Evolved from the AMBAC Insurance Corporation in 1985, the American Municipal Bond Assurance Corporation is one of the largest insurers of municipal bonds in the United States. A municipal bond is issued by a city, county or state government to finance its operations or projects.
Municipal bonds are tax-free investments that help raise the money necessary to build roads, build and maintain schools, maintain and repair state and county roads, and otherwise stimulate the economy. When an investor purchases a municipal bond insured by the American Municipal Bond Assurance Corporation, that pledge is a binding agreement that ensures he or she will be paid a fixed amount of money at a fixed rate of interest on a particular date for investing in the project at hand.
Because of the security and steady history of the company, municipal bonds insured by AMBAC mandate a higher price than most when issued, depending on the extent to which the insurance policy guarantees interest and principal repayments. Therefore, they are more marketable and valuable than many other municipal bonds issued by other organizations.