Item 8.01 Other Events.

On November 19, 2008, Ambac Financial Group, Inc. ("Ambac") announced that it has commuted two CDO of CDO of ABS (commonly referred to as CDO-squared) exposures and two high grade CDO of ABS exposures. The four transactions, with an aggregate of approximately $3.52 billion notional outstanding at September 30, 2008, were settled with counterparties in exchange for a total cash payment by Ambac Assurance Corporation ("Ambac Assurance") of $1.0 billion. The two CDO-squared transactions originally comprised collateral consisting of A-rated CDO of ABS tranches, and the two high grade CDO of ABS exposures originally comprised collateral consisting of subprime and other RMBS rated A- or higher. Most of the collateral had been downgraded to below investment grade since the inception of the transactions. All four of the transactions had been internally downgraded to below investment grade.

As a result of the settlements, Ambac expects to record positive adjustments to its aggregate mark-to-market and impairment reserves. In addition, the stress case losses in the rating agency capital models for these transactions exceeded Ambac Assurance's final payment; therefore, the settlement will result in an improved rating agency capital position for Ambac Assurance.

On November 19, 2008, Standard & Poor's Ratings Services ("S&P") downgraded the 'AA' financial strength rating of Ambac Assurance to 'A'. At the same time, S&P downgraded Ambac's senior debt and hybrid security ratings to 'BBB' and 'BB+' from 'A' and 'BBB+', respectively. In addition, S&P downgraded Ambac's 'A' ratings on preferred stock issued by financing trusts to 'BBB'.

Certain statements in this document and the exhibit are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in Ambac's filings with the Securities and Exchange Commission.

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