Ambac Financial Group Inc. last night announced that bond insurer subsidiary Ambac Assurance Corp. paid $1 billion to financial counterparties to commute four transactions representing $3.5 billion in collateralized debt obligation exposures. Earlier in the day, Standard & Poor's day downgraded the insurer three notches to A from AA.

Ambac expects to "record positive adjustments to its aggregate mark-to-market and impairment reserves" and that Ambac Assurance's rating agency capital position will improve as a result of the commutations.

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