Business World

Billionaire Wilbur Ross has agreed to invest up to $1 billion in Assured Guaranty Ltd (AGO.N: Quote, Profile, Research), bypassing big bond insurers like Ambac Financial Group Inc (ABK.N: Quote, Profile, Research) in favor of a rival that has largely avoided the credit problems plaguing the industry.

Ross agreed to buy $250 million of common shares of Assured and committed to purchase up to $750 million in additional stock at the company’s option.

Investors had hoped that Ross’s WL Ross & Co LLC would help rescue Ambac, after reports last month that the tycoon was eyeing an investment in the second-largest bond insurer. Ambac’s efforts to raise new capital are progressing more slowly than hoped, according to people briefed on the matter.

Even without new funds, though, Ambac’s main unit has enough capital to maintain its top credit ratings, Moody’s Investors Service said on Friday.

The combination of positive and negative news meant that Ambac’s shares traded as much as 8.3 percent lower and 2.5 percent higher before settling to essentially unchanged.

Assured Guaranty shares rose as much as 15.8 percent.

Ross told Reuters that he had chosen Assured Guaranty because it needs capital to pursue new business, rather than to cure damage.

“The idea of this capital is .. cash advance. not to simply patch a hole,” Ross said in a telephone interview, adding that he was still in conversations with other bond insurers. 

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