Core Viewpoint - Ambac Financial Group is set to acquire ArmadaCare, a leading manager of supplemental health programs, indicating a strategic move to enhance its portfolio in the health insurance sector [1] Company Summary - Ambac Financial Group is expanding its operations by acquiring ArmadaCare, which specializes in supplemental health programs [1] - The acquisition aims to strengthen Ambac's position in the health insurance market and diversify its offerings [1] Industry Summary - The supplemental health insurance market is experiencing growth, and the acquisition reflects a trend of consolidation among companies seeking to enhance their service offerings [1] - This move may signal increased competition in the supplemental health insurance sector as companies look to expand their capabilities and market reach [1]

Core Insights - SiriusPoint Ltd. has agreed to sell its wholly owned supplemental health insurance program manager, ArmadaCare, to Ambac Financial Group Inc. for $250 million, while maintaining a capacity partnership with Armada until the end of 2030 [1][3] Financial Summary - Upon completion of the sale, SiriusPoint will recognize a pre-tax gain of $220-230 million, with the transaction valuing Armada at approximately 14 times EBITDA [2] - Pro-forma tangible book value is expected to increase by approximately 10% upon the close of the transaction [2] Strategic Perspective - The CEO of SiriusPoint emphasized that the sale is a significant step in unlocking the off-balance sheet value of Armada, while expressing optimism about the ongoing partnership through a long-term capacity agreement [3] - SiriusPoint reaffirms its target return on equity of 12% to 15% across the cycle, indicating confidence in future growth opportunities within the Accident & Health segment [4] Transaction Details - The transaction is expected to close in the fourth quarter, pending customary closing conditions and regulatory approvals [4] - Jefferies LLC acted as the exclusive financial advisor, while Paul Hastings LLP served as the legal advisor for the sale of Armada [5] Company Background - SiriusPoint is a global underwriter of insurance and reinsurance, headquartered in Bermuda, with a total capital of approximately $2.8 billion and a financial strength rating of A- from AM Best, S&P, and Fitch [6] - ArmadaCare is recognized for delivering innovative health insurance solutions that enhance ordinary health benefits, focusing on filling coverage gaps and providing valuable support services [7]

Core Viewpoint - Ambac (NYSE: AMBC) is positioned as an evolving insurance company with a turnaround story that has been consistently rated as a Buy, indicating strong potential for growth and recovery [1]. Group 1: Company Overview - Ambac has been under coverage since March 2024, with a focus on its evolving business model and potential catalysts for growth [1]. - The company is analyzed through the lens of value investing, emphasizing an owner's mindset and a long-term investment horizon [1]. Group 2: Analyst Position - The analyst holds a beneficial long position in AMBC shares, indicating confidence in the company's future performance [2]. - The article reflects the analyst's personal opinions and is not influenced by external compensation, ensuring an unbiased perspective [2].

Financial Data and Key Metrics Changes - Ambac reported a net loss from continuing operations of $21 million or $0.45 per share, compared to a loss of $15 million or $0.33 per share in the previous year, driven by increased intangible amortization and interest expense [13] - Total revenues from continuing operations increased by 8% to $55 million compared to the previous year [14] - Adjusted EBITDA from continuing operations was a loss of $5 million, compared to a loss of less than $1 million in the previous year [13][14] Business Line Data and Key Metrics Changes - The operating businesses generated $346 million in premium, up 110%, and $54 million in revenue, up 20% from the prior year [6] - The Insurance Distribution segment, Serato, generated $250 million in premium for the quarter, up 368% [7] - Everspan's net written and net earned premiums were $15 million and $16 million, down from $32 million and $27 million respectively, due to proactive non-renewal of certain programs [17] Market Data and Key Metrics Changes - Organic growth, including BEAT, was over 12% in the quarter, despite a slight pullback due to industry turbulence in the ESL and short-term medical markets [10] - The ESL markets are beginning to stabilize, showing early signs of improvement [10] - The loss ratio for Everspan improved to 67.8% from 85.1% in the previous year [17] Company Strategy and Development Direction - The company plans to launch several strategic initiatives post-sale of its legacy financial guaranty business, including organizational rebranding and a new executive compensation program [5][6] - Ambac aims to position itself as a growth platform with a target of $80 million to $90 million of adjusted EBITDA for common shareholders by 2028 [21] - Continued investment in data and AI technologies is part of the strategic initiatives to enhance growth and performance [10][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth of the Specialty P&C business and the anticipated closing of the legacy business sale [20] - The company expects to see strong performance in the third and fourth quarters, historically being the strongest periods [30] - Management remains focused on profitability while balancing growth, particularly in Everspan [25] Other Important Information - The company experienced net FX losses of $2.5 million, which were offset by net translation gains of $20 million [15] - The expense ratio for Everspan increased to 38.9% from 24.3% in the prior year, driven by various factors including lower earned premium [18] Q&A Session Summary Question: Anticipated impact of runoff in Everspan - Management expects around $400 million of gross premium for the year, focusing on profitability rather than pushing for growth [25] Question: Net growth expectations - Management indicated that net retention levels are expected to average between 15% to 20% going forward [26] Question: Commission income dynamics in distribution business - Seasonal issues and different reporting frameworks for BEAT's commissions were noted as factors affecting commission income [27] Question: Outlook for A&H and ESL markets - Management sees stabilization in the A&H space and expects the third and fourth quarters to be strong [30] Question: Performance in property markets - The company has seen some price pressures in large property markets but is primarily focused on non-cat exposed property, with mid-single-digit declines expected [32]

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]