Ambac Financial Group Inc. yesterday said it has terminated its relationship with Fitch Ratings after deciding that it no longer had a need for the rating of the market's smallest credit rating agency.
Fitch assigns a AA rating with a negative outlook on Ambac's bond insurer, Ambac Assurance Corp., after it downgraded the insurer from AAA in January.
"Our decision to refocus and realign our business around our core expertise in the public finance and infrastructure sectors has led us to re-evaluate our ratings needs," Ambac said in a release. "As part of this review, we have asked Fitch to remove its ratings on Ambac and all its subsidiaries effective immediately."
In a statement, Fitch said it received the request and that is considering it.
The withdrawal of the rating is not likely to happen anytime soon. The rating agency has said in the past that it would continue rating a bond insurer for as long as it felt like its knowledge of the insured portfolio was up to date.
In September 2007, Radian Group Inc. also asked Fitch to withdraw the rating on its bond insurer, Radian Asset Assurance Inc. It was only at the beginning of May that Fitch finally removed the rating. MBIA Insurance Corp. and CIFG Assurance NA have also asked Fitch to withdraw their ratings.
The rating agency has come under criticism because of what some call overly harsh ratings criteria and a capital model that requires billions of dollars more in capital to maintain a triple-A level. Fitch maintains that it is being realistic about potential losses in the insurers' portfolios.
Plans are underway at Ambac to capitalize a wholly owned subsidiary, Connie Lee Insurance Co., for the purposes of insuring municipal credits. The company is looking for ratings stability as it moves forward with the plan. It has made the choice to pursue ratings stability at the two agencies that rate the greatest proportion of public finance credits.
Standard & Poor's assigns a rating of AA on negative watch for Ambac Assurance, while Moody's Investors Service rates the financial guarantor Aaa, but has it on review for a downgrade.
