NEW YORK, September 21, 2011 - Ambac Financial Group Inc. (OTC: ABKFQ) (“Ambac Financial”) today announced that it has reached an agreement with Ambac Assurance Corporation ("Ambac Assurance"), the Segregated Account of Ambac Assurance Corporation, the Commissioner of Insurance of the State of Wisconsin, the Rehabilitator of the Segregated Account of Ambac Assurance Corporation, and the Official Committee of Unsecured Creditors of Ambac Financial Group, Inc. with respect to all outstanding tax and expense-related issues between Ambac Financial and Ambac Assurance. On the basis of such agreement, Ambac Financial has filed an amended Plan of Reorganization and an amended Disclosure Statement with the U.S. Bankruptcy Court (the "Amended Plan and Disclosure Statement"). The Amended Plan and Disclosure Statement set forth the terms of such agreement. A copy of the Amended Plan and Disclosure Statement can be obtained at http://www.kccllc.net/ambac under the heading "Court Documents."

The dispute between Ambac Financial and the Internal Revenue Service relating to the tax treatment of CDS contracts currently remains unresolved. Successful resolution of this dispute is a condition precedent to consummation of the Plan of Reorganization.

About Ambac

Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac filed for a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Company will continue to operate in the ordinary course of business as “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac Financial Group, Inc.’s common stock trades in the over-the- counter market under the ticker symbol ABKFQ.

Ambac's principal operating subsidiary, Ambac Assurance Corporation, is a guarantor of public finance and structured finance obligations.

Investor Contact: Michael Fitzgerald
(212) 208-3222
mfitzgerald@ambac.com