Ambac Financial Group, Inc. Announces Proposed Offering of Directly-Issued Subordinated Capital Securities.

NEW YORK -- Ambac Financial Group, Inc. (NYSE:ABK) today announced its plan to conduct a public offering of approximately $400 million Directly-Issued Subordinated Capital Securities (DISCS(SM)). The DISCS are expected to be rated Aa3 by Moody's Investors Service, Inc. and A+ by Standard & Poor's Ratings Services.

The Company currently intends to use the proceeds to repurchase shares of its common stock pursuant to an accelerated share repurchase program, subject to market and other business conditions. Any proceeds not used for such share repurchases are intended to be used for general corporate purposes.

Citigroup Corporate and Investment Banking, Goldman Sachs & Co. and JPMorgan will act as joint book-running managers for the DISCS underwriting syndicate.

The proposed offering would be conducted via an existing effective shelf registration statement. This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities, nor shall there be any sale of securities mentioned in this press release in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The offering of the DISCS will be made only by means of a prospectus and a related prospectus supplement.

When available, copies of the prospectus and prospectus supplement may be obtained from:

Citigroup Corporate and Investment Banking
Brooklyn Army Terminal, 140 58th Street, 8th Floor
Brooklyn, NY 11220
Tel: [phone] or Fax: [phone]

Goldman, Sachs & Co.
Attn: Prospectus Dept., 85 Broad St.
New York, NY 10004
Fax: [phone] or email at [e-mail]

JPMorgan
High Grade Syndicate
270 Park Avenue
New York, NY  10017
Tel:  [phone]

Forward-Looking Statements

This release contains statements certain statements that constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including the Company's plan to conduct the DISCS offering and the proposed use of proceeds from the offering. These statements are based on current expectations and the current economic environment. We caution you that these statements are not guarantees of future performance or events or events. They involve a number of risks and uncertainties that are difficult to predict. Our actual results could differ materially from those expressed or implied in the forward-looking statements. Important assumptions and other important factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the Company's Form 10-K for the year ended December 31, 2005 and Forms 10-Q for the quarters ended March 31, 2006, June 30, 2006 and September 30, 2006. We undertake no obligation to publicly correct or update any forward-looking statement if we later become aware that it is not likely to be achieved, except as required by law.

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 and Fitch, Inc. Ambac Financial Group, Inc. common stock is listed on the New York Stock Exchange (ticker symbol ABK).

DISCS(SM) is a service mark of Citigroup Global Markets Inc. Citigroup Global Markets Inc. has applied for patent protection for certain aspects of the DISCS(SM) structure described in the related prospectus supplement.