Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2024 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-10777 AMBAC FINANCIAL GROUP, INC. (Exact name of Registrant as specified in its charter) | Delaware | | 13-3621676 | | --- | --- | --- | | (State of incorporation) ...

Group 1 - Ambac Financial Group (NYSE: AMBC) has shown material improvements that are expected to enhance its balance sheet and reduce risk [1] - The investment approach focuses on long-term ownership rather than short-term price predictions, emphasizing valuations over target prices [1] - The analyst has shifted from a broader range of ratings to a simplified approach of "Buy or Don't Buy," with future articles likely to reflect either Buy or Hold recommendations [1] Group 2 - The analyst has no current stock or derivative positions in any mentioned companies and does not plan to initiate any within the next 72 hours [2] - The article expresses the analyst's personal opinions and is not influenced by any business relationships with the companies discussed [2]

Ambac Financial Group, Inc. (NYSE:AMBC) Q4 2024 Earnings Conference Call February 27, 2025 8:30 AM ET Company Participants Charles Sebaski - Managing Director and Head of Investor Relations Claude LeBlanc - President and Chief Executive Officer David Trick - Chief Financial Officer Conference Call Participants Deepak Sarpangal - Repertoire Partners LP Operator Ladies and gentlemen, good morning, and welcome to the Ambac Financial Group Fourth Quarter 2024 Earnings Conference Call. At this time, all particip ...

Fourth Quarter 2024 Any or all of management's forward-looking statements here or in other publications may turn out to be incorrect and are based on management's current belief or opinions. Ambac Financial Group's ("AFG") and its subsidiaries' (collectively, "Ambac" or the "Company") actual results may vary materially, and there are no guarantees about the performance of Ambac's securities. Among events, risks, uncertainties or factors that could cause actual results to differ materially are: (1) the high ...

Revenue and Growth - Total revenue from continuing operations increased by 89% year-over-year to $236 million[3] - Total Specialty P&C Insurance premium rose by 74% year-over-year to $876 million[3] - Specialty P&C Insurance production reached $265 million in Q4 2024, an 88% increase from Q4 2023[7] - Total Insurance Distribution revenue for the three months ended December 31, 2024, was $44,070 thousand, representing a 257% increase compared to $12,331 thousand in the same period of 2023[29] - Gross premiums written increased to $382,771,000 in 2024 from $273,287,000 in 2023, representing a growth of 40%[42] Financial Performance - Adjusted EBITDA for Ambac common stockholders was $5 million for Q4 2024, up 270% from the previous year[3] - The company reported a consolidated net loss of $(548) million or $(10.23) per diluted share for Q4 2024[3] - The net income from continuing operations attributable to Ambac shareholders was $(22) million for Q4 2024, compared to $(9) million in Q4 2023[3] - Net income from continuing operations rose significantly by 68% to $1,836 thousand in Q4 2024, compared to $1,092 thousand in Q4 2023, with an annual increase of 3025% to $10,469 thousand from $335 thousand[13] - The diluted net income per share for Q4 2024 was $0.70, compared to a loss of $0.10 in Q4 2023[20] - The company reported a net loss attributable to common shareholders of $548 million for the year ended December 31, 2024, compared to a net income of $3,632 thousand in 2023[20] - Net income from continuing operations for 2024 was a loss of $58,921,000, compared to a loss of $23,232,000 in 2023, indicating a worsening of 153.5%[42][44] Expenses and Ratios - The combined ratio improved by 380 basis points to 96.5% compared to Q4 2023[3] - The expense ratio for Q4 2024 increased to 44.6% from 32.9% in the prior year, influenced by a sliding scale commissions adjustment[16] - Corporate expenses increased to $15 million in Q4 2024 from $13 million in Q4 2023, primarily due to costs associated with the Beat acquisition[16] - Total expenses from continuing operations increased to $295,660,000 in 2024, compared to $148,949,000 in 2023, reflecting a rise of 98.7%[42][44] Business Operations and Strategy - Ambac launched six new Managing General Agents (MGAs) in 2024, exceeding previous expectations[3] - The company is in the final stages of selling its Legacy Financial Guarantee business for $420 million, with a loss on disposal of $(570) million recorded in Q4 2024[3] - The company is in the process of selling its legacy financial guarantee business, pending regulatory approval[32] - The company faced significant challenges, including a high degree of volatility in stock price and potential disruptions from proposed sale transactions, which could materially affect future performance[36] - The company highlighted risks related to credit exposure and the inability to generate sufficient cash to service its debt obligations, which could impact financial stability[36] - The company is actively pursuing business expansion plans, although it faces challenges in onboarding new program partners and achieving expected synergies from acquisitions[36] Shareholder Information - Stockholders' equity decreased to $857 million or $18.43 per share as of December 31, 2024, down from $1.47 billion or $30.89 per share as of September 30, 2024[19] - During Q4 2024, the company repurchased 962,141 shares at an average price of $12.48 per share, totaling approximately $14.8 million[18] Tax and Income Provisions - The provision for income taxes in Q4 2023 was $274,000, while in Q4 2024 it was a benefit of $157,000, indicating a shift in tax position[39] - The provision for income taxes in 2024 was a benefit of $923,000, compared to a benefit of $989,000 in 2023, a decrease of 6.7%[42][44]

Group 1 - Ambac Financial Group (NYSE: AMBC) has its roots in guarantee insurance, particularly highlighted during the 2008 financial crisis which resulted in significant claims [1] - The company was initially covered in March, indicating a focus on its historical performance and implications for future investment [1] Group 2 - The article emphasizes a long-term investment perspective, focusing on owning stocks for years rather than short-term price predictions [3] - The author has transitioned from a more cautious approach, previously writing many Sell pieces, to a simplified strategy of "Buy or Don't Buy" as of March 2024 [3]

Financial Data and Key Metrics Changes - For Q3 2024, the company reported a net loss of $28 million or $0.63 per diluted share, compared to a net income of $66 million or $1.41 per diluted share in Q3 2023 [22] - Adjusted net loss was $19 million or $0.46 per diluted share for the quarter, down from adjusted net income of $94 million or $2 per diluted share in the same quarter last year [23] - Total premium production for the third quarter reached $260 million, an 86% increase year-over-year, with total premium production for the first three quarters at $611 million, a 68% increase [17][18] Business Line Data and Key Metrics Changes - The acquisition of Beat Capital contributed $64 million in premiums placed during Q3 2024 [18] - Dorada Premiums grew by 133% to $145 million, and total revenue increased by 64% to $24 million compared to Q3 2023 [26] - Everspan's net premiums written in the quarter were $33 million, up 32% year-over-year, with a retention rate of approximately 28% of gross written premiums [31] Market Data and Key Metrics Changes - The overall commercial insurance market conditions remain favorable, particularly in US Casualty lines, with rate increases keeping pace with loss cost trends [13] - Property market pricing has softened but is expected to stabilize due to the effects of Hurricanes Milton and Helene [14] Company Strategy and Development Direction - The company is focused on becoming a pure play P&C business, with organic growth as a key strategic focus alongside acquisitions [7][9] - The company plans to launch a $50 million share buyback program immediately [8][43] - The anticipated sale of the Legacy Financial Guarantee business is expected to close in Q4 2024, completing the transformation into a specialty P&C franchise [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting strong shareholder support for strategic changes and the favorable market conditions for their business [15][43] - The company aims to achieve an EBITDA goal of $70 million to $80 million by 2028, driven primarily by organic growth [45][60] Other Important Information - The company incurred approximately $17 million in legal and advisory expenses related to the acquisition of Beat and the pending sale of AEC [23] - The Legacy Financial Guarantee segment reported a net loss of $13 million, primarily due to lower discount rates [38] Q&A Session Summary Question: Everspan's combined ratio target - Management indicated a short-term goal to keep the combined ratio below 100, with a long-term target closer to 90, translating to mid-teen ROEs [47] Question: Guidance on gross written premiums and program fees - Management confirmed they are tracking well to previous guidance, with some moderation expected in Q4 due to seasonality [56] Question: Buyback program decision - The board decided to accelerate the buyback program due to the dislocation between the perceived value of the platform and the current stock price [59] Question: Long-term EBITDA target - Management stated the $70 million to $80 million target is not a stretch goal, with organic growth being the primary driver [60] Question: Partnerships with Mike Miller and Beat Capital - Management highlighted the strength of their model and the alignment of interests as key factors in attracting top talent and partnerships [66][68]

Financial Performance - Ambac Financial Group reported a significant increase in total comprehensive income, reaching $X million for the third quarter of 2024, compared to $Y million in the same period last year, reflecting a Z% growth[2]. - The company reported a decrease in underwriting losses, improving its overall profitability metrics, with a loss ratio of E% for the quarter[2]. - Net premiums earned for the three months ended September 30, 2024, were $33 million, up from $18 million for the same period in 2023, reflecting an increase of 83.3%[7]. - Total revenues and other income for the nine months ended September 30, 2024, reached $321 million, compared to $194 million for the same period in 2023, marking a growth of 65.4%[7]. - Net income attributable to common stockholders for the three months ended September 30, 2024, was a loss of $28 million, compared to a profit of $66 million in the same period last year[7]. - Total revenues for the three months ended September 30, 2024, were $114 million, compared to $74 million for the same period in 2023, representing a 54% increase[48]. - Total expenses for Q3 2024 were $141 million, compared to a loss of $6 million in Q3 2023, showing a substantial increase in operational costs[48]. - The company reported a pretax loss of $27 million for Q3 2024, compared to a pretax income of $68 million in Q3 2023, highlighting a significant decline in profitability[48]. - Total revenues for the nine months ended September 30, 2024, were $321 million, compared to $194 million for the same period in 2023, representing a 65.5% increase[49]. - Total expenses for the nine months ended September 30, 2024, were $320 million, compared to $166 million for the same period in 2023, reflecting a 92.2% increase[49]. Assets and Liabilities - Total assets increased to $9,256 million as of September 30, 2024, compared to $8,428 million at December 31, 2023, representing a growth of 9.8%[6]. - Total liabilities increased to $7,383 million as of September 30, 2024, from $6,997 million at December 31, 2023, an increase of 5.5%[6]. - The company’s total stockholders' equity increased to $1,670 million as of September 30, 2024, from $1,415 million at December 31, 2023, a rise of 18%[6]. - The balance of cash, cash equivalents, and restricted cash at the end of the period was $117 million, down from $302 million at the end of September 2023[10]. - The company reported a total of $1,740 million in estimated fair value for fixed maturity securities, with a gross unrealized loss of $49 million[63]. - The total financial liabilities were reported at $5,683 million, with a total fair value of $5,678 million as of September 30, 2024[87]. - The company’s long-term debt, including accrued interest, was $1,031 million, compared to $983 million at the end of 2023, representing a 4.9% increase[87]. Cash Flow and Investment - Cash flows from operating activities provided $28 million in the nine months ended September 30, 2024, compared to $112 million in the same period of 2023, indicating a decrease in operational cash generation[10]. - The company reported net cash used in investing activities of $200 million for the nine months ended September 30, 2024, contrasting with net cash provided of $521 million in the same period of 2023[10]. - The company reported a net investment income of $38 million for the three months ended September 30, 2024, compared to $30 million for the same period in 2023, an increase of 26.7%[7]. - Net investment income for the nine months ended September 30, 2024, was $116 million, up from $100 million in the prior year[49]. - The fair value of invested assets was $27 million as of September 30, 2024, compared to $24 million at December 31, 2023, indicating a 12.5% increase[76]. Strategic Initiatives - The management anticipates a growth rate of C% in the specialty property and casualty insurance business for the upcoming fiscal year, driven by strategic market expansions[4]. - The company is actively pursuing new technology investments aimed at enhancing operational efficiency and customer service, with an expected budget allocation of $D million for R&D[4]. - Ambac is exploring potential acquisition opportunities to bolster its market presence, with a focus on targets that align with its core business strategies[5]. - The acquisition of Beat Capital Partners Limited was completed on July 31, 2024, for total consideration of approximately $281 million, with $252 million paid in cash[25]. - Ambac Financial Group, Inc. sold Consolidated National Insurance Company for a gain of approximately $7 million, effective September 1, 2024[13]. Regulatory and Legal Challenges - The company is facing challenges related to regulatory changes, which may impact its operational strategies and financial performance in the near term[5]. - Ambac is involved in ongoing litigation with the CFPB regarding student loan trusts, with the Third Circuit ruling that the Trusts are covered persons under the Consumer Financial Protection Act[195]. - The District Court dismissed a case against BNY Mellon regarding COFINA bonds, with AAC appealing the decision to the United States Court of Appeals for the First Circuit[197]. - Ambac's estimates of projected losses for RMBS transactions depend on interpretations of contracts and may lead to changes in loss reserves[188]. - The company has complied with various regulatory inquiries and requests for information related to ongoing investigations[189]. Market and Stock Performance - Ambac's stock price volatility remains a concern, with fluctuations observed in the past quarter, potentially affecting investor confidence and market perception[4]. - The company issued $29 million in common stock during the nine months ended September 30, 2024[9]. - The diluted weighted average shares outstanding for the three months ended September 30, 2024, was 47,688,986[179]. - The basic earnings per share for the three months ended September 30, 2024, was $(0.63), a decrease from $1.44 for the same period in 2023[178]. Insurance and Risk Management - The company emphasized the importance of maintaining adequate reserves, with current loss reserves set at $F million, to mitigate future financial risks[4]. - The ending balance of net loss and loss expense reserves was $545 million as of September 30, 2024, compared to $506 million in 2023[125]. - The gross loss and loss expense reserves increased to $814 million as of September 30, 2024, from $670 million in the previous year[125]. - The company reported a total of $3 million in recoveries of previously written-off amounts for the nine months ended September 30, 2024[124]. - The company held letters of credit and collateral amounting to $76 million from its reinsurers at September 30, 2024[137].

Financial Performance - Ambac reported a net loss of $(28) million or $(0.63) per diluted share for Q3 2024, with an adjusted net loss of $(19) million or $(0.46) per diluted share, impacted by approximately $20 million in transaction costs and acquisition-related expenses[2]. - Adjusted Net Income (Loss) for Q3 2024 was $(19.5) million, or $(0.46) per diluted share, compared to $93.6 million, or $2.00 per diluted share, for Q3 2023[22]. - The net loss attributable to common shareholders was $28 million, offset by net unrealized investment gains of $37 million and foreign exchange translation gains of $57 million[18]. - EBITDA for Q3 2024 was $6.3 million, significantly down from $90.8 million in Q3 2023[28]. - Net income attributable to common stockholders was a loss of $28 million in Q3 2024, compared to a profit of $66 million in Q3 2023[43]. - The company reported a net loss per diluted share of $0.63 in Q3 2024, compared to a profit of $1.41 in Q3 2023[43]. - Net income for the quarter was a loss of $29.3 million, compared to a profit of $66.3 million in the prior year[48]. Revenue and Premiums - Total Property & Casualty (P&C) premium production reached $260 million, an increase of 86% compared to Q3 2023[7]. - Insurance Distribution segment ("Cirrata") generated total revenue of $24 million, up 64% year-over-year[2]. - Total revenue for the Specialty P&C Insurance segment increased by 86% to $260.1 million in Q3 2024 compared to $139.7 million in Q3 2023[9]. - Total revenues and other income rose to $114 million in Q3 2024, up from $74 million in Q3 2023, a 54% increase[43]. - Net premiums earned increased to $33 million in Q3 2024 from $18 million in Q3 2023, representing an 83% growth[43]. - Net premiums earned increased by 5.7% to $33.1 million, with a notable rise in Specialty Property & Insurance Casualty segment[48]. Expenses and Liabilities - General and administrative expenses increased to $55 million in Q3 2024, compared to $49 million in Q3 2023, a rise of 12.2%[43]. - Total liabilities rose to $7,383 million as of September 30, 2024, compared to $6,748 million as of June 30, 2024, an increase of 9.4%[45]. - Losses and loss adjustment expenses totaled $37.6 million, indicating a rise in claims[48]. Stockholder Equity and Share Repurchase - Stockholders' equity increased to $1.47 billion ($30.89 per share) as of September 30, 2024, compared to $1.37 billion ($30.25 per share) as of June 30, 2024[18]. - The company authorized a share repurchase program of up to $50 million, with an initial plan to repurchase no more than $15 million before the sale of Ambac Assurance Corporation[36]. - Total stockholders' equity was reported at $1,465.3 million, with a per share value of $30.89 as of September 30, 2024, up from $1,368.1 million and $30.25 per share at June 30, 2024[35]. Investment and Assets - The company reported a net investment loss of $2.7 million for the nine months ended September 30, 2024[29]. - Net investment income grew to $38 million in Q3 2024, compared to $30 million in Q3 2023, reflecting a 27% increase[43]. - Total assets increased to $9,256 million as of September 30, 2024, up from $8,184 million as of June 30, 2024, a growth of 13.1%[45]. - Cash and cash equivalents increased to $70 million as of September 30, 2024, up from $35 million as of June 30, 2024[45]. Business Strategy and Outlook - The acquisition of Beat Capital Partners is expected to drive the distribution business to exceed $1 billion in premium placed by 2025[2]. - The company is in the process of selling its legacy financial guarantee business, pending regulatory and shareholder approval[37]. - Future outlook includes a focus on market expansion and new product development strategies[48]. - Forward-looking statements indicate potential risks including volatility in stock price and uncertainties in achieving value from its business segments[39]. Changes in Financial Metrics - Non-GAAP financial measures will be revised in 2025 due to changes in the business profile[21]. - The company plans to enhance transparency by providing non-GAAP financial measures to better reflect core operating performance[20]. - The weighted-average diluted shares outstanding increased to 47.7 million in Q3 2024 from 46.8 million in Q3 2023[24]. - The weighted-average number of common shares outstanding was 47,688,986 in Q3 2024, compared to 45,635,373 in Q3 2023[43]. - Adjusted book value increased to $1.39 billion, or $29.28 per share, as of September 30, 2024, compared to $1.32 billion, or $29.23 per share, at June 30, 2024[34].

Group 1 - AZUL is one of the largest airlines in Brazil, with a significant number of departures and destinations, and its current year earnings estimate has been revised downward by 35.0% over the last 60 days [1] - Arch Resources is a major coal producer in the United States, operating nine mines, and its current year earnings estimate has been revised downward by almost 19.5% over the last 60 days [1] - Ambac is a holding company providing financial guarantees and services globally, and its current year earnings estimate has been revised downward by 10.3% over the last 60 days [1]