Ambac Financial Group Inc, which was the second-largest U.S. bond insurer before suffering huge losses on risky mortgages, filed for Chapter 11 bankruptcy on Monday. The company, which filed in Manhattan bankruptcy court, said it had liabilities of $1.68 billion. The company's shares plummeted in after-hours trading to 20 cents, down from 52 cents at their close on the New York Stock Exchange. Ambac faltered after it began chasing higher profits by expanding beyond municipal bond insurance and insuring riskier debt. That move backfired when the housing market crashed and credit markets tightened. Ambac said it was unable to raise needed capital and failed to reach an agreement with senior bondholders that would have allowed it to restructure through a prepackaged bankruptcy.