Until last year, Ambac Assurance, a Wisconsin domiciled insurer, was one of the largest monoline insurers in the world. Originally it insured low-risk, public finance bonds. However, in the 1990s it started to offer financial guarantee insurance on residential mortgage backed securities and collateralized debt obligations of asset-backed securities. Not surprisingly, Ambac was a casualty of the 2008 financial crisis. In response, Ambac stopped writing policies and began an informal run-off.

The separate account and its rehabilitation

In 2010, Ambac created a segregated account for the purpose of isolating certain of its liabilities. The segregated account holds many of the policies against which there are significant existing claims or the likelihood of significant claims. Under Wisconsin insurance law, the segregated account is treated as a separate insurer from Ambac for purposes of rehabilitation. The Wisconsin Office of the Commissioner of Insurance (OCI) filed this petition for a rehabilitation for the segregated account.