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Is this a non-business? It certainly looks like it.

Set aside the quarterly net loss of $1.66bn, or $11.69 a share. Glance beyond the total of $1.73bn in mark-to-market losses on credit derivatives - $940m of which Ambac now expects to have to pay out on - and a further $1bn in loss provisions on insurance written on MBS.

The monoline’s business has just vanished. Credit enhancement production, a measure of new business, fell to $40.5m in the first quarter, down from $310.1m last year.

Even worse, its “good bank” line of work has evaporated more quickly than its “bad bank” operations. Business in public finance fell by 95 per cent to $5.5m, while structured finance dropped by 78 per cent, propped up by deals already closed or committed to by the time the monoline had shut its doors to new business in this area. Bad at $29.4m outweighed the good by a factor of five.

US municipal issuance may have slumped, down 22 per cent quarter on quarter. But those that are raising money are not choosing to bring their business to Ambac.

Subsequent to Ambac’s successful $1.5 billion capital raise in early March, Ambac’s ratings remain on “negative outlook” and issuers seeking insurance have thus far opted to insure with competitors with stable triple-A ratings.

Or they’re opting to do without the help of a monoline wrap all together.

Investors disappointed by the size of the bond insurer’s $1.5bn rescue plan last month seem to have had their doubts confirmed . Ambac shares slumped by almost 30 per cent, while the cost of protecting its debt against default widened by more than 100bp.

They will, of course, be comforted by the company’s reminder that they exceed “S&P’s AAA target level of capital by a comfortable margin and expect to meet our goal of exceeding Moody’s target level of capital in the second quarter.”

Links
Ambac’s first quarter results
Ambac hit by $3bn charges - FT.com
California sells $1.75bn uninsured debt - FT.com