Auditors, Tax Consultants and Bankruptcy Administration Consultants for the Debtor and Debtor in Possession. x : : : : : : : x

Transcription

1 Paul G. Laurenzano, Partner KPMG LLP 345 Park Ave. New York, New York Tel: (212) Fax: (212) Auditors, Tax Consultants and Bankruptcy Administration Consultants for the Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re AMBAC FINANCIAL GROUP, INC., Debtor. x : : : : : : : x Chapter 11 Case No (SCC) FIRST MONTHLY FEE STATEMENT OF KPMG LLP FOR COMPENSATION FOR SERVICES RENDERED AND REIMBURSEMENT OF EXPENSES INCURRED AS AUDITORS AND TAX CONSULTANTS AND BANKRUPTCY ADMINISTRATION CONSULTANTS TO THE DEBTOR FOR THE PERIOD FROM NOVEMBER 8, 2010 THROUGH DECEMBER 31, 2010 Name of Applicant: Authorized to Provide Professional Services to: KPMG LLP The Debtor Date of Retention: January 19, 2011, nunc pro tunc to November 8, 2010 (the Commencement Date ) Period for Which Compensation and Reimbursement is Sought: Amount of Compensation Sought as Actual, Reasonable, and Necessary: Amount of Expense Reimbursement Sought as Actual, Reasonable, and Necessary: (the Monthly Compensation Period ) $ 475, $ 1, This is a: X Monthly Interim Final Fee Application 1 Amount contains an aggregated amount for the Integrated Audit and Tax Consulting Services that Ambac will allocate among the Debtor and its non-debtor affiliates in accordance with the process described in KPMG s employment application and order.

2 EXHIBIT A Summary Of Hours and Discounted Fees Incurred By Professional Professional Position Current Hours Discounted Hourly Rate Discounted Fees Billed Conjura,Carol Washington National Tax Partner 4.0 $635 $ 2, Hoffenberg,Mark R. Tax Principal 5.0 $635 $ 3, Steinberg,Howard Brian Tax Partner 19.2 $635 $ 12, Vogel,Jeffrey L. Tax Principal 1.0 $635 $ Audit Partner 21.5 $550 $ 11, Schmitt,Daniel F. Audit Partner 1.0 $550 $ Burgdorf,Joshua M. Department of Professional Practice 1.6 $475 $ Keppler,Juliane L. Tax Senior Manager 5.8 $500 $ 2, Spiegel,Samuel A Tax Senior Manager 28.5 $500 $ 14, Yeadon,Alexandra Tax Senior Manager 3.5 $500 $ 1, Zauderer,Michael Tax Senior Manager 2.0 $500 $ 1, Advisory Manager 20.7 $485 $ 10, Advisory Manager 0.5 $425 (1) $ Hayden,Lawrence Audit Manager 12.3 $375 $ 4, Ng,Linda Tax Senior Associate 4.5 $400 $ 1, Varela,Jacqueline Tax Senior Associate 43.5 $300 $ 13, Tatum,Pamela Renea Advisory Senior Associate 3.9 $385 $ 1, Tatum,Pamela Renea Advisory Senior Associate 1.5 $300 (1) $ Melfi,Mitchell A Audit Senior Associate 0.4 $300 $ Cancel,Alexandra M. Tax Associate 1.0 $275 $ Kim,Cecilia Tax Associate 11.0 $275 $ 3, Zahid,Ummara Tax Associate 4.0 $275 $ 1, Shaffer,Wendy Advisory Associate 1.0 $265 $ Total Hours and Fees at Discounted Rate $ 88, Discounted Fees $ 88, In-Scope Audit Services - Fixed Fee $ 387, Total Fees $ 475, Out of Pocket Expenses $ 1, Subtotal of Fees and Out of Pocket Expenses $ 476, less Holdback Adjustment (20%) $ (95,044.60) Net Requested Fees & Out of Pocket Expenses $ 381, Hourly Blended Rate $ (1) Services performed are for Out of Scope Audit Services and as such Out of Scope Audit rates apply.

3 EXHIBIT B Summary of Hours and Discounted Fees Incurred by Category Category Exhibit Hours Fees In-Scope Audit Services D1 - $ 387, Out of Scope Audit Services D $ 10, Tax Consulting Services D $ 58, Retention and Fee Application Preparation D $ 19, Total $ 475, (1) (1) Per the Integrated Audit Engagement Letter dated December 1, 2010, KPMG and the Debtors agreed to a fixed fee arrangement and subsequent billings for services provided in the amount of $219, per month (an amount equal to one-twelfth of the total estimated fees). KPMG is billing $168, for the period of November 8, 2010 through November 30, 2010 and $219, for the period of December 1, 2010 through December 31, 2010 in this monthly fee statement. KPMG LLP Monthly Fee Statement Page 2 of 31

4 EXHIBIT C Summary of Out of Pocket Expenses Category Amount Airfare $ Lodging $ Meals $ Ground Transportation $ Miscellaneous $ - Total $ 1, KPMG LLP Monthly Fee Statement Page 3 of 31

5 EXHIBIT C1 Detail of Out of Pocket Expenses Name Date Description Amount Conjura,Carol 13-Dec-10 One way coach class airfare from Washington, D.C. to New York, La Guardia. Departure date: Business purpose: Meeting with Ambac Board of Directors regarding tax opinion on accounting method change for notional principal contracts. $ Conjura,Carol 14-Dec-10 One way coach class airfare from New York La Guardia to $ Washington, D.C. Departure date: Business purpose: Meeting with Ambac Board of Directors regarding tax opinion on accounting method change for notional principal contracts. Air Fare Subtotal $ Conjura,Carol 14-Dec-10 Lodging for one night at the Ritz Carlton, Battery Park, NYC Business Purpose: Ambac Board meeting $ Lodging Subtotal $ Conjura,Carol 13-Dec-10 Out of town dinner at hotel. Business Purpose - Ambac Board Meeting $ Meals Subtotal $ Conjura,Carol 13-Dec-11 Taxi from LaGuardia Airport to hotel. $ Conjura,Carol 14-Dec-10 Taxi from client site to LaGuardia Airport to return from attendance at Board Meeting. Conjura,Carol 14-Jan-10 Parking for 1.5 days at Washington National Airport while attending Board Meeting. $ $ Ground Transportation Subtotal $ Miscellaneous Subtotal $ - Total Out of Pocket Expenses $ 1, KPMG LLP Monthly Fee Statement Page 4 of 31

6 EXHIBIT D1 In-Scope Audit Services Name Title Firm Total Hours Fee Andrew,Gregory N Advisory Senior Manager KPMG LLP 6.0 Baharestani,Linda Audit Senior Associate KPMG LLP Boor,Abigail Grace Advisory Senior Associate KPMG LLP 1.0 Bower,Jeffrey E Advisory Managing Director KPMG LLP 4.0 Hayden,Lawrence Audit Manager KPMG LLP Kirkpatrick,Bruce A Advisory Senior Manager KPMG LLP 7.0 Audit Partner KPMG LLP 20.6 Melfi,Mitchell A Audit Senior Associate KPMG LLP Rabinowitz,Jonathan Advisory Associate KPMG LLP 74.0 Ruddock,Ian Audit Associate KPMG LLP Schmitt,Daniel F. Audit Partner KPMG LLP 11.5 Siu,Robyn M. Audit Senior Manager KPMG LLP 32.0 Stoyanov,Valentin P Advisory Senior Associate KPMG LLP 28.0 Tse,Almon Advisory Senior Associate KPMG LLP 10.0 Twerdok,Mark A. Advisory Partner KPMG LLP 1.0 Whiting,Steven Advisory Principal KPMG LLP 1.0 Zauderer,Michael Tax Senior Manager KPMG LLP 2.5 Total In-Scope Audit Services (1) $ 387, (1) Per the Integrated Audit Engagement Letter dated December 1, 2010, KPMG and the Debtors agreed to a fixed fee arrangement and subsequent billings for services provided in the amount of $219, per month (an amount equal to onetwelfth of the total estimated fees). KPMG is billing $168, for the period of November 8, 2010 through November 30, 2010 and $219, for the period of December 1, 2010 through December 31, 2010 in this monthly fee statement. KPMG LLP Monthly Fee Statement Page 5 of 31

7 EXHIBIT D2 Out of Scope Audit Services Hayden,Lawrence 10-Nov-10 Review Bankruptcy Practice aides and accounting guidance to begin to prepare memorandum. 1.0 $ 375 $ Hayden,Lawrence 11-Nov-10 Drafting memo regarding bankruptcy filing and accounting guidance. 1.6 $ 375 $ Hayden,Lawrence 12-Nov-10 Continuing work on the Bankruptcy memo which describes all the work we will need to do as a result of the bankruptcy. It also describes the events leading up to the bankruptcy and some background on the requirements in bankruptcy. 1.5 $ 375 $ Nov-10 Discussed with D. Wallis (Ambac) the status of bankruptcy proceedings and go forward procedures. 0.6 $ 550 $ Nov-10 Discussed with D. Trick (Ambac) the accounting issues to be considered post rehabilitation plan approval by The Office of the Commissioner of Insurance (OCI). Hayden,Lawrence 19-Nov-10 Continuing work on the Bankruptcy memo which describes all the work we will need to do as a result of the bankruptcy. It also describes the events leading up to the bankruptcy and some background on the requirements in bankruptcy. 0.8 $ 550 $ $ 375 $ Nov-10 Discussion with R. Eisman (Ambac) regarding application issues with Fresh Start Accounting. 0.5 $ 550 $ Nov-10 Discussion with R. Alger (Ambac) regarding KPMG comments after reviewing the latest draft of the SEC Comment letter Response prepared. 0.5 $ 550 $ KPMG LLP Monthly Fee Statement Page 6 of 31

8 EXHIBIT D2 Out of Scope Audit Services 24-Nov-10 Discussion with D. Trick (Ambac) on next steps facing Ambac as they move through bankruptcy proceedings to determine what additional assistance KPMG can provide. 0.5 $ 550 $ Nov-10 Discussion with T. Bibby (KPMG Restructuring) regarding processes that KPMG can utilize in planning audit procedures related to the 12/31/10 audit of the financial statements of Ambac. 1.0 $ 550 $ Hayden,Lawrence 29-Nov-10 Started to prepare a re-evaluation memo in relation to the bankruptcy filing and the risk profile of Ambac. Melfi,Mitchell A 29-Nov-10 Document Ambac's 11/17/10 SEC comment letter responses to J. Rosenberg (SEC contact). 1.0 $ 375 $ $ 300 $ Dec-10 Review SEC comment letter responses proposed by Ambac. 1.0 $ 550 $ Dec-10 Discussion with R. Alger (Ambac) regarding KPMG comments after reviewing the latest draft of the SEC Comment letter Response prepared. 1.0 $ 550 $ Dec-10 Review SEC comment letter responses proposed by Ambac with R. Alger (Ambac). 1.0 $ 550 $ Schmitt,Daniel F. 03-Dec-10 Review of SEC comment letter response. 1.0 $ 550 $ Dec-10 Discussion with S. Qui (Ambac) regarding bankruptcy accounting issues for Ambac. 1.0 $ 550 $ Dec-10 Review discussion information in preparation for the December 10, 2010 bankruptcy accounting call with Ambac. 0.5 $ 550 $ Dec-10 Discuss Ambac bankruptcy issues and matters with J. Burgdorf (KPMG DPP). 0.5 $ 550 $ KPMG LLP Monthly Fee Statement Page 7 of 31

9 EXHIBIT D2 Out of Scope Audit Services Burgdorf,Joshua M. 09-Dec-10 Discuss Ambac bankruptcy issues and matters with P. Laurenzano (KPMG). 0.5 $ 475 $ Burgdorf,Joshua M. 09-Dec-10 Department of Professional Practice (DPP) inquiry regarding bankruptcy accounting, intercompany transactions. 1.1 $ 475 $ Hayden,Lawrence 10-Dec-10 Discussion regarding bankruptcy accounting with L. Hayden and P. Laurenzano (both KPMG) and R. Alger, S. Qiu, R. Eisman, W. Mitchell, (all Ambac). 1.1 $ 375 $ Dec-10 Discussion regarding bankruptcy accounting with L. Hayden and P. Laurenzano (both KPMG) and R. Alger, S. Qiu, R. Eisman, W. Mitchell, (all Ambac). 1.1 $ 550 $ Hayden,Lawrence 13-Dec-10 Call between P. Tatum, M. Sellers and L. Hayden (all KPMG) regarding bankruptcy documents on docket and information for Audit Procedures workpapers. 0.5 $ 375 $ Tatum,Pamela Renea 13-Dec-10 Call between P. Tatum, M. Sellers and L. Hayden (all KPMG) regarding bankruptcy documents on docket and information for Audit Procedures workpapers. 0.5 $ 300 $ Dec-10 Call between P. Tatum, M. Sellers and L. Hayden (all KPMG) regarding bankruptcy documents on docket and information for Audit Procedures workpapers. 0.5 $ 425 $ Tatum,Pamela Renea 13-Dec-10 Research various bankruptcy documents and provide to L. Hayden (KPMG) for inclusion in the Audit Procedures workpapers. 1.0 $ 300 $ Total Out of Scope Audit Services 23.7 $10, KPMG LLP Monthly Fee Statement Page 8 of 31

10 EXHIBIT D3 Tax Consulting Services Spiegel,Samuel A 09-Nov-10 Review bankruptcy documents regarding section 382(l)(5) qualification issues. 3.6 $ 500 $ 1, Spiegel,Samuel A 09-Nov-10 Continue to review bankruptcy documents and analyze section 382(l)(5) matters. Spiegel,Samuel A 11-Nov-10 Research certain section 382(l)(5) issues and begin to draft section 382(l)(5) memo. Spiegel,Samuel A 11-Nov-10 Continue with section 382(l)(5) analysis and drafting section 382(l)(5) memo. Varela,Jacqueline 11-Nov-10 Review the 108 calculation to be performed and the approach and data required for the calculation. Varela,Jacqueline 11-Nov-10 Continue to review the 108 calculation to be performed and the approach and data required for the calculation. 0.4 $ 500 $ $ 500 $ 1, $ 500 $ 1, $ 300 $ 1, $ 300 $ Ng,Linda 12-Nov-10 Conference call between J. Varela (KPMG Senior Associate), S. Spiegel (KPMG Senior Manager), L. Ng (KPMG Senior Associate), M. Zauderer (KPMG Insurance tax specialist), A. Cancel ( KPMG Associate) and U. Zahid (KPMG Insurance tax specialist) to discuss insurance specific tax reporting requirements regarding tax basis determination. 1.0 $ 400 $ KPMG LLP Monthly Fee Statement Page 9 of 31

11 EXHIBIT D3 Tax Consulting Services Zauderer,Michael 12-Nov-10 Conference call between J. Varela (KPMG Senior Associate), S. Spiegel (KPMG Senior Manager), L. Ng (KPMG Senior Associate), M. Zauderer (KPMG Insurance tax specialist), A. Cancel ( KPMG Associate) and U. Zahid (KPMG Insurance tax specialist) to discuss insurance specific tax reporting requirements regarding tax basis determination. 1.0 $ 500 $ Zahid,Ummara 12-Nov-10 Conference call between J. Varela (KPMG Senior Associate), S. Spiegel (KPMG Senior Manager), L. Ng (KPMG Senior Associate), M. Zauderer (KPMG Insurance tax specialist), A. Cancel ( KPMG Associate) and U. Zahid (KPMG Insurance tax specialist) to discuss insurance specific tax reporting requirements regarding tax basis determination. 1.0 $ 275 $ Varela,Jacqueline 12-Nov-10 Conference call between J. Varela (KPMG Senior Associate), S. Spiegel (KPMG Senior Manager), L. Ng (KPMG Senior Associate), M. Zauderer (KPMG Insurance tax specialist), A. Cancel ( KPMG Associate) and U. Zahid (KPMG Insurance tax specialist) to discuss insurance specific tax reporting requirements regarding tax basis determination. 1.0 $ 300 $ Spiegel,Samuel A 12-Nov-10 Conference call between J. Varela (KPMG Senior Associate), S. Spiegel (KPMG Senior Manager), L. Ng (KPMG Senior Associate), M. Zauderer (KPMG Insurance tax specialist), A. Cancel ( KPMG Associate) and U. Zahid (KPMG Insurance tax specialist) to discuss insurance specific tax reporting requirements regarding tax basis determination. 1.0 $ 500 $ KPMG LLP Monthly Fee Statement Page 10 of 31

12 EXHIBIT D3 Tax Consulting Services Cancel,Alexandra M. 12-Nov-10 Conference call between J. Varela (KPMG Senior Associate), S. Spiegel (KPMG Senior Manager), L. Ng (KPMG Senior Associate), M. Zauderer (KPMG Insurance tax specialist), A. Cancel ( KPMG Associate) and U. Zahid (KPMG Insurance tax specialist) to discuss the tax treatment of and tax reporting requirements of insurance companies specific to AFGI regarding tax basis determination. 1.0 $ 275 $ Spiegel,Samuel A 12-Nov-10 Review income tax return historical separate company information in determining basis for purposes of attribute reduction under section 108. Varela,Jacqueline 12-Nov-10 Review of the specific tax insurance requirements regarding AFGI. Varela,Jacqueline 12-Nov-10 Review the Deferred Tax Assets and Deferred Tax Liability (DTA/DTL) items disclosed in the 9/30/2010 provision files for AFGI. 1.0 $ 500 $ $ 300 $ $ 300 $ Varela,Jacqueline 12-Nov-10 Basis calculation of AFGI and its subsidiaries, access tax returns historical information by KPMG and extract relevant information. 1.0 $ 300 $ Varela,Jacqueline 12-Nov-10 Meeting with C. Kim (KPMG M&A associate) regarding the basis calculation information extraction and input into KPMG 1502 model. 1.0 $ 300 $ Kim,Cecilia 12-Nov-10 Meeting with J. Varela (KPMG Tax Senior Associate) regarding the basis calculation information extraction and input into KPMG 1502 model. Ng,Linda 12-Nov-10 Assessment of the terms surrounding the potential cancellation of debt regarding cancellation of debt (COD) computation. 1.0 $ 275 $ $ 400 $ KPMG LLP Monthly Fee Statement Page 11 of 31

13 EXHIBIT D3 Tax Consulting Services Steinberg,Howard Brian 12-Nov-10 Partner review and analysis of Section 382(l)(5) qualification with respect to the exceptions under $ 635 $ 1, Steinberg,Howard Brian 13-Nov-10 Analysis of cancellation of forward contract regarding Section 382 implications. 0.5 $ 635 $ Kim,Cecilia 15-Nov-10 Update excel file to include numbers extracted for contribution and distribution amounts, pulled from tax returns, into Ambac 1502 Model in order to calculate basis with those numbers. Varela,Jacqueline 15-Nov-10 Review of 2009 and prior insurance annual statements (yellow books) with M. Zauderer, S. Spiegel, J. Varela, U. Zahid and L. Ng (all KPMG) performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. 3.0 $ 275 $ $ 300 $ Spiegel,Samuel A 15-Nov-10 Review of 2009 and prior insurance annual statements (yellow books) with M. Zauderer, S. Spiegel, J. Varela, U. Zahid and L. Ng (all KPMG) performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. 0.5 $ 500 $ Zauderer,Michael 15-Nov-10 Review of 2009 and prior insurance annual statements (yellow books) with M. Zauderer, S. Spiegel, J. Varela, U. Zahid and L. Ng (all KPMG) performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. 0.5 $ 500 $ KPMG LLP Monthly Fee Statement Page 12 of 31

14 EXHIBIT D3 Tax Consulting Services Ng,Linda 15-Nov-10 Review of 2009 and prior insurance annual statements (yellow books) with M. Zauderer, S. Spiegel, J. Varela, U. Zahid and L. Ng (all KPMG) performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. 0.5 $ 400 $ Zahid,Ummara 15-Nov-10 Review of 2009 and prior insurance annual statements (yellow books) with M. Zauderer, S. Spiegel, J. Varela, U. Zahid and L. Ng (all KPMG) performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. 0.5 $ 275 $ Zauderer,Michael 15-Nov-10 Review of sample tax basis calculation/process using prior insurance company estimated tax basis studies with M. Zauderer, S. Spiegel, U. Zahid, J. Varela and L. Ng (all KPMG) performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. Varela,Jacqueline 15-Nov-10 Review of sample tax basis calculation/process using prior insurance company estimated tax basis studies with M. Zauderer, S. Spiegel, U. Zahid, J. Varela and L. Ng (all KPMG) performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. 0.5 $ 500 $ $ 300 $ KPMG LLP Monthly Fee Statement Page 13 of 31

15 EXHIBIT D3 Tax Consulting Services Spiegel,Samuel A 15-Nov-10 Review of sample tax basis calculation/process using prior insurance company estimated tax basis studies with M. Zauderer, S. Spiegel, U. Zahid, J. Varela and L. Ng (all KPMG) performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. 0.5 $ 500 $ Ng,Linda 15-Nov-10 Review of sample tax basis calculation/process using prior insurance company estimated tax basis studies with M. Zauderer, S. Spiegel, U. Zahid, J. Varela and L. Ng (all KPMG) performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. 0.5 $ 400 $ Zahid,Ummara 15-Nov-10 Review of sample tax basis calculation/process using prior insurance company estimated tax basis studies with M. Zauderer, S. Spiegel, U. Zahid, J. Varela and L. Ng (all KPMG) performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. 0.5 $ 275 $ Zahid,Ummara 15-Nov-10 Review of W. Kirchhoff s (Ambac) basis calculation for AAC to compare and contrast to KPMG methodology to see if we agree with clients assessment; corresponding review of tax return(s) relating to client basis calculation performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. 0.5 $ 275 $ KPMG LLP Monthly Fee Statement Page 14 of 31

16 EXHIBIT D3 Tax Consulting Services Zahid,Ummara 15-Nov-10 After return review, observations provided to M&A team to determine what items need to be added back to determine appropriate basis; analysis of what book-tax items exist so that appropriate adjustments could be performed for the purposes of assisting KPMG s M&A tax team conduct their AMBAC tax basis study. 0.5 $ 275 $ Spiegel,Samuel A 15-Nov-10 Review statutory balance sheet as means of translating into tax balance sheet for basis reduction. Varela,Jacqueline 15-Nov-10 Review and provide comments to C. Kim (KPMG M&A associate) regarding the basis calculation information extraction and input into KPMG 1502 model. Varela,Jacqueline 15-Nov-10 Research information relating to Form 1120-PC and assessed how to extract information from the 1120 PC forms to be used in the 1502 model. Varela,Jacqueline 15-Nov-10 Cancellation of debt (COD) calculation template reviewed and updated with the initial requirements for the AFGI calculation. Ng,Linda 15-Nov-10 Review of the initial stock basis study under treas. Reg and initial analysis of the potential attribute reduction under treas. Reg Hoffenberg,Mark R. 15-Nov-10 Review correspondences' and perform analysis regarding the equity unit cancellation. 2.0 $ 500 $ 1, $ 300 $ $ 300 $ $ 300 $ $ 400 $ $ 635 $ KPMG LLP Monthly Fee Statement Page 15 of 31

17 EXHIBIT D3 Tax Consulting Services Kim,Cecilia 16-Nov-10 Continue to update excel file to include numbers extracted for contribution and distribution amounts, pulled from tax returns, into Ambac 1502 Model in order to calculate basis with those numbers. Kim,Cecilia 16-Nov-10 Continue to update excel file to include numbers extracted for contribution and distribution amounts, pulled from tax returns, into Ambac 1502 Model in order to calculate basis with those numbers. 3.0 $ 275 $ $ 275 $ Keppler,Juliane L. 16-Nov-10 Review bondholder data provided by vendor. 1.0 $ 500 $ Keppler,Juliane L. 16-Nov-10 Analyze bondholder data and test results provided by vendor. Spiegel,Samuel A 16-Nov-10 Senior Manager review of basis computation work performed by Senior Associate. Ng,Linda 16-Nov-10 Review of the initial draft stock basis calculation. Varela,Jacqueline 16-Nov-10 Continue to review and provide comments to C. Kim (KPMG M&A associate) regarding the basis calculation information extraction and input into KPMG 1502 model. 1.5 $ 500 $ $ 500 $ $ 400 $ $ 300 $ Varela,Jacqueline 16-Nov-10 Continue to research information relating to Form 1120-PC and assessed how to extract information from the 1120 PC forms to be used in the 1502 model. 3.0 $ 300 $ Varela,Jacqueline 16-Nov-10 Senior Associate review of the 1502 Model. 2.0 $ 300 $ KPMG LLP Monthly Fee Statement Page 16 of 31

18 EXHIBIT D3 Tax Consulting Services Steinberg,Howard Brian 16-Nov-10 Partner review of preliminary basis model. 1.5 $ 635 $ Steinberg,Howard Brian 16-Nov-10 Analysis of bondholder analysis regarding qualification for Section 382(l)(5). 0.5 $ 635 $ Kim,Cecilia 17-Nov-10 Revisions to Ambac Model based on comments from senior associate and senior manager regarding initial basis calculation. 2.0 $ 275 $ Varela,Jacqueline 17-Nov-10 Conference call between U. Zahid and J. Varela (both KPMG) to discuss the Deferred Tax Assets and Deferred Tax Liability (DTAs/DTLs) research analysis and review the explanations for tax basis study groupings. 1.0 $ 300 $ Zahid,Ummara 17-Nov-10 Conference call with J. Varela (KPMG) to discuss the Deferred Tax Assets and Deferred Tax Liability (DTAs/DTLs) research analysis and review the explanations for tax basis study groupings to assist M&A tax team conduct their Ambac tax basis study. 1.0 $ 275 $ Varela,Jacqueline 17-Nov-10 Discussions with S. Spiegel (KPMG) regarding the cancellation of debt (COD) calculation and attribute reduction. Spiegel,Samuel A 17-Nov-10 Discussions with J. Varela (KPMG) regarding the cancellation of debt (COD) calculation and attribute reduction. Varela,Jacqueline 17-Nov-10 Continue Senior Associate review of the 1502 Model. 1.0 $ 300 $ $ 500 $ $ 300 $ KPMG LLP Monthly Fee Statement Page 17 of 31

19 EXHIBIT D3 Tax Consulting Services Varela,Jacqueline 17-Nov-10 Completed research relating to Form 1120-PC and assessed how to extract information from the 1120 PC forms to be used in the 1502 model. Keppler,Juliane L. 18-Nov-10 Test vendor results and research additional bondholder data. 3.0 $ 300 $ $ 500 $ Varela,Jacqueline 18-Nov-10 Updates to 108 calculation to include updates from the DTA/DTL workpapers to the inside asset basis calculation. 1.0 $ 300 $ Varela,Jacqueline 18-Nov-10 Continuation of the 108 calculation to include updates from the DTA/DTL workpapers to the inside asset basis calculation. 2.5 $ 300 $ Hoffenberg,Mark R. 18-Nov-10 Conference call with W. Kirchoff (Ambac), L. Hill, M. Caterini and A. Lynch (all Dewey) regarding KPMG modeling and bankruptcy related issues. Yeadon,Alexandra 22-Nov-10 Review correspondence exchanged with H. Steinberg (KPMG) regarding prior work on notional principal contracts. 1.0 $ 635 $ $ 500 $ Yeadon,Alexandra 22-Nov-10 Review prior draft opinions regarding notional principal contracts. 0.5 $ 500 $ Steinberg,Howard Brian 01-Dec-10 Discussion between J. Keppler and H. Steinberg (both KPMG) regarding the bondholder analysis performed by Mackenzie Partners and our next steps. 0.5 $ 635 $ KPMG LLP Monthly Fee Statement Page 18 of 31

20 EXHIBIT D3 Tax Consulting Services Keppler,Juliane L. 01-Dec-10 Discussion between J. Keppler and H. Steinberg (both KPMG) regarding the bondholder analysis performed by Mackenzie Partners and our next steps. 0.5 $ 500 $ Keppler,Juliane L. 01-Dec-10 Bondholder data review. 0.8 $ 500 $ Keppler,Juliane L. 02-Dec-10 Conduct call with M. Fitzgerald (Ambac) and K. Auten (Mackenzie Partners) regarding the Bondholder analysis. 1.0 $ 500 $ Steinberg,Howard Brian 02-Dec-10 Conference call between S. Spiegel and H. Steinberg (both KPMG) and Wes Kirchoff (Ambac) regarding Application of Section 368(l)(5) to Ambac and reduction of Ambac attributes under section $ 635 $ 1, Spiegel,Samuel A 02-Dec-10 Conference call between S. Spiegel and H. Steinberg (both KPMG) and Wes Kirchoff (Ambac) regarding Application of Section 368(l)(5) to Ambac and reduction of Ambac attributes under section $ 500 $ 1, Hoffenberg,Mark R. 02-Dec-10 Review correspondence exchanged with H. Steinberg (KPMG) regarding section 382(l)(5) modeling and other bankruptcy related issues. 0.5 $ 635 $ Hoffenberg,Mark R. 02-Dec-10 Call with W. Kirchoff (Ambac) regarding section 382(l)(5) analysis and other bankruptcy related issues. Spiegel,Samuel A 07-Dec-10 Review rules of tax attribute reduction as applies to subsidiaries within tax consolidated group. 0.5 $ 635 $ $ 500 $ KPMG LLP Monthly Fee Statement Page 19 of 31

21 EXHIBIT D3 Tax Consulting Services Hoffenberg,Mark R. 07-Dec-10 Conference call with W. Kirchoff (Ambac), L. Hill, M. Caterini and A. Lynch (all Dewey) regarding bankruptcy related issues and discuss updating our written advice on the change of accounting method regarding same. 0.7 $ 635 $ Hoffenberg,Mark R. 07-Dec-10 Draft correspondence to A. Yeadon (KPMG) related to the request for written advice regarding change of accounting method discussed in call with W. Kirchoff (Ambac), L. Hill, M. Caterini and A. Lynch (all Dewey). 0.3 $ 635 $ Steinberg,Howard Brian 07-Dec-10 Analysis of preliminary cancellation of debt (COD) computation for attribute reduction analysis. 1.5 $ 635 $ Steinberg,Howard Brian 07-Dec-10 Partner review of tax attributes by legal entity. 1.2 $ 635 $ Steinberg,Howard Brian 07-Dec-10 Analysis of Section 382 (l)(5) qualification and related matters. 2.5 $ 635 $ 1, Yeadon,Alexandra 08-Dec-10 Review opinions regarding section 382 and recognized built-in loss (RBIL) issues. 1.0 $ 500 $ Yeadon,Alexandra 08-Dec-10 Research recognized built-in loss (RBIL) issues. Steinberg,Howard Brian 13-Dec-10 Call between A. Yeadon, J. Vogel and H. Steinberg (all KPMG) regarding net operating loss reattribution issues. 1.0 $ 500 $ $ 635 $ Yeadon,Alexandra 13-Dec-10 Call between A. Yeadon, J. Vogel and H. Steinberg (all KPMG) regarding net operating loss reattribution issues. 0.5 $ 500 $ KPMG LLP Monthly Fee Statement Page 20 of 31

22 EXHIBIT D3 Tax Consulting Services Vogel,Jeffrey L. 13-Dec-10 Call between A. Yeadon, J. Vogel and H. Steinberg (all KPMG) regarding net operating loss reattribution issues. Vogel,Jeffrey L. 13-Dec-10 Review of and attribute reduction in preparation for discussion regarding same. 0.5 $ 635 $ $ 635 $ Spiegel,Samuel A 13-Dec-10 Review rules of tax attribute reduction as applies to subsidiaries within tax consolidated group. 3.9 $ 500 $ 1, Spiegel,Samuel A 13-Dec-10 Drafting of 382(l)(5) memo. 2.1 $ 500 $ 1, Steinberg,Howard Brian 13-Dec-10 Partner review of preliminary stock basis analysis for first tier subs. 2.0 $ 635 $ 1, Conjura,Carol 14-Dec-10 Board meeting to discuss accounting method change on notional principal contracts. Discuss historical tax positions claimed by the company for the benefit of the board to gain a better understanding of the implications to the company as the company considers tax planning in context of the bankruptcy proceeding Spiegel,Samuel A 14-Dec-10 Discussions with J. Varela (KPMG Senior Associate) regarding the status of legal proceedings of AFGI and the impact on the cancellation of debt (COD) calculation. 4.0 $ 635 $ 2, $ 500 $ Varela,Jacqueline 14-Dec-10 Discussions with S. Spiegel (KPMG Senior Manager) regarding the status of legal proceedings of AFGI and the impact on the cancellation of debt (COD) calculation. 1.0 $ 300 $ KPMG LLP Monthly Fee Statement Page 21 of 31

23 EXHIBIT D3 Tax Consulting Services Steinberg,Howard Brian 14-Dec-10 Board meeting to discuss accounting method change on notional principal contracts including discussion with the Board regarding the historical tax positions claimed by the company as company considers tax planning while in Chapter $ 635 $ 2, Tatum,Pamela Renea 15-Dec-10 Research various documents and provide to S. Spiegel (KPMG) for inclusion in the tax documents. 1.0 $ 385 $ Spiegel,Samuel A 15-Dec-10 Review tax basis data to arrive at tentative conclusion with respect to how attribute reduction will apply to Ambac group. 2.0 $ 500 $ 1, Hoffenberg,Mark R. 16-Dec-10 Conference call with W. Kirchoff (Ambac), L. Hill, M. Caterini and A. Lynch (all Dewey) regarding an update on the bankruptcy related issues discussed previously. 1.0 $ 635 $ Total Tax Consulting Services $ 58, KPMG LLP Monthly Fee Statement Page 22 of 31

24 EXHIBIT D4 Retention and Fee Application Preparation Hayden,Lawrence 08-Nov-10 Complete required information necessary for inclusion in the retention documents and provide to M. Sellers (KPMG). 3.0 $ 375 $ 1, Hayden,Lawrence 08-Nov-10 Discussion with M. Sellers (KPMG) regarding information required for the retention documents. 08-Nov-10 Discussion with L. Hayden (KPMG) regarding information required for the retention documents. 08-Nov-10 Pull docket information regarding Ambac bankruptcy matter; research information for retention documents and provide documents to KPMG management. 0.6 $ 375 $ $ 485 $ $ 485 $ Nov-10 Begin draft of declaration and review s to incorporate information into declaration. Compile information regarding fees per from H. Steinberg (KPMG). 1.1 $ 485 $ Nov-10 Transmit internal s regarding information to be included in Laurenzano Declaration. 0.3 $ 485 $ Nov-10 Create document regarding services to be provided in bankruptcy, engagement letter dates, services performed, etc. to rely on when completing Partner Declaration. 0.4 $ 485 $ Nov-10 Revise declaration throughout day with most recent information received. 0.4 $ 485 $ KPMG LLP Monthly Fee Statement Page 23 of 31

25 EXHIBIT D4 Retention and Fee Application Preparation 19-Nov-10 Transmit external to Debtor's counsel regarding go-forward procedures, KPMG services during bankruptcy matter, timing of filing of retention documents, etc. 0.2 $ 485 $ Nov-10 Update Declaration to include most recent information received, specifically surrounding services to be performed and listing of categories regarding interested parties; rely on information received from Debtor's counsel regarding those parties. 1.2 $ 485 $ Nov-10 Transmit to S Carlin (KPMG-OGC) regarding new bankruptcy matter, timing, services, etc. regarding retention documents and approvals required prior to filing. 0.1 $ 485 $ Nov-10 Discussion between M. Sellers and P. Laurenzano (both KPMG) regarding the next steps required for KPMG filings to be made with Bankruptcy Court. 0.5 $ 550 $ Nov-10 Discussion between M. Sellers and P. Laurenzano (both KPMG) regarding the next steps required for KPMG filings to be made with Bankruptcy Court. 0.5 $ 485 $ Nov-10 Respond to s regarding retention matter and go-forward procedures. 0.4 $ 485 $ Nov-10 Conversation with M. Sellers (KPMG) regarding retention in matter, audit services, draft declaration and go-forward procedures. 0.9 $ 550 $ KPMG LLP Monthly Fee Statement Page 24 of 31

26 EXHIBIT D4 Retention and Fee Application Preparation 24-Nov-10 Review and analyze retention issues to be resolved as part of KPMG's upcoming filing related to the Bankruptcy. 0.1 $ 550 $ Nov-10 Conversation with P. Laurenzano (KPMG) regarding retention in matter, audit services, draft declaration and go-forward procedures. 0.9 $ 485 $ Nov-10 Revise declaration and provide first Draft to Partners and OGC, discussing process and background with OGC beforehand. 1.5 $ 485 $ Dec-10 Discussion between P. Laurenzano and M. Sellers (both KPMG) to discuss this retention process and open items prior to finalizing documents for filing purposes. 0.5 $ 550 $ Dec-10 Discussion between P. Laurenzano and M. Sellers (both KPMG) to discuss this retention process and open items prior to finalizing documents for filing purposes. 0.5 $ 485 $ Dec-10 Revise Declaration, review comments received, review rates to be charged and information to be reflected in Declaration. 1.7 $ 485 $ Shaffer,Wendy 02-Dec-10 Discuss with Phil Duff (Ambac Audit Committee Chair) potential modifications to engagement letter and in turn retention documents. 02-Dec-10 Draft Schedules 1 and 2 for the Ambac Retention documents per M. Sellers request. 0.5 $ 550 $ $ 265 $ KPMG LLP Monthly Fee Statement Page 25 of 31

27 EXHIBIT D4 Retention and Fee Application Preparation 02-Dec-10 Discuss and review retention document modifications associated with engagement letter modifications with M. Sellers (KPMG). 0.5 $ 550 $ Dec-10 Discuss and review retention document modifications associated with engagement letter modifications with P. Laurenzano (KPMG). 02-Dec-10 Revise retention documents and send draft to Debtor's counsel. Transmit to Debtor's counsel under separate all current engagement letters reflected in Declaration; advise counsel regarding additional information and attachments to that Declaration. 02-Dec-10 Continue review regarding any disclosures required in Declaration. 0.5 $ 485 $ $ 485 $ $ 485 $ Dec-10 Review signed audit engagement letter and reconcile all information to ensure information is reflected in Declaration. 0.6 $ 485 $ Dec-10 Review advisory engagement letter and revise declaration to capture revised scope. Track changes to revised Declaration and send draft document to Debtor's counsel. 0.9 $ 485 $ Dec-10 Review and modify retention documents for Ambac. 1.8 $ 550 $ Dec-10 Review changes received by Debtor's counsel regarding KPMG Declaration. Request updates internally, ing and request specific updates regarding outstanding issues. 0.7 $ 485 $ KPMG LLP Monthly Fee Statement Page 26 of 31

28 EXHIBIT D4 Retention and Fee Application Preparation 06-Dec-10 Discussion with P. Laurenzano (KPMG) regarding go forward procedures. 06-Dec-10 Discussion with M. Sellers (KPMG) regarding go forward procedures. 0.2 $ 485 $ $ 550 $ Dec-10 Review modifications made to the retention documents and the Laurenzano declaration 1.0 $ 550 $ Dec-10 Review recent tax engagement letter, include information in draft declaration and send to Office of General Counsel regarding open items with documents. 0.4 $ 485 $ Dec-10 Discussion with T. Jeffries (D&L - Debtor's counsel) regarding go forward procedures and additional services to be reflected in KPMG Declaration. 0.3 $ 485 $ Dec-10 Follow up internally regarding receivables and reflect additional revisions to retention documents from information received throughout day. 08-Dec-10 Discuss retention document modification issues with Wes Kirchoff (Ambac) and attorneys from Dewey. 0.7 $ 485 $ $ 550 $ Dec-10 Conference call with D&L attorneys and M. Sellers (KPMG) regarding retention process, timing, filing, additional services and goforward procedures. 0.4 $ 550 $ KPMG LLP Monthly Fee Statement Page 27 of 31

29 EXHIBIT D4 Retention and Fee Application Preparation 08-Dec-10 Conference call with M. Sellers (KPMG) and attorney regarding retention in bankruptcy matter and Partner Declaration, statements, goforward procedures, etc. 08-Dec-10 Reviewed and considered retention document modifications. 0.7 $ 550 $ $ 550 $ Dec-10 Conference call with D&L attorneys and P. Laurenzano (KPMG) regarding retention process, timing, filing, additional services and go-forward procedures. 0.4 $ 485 $ Dec-10 Revise retention documents and schedules (per Debtor's counsel request) and transmit to Debtor's counsel. 0.6 $ 485 $ Dec-10 Conference call with A. Ward and S. Carlin (both KPMG) regarding revisions to documents and KPMG's go-forward procedures; transmit those procedures to P. Laurenzano (KPMG). 08-Dec-10 Conference call with P. Laurenzano (KPMG) and attorney regarding retention in bankruptcy matter and Partner Declaration, statements, goforward procedures, etc. 09-Dec-10 Reviewed modifications made to the retention documents and declarations. 0.4 $ 485 $ $ 485 $ $ 550 $ Dec-10 Continue revisions to retention documents, incorporating most recent information received; review current s and respond internally with clarification requests. 0.5 $ 485 $ KPMG LLP Monthly Fee Statement Page 28 of 31

30 EXHIBIT D4 Retention and Fee Application Preparation 10-Dec-10 Reviewed modifications to the retention documents. 1.0 $ 550 $ Dec-10 Discussed with R. Eisman (Ambac) questions regarding the retention documents including KPMG's declaration and the handling of fee payments. 10-Dec-10 Continue retention document revisions, review s received regarding Ambac retention and request final documents and advise internal professionals of timing and requirements for filing. 13-Dec-10 Prepare for call with L Hayden and P Tatum (both KPMG) regarding documents on docket and information for audit procedures. 0.9 $ 550 $ $ 485 $ $ 485 $ Dec-10 Call with S. Carlin (KPMG) regarding bankruptcy project and go-forward procedures 16-Dec-10 Review s regarding Ambac bankruptcy and respond providing most recent information. 19-Dec-10 Review the supplemental declaration to be filed with the bankruptcy court related to KPMG services provided 21-Dec-10 Transmit to L. Hayden (KPMG) regarding billing process and procedures while client is in bankruptcy. 0.3 $ 485 $ $ 485 $ $ 550 $ $ 485 $ Dec-10 Review s circulating regarding supplemental declaration and coordinate completion of documents prior to sending to Debtor's counsel for filing purposes. 0.2 $ 485 $ KPMG LLP Monthly Fee Statement Page 29 of 31

31 EXHIBIT D4 Retention and Fee Application Preparation 22-Dec-10 Research s and information received from Debtor's counsel regarding Debtor and non-debtor subsidiaries; transmit to KPMG Office of General Counsel, channeling information found and request for clarification. Transmit s during day to T. Jeffries at Debtor's counsel regarding disclosures and go-forward. 0.6 $ 485 $ Subtotal Retention Preparation 36.8 $ 17, Tatum,Pamela Renea 12-Nov-10 Prepare correspondence to the Partners containing go-forward information related to the bankruptcy. 0.2 $ 385 $ Tatum,Pamela Renea Tatum,Pamela Renea Tatum,Pamela Renea Tatum,Pamela Renea Tatum,Pamela Renea 12-Nov-10 Prepare correspondence requesting the work in progress report required to generate the fee statement. 18-Nov-10 Prepare bankruptcy time template and distribute to team members. 18-Nov-10 Review the November time detail to adhere and comply with bankruptcy requirements. 18-Nov-10 Prepare correspondence to various KPMG professionals for clarification on time descriptions, including but not limited to use of acronyms, unclear information and incomplete meeting participants, to adhere and comply with bankruptcy requirements. 10-Dec-10 Prepare bankruptcy time template and distribute to Tax Consulting Services team members. 0.2 $ 385 $ $ 385 $ $ 385 $ $ 385 $ $ 385 $ KPMG LLP Monthly Fee Statement Page 30 of 31

32 EXHIBIT D4 Retention and Fee Application Preparation Tatum,Pamela Renea 13-Dec-10 Obtain retention application from the docket and review approved services to include in the fee statement. 0.2 $ 385 $ Subtotal Fee Application Preparation 2.9 $ 1, Total Retention and Fee Application , KPMG LLP Monthly Fee Statement Page 31 of 31