A couple of looks:
"Bond insurer Ambac Financial Group Inc is in discussions to split itself up in a move aimed at ensuring that municipal bonds backed by the company retain high credit ratings...A deal could fall apart because of the complexities in such a move, said the report, quoting a source familiar with the situation.MBIA Criticizes Bond-Insurer Plan - WSJ.com:
A halving of Ambac would create one unit to insure municipal debt and one that would cover rapidly diminishing securities tied to mortgages in a structure that effectively would create a so-called "good bank" and "bad bank", the report said."
"The nation's largest bond insurer said it agrees with a spokesman for the New York insurance department who said Mr. Ackman's proposal would split the company and likely lead to a substantial downgrade for the structured side.
Splitting bond insurers into two sectors -- one focused on lower-risk municipal bonds and another to handle higher-risk collateralized debt obligations -- allows shareholders of the lower-risk holding company to benefit while holders of the CDOs suffer.
'Our preference, like the regulators, continues to be finding a solution that would be in the best interest of all policyholders,' MBIA said."