8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 25, 2006 (September 21, 2006)

AMBAC FINANCIAL GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware	1-10777	13-3621676
(State of incorporation)	(Commission file number)	(I.R.S. employer identification no.)

One State Street Plaza, New York, New York 10004

(Address of principal executive offices) (Zip Code)

(212) 668-0340

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

q Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

q Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

q Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

q Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c))

Item 8.01 Other Events

On September 25, 2006, Ambac Financial Group, Inc. issued a press release announcing that it has called for the redemption of all of its outstanding 7% Debentures due October 17, 2051 (the “Redemption”). The Redemption will occur on October 23, 2006 (the “Redemption Date”) and the redemption price will equal 100% of the principal amount of the Debentures plus accrued and unpaid interest up to, but excluding the Redemption Date. The aggregate principal amount of the outstanding Debentures is $200 million.

A copy of the press release is attached hereto as Exhibit 99.08 and is incorporated by reference herein.

In connection with the Redemption, a notice of redemption was mailed on September 21, 2006 to the record holders of the Debentures by the Bank of New York, the trustee under the indenture governing the Debentures. A copy of the notice of redemption is attached hereto as Exhibit 99.09 and is incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

Exhibit Number	Item
99.08	Press release dated September 25, 2006.
99.09	Notice of Redemption dated September 21, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Ambac Financial Group, Inc.
	(Registrant)
Dated: September 25, 2006
	By:	/s/ Anne Gill Kelly
		Anne Gill Kelly
		Managing Director, Corporate Secretary and Assistant General Counsel

INDEX TO EXHIBITS

Exhibit Number	Description of Exhibit
99.08	Press Release dated September 25, 2006.
99.09	Notice of Redemption dated September 21, 2006.

EX-99.08

Exhibit 99.08

Ambac Financial Group, Inc. One State Street Plaza New York, NY 10004 212.668.0340

News Release

For Immediate Release

Investor/Media Contact: Peter R. Poillon

(212) 208-3333

ppoillon@ambac.com

Web site: www.ambac.com

AMBAC FINANCIAL GROUP, INC. ANNOUNCES REDEMPTION

OF 7.00% DEBENTURES DUE OCTOBER 17, 2051

NEW YORK, September 25, 2006— Ambac Financial Group, Inc. (NYSE:ABK) (Ambac) announced today that it will redeem all of its outstanding $200 million 7.00% debentures (NYSE Listing AFK, CUSIP No. 023139405), on October 23, 2006 (the “Redemption Date”) at par ($25 per debenture) plus accrued interest to the Redemption Date. The Bank of New York shall act as the Paying Agent. Redemption payments will be made upon the presentation and surrender of the notes to the Paying Agent by mail at The Bank of New York, Corporate Trust Operations, P.O. Box 396, East Syracuse, New York, 13057 or by hand or overnight delivery at The Bank of New York, Corporate Trust Operations, 111 Sanders Creek Parkway, East Syracuse, New York, 13057.

The debentures will be redeemed using portions of the proceeds from Ambac’s $400 million issuance of 5.95% debentures in December 2005. On the Redemption Date, Ambac will write-off fees and expenses related to the original issuance of the 7.00% debentures of approximately $6.0 million ($3.9 million after-tax).

*******************

Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provide financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac’s principal operating subsidiary, Ambac Assurance Corporation, a leading guarantor of public finance and structured finance obligations, has earned triple-A ratings, the highest ratings available from Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services, Fitch, Inc. and Rating and Investment Information, Inc. Ambac Financial Group, Inc. common stock is listed on the New York Stock Exchange (ticker symbol ABK).

EX-99.09

Exhibit 99.09

NOTICE OF REDEMPTION

to the Holders of Ambac Financial Group, Inc.

7.00% Debentures due October 17, 2051

CUSIP Number 023139405*

NOTICE IS HEREBY GIVEN, that pursuant to the terms of the Indenture dated as of August 24, 2001 (the “Indenture”), between Ambac Financial Group, Inc. (the “Company”) and The Bank of New York (as successor to JPMorgan Chase Bank), as Trustee, the Company will redeem on October 23, 2006 (the “Redemption Date”) all of its outstanding 7.00% Debentures due October 17, 2051 (the “Bonds”) at a redemption price of 100.00% of the principal amount thereof, together with accrued and unpaid interest, if any, to the Redemption Date (the “Redemption Price”). On the Redemption Date, the Redemption Price will become due and payable upon surrender of the Bonds and interest will cease to accrue on and after such date.

Payment of the Redemption Price shall be made, on or after the Redemption Date, upon the presentation and surrender of the Bonds to the Paying Agent at any of the following addresses:

By Mail to:	By hand or overnight delivery to:
The Bank of New York	The Bank of New York
P.O. Box 396	111 Sanders Creek Parkway
East Syracuse, New York 13057	East Syracuse, New York 13057
Attn: Corporate Trust Operations	Attn: Corporate Trust Operations

Dated: September 21, 2006

Ambac Financial Group, Inc.

    By: The Bank of New York, Trustee

Under the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (the “Act”), paying agents making payments of interest or principal on corporate or municipal securities may be obligated to withhold a 28% tax from remittance to individuals who have failed to furnish the paying agent with a valid taxpayer identification number. Owners of Bonds who wish to avoid the imposition of the tax should submit certified taxpayer identification numbers when presenting their Bonds for payment.

If you have any questions concerning this redemption, you may contact the Paying Agent by mail at one of the addresses listed above or by telephone at 1-800-254-2826.

* This CUSIP Number has been assigned to this issue by an organization not affiliated with the Trustee and is included solely for the convenience of the Bondholders. Neither Ambac Financial Group, Inc. nor the Trustee shall be responsible for the selection or use of this CUSIP Number, nor is any representation made as to its correctness on the Bond or as indicated in any redemption notice.