The company filed for bankruptcy protection in 2010 after suffering substantial losses from insuring structured financial instruments.

In that same year the Wisconsininsurance regulator placed subsidiary Ambac Assurance—holder of the structured-financial instruments that consisted of mortgage-backed securities—into rehabilitation, segregating it from Ambac Financial Group, Inc.

As for the company's next step, Michael E. Fitzgerald, managing director, Investor Relations says in a statement, “We must now turn to satisfying the conditions precedent to the consummation of the plan, including reaching a final agreement on the terms of the IRS settlement and getting the necessary approvals. This may take some time to complete.”

Ambac has offered to pay the Internal Revenue Service $100 million and give up tax credits to settle a dispute over tax treatment of credit-default swaps.

Ambac also announced that it has come to a settlement with the city ofHercules,Calif.and its redevelopment agency over allegations that the city improperly diverted revenues pledged to bondholders from the redevelopment agency to the city.

Ambac says that under the settlement it will receive security in two city properties “with values estimated to be well in excess of the revenues diverted. The carrier will also be paid interest and legal costs.

Fitzgerald declined to discuss specifics of the litigation, but says, “We are pleased with the settlement and believe the court's decision is supportive of our role and efforts in defending Ambac's rights and the interests of bondholders in such circumstances.”