AMBAC GUARANTEES £680 MILLION OF SENIOR BONDS (INCLUDING £100 MILLION OF VARIATION BONDS) IN COLCHESTER GARRISON PFI FINANCING

LONDON, 11 February, 2004--Ambac Assurance UK Limited guaranteed a bond offering by RMPA Services PLC on 9th February 2004. The £680 million financing will be used to redevelop the Ministry of Defence garrison at Colchester to provide serviced living and working accommodation for over 3,500 army personnel and approximately 700 civilian staff. The fixed rate bonds will be repaid from a 35-year service payment from the Ministry of Defence under the UK Government's Private Finance Initiative. The project, which represents the largest PFI accommodation deal to date, also includes the sale of surplus land generated by the redevelopment of the garrison. Royal Bank of Canada Europe Limited and Morgan Stanley were the joint lead managers on the issue.

The RMPA Consortium, which includes investment arms of the Sir Robert McAlpine Group, WS Atkins plc, Sodexho Alliance S.A. and HSBC, will commence provision of services to the existing garrison and redevelopment of the facility immediately.

"We are delighted to have been able to provide significant support for the upgrade of these essential assets for the Ministry of Defence," said Ian Dixon, Managing Director, Ambac UK. Ambac was recently named "2003 Global Monoline of the Year" by Project Finance International.

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 Assurance UK Limited is a wholly-owned subsidiary of Ambac Assurance Corporation. Ambac Financial Group, Inc. common stock is listed on the New York Stock Exchange (ticker symbol ABK).

The relevant contents of this statement have been approved solely for the purposes of Section 21 of the Financial Services and Markets Act 2000 by Ambac Assurance UK Limited of Hasilwood House, 60 Bishopsgate, London. Ambac Assurance UK Limited is authorised and regulated by the Financial Services Authority.