Assured Guaranty Ltd. chief executive officer Dominic Frederico yesterday said that Ambac Financial Group Inc.'s decision to recapitalize Connie Lee Insurance Co. represented a "positive sign for the industry," one day after Ambac received regulatory approval from Wisconsin to reactive the bond insurer subsidiary.

Speaking at an insurance conference hosted by Keefe, Bruyette & Woods Inc. Frederico said other companies will likely follow Connie Lee into the bond insurance market. Rating downgrades have caused penetration rates to fall, but "a significant level of pent-up demand" for insurance exists, he said.

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