Ambac drops Lehman action

Monoline insurer Ambac has dropped its $6.1bn legal action against the estate of bankrupt investment bank Lehman Brothers, with Lehman dropping counter claims, The FT reports.

Ambac claimed that Lehman owed money for credit protection that Ambac had sold on packages of residential mortgages.

Lehman claimed that after Ambac’s bad assets were taken over by regulators in the state of Wisconsin in March, it was entitled to payments for the ending of those contracts.

No cash or securities would be exchanged in the settlement.