Moody's cuts ratings on bond insurers Ambac, MBIA

NEW YORK (AP) _ Moody's Investors Service said Thursday it cut its ratings on Ambac Financial Group Inc. and MBIA Inc. amid ongoing concerns about the bond insurers' financial health.

The rating house cut the insurance financial strength ratings for Ambac Assurance Corp. and Ambac Assurance UK Ltd. to "Aa3" from "Aaa," and for MBIA Insurance Corp. to "A2" from "Aaa."

In addition, Moody's downgraded Ambac's senior unsecured debt to "A3" from "Aa3." It lowered the surplus note rating for MBIA Insurance to "Baa1" from "Aa2," and the senior debt for MBIA to "Baa2" from "Aa3."

All the ratings remain investment grade.

The downgrades follow a review of the insurers started June 4, and reflect challenges with both companies' "financial flexibility" and expectations that losses from bonds they insure will continue to mount, Moody's said.

Moody's said the ratings outlook for both companies is "negative," suggesting additional downgrades are possible.