Second Quarter 2025 Highlights - P&C premium production increased by 110% to approximately $346 million[5] - P&C revenue increased by 21% to approximately $54 million, and total revenue increased by 8% to approximately $55 million[5] - Cirrata's premium placed increased 368% to $250 million[12] - Cirrata's total revenue increased 148% to $33 million year-over-year[12] Segment Performance - Everspan's Gross Written Premiums (GPW) was $96 million, down (13)% compared to the second quarter of 2024[15] - 61% of Everspan's 2Q25 GPW is E&S lines[15] - Cirrata experienced organic growth of (3)%[12] - Beat Capital had organic growth of approximately 26%, and Cirrata Proforma Organic Growth Inclusive of Beat was approximately 12%[5] Profitability Metrics - Cirrata reported a net loss of $(8) million with a margin of (24)%[12] - Cirrata's Adjusted EBITDA was $5 million with a margin of 14%[12] - Cirrata's Adjusted EBITDA to shareholders was $3 million with a margin of 8%[12]

Company Performance - Ambac Financial Group reported a quarterly loss of $0.22 per share, which was better than the Zacks Consensus Estimate of a loss of $0.24, and compared to earnings of $0.18 per share a year ago, indicating an earnings surprise of +8.33% [1] - The company posted revenues of $54.96 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.14%, and down from $105 million in the same quarter last year [2] - Over the last four quarters, Ambac has surpassed consensus EPS estimates only once and has not beaten consensus revenue estimates during this period [2] Stock Performance - Ambac shares have declined approximately 32.5% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.20 on revenues of $59.66 million, and for the current fiscal year, it is -$0.67 on revenues of $249.95 million [7] Industry Outlook - The Insurance - Property and Casualty industry, to which Ambac belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Unaudited Financial Statements](index=5&type=section&id=Item%201.%20Unaudited%20Financial%20Statements%20of%20Ambac%20Financial%20Group%2C%20Inc.%20and%20Subsidiaries) This section presents the unaudited consolidated financial statements and related notes for the periods ended June 30, 2025, and 2024 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $8.52 billion, driven by an increase in assets held-for-sale from the pending AAC divestiture Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$8,522,386** | **$8,058,378** | | Assets held-for-sale | $6,592,417 | $6,267,200 | | Goodwill | $451,808 | $418,234 | | Intangible assets, less accumulated amortization | $353,904 | $344,775 | | **Total Liabilities** | **$7,303,678** | **$6,862,857** | | Liabilities held-for-sale | $6,213,024 | $5,887,685 | | Short-term debt | $150,000 | $150,000 | | **Total Stockholders' Equity** | **$1,028,361** | **$1,054,661** | [Consolidated Statements of Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)) The company reported a Q2 2025 net loss of $72.7 million, driven by a significant loss from discontinued operations Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $54,957 | $51,037 | $117,713 | $100,588 | | Total Expenses | $77,931 | $65,786 | $155,794 | $118,576 | | Net income (loss) from continuing operations | $(20,802) | $(14,719) | $(35,292) | $(18,088) | | Net income (loss) from discontinued operations | $(52,151) | $14,182 | $(82,398) | $38,322 | | **Net income (loss) attributable to shareholders** | **$(72,699)** | **$(750)** | **$(119,090)** | **$19,320** | | **Diluted EPS** | **$(1.54)** | **$(0.02)** | **$(2.75)** | **$0.42** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in continuing operations was $0.9 million for the first six months of 2025, a reversal from cash provided in 2024 Cash Flow Summary - Continuing Operations (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $(10,463) | $27,481 | | Net cash from investing activities | $18,030 | $(19,826) | | Net cash from financing activities | $(9,747) | $(1,732) | | **Net cash provided by (used in) continuing operations** | **$(892)** | **$5,923** | [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) These notes detail segment performance, the discontinued operation of AAC, and key accounting policies - The company's principal businesses are organized into two segments: **Insurance Distribution** and **Specialty Property & Casualty Insurance**[22](index=22&type=chunk)[29](index=29&type=chunk) - The pending sale of Ambac Assurance Corporation (AAC) has led to its assets and liabilities being classified as **held-for-sale** and its operations reported as **discontinued**[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 2. Segment Information](index=14&type=section&id=Note%202.%20Segment%20Information) The Specialty P&C segment generated pre-tax income while the Insurance Distribution segment posted a pre-tax loss in Q2 2025 Segment Pretax Income (Loss) for Q2 2025 (in thousands) | Segment | Q2 2025 Pretax Income (Loss) | Q2 2024 Pretax Income (Loss) | | :--- | :--- | :--- | | Specialty Property & Casualty Insurance | $620 | $(1,097) | | Insurance Distribution | $(10,173) | $1,257 | | Corporate & Other | $(13,423) | $(14,908) | | **Total** | **$(22,974)** | **$(14,749)** | [Note 3. Discontinued Operation](index=16&type=section&id=Note%203.%20Discontinued%20Operation) Ambac agreed to sell Ambac Assurance Corporation (AAC) for $420 million, recording an additional $53.0 million loss on disposal in Q2 2025 - AFG entered into an agreement to sell all common stock of its subsidiary, Ambac Assurance Corporation (AAC), for **$420 million in cash**, pending regulatory approval[58](index=58&type=chunk)[60](index=60&type=chunk) Loss on Disposal Calculation (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fair value of net consideration | $402,239 | $399,727 | | Less: estimated closing costs | $7,535 | $7,235 | | Net Proceeds | $394,704 | $392,492 | | Carrying amount of net assets held for-sale | $1,032,305 | $962,637 | | **Loss on disposal** | **$(637,601)** | **$(570,145)** | [Note 6. Insurance Contracts](index=26&type=section&id=Note%206.%20Insurance%20Contracts) Net premiums written for continuing operations decreased significantly due to the non-renewal of certain programs Premiums Written and Earned (in thousands) | Premium Type | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Direct Written | $89,849 | $90,714 | | Assumed Written | $6,399 | $20,492 | | Ceded Written | $(81,041) | $(78,917) | | **Net Premiums Written** | **$15,207** | **$32,289** | | **Net Premiums Earned** | **$16,203** | **$27,054** | [Note 11. Net Income Per Share](index=31&type=section&id=Note%2011.%20Net%20Income%20Per%20Share) The company reported a diluted EPS loss of $1.54 for Q2 2025 and continued its share repurchase program Share Repurchase Activity (YTD 2025) | Metric | YTD 2025 | | :--- | :--- | | Shares repurchased | 292,191 | | Total cost (in thousands) | $3,301 | | Average purchase price per share | $11.29 | | Unused authorization amount (in thousands) | $35,001 | Earnings Per Share Calculation (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) attributable to common stockholders | $(72,699) | $(750) | | Adjustments for NCI | $(1,241) | $(184) | | **Numerator for EPS** | **$(73,940)** | **$(934)** | | **Basic & Diluted EPS** | **$(1.54)** | **$(0.02)** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the performance of its continuing businesses, liquidity, and the impact of the Beat acquisition and AAC sale [Results of Operations](index=40&type=section&id=Results%20of%20Operations) The Q2 2025 net loss from continuing operations widened, influenced by acquisition costs and lower earned premiums - The Specialty P&C Insurance segment's **combined ratio improved to 106.7%** for Q2 2025 from 109.4% in Q2 2024, driven by a lower loss ratio[194](index=194&type=chunk)[195](index=195&type=chunk)[197](index=197&type=chunk) - The Insurance Distribution segment's **pre-tax loss of $10.2 million** in Q2 2025 was primarily driven by costs related to the Beat acquisition[203](index=203&type=chunk)[205](index=205&type=chunk) - Corporate expenses were lower in Q2 2025 due to **reduced costs related to corporate development** and the sale of AAC[214](index=214&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The holding company's net assets decreased, with future liquidity dependent on the $420 million proceeds from the AAC sale - AFG's liquidity is primarily dependent on its net assets (excluding operating subsidiaries), which totaled **$84.9 million** at June 30, 2025[215](index=215&type=chunk)[216](index=216&type=chunk) - The company has a **$150 million short-term credit facility** related to the Beat acquisition, which it plans to repay with proceeds from the AAC sale[217](index=217&type=chunk) - Future funding needs could be significant, with potential payments for puts, calls, and other capital commitments estimated at approximately **$300 million through 2030**[218](index=218&type=chunk) [Non-GAAP Financial Measures](index=48&type=section&id=Non-GAAP%20Financial%20Measures) Consolidated Adjusted EBITDA was a loss of $2.5 million in Q2 2025, and the Insurance Distribution segment's organic revenue declined Adjusted EBITDA Reconciliation (in thousands) | Segment | Q2 2025 Adj. EBITDA | Q2 2024 Adj. EBITDA | | :--- | :--- | :--- | | Specialty Property & Casualty Insurance | $681 | $(1,023) | | Insurance Distribution | $4,580 | $2,404 | | Corporate & Other | $(7,771) | $(1,562) | | **Consolidated** | **$(2,508)** | **$(182)** | Insurance Distribution Organic Revenue Growth | Period | 2025 | 2024 | % Growth | | :--- | :--- | :--- | :--- | | **Q2 Organic Revenue ($ thousands)** | **$11,852** | **$12,165** | **(2.6)%** | | **Six Months Organic Revenue ($ thousands)** | **$28,189** | **$28,848** | **(2.3)%** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its exposure to market risks since year-end 2024 - There are **no material changes** in the company's market risks compared to December 31, 2024[271](index=271&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective, excluding the recently acquired Beat Capital Partners - Management concluded that disclosure controls and procedures were **effective** as of June 30, 2025[273](index=273&type=chunk) - The assessment of internal control over financial reporting **excluded Beat Capital Partners Limited**, which was acquired in 2024[274](index=274&type=chunk) [PART II. OTHER INFORMATION](index=52&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 of the financial statements for details on ongoing legal proceedings - For information on legal proceedings, the report refers to **Note 13** in Part I, Item 1[276](index=276&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) Key risks include the potential failure to complete the AAC sale, catastrophic events, and strain from acquisition-related debt - A primary risk is that the sale of Ambac Assurance Corporation (AAC) **may not be completed** as anticipated due to failure to receive regulatory approvals[278](index=278&type=chunk) - **Catastrophic events** could cause volatility in earnings, inadequacy of loss reserves, and declines in revenue for the company's insurance businesses[283](index=283&type=chunk)[286](index=286&type=chunk) - The company has **substantial indebtedness ($150 million Credit Facility)** which could adversely affect its financial condition and operational flexibility[291](index=291&type=chunk)[292](index=292&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 292,191 shares for $3.3 million year-to-date, with $35.0 million remaining under its authorization Share Repurchase Summary | Period | Shares Repurchased | Total Cost (in thousands) | Avg. Price Per Share | Unused Authorization (in thousands) | | :--- | :--- | :--- | :--- | :--- | | YTD 2025 | 292,191 | $3,300 | $11.29 | $35,001 |

[Second Quarter 2025 Financial Highlights](index=1&type=section&id=Ambac%20Reports%20Second%20Quarter%202025%20Results) Ambac's Q2 2025 results show strong P&C premium growth driven by acquisitions, alongside increased net loss from continuing operations [Management Commentary and Key Metrics](index=1&type=section&id=Management%20Commentary%20and%20Key%20Metrics) Management highlighted 110% P&C premium growth to over $340 million, driven by the Beat acquisition, while progressing the Legacy Financial Guarantee business sale - P&C premium production increased **110% to over $340 million**, and revenue grew **21% to $54 million** compared to Q2 2024, driven by the Beat acquisition[3](index=3&type=chunk) - Organic growth contracted by **2%**, impacted by the Employer Stop Loss business, but including the Beat acquisition, organic growth would have been **12%**[3](index=3&type=chunk) - The Wisconsin Office of the Commissioner of Insurance (OCI) has recommended approval for the sale of the Legacy Financial Guarantee business (AAC), with a hearing scheduled for September 3, 2025[3](index=3&type=chunk)[4](index=4&type=chunk) Q2 2025 Segment Highlights | Segment | Metric | Value ($ millions) | Change (YoY) | | :--- | :--- | :--- | :--- | | **Insurance Distribution (Cirrata)** | Total Revenue | $33 | +148% | | | Adjusted EBITDA | $5 | +91% | | **Specialty P&C Insurance (Everspan)** | Combined Ratio | 107% | -270 bps | | | Loss Ratio | 67.8% | -17 percentage points | [Consolidated Financial Performance](index=2&type=section&id=Consolidated%20Financial%20Performance) Q2 2025 total revenue from continuing operations rose 8% to $55 million due to acquisitions, but expenses increased 18%, leading to a wider net loss of $(21) million Q2 2025 Consolidated Financial Results (Continuing Operations) | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $55.0 | $51.0 | 8% | | Total Expenses | $77.9 | $65.8 | 18% | | Net Loss from Continuing Operations | $(20.8) | $(14.7) | (41)% | | Net Loss from Continuing Operations to Shareholders | $(20.5) | $(14.9) | 38% | | Adjusted EBITDA to Shareholders | $(4.6) | $(0.6) | NM | - The increase in revenue was primarily driven by the inclusion of Beat Capital, which offset a managed reduction in earned premium at Everspan and lower corporate investment gains[6](index=6&type=chunk) - The rise in expenses was mainly due to increased G&A, intangible amortization, and interest expense related to the Beat acquisition[7](index=7&type=chunk) [Segment Performance](index=3&type=section&id=Results%20of%20Operations%20by%20Segment) This section details the Q2 2025 financial performance of Ambac's Insurance Distribution, Specialty P&C, and Corporate segments [Insurance Distribution Segment (Cirrata)](index=3&type=section&id=Insurance%20Distribution%20Segment) Cirrata's Q2 2025 revenue surged 148% to $33.0 million due to acquisitions, despite a (2.6)% organic growth contraction Insurance Distribution Segment Q2 2025 Performance | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $33.0 | $13.3 | 148% | | Pretax Loss to Shareholders | $(9.9) | $1.0 | (1050)% | | Adjusted EBITDA to Shareholders | $2.5 | $2.0 | 28% | | Organic Growth | (2.6)% | 45.2% | N/A | - The significant increase in revenue and pretax loss is primarily attributable to the inclusion of recent acquisitions, notably Beat Capital[6](index=6&type=chunk)[7](index=7&type=chunk) [Specialty Property & Casualty Insurance Segment (Everspan)](index=3&type=section&id=Specialty%20Property%20%26%20Casualty%20Insurance%20Segment) Everspan's Q2 2025 net premiums earned decreased 40% to $16.2 million due to strategic exits, but underwriting performance improved with a 106.7% combined ratio Specialty P&C Insurance Segment Q2 2025 Performance | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Gross Premium Written | $96.2 | $111.2 | (13)% | | Net Premiums Earned | $16.2 | $27.1 | (40)% | | Net Income (Loss) | $0.4 | $(1.1) | 140% | | Loss Ratio | 67.8% | 85.1% | -1730 bps | | Combined Ratio | 106.7% | 109.4% | -270 bps | - The reduction in premiums and revenue is a result of a managed exit from several retained programs initiated in the previous year[6](index=6&type=chunk)[7](index=7&type=chunk) [AFG Corporate](index=3&type=section&id=AFG%20Corporate%20(holding%20company%20only)) As of June 30, 2025, Ambac Financial Group's standalone holding company held $85 million in net assets, including $45 million in cash and liquid securities - AFG standalone net assets were **$85 million** as of June 30, 2025[16](index=16&type=chunk) - The holding company's assets included **$45 million in cash and liquid securities** and **$30 million in other investments**[16](index=16&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) This section presents Ambac's Q2 2025 consolidated statements, including stockholders' equity, income, and balance sheet, reflecting the impact of acquisitions and discontinued operations [Stockholders' Equity and Earnings Per Share](index=4&type=section&id=Stockholders'%20Equity%20and%20Earnings%20Per%20Share) Stockholders' equity per share slightly increased to $18.53, while diluted net loss per share widened to $(1.54) due to discontinued operations - Stockholders' equity attributable to common shareholders was **$860 million**, or **$18.53 per share**, at June 30, 2025[17](index=17&type=chunk) Q2 2025 Earnings Per Share (Diluted) | Metric | Q2 2025 ($) | Q2 2024 ($) | | :--- | :--- | :--- | | Net Loss from Continuing Operations per Share | $(0.45) | $(0.33) | | Net Loss per Share (Total) | $(1.54) | $(0.02) | [Consolidated Statements of Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)) Q2 2025 total revenues increased to $55.0 million, but rising expenses led to a net loss from continuing operations of $(20.8) million and a total net loss of $(72.7) million Q2 2025 vs Q2 2024 Income Statement Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Revenues:** | | | | Commissions | $30,322 | $13,221 | | Net premiums earned | $16,203 | $27,054 | | **Total revenues** | **$54,957** | **$51,037** | | **Expenses:** | | | | General and administrative | $40,540 | $27,861 | | Intangible amortization | $9,741 | $1,614 | | Interest | $5,570 | $0 | | **Total expenses** | **$77,931** | **$65,786** | | **Net loss from continuing operations** | **$(20,802)** | **$(14,719)** | | **Net loss from discontinued operations** | **$(52,151)** | **$14,182** | | **Net loss attributable to shareholders** | **$(72,699)** | **$(750)** | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $8.52 billion and total liabilities $7.30 billion, with significant portions classified as held-for-sale, and total stockholders' equity at $1.03 billion Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Assets | $8,522,386 | $8,253,282 | | Assets held-for-sale | $6,592,417 | $6,392,004 | | Total Liabilities | $7,303,678 | $7,041,817 | | Liabilities held-for-sale | $6,213,024 | $6,003,908 | | Total Stockholders' Equity | $1,028,361 | $1,026,048 | [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Data) This section defines and reconciles Ambac's non-GAAP financial measures, including Adjusted EBITDA and Organic Revenue Growth, to provide clearer insights into business performance [Definition of Non-GAAP Measures](index=7&type=section&id=Definition%20of%20Non-GAAP%20Measures) Ambac uses non-GAAP measures like Adjusted EBITDA and Organic Revenue Growth to offer transparent insights into core operating performance by excluding non-recurring items - The company reports non-GAAP measures like EBITDA, Adjusted EBITDA, and Adjusted Net Income to enhance visibility into the underlying drivers of its businesses[23](index=23&type=chunk)[24](index=24&type=chunk) - Adjusted EBITDA is defined as net income from continuing operations adjusted for interest, taxes, depreciation, amortization, share-based compensation, acquisition expenses, and other non-recurring items[29](index=29&type=chunk) - Organic Revenue Growth for the Insurance Distribution segment excludes the initial twelve months of revenue from acquisitions and revenue from divestitures to show underlying growth[25](index=25&type=chunk) [Reconciliation of Non-GAAP Measures by Segment](index=8&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures%20by%20Segment) This section provides detailed reconciliations of GAAP net income to non-GAAP EBITDA and Adjusted EBITDA for each segment, with consolidated Adjusted EBITDA to shareholders at $(4.6) million for Q2 2025 Q2 2025 Adjusted EBITDA Reconciliation Summary (in thousands) | Segment | Net Income (Loss) | Adjusted EBITDA | Adjusted EBITDA to Shareholders | | :--- | :--- | :--- | :--- | | Specialty P&C Insurance | $428 | $681 | $681 | | Insurance Distribution | $(7,992) | $4,580 | $2,519 | | Corporate & Other | $(13,240) | $(7,771) | $(7,771) | | **Consolidated** | **$(20,802)** | **$(2,508)** | **$(4,569)** | [Organic Growth and P&C Production](index=12&type=section&id=Organic%20Growth%20and%20P%26C%20Production) While Insurance Distribution organic revenue contracted by 2.6%, total Specialty P&C Insurance Production surged 110% to $346.2 million, driven by distribution premiums Insurance Distribution Organic Growth (Q2) | Metric | 2025 ($ millions) | 2024 ($ millions) | % Growth | | :--- | :--- | :--- | :--- | | Total Organic Revenue | $11.9 | $12.2 | (2.6)% | Total Specialty P&C Insurance Production (Q2, in thousands) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Specialty P&C Gross Premiums Written | $96,247 | $111,206 | (13)% | | Insurance Distribution Premiums Placed | $249,912 | $53,418 | 368% | | **Total Production** | **$346,159** | **$164,624** | **110%** | [Other Information](index=12&type=section&id=Other%20Information) This section provides background on Ambac's business, focusing on its specialty P&C platform and the ongoing sale of its legacy financial guarantee business, along with forward-looking statement disclaimers [About Ambac](index=12&type=section&id=About%20Ambac) Ambac Financial Group is a New York City-based insurance holding company focused on its specialty P&C platform, currently divesting its legacy financial guarantee business - Ambac's core business is a specialty P&C distribution and underwriting platform[41](index=41&type=chunk) - The company has a legacy financial guarantee business in run-off that it has agreed to sell to funds managed by Oaktree Capital Management[41](index=41&type=chunk) [Forward-Looking Statements](index=12&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements subject to inherent uncertainties and risks, including the potential failure to complete the AAC sale and various underwriting risks - The report includes forward-looking statements that are not guarantees of future performance and are subject to risks and uncertainties[43](index=43&type=chunk) - Key risk factors include the potential failure to complete the sale of the legacy business (AAC), inadequacy of loss reserves, credit risk, and greater than expected underwriting losses[44](index=44&type=chunk)

Core Viewpoint - Ambac Financial Group (AMBC) is expected to report a year-over-year decline in earnings due to lower revenues, with a consensus outlook indicating a quarterly loss of $0.24 per share, representing a -233.3% change from the previous year [1][3]. Earnings Expectations - The upcoming earnings report is crucial for stock movement; better-than-expected results could drive the stock higher, while a miss may lead to a decline [2]. - The consensus estimate for revenues is projected at $55.59 million, down 47.1% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 25% higher in the last 30 days, reflecting a reassessment by analysts [4]. - Ambac's Most Accurate Estimate is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +12.50%, indicating a likelihood of beating the consensus EPS estimate [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a favorable Zacks Rank [10]. - Ambac currently holds a Zacks Rank of 3, which indicates a neutral outlook, but the positive Earnings ESP suggests potential for an earnings surprise [12]. Historical Performance - Ambac has not been able to beat consensus EPS estimates in any of the last four quarters, with the last reported quarter showing a significant miss of -85.71% [13][14]. Industry Comparison - Skyward Specialty Insurance (SKWD), another player in the insurance industry, is expected to report a year-over-year EPS increase of +7.5% and has a positive Earnings ESP of +2.51%, indicating a likely earnings beat [18][19].

Group 1 - Ambac Financial Group (AMBC) shares increased by 17.7% to close at $8.65, with trading volume significantly higher than usual [1] - The surge in Ambac shares is attributed to a scheduled hearing by the Wisconsin Office of the Commissioner of Insurance regarding the sale of Ambac Assurance Corporation, marking a key step in regulatory approval [2] - Ambac is expected to report a quarterly loss of $0.24 per share, a year-over-year decline of 233.3%, with revenues projected at $55.59 million, down 47.1% from the previous year [3] Group 2 - The consensus EPS estimate for Ambac has been revised 25% higher in the last 30 days, indicating a potential for price appreciation [4] - Ambac currently holds a Zacks Rank of 3 (Hold) within the Insurance - Property and Casualty industry [5] - RLI Corp., a peer in the same industry, has seen a consensus EPS estimate decrease of 0.4% over the past month, reflecting a 12.8% decline from the previous year [6]

Group 1 - Ambac Financial Group, Inc. (NYSE: AMBC) is expected to receive $420 million from Oaktree Capital soon [1] - The company is engaged in ongoing discussions to acquire one or more businesses, which may attract new investors [1] - The independent investor emphasizes the importance of cash flow statements and unlevered free cash flow figures in evaluating companies [1] Group 2 - The investor typically focuses on established companies rather than growth stocks, analyzing financial metrics such as EV/FCF, net income, and EV/EBITDA [1] - The investor aims to contribute to the investment community by sharing insights and learning from others [1]

First Quarter 2025 Investor Presentation Quarterly Highlights Forward Looking Statement In this presentation, we have included statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "estimate," "project," "plan," "believe," "anticipate," "intend," "planned," "potential" and similar expressions, or future or conditional verbs such as "will," "should," "would," "could," and "may," or th ...

First Quarter 2025 Highlights - P&C premium production increased by 70% to approximately $318 million[5] - Total revenue increased by 27% to approximately $63 million[5] - Beat Capital contributed over $20 million of revenue, up approximately 40%[5] Cirrata: Insurance Distribution - Premium placed increased 156% to $231 million[9] - Total revenue increased 129% to $41 million over prior year[9] - Adjusted EBITDA of $12 million with a margin of 29%[9] - Adjusted EBITDA to shareholders of $7 million with a margin of 17%[9] Everspan: Specialty P&C Program Insurer - Gross Written Premiums (GPW) was $87 million, down 10% compared to 1Q2024[12] - 67% of 1Q25 GPW is E&S lines[12] - Loss ratio of 669% compared to 757% for 1Q2024[12] - Combined ratio of 1021% vs 984% for 1Q2024[12]

Financial Data and Key Metrics Changes - Ambac generated $318 million in premium, up 70%, and $63 million in revenue, up 27% from the prior year [6][12] - The net loss from continuing operations was $16 million or $0.58 per share, compared to a loss of $4 million or $0.09 per share in the same quarter last year [12] - Adjusted EBITDA from continuing operations was a loss of $1 million compared to a slight profit in the first quarter of 2024 [13] Business Line Data and Key Metrics Changes - The distribution business segment, Serata, generated over $230 million in premium for the quarter, up 156% [6] - Everspan's gross premiums written were approximately $87 million, down 10% from the prior year [10] - Dorado revenue increased by 129% to $41 million, driven primarily by the acquisition of B Capital [14] Market Data and Key Metrics Changes - Organic growth, excluding the Beat acquisition, contracted by 2%, but would have been almost 12% without the pullback in ESL and short-term medical business [7] - Everspan's loss ratio improved to 66.9% from 75.7% in the prior year [15] - The combined ratio for Everspan was 102.1%, up from 98.4% last year [16] Company Strategy and Development Direction - The company aims to maintain profitable underwriting results and expand its specialty P&C business, focusing on organic and inorganic growth [8][17] - Ambac plans to generate $80 million to $90 million of adjusted EBITDA for common shareholders by 2028 [18] - The company is enhancing risk capacity, product expansion, and distribution to drive synergies across its platform [9] Management's Comments on Operating Environment and Future Outlook - Management believes market conditions are stabilizing and turning favorable for growth despite challenges in ESL [8] - The company is focused on building a long-term business model that resonates in the specialty MGA and delegated authority program space [17] - Management sees significant opportunities for staffing growth and attracting top talent in the current market [20] Other Important Information - The OCI approval process for the sale of the legacy business is ongoing, which is expected to transform Ambac into a pure play specialty P&C insurance business [11] - The increase in total expenses was driven by a $21 million increase in general and administrative expenses related to the acquisition of Beat [13] Q&A Session Summary Question: Importance of staffing to top line growth and market conditions for recruiting - Management emphasized that staffing is crucial for individual MGAs and that there are significant opportunities for staffing growth due to the attractiveness of their business model [20][21] Question: Update on property versus casualty mix and growth outlook - Management indicated that liability will be the primary source of growth, while property remains attractive despite softening prices [22][23] Question: Comments on the competitive environment - Management acknowledged growing competition but believes their unique business model and capacity relationships allow them to attract top talent [25]