The insurance sector is experiencing strong buying interest Wednesday morning after Ambac Financial Group Inc. (ABK) announced that it obtained regulatory approval to capitalize and reactivate its financial guarantee subsidiary Connie Lee Insurance Co.
Shares of Ambac and Syncora Holdings Ltd. (SCA) are both posting gains of over 20%. Meanwhile, shares of PMI Group Inc. (PMI) and Radian Group Inc. (RDN) have each climbed about 14% each.
Around 10:25 am Eastern Time, shares of Ambac were up $1.81 to $8.88 a share, while Syncora stock was up 42 cents to $2.27. PMI shares were up 71 cents at $4.18 and Radian stock was up 64 cents at $4.74.
Other stocks posting notable gains within the sector include MGIC Investment Corp. (MTG), RAM Holdings Ltd. (RAMR) and CAN Surety Corp. (SUR).
Ambac revealed Tuesday after the closing bell that the Commissioner of Insurance of the State of Wisconsin has approved the company's proposal to capitalize and reactivate its financial guarantee subsidiary, Connie Lee.
Following the reactivation, Connie Lee will function as an independent corporate and legal entity within the Ambac Financial Group. Connie Lee is expected to write new insurance policies by the fourth quarter, the company said.
Connie Lee will assume a new name and focus on the U.S. municipal and global public purpose financing markets. Ambac Assurance intends to provide $850 million to Connie Lee to enhance its capital. Connie Lee's business model will be based primarily on independent risk management.
Ambac said that Douglas Renfield-Miller has been named the CEO designate for Connie Lee. Ambac plans to transfer certain underwriting, management and support staff to Connie Lee in the next few months. Additionally, the company appointed former Citigroup executive Judy Slotkin as Chief Risk Officer of Connie Lee.
Ambac Chairman Michael Callen commented, "Connie Lee will help carry forward the successful franchise Ambac has built up over 37 years while addressing rating agency concerns regarding business production. This is an important element in our strategy to restore Ambac Assurance's own triple-A ratings and create value for our shareholders."
In light of Hurricane Gustav making landfall in the Louisiana Gulf Coast on Monday, Jay Gelb of Lehman Brothers sees the storm as the first major test for the insurance sector.
"Gustav is a large storm but it is both smaller and weaker than Katrina was at landfall," Gelb said. "As a result, we expect P&C insurers risk management efforts to hold up well resulting hopefully in insured losses not exceeding more than several quarters' earnings and not being large enough to require significant additional capital."
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.