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): January 18, 2008 (January 17, 2008)

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:

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

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

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

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

Item 8.01 OTHER EVENTS.

On January 17, 2008, Ambac Financial Group, Inc. (“Ambac”) issued a press release announcing that Moody’s Investors Service (“Moody’s”) has placed Ambac Assurance Corporation’s and Ambac Assurance UK Limited’s ‘Aaa’ insurance financial strength rating on review for possible downgrade. Ambac, Ambac Assurance Corporation and Ambac Assurance UK Limited shall be collectively referred to herein as the “Company”. A copy of the press release, filed as Exhibit 99.01 to this Current Report on Form 8-K and is incorporated by reference herein.

In addition, Moody’s has placed on possible downgrade Ambac’s Aa2 senior unsecured debt rating and financing trusts and, Aa3 junior subordinated debt rating and (P)A1 provisional rating on preferred stock. As a result of Moody’s review, the Moody’s-rated securities that are “wrapped” or guaranteed by Ambac are also placed under review for possible downgrade, except those with higher public underlying ratings. Moody’s stated that this action follows Ambac’s announcement of record losses, a capital raising plan, and the retirement of its CEO.

Moody’s review of the Company’s ratings will focus on risk in the Company’s insured portfolio and execution of its capital plan, as well as new management’s ability to formulate and execute strategic and operational plans in the rapidly evolving market for financial guaranty insurance.

Certain statements in this document and the exhibit are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in Ambac’s filings with the Securities and Exchange Commission.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

Exhibit Number	Item
99.01	Press release, dated January 17, 2008, issued by Ambac Financial Group, Inc.

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: January 18, 2008
	By:	/s/ Anne Gill Kelly
		Anne Gill Kelly
		Managing Director, Corporate Secretary and Assistant General Counsel

INDEX TO EXHIBITS

Exhibit Number	Description of Exhibit
99.01	Press release, dated January 17, 2008, issued by Ambac Financial Group, Inc

EX-99.01

Exhibit 99.01

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 COMMENTS ON RECENT MOODY’S REPORT

New York, January 17, 2008 – Ambac Financial Group, Inc. (NYSE: ABK) (“Ambac”), the parent company of Ambac Assurance Corporation, today commented on a January 16, 2008 announcement by Moody’s Investors Service that it has placed Ambac Assurance Corporation’s ‘Aaa’ insurance financial strength rating on review for possible downgrade.

In view of the uncertainty generated by Moody’s surprising announcement, Ambac is assessing the impact of this action on the Company’s previously announced capital plan.

Management remains confident in Ambac’s insured portfolio and will communicate further on these matters in its previously scheduled conference call on Tuesday, January 22, 2008 at 10 a.m. (ET). The call in number to listen in is 877-407-0778 (U.S.) and 201-689-8565 (outside the U.S.). The conference call will also be webcast live at www.ambac.com.

Forward-Looking Statements

This release contains statements about our future results that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in Ambac’s filings with the Securities and Exchange Commission. There are a variety of factors, many of which are beyond Ambac’s control, which affect the operations, performance, business strategy and results and could cause its actual results to differ materially from the expectations and objectives expressed in any forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the

date they are made. Ambac does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements are made. The reader should, however, consult any further disclosures Ambac may make in its future filings of its reports on Form 10-K, Form 10-Q and Form 8-K.

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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 from Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services and Fitch, Inc. Moody’s has placed Ambac’s triple-A rating on review for possible downgrade. Standard & Poor’s has placed Ambac’s triple-A rating on “negative outlook.” Fitch has placed Ambac’s triple-A rating on “rating watch negative.” Ambac Financial Group, Inc. common stock is listed on the New York Stock Exchange (ticker symbol ABK).