SEC Division of Corporation Finance no-action letter: Segregated Account of Ambac Assurance Corporation

ATTORNEYS AT LAW
777 EAST WISCONSIN AVENUE
MILWAUKEE, WI 53202-5306
414.271.2400 TEL
414.297.4900 FAX
April 8, 2011 foley.com
WRITER’S DIRECT LINE
414.297.5662 sbarth@foley.com EMAIL VIA E-MAIL
CLIENT/MATTER NUMBER
092281-0101
Securities and Exchange Commission Securities Act of 1933, as amended – Division of Corporation Finance Section 3(a)(10)

100 F Street, NE
Washington, D.C. 20549
Re: Segregated Account of Ambac Assurance Corporation Ladies and Gentlemen:
We are writing on behalf of the Segregated Account of Ambac Assurance Corporation, a segregated account of Ambac Assurance Corporation, a Wisconsin corporation (“Ambac Assurance”), established pursuant to Wis. Stat. § 611.24(2) (the “Segregated Account”). Ambac Assurance is the principal operating insurance company of Ambac Financial Group, Inc. (“AFGI”). On December 27, 2010, the Segregated Account and Ambac Assurance entered into a Settlement Agreement (the “Settlement Agreement”) with Nuveen Asset Management, Restoration Capital Management LLC and Stone Lion Capital Partners L.P., on behalf of themselves and/or funds and accounts managed or controlled by them, as holders of Las Vegas Monorail Project Revenue Bonds, 1st Tier Series 2000, consisting of current interest bonds and capital appreciation bonds (the “LVM Insured Bonds”). Pursuant to the Settlement Agreement, the Segregated Account will issue surplus notes (“Surplus Notes”) to Wells Fargo Bank, N.A., as trustee (the “Trustee”), on behalf of holders of LVM Insurance Bonds (the “LVM Bondholders”) in partial satisfaction of its obligations under the financial guaranty insurance policy and surety bond issued for the benefit of the LVM Bondholders (the “LVM Policies”).
I. Request
By this letter, we respectfully request confirmation from the staff of the Division of Corporation Finance (the “Staff”) that, based upon the facts and circumstances described herein, it will not recommend any enforcement action to the Securities and Exchange Commission (the “SEC”) if, pursuant to the Settlement Agreement, the Segregated Account issues Surplus Notes to LVM Bondholders in partial satisfaction of the Segregated Account’s obligations under the LVM Policies without registration of the Surplus Notes under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) thereof. BOSTON JACKSONVILLE MILWAUKEE SAN DIEGO SILICON VALLEY BRUSSELS LOS ANGELES NEW YORK SAN DIEGO/DEL MAR TALLAHASSEE CHICAGO MADISON ORLANDO SAN FRANCISCO TAMPA DETROIT MIAMI SACRAMENTO SHANGHAI TOKYO WASHINGTON, D.C. MILW_10745629.10