The insurance regulator for Ambac Assurance Corp. has named Roger Peterson special deputy commissioner for the company's segregated account containing its riskiest policies, pending court approval.
The regulator, the Wisconsin Office of the Commissioner of Insurance, said Peterson will resign from his position as deputy administrator of the OCI's division of regulation and enforcement, and focus solely on his role as special deputy commissioner.
Peterson will assume his new duties effective July 1 and will report to Theodore Nickel, the rehabilitator of the segregated account. He will move to New York from Wisconsin.
Peterson will now act as a consultant on a full-time basis and be responsible for oversight and strategic management of the segregated account, including developing business plans, goals, and priorities for the account. He also will manage the account's loss-mitigation efforts, litigation strategies, and surplus note issuance and payments.
The segregated account was formed in March 2010 for the bond insurer's most troubled assets after the insurer ran into serious trouble in late 2007 due to decaying credit quality in its structured finance policies. Some $50 billion worth of assets were placed in the walled-off account while the regulator came up with a plan of rehabilitation.
Peterson "will act for the benefit of policyholders and will not take into account the interests of security holders of Ambac Financial Group, or holders of preferred shares of Ambac Assurance," Ambac wrote in a statement.
Peterson's compensation includes a bonus if he remains as a consultant for a specified period of time, but his compensation does not include increased payments related to the financial outcome for policyholders or holders of Ambac Assurance securities. A spokesman for Ambac declined to comment.
"It has become increasingly evident to Commissioner Nickel and OCI that the role of special deputy commissioner in a rehabilitation process of this magnitude and complexity demands a person working full-time on matters pertaining to the segregated account and who can be regularly on-site in the insurer's offices in New York," the regulator wrote in a statement.
"Earlier this year, Commissioner Nickel concluded that one person at OCI could no longer occupy a dual role of supervising regulatory duties on matters unrelated to Ambac in Wisconsin and also as special deputy commissioner for the segregated account," the statement added. "Commissioner Nickel concluded that it was necessary to engage an independent contractor to serve full-time in the role of special deputy commissioner who would be based on-site in New York."
The application was filed on June 8 and is pending approval of the Dane County Circuit Court.