The stock market was roiled Wednesday in part by bond insurer Ambac Financial Group, which said it would seek to raise $1 billion in capital while slashing its quarterly dividend by more than 60 percent as part of a plan to maintain its AAA ratings from each of the major rating agencies. MBIA announced a similar plan last week. The guarantor also said that CEO Robert Genader stepped down "effective immediately," and will be replaced by board member Michael Callen on an interim basis. Callen will also assume Chairman responsibilities with the board. (Sure sounds like a forced resignation to me). Shares of the bond insurer plunged 35 percent, or $7.39, to $13.75 on the news. Losses mount Ambac also said it would take a $5.4 billion write-down on the value of its credit derivative portfolio for the fourth quarter, $1.1 billion of which is tied to CDOs backed primarily by mezzanine-level subprime residential mortgage-backed securities. The insurer also said it expects to boost its loan loss provision approximately $143 million, relating primarily to underperforming home equity line of credit and closed-end second lien RMBS securitizations. The charges will drive an operating loss that could be as large as $5.80 per share for the fourth quarter, it said. The expected losses at one bond insurer led another insurer, MBIA, to tank in trading today as well; investors clearly extrapolated Ambac's loss estimates to the world's largest monoline. MBIA shares were off 14 percent, or $2.24, to $13.81. For more information, visit http://www.ambac.com. Disclosure: At the time this story was published, the author held no positions in ABK or MBI.