac or its larger rival MBIA Inc., the CEO, David Wallis, said in an interview Friday. "Along with that comes equity warrants and some degree of public ownership."
Mr. Wallis stopped short of making a prediction and said Ambac has a stable business model and is "extremely solvent." Ambac and other bond insurers have posted record losses after expanding from guarantees on municipal bonds that rarely default to insuring securities tied to mortgages that are now going delinquent.
"We have lots of money in the bank," Mr. Wallis said. "We are absolutely a solvent entity. We are not going to Treasury with a banking problem. This is an issue in relation to getting ourselves back to the market, giving people confidence, and providing the lubricant to the markets."
Mr. Wallis, 48, was named CEO last month. Ambac posted a $2.43 billion third-quarter loss last week, which prompted Moody's Investors Service Inc. to downgrade of its credit rating by four levels. The cut left Ambac with a $3.2 billion cash shortfall after it was required to post collateral and terminate contracts in its investment management unit.
"We're working extremely hard in this horrendously difficult market to mediate and de-risk our portfolio," Mr. Wallis said. "We do need help in accelerating the turnaround. We do need to move forward and manage the risk."