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): March 12, 2008 (March 6, 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

In connection with the issuance of Equity Units (the “Equity Units”) of Ambac Financial Group, Inc. (the “Company”), Anne Gill Kelly, Esq., Managing Director, Secretary and Assistant General Counsel of the Company, has delivered an opinion, dated March 12, 2008, regarding the legality of the Equity Units. A copy of the opinion is filed as Exhibit 5.4 to this Current Report on Form 8-K and is filed with reference to and is hereby incorporated by reference into the Company’s Registration Statement (the “Original Registration Statement”) on Form S-3 (No. 333-131888) filed by the Company with the Securities and Exchange Commission (the “Commission”) on February 15, 2006, as amended by Post-Effective Amendment No. 1 filed on February 6, 2007 and Post-Effective Amendment No. 2 filed on January 16, 2008 (such Original Registration Statement, as amended, the “Registration Statement”), and as supplemented by the final prospectus supplement related to the Equity Units Offering filed by the Company with the Commission on March 10, 2008, pursuant to Rule 424(b) under the Securities Act (the “Units Prospectus Supplement”).

In connection with the issuance of Equity Units, Wachtell, Lipton, Rosen & Katz, counsel to the Company, has delivered an opinion to the Company regarding certain tax matters. A copy of the opinion is filed as Exhibit 5.5 to this Current Report on Form 8-K and is filed with reference to and is hereby incorporated by reference into the Registration Statement.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

Exhibit Number	Item
5.4	Opinion of Anne Gill-Kelly, Esq. (relating to the legality of the Equity Units)
5.5	Opinion of Wachtell, Lipton, Rosen & Katz (relating to certain tax matters)
23.1	Consent of Anne Gill-Kelly, Esq. (included in Exhibit 5.4)
23.2	Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.5)

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)

March 12, 2008
	By:	/s/ Anne Gill Kelly
		Anne Gill Kelly, Esq. Managing Director, Corporate Secretary and Assistant General Counsel

INDEX TO EXHIBITS

Exhibit Number	Description of Exhibit
5.4	Opinion of Anne Gill-Kelly, Esq. (relating to the legality of the Equity Units)
5.5	Opinion of Wachtell, Lipton, Rosen & Katz (relating to certain tax matters)
23.1	Consent of Anne Gill-Kelly, Esq. (included in Exhibit 5.4)
23.2	Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.5)

EX-5.4

Exhibit 5.4

Opinion of Anne Gill Kelly, Esq.

[Ambac Letterhead]

Ambac Financial Group, Inc.

One State Street Plaza

New York, NY 10004

March 12, 2008

Ambac Financial Group, Inc.

One State Street Plaza

New York, NY 10004

Re: 5,750,000 Equity Units

Ladies and Gentlemen:

This opinion is furnished by me as Managing Director, Secretary and Assistant General Counsel for Ambac Financial Group, Inc., a Delaware corporation (the “Company”), in connection with the offering of up to 5,750,000 Equity Units of the Company (the “Equity Units”) in accordance with the Underwriting Agreement related to the Equity Units, dated March 6, 2008, by and among the Company and Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Banc of America Securities LLC and UBS Securities LLC (collectively, the “Representatives”), as representatives of the several underwriters named on Schedule A thereof (the “Underwriting Agreement”). The Equity Units will initially consist of up to 5,750,000 Corporate Units, of $50 stated amount (the “Stated Amount”). Each of the Corporate Units will consist of:

(a) a Purchase Contract (each a “Stock Purchase Contract”) under which (i) the holder will agree to purchase on May 17, 2011 (the “Purchase Contract Settlement Date”), subject to acceleration in connection with any early settlement of such Stock Purchase Contract pursuant to the provisions of the Purchase Contract Agreement (as defined below), for an amount of cash equal to the Stated Amount, a number of shares, determined by the Purchase Contract Agreement, of either (A) common stock of the Company, par value $.01 per share (the “Common Stock”, and such determined number of shares, in the aggregate, “Issuable Common Stock”), or (B) if we do not have a sufficient number of shares of Common Stock authorized and unissued (and not reserved for other purposes) for settlement of all Stock Purchase Contracts, shares of our Series A Participating Preferred Stock (the “Preferred Stock”, and such number of shares, in the aggregate, “Issuable Preferred Stock”), the terms of which are set forth in the Certificate of Designations (the “Certificate of Designations”) creating such Preferred Stock, each of which will automatically convert into 100 shares of the Company’s Common Stock upon the occurrence of the Company’s having a sufficient number of shares of Common Stock authorized, reserved and registered (and unreserved for other purposes) and (ii) the Company will pay to the holder contract adjustment payments at a rate of 0.00% per annum, which will increase to a rate of 5.00% per annum if the Company does not have a sufficient number of authorized and unissued shares of Common Stock within 120 days after the date hereof to permit settlement of all Stock Purchase Contracts; and

(b) a 1/20^th, or 5%, beneficial ownership interest in a $1,000 principal amount senior note of the Company initially due 2021 (the “Notes”) issued under the Indenture (the “Base Indenture”), dated February 15, 2006, between the Company and The Bank of New York, as Trustee (the “Trustee”), as supplemented by Supplemental Indenture No. 1 (the “Supplemental Indenture” and together with the Base Indenture, the “Indenture”), dated as of the date hereof, between the Company and the Trustee, establishing the terms of the Notes.

The Corporate Units will be evidenced by unit certificates (the “Unit Certificates”). The Unit Certificates also will certify that the holder thereof is the registered holder of the number of units set forth therein.

The Equity Units are to be issued pursuant to the Purchase Contract Agreement (the “Purchase Contract Agreement”), dated as of the date hereof, among the Company and The Bank of New York, as purchase contract agent, and the Pledge Agreement (the “Pledge Agreement”), dated as of the date hereof, among the Company and The Bank of New York, as collateral agent, custodial agent and securities intermediary, and The Bank of New York, as purchase contract agent. In accordance with the terms of the Purchase Contract Agreement and Pledge Agreement, a holder’s ownership interest in the Notes initially will be pledged to secure such holder’s obligation to purchase the Issuable Common Stock, or Issuable Preferred Stock, as applicable, on the Purchase Contract Settlement Date, such pledge to be on the terms and conditions set forth in the Pledge Agreement. The “Component Securities” means, collectively, the Purchase Contracts, the Notes, the Issuable Common Stock or the Issuable Preferred Stock, as the case may be. Each of the Underwriting Agreement, the Remarketing Agreement, dated as of the date hereof, among the Company and the Representatives and The Bank of New York, not individually but solely as purchase contract agent and as attorney-in-fact of the holders of Purchase Contracts, the Certificate of Designations, the Indenture, the Supplemental Indenture, the Purchase Contract Agreement and the Pledge Agreement (collectively, the “Transaction Documents”) will be filed as an exhibit on a Current Report on Form 8-K (the “Current Report”) incorporated in the Registration Statement (as defined below) by reference. The Component Securities were the subject of opinions dated January 16, 2008, filed as Exhibit 5.3 to the Registration Statement.

This opinion is delivered in accordance with the requirements of Items 601(b)(5) of Regulation S-K under the Securities.

In connection with the opinion set forth herein, I, or attorneys working under my direction (with whom I have consulted), have examined originals or copies certified or otherwise identified to my satisfaction of such documents, corporate records, agreements, certificates of public officials and other instruments as I have deemed necessary or appropriate for the purposes of this opinion, including, among others, the following: (a) the Registration Statement on Form S-3 (Registration No. 333-131888), as filed with the Securities and Exchange Commission, as amended through the date hereof (the “Registration Statement”), together with the final prospectus supplement (including the base prospectus, dated January 16, 2008 (the “Base Prospectus”)), dated March 6, 2008 (the “Final Prospectus”), included therein; (b) the Transaction Documents; (c) the Certificate of Incorporation and By-laws of the Company,

respectively; (d) the resolutions of the Board of Directors of the Company, dated March 5, 2008; (e) the resolutions of the Pricing Committee of the Board of Directors of the Company, dated March 6, 2008; (f) the resolutions of the Board of Directors of the Company, dated January 16, 2008; and (g) specimens of the Component Securities and the Unit Certificates.

With respect to each of the Transaction Documents, for purposes of the opinions expressed herein I have assumed: (a) that each party to the Transaction Documents (other than the Company) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all necessary corporate or other power and authority to enter into the Transaction Documents and perform its obligations thereunder; (b) the truth and accuracy of all representations and warranties, and compliance with all covenants, contained in the Transaction Documents (except to the extent that they contain legal conclusions that are otherwise the subject of this opinion); (c) that such Transaction Documents were duly authorized, executed and delivered by each party thereto (other than the Company); (d) that the Equity Units have been paid for in accordance with the terms of the Underwriting Agreement; and (e) that each of the Transaction Documents constitute the valid and binding obligation of each party thereto (other than the Company), enforceable against each such party in accordance with its terms. I have also assumed that the Unit Certificates and the Notes will conform to the specimens thereof examined by me and that each will be duly authenticated and delivered in accordance with the requirements of the Purchase Contract Agreement, the Pledge Agreement and Indenture, respectively.

I have further assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to me as originals, the conformity to original documents of documents submitted to me as certified, facsimile, conformed, electronic or photostatic copies and the authenticity of the originals of such copies. As to all questions of fact material to this opinion that have not been independently established, I have relied with your consent upon certificates or comparable documents, and oral and written statements and representations, of officers and representatives of the Company and, in certain instances, upon the representations and warranties of the Company contained in the Transaction Documents (except to the extent that they contain legal conclusions that are otherwise the subject of this opinion). I have not independently verified such information and assumptions.

Based upon the foregoing, and subject to the assumptions, exceptions, limitations, qualifications and comments stated herein, I am of the opinion that, as of the date this opinion:

1. Each of the Pledge Agreement, the Purchase Contract Agreement and the Indenture has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company.

2. Each of the Equity Units and Component Securities (other than the shares of Issuable Common Stock and Issuable Preferred Stock) has been duly authorized and executed by the Company, and when duly authenticated by the Trustee (with respect to the Notes) or Purchase Contract Agent (with respect to the Equity Units and Purchase Contracts), and issued and delivered by the Company against payment therefor in accordance with the terms of the relevant Transaction Documents, each of the Equity Units and Component Securities (other than the shares of the Issuable Common Stock and Issuable Preferred Stock) will constitute a valid and binding obligation of the Company entitled to the benefits of the relevant Transaction Documents.

3. The shares of Issuable Common Stock have been duly authorized and reserved for issuance by the Company. The shares of Issuable Preferred Stock have been duly authorized and reserved for issuance. When issued in accordance with the Purchase Contract Agreement, and with respect to the Preferred Stock, the Certificate of Designations, the shares of Issuable Common Stock or Issuable Preferred Stock, as the case may be, will be validly issued, fully paid and non-assessable and will not be subject to preemptive rights pursuant to the General Corporation Law of the State of Delaware.

The opinions expressed herein are subject to the following qualifications and comments:

a) Each of the Transaction Documents is subject to the effect of (1) bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally; (2) the application of general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether enforcement is considered in proceedings at law or in equity); and (3) applicable law and public policy with respect to rights to indemnity and contribution.

b) The provisions of the Transaction Documents that permit any party thereto to take action or make determinations, or to benefit from indemnities and similar undertakings of any part to the Transaction Documents, may be subject to the requirement that such action be taken or such determinations be made, and any action or inaction by such party that may give rise to a request for payment under such an undertaking be taken or not taken, on a reasonable basis and in good faith.

c) Insofar as any provisions of the Transaction Documents may provide for indemnification with respect to liabilities resulting from or based upon a party’s own negligence, recklessness or willful misconduct or violations of Federal or state securities laws or regulations, the enforceability thereof may be limited.

d) I express no opinion as to the effect of non-compliance by any party to the Transaction Documents with any federal or state laws or regulations applicable to transactions because of the nature of its business.

e) I express no opinion as to the effect of the laws of any jurisdiction (other than federal laws of the United States and the laws of the State of New York) wherein any holder of the Units or Notes may be located which limits rates of interest that may be charged or collected by such holder.

f) I have assumed that the Company will apply the proceeds from the sale of the Units as contemplated in the Final Prospectus.

g) I express no opinion with respect to (1) broadly or vaguely stated waivers or waivers of rights granted by law where such waivers are against public policy or prohibited by law, (2) the enforceability of confession of judgment provisions and (3) the enforceability of provisions imposing penalties, liquidated damages or other economic remedies.

h) I express no opinion with respect to the (1) provisions in the Transaction Documents relating to delay or omission of enforcement of rights or remedies, waivers of

defenses, or waivers of benefits of any usury, appraisement, valuation, stay, extension, moratorium, redemption, statutes of limitation or other non-waivable benefits bestowed by operation of law, (2) exculpation provisions, provisions relating to releases of unmatured claims, provisions purporting to waive immaterial rights, severability provisions and provisions similar in substance and nature to those described in the foregoing clause (1) and this clause (2), all insofar as any are contained in the Transaction Documents and (3) any provisions of the Transaction Documents insofar as they purport to create rights of set off.

i) I express no opinion as to whether a federal or state court outside the State of New York would give effect to the choice of New York law provided for in the Transaction Documents.

I hereby consent to the filing of this opinion with the Securities and Exchange Commission (the “Commission”) as Exhibit 5.4 on the Current report. I also consent to the reference to me under the heading “Legal Opinions” in the Registration Statement. In giving this consent, I do not thereby admit that I am in the category of persons whose consent is required under Section 7 of the Securities Act or the Rules and Regulations of the Commission promulgated thereunder. This opinion is expressed as of the date hereof unless otherwise expressly stated, and I disclaim any undertaking to advise you of any subsequent changes of the facts stated or assumed herein or any subsequent changes in applicable law.

*     *     *

Very truly yours,

/s/ Anne Gill Kelly, Esq.

EX-5.5

Exhibit 5.5

[Letterhead of Wachtell, Lipton, Rosen & Katz]

March 12, 2008

Ambac Financial Group, Inc. Equity Units

Ambac Financial Group, Inc.

One State Street Plaza

New York, NY 10004

Ladies and Gentlemen:

We have acted as special tax counsel to Ambac Financial Group, Inc., a corporation organized under the laws of Delaware (the “Company”), in connection with the Registration Statement on Form S-3 (Registration No. 333-131888), as amended through the date hereof (the “Registration Statement”), together with the final prospectus supplement of the Company, dated March 6, 2008 (the “Prospectus Supplement”), and including the base prospectus, dated January 16, 2008 (the “Base Prospectus”) (together with the Registration Statement and the Prospectus Supplement, the “Offering Documents”), relating to the offering by the Company of up to 5,750,000 Equity Units (the “Equity Units”) of the Company, each of which will consist of (i) a purchase contract under which the holder agrees to purchase on May 17, 2011, for $50 in cash, shares of Company common stock or Series A Preferred Stock, as applicable (the “Purchase Contracts”) and (ii) a 1/20^th, or 5%, undivided beneficial ownership interest in a $1000 principal amount senior note of the Company initially due February 15, 2021 (the “Notes”).

Wachtell, Lipton, Rosen & Katz

March 12, 2008

Page 2

In connection with this opinion, we have examined the Purchase Contract Agreement, dated as of March 12, 2008, between the Company and The Bank of New York, as Purchase Contract Agent for, and as attorney-in-fact of, the Holders of the Units, as amended from time to time (the “Purchase Contract Agreement”)¹, the Supplemental Indenture, the Indenture, dated as of March 12, 2008 (the “Base Indenture”), the Pledge Agreement, the Underwriting Agreement, the Remarketing Agreement, the Certificates of Designations, the unit certificates evidencing the Equity Units (the “Unit Certificates”), the Notes (together with the Purchase Contract Agreement, Supplemental Indenture, Base Indenture, Pledge Agreement, Underwriting Agreement, Remarketing Agreement, Certificate of Designations and the Unit Certificates, the “Transaction Documents”), the Offering Documents and such other documents and corporate records as we have deemed necessary or appropriate for purposes of our opinion.

In our examination, we have assumed that (i) the statements concerning the issuance of the Equity Units and Notes contained in the Offering Documents are true, correct and complete, (ii) the terms of the Transaction Documents referred to in the preceding paragraph will be complied with, (iii) the factual representations made to us by the Company in its letter to us dated as of the date hereof and delivered to us for purposes of this opinion (the “Company Representation Letter”) are true, correct and complete, (iv) the conclusions made by Credit Suisse Securities (USA) LLC and Citigroup Global Markets Inc. in their letter delivered to us dated as of the date hereof and delivered to us for purposes of this opinion (the “Underwriter Letter”) are true, correct and complete and (v) any factual representations and conclusions made in the Offering Documents, the Company Representation Letter or the Underwriter Letter “to the best knowledge of,” in the “belief” of, or similarly qualified are true, correct and complete without such qualification. If any of the above described assumptions are untrue for any reason or if the issuance of the Equity Units and Notes is consummated in a manner that is inconsistent with the manner in which it is described in the Offering Documents, our opinion as expressed below may be adversely affected and may not be relied upon. For the avoidance of doubt, if under any circumstance we are not, or the Company is not, permitted to rely on the conclusions made in Underwriter Letter, our opinion as expressed below may not be relied upon.

Based solely upon the foregoing, we are of the opinion that under current United States federal income tax law:

1. the Notes and the Purchase Contracts will be treated for United States federal income tax purposes as separate securities,

2. the Notes will be classified for United States federal income tax purposes as indebtedness of the Company, and

3. that under current United States federal income tax law, the Company should be able to deduct stated interest and/or original issue discount on the Notes. We note that,

¹ Capitalized terms not defined herein have the meaning ascribed to them in the Purchase Contract Agreement.

Wachtell, Lipton, Rosen & Katz

March 12, 2008

Page 3

while this opinion does address the effect of Internal Revenue Code Section 163(l) on the deductibility of interest on the Notes, it does not address any other restriction or limitation on the deductibility of interest (including Internal Revenue Code Sections 163(e)(5), 163(i), 263, 265 and 279).

4. We have participated in the preparation of the discussion set forth in the section entitled “CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES” in the Prospectus Supplement. Although the discussion set forth therein does not purport to discuss all possible United States federal income tax consequences of the purchase, ownership and disposition of the Equity Units, such discussion constitutes, in all material respects, a fair and accurate summary of the United States federal income tax consequences described therein subject to the limitations and qualifications set forth therein.

Our opinion is limited to the United States federal income tax matters specifically covered hereby and does not address any other tax consequences relating to the Notes or any other transactions. Our opinion is based upon current statutory, regulatory and judicial authority, any of which may be changed at any time with retroactive effect. Moreover, we note that, other than one published revenue ruling addressing the United States federal income tax treatment of units essentially comparable to the Equity Units, there is no authority directly on point dealing with securities such as the Equity Units or transactions of the type described herein and that our opinion is not binding on the Internal Revenue Service or the courts, either of which could take a contrary position. We disclaim any undertaking to advise you of any subsequent changes of the matters stated, represented or assumed herein or any subsequent changes in applicable law, regulations or interpretations thereof.

We are furnishing this opinion to you solely in connection with the issuance of the Equity Units and this opinion is not to be relied upon for any other purpose. We hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K of the Company, the incorporation by reference of this opinion by the Registration Statement and the references to us and this opinion in the Prospectus Supplement forming a part of the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules or regulations of the Securities and Exchange Commission promulgated thereunder.

Very truly yours,

/s/ Wachtell, Lipton, Rosen & Katz