It's a theme we've been reiterating here at HW, but the credit crunch that has roiled markets since the back half of last year is proving that it still has bite left. The latest example comes courtesy of troubled monoline bond insurer Ambac Financial Group, Inc. (ABK), which said Wednesday afternoon that it absorbed net write-downs of $176 million on its insured credit derivatives portfolio during April. The insurer took a $228 million write-down on the value of collateralized debt obligations backed by mortgage-backed securities, commonly called CDOs of ABS. The complex financial instruments have been among the hardest hit throughout the credit crisis, and Ambac's disclosure of further write-downs in April suggests that a bottom has yet to be reached. Ambac also reduced the value of its investment portfolio by $53.4 million during the month, including unrealized and realized losses, it said in a press statement. The troubled monoline lost nearly $1.7 billion during the first quarter, as write-downs and loss provisions in Q1 reached $2.8 billion. Ambac had more than $1.28 billion in cash and short-term investments available at the end of April, it said. Insurers like Ambac provided the top-rated portions of RMBS and related CDO deals with a guarantee that essentially was designed to serve as a private-party proxy for the government guarantee that exists on Fannie/Freddie/Ginnie mortgage bond issues. But the strength of that guarantee is only as good as the rating of the firm that provides it, which means that increasing MBS losses have led to downgrades affecting both the securities in question as well as the insurers that guaranteed principal payments to investors. For more information, visit http://www.ambac.com. Disclosure: The author held no positions ABK when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.