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]

Core Viewpoint - Ambac Financial Group's shares have increased nearly 10% over the past five trading sessions after a decline since the beginning of 2024, with expectations for cash earnings to materialize within one to two years following the sale of its legacy financial guarantee business [1] Group 1: Financial Performance and Projections - The sale of Ambac Financial Group's financial guarantee business to Oaktree Capital Management is expected to close by year-end, resulting in approximately $180 million of deployable cash after repaying the bridge loan [2] - Analyst Harry Fong upgraded the rating for Ambac Financial Group from Neutral to Buy and raised the price target from $13 to $15, indicating a positive outlook for the company's stock [1] - Following the sale, the company plans to initiate a share repurchase program of up to $50 million, which is anticipated to provide upside to the stock [1] Group 2: Strategic Initiatives - The company is expected to repurchase shares at current levels up to about $15 per share, as it requires capital for acquisitions primarily in the distribution business [2] - There are potential strategic changes that could enhance investor enthusiasm, such as the possible sale of its underwriting operation, which is not considered core to its strategy [2] - The rollout of the new specialty insurance distribution business will take time, but there are other strategic initiatives that could be implemented sooner [2] Group 3: Market Reaction - At the time of publication, shares of Ambac Financial Group had risen by 6.18% to $11.86 [3]

Core Viewpoint - Three stocks have been added to the Zacks Rank 5 (Strong Sell) List, indicating a negative outlook for these companies based on recent earnings estimate revisions [1] Company Summaries - Ambac Financial Group, Inc. (AMBC) is a financial services holding company, with the Zacks Consensus Estimate for its current year earnings revised downward by 10.3% over the last 60 days [1] - Beazer Homes USA, Inc. (BZH) is a home-builder that constructs single and multi-family homes, with the Zacks Consensus Estimate for its current year earnings revised downward by 9.5% over the last 60 days [1] - CPI Card Group Inc. (PMTS) is a designer of financial cards, with the Zacks Consensus Estimate for its current year earnings revised downward by 4.5% over the last 60 days [1]

Financial Data and Key Metrics Changes - The company reported a net loss of just under $1 million for Q2 2024, an improvement from a net loss of $13 million in Q2 2023 [16] - Adjusted net income increased to $8 million or $0.18 per diluted share, compared to $3 million or $0.07 per diluted share in the prior year [17] - Consolidated EBITDA for the quarter was $27 million, reflecting strong growth in specialty P&C businesses [6][18] - Shareholders' equity stood at $1.37 billion or $30.25 per share as of June 30, 2024, compared to $30.19 at March 31, 2024 [24] Business Line Data and Key Metrics Changes - The specialty P&C insurance platform generated over $165 million in premium, a 75% increase year-over-year [13] - Everspan reported gross written premium of $111 million, up 109% from the previous year, with a combined ratio of 109.4%, improving from 112.7% [14][21] - The insurance distribution business placed over $53 million in premium, a 31% increase compared to the prior year [13] Market Data and Key Metrics Changes - The combined Cirrata and Beat insurance distribution platform is expected to generate approximately $1.4 billion in premium for 2024, effectively doubling the size of the P&C platform [11] - The company’s distribution businesses are focused on specialty and E&S lines, which have outperformed the broader P&C markets [10] Company Strategy and Development Direction - The company is transitioning to a pure-play specialty P&C company by selling its legacy financial guarantee business to Oaktree Capital for $420 million [7] - A share repurchase program of up to $50 million will be initiated post-sale closure, reflecting a commitment to returning capital to shareholders [8] - The combination of Cirrata and Beat is expected to create significant revenue, capital, and expense synergies, enhancing long-term shareholder value [9][25] Management's Comments on Operating Environment and Future Outlook - Management expressed strong conviction in the growth prospects of the combined business and the strategic direction taken [25] - The company anticipates continued volatility in the near term due to increased loss frequency in commercial auto but remains focused on disciplined underwriting [15] - Management is optimistic about leveraging key differentiated offerings to attract top MGA talent and enhance growth [12] Other Important Information - The company experienced significant growth in its specialty P&C businesses, with Cirrata premiums placed growing 31% year-over-year [17] - Consolidated investment income for Q2 2024 was $36 million, slightly up from $35 million in Q2 2023, driven by higher yields on fixed income securities [23] Q&A Session Summary Question: Potential obligations to fund minority interests at the MGAs - Management clarified that obligations relate to puts and calls with MGAs, with the first put call for Beat expected in 2026 [29] Question: Share repurchase authorization and market cap considerations - The $50 million repurchase plan will be initiated post-AAC transaction closure, with management indicating a strong belief in the company's undervalued stock [32] Question: Holdco leverage for funding growth opportunities - Management indicated a willingness to leverage the company prudently, with a target leverage range of 2 to 4 times EBITDA over the long term [36] Question: Breakdown of obligations related to Beat versus previous acquisitions - The majority of the obligations are expected to relate to Beat, with existing MGAs contributing a smaller portion [40] Question: Transaction costs and expenses related to the merger - Management confirmed that significant portions of transaction expenses have been accrued, with additional expenses expected in the coming quarters [51]

Financial Performance - Net premiums earned for the three months ended June 30, 2024, increased to $33 million from $15 million, representing a 120% growth year-over-year[9]. - Total revenues and other income for the three months ended June 30, 2024, reached $105 million, up from $62 million, marking a 69% increase compared to the same period last year[9]. - Net income attributable to common stockholders for the six months ended June 30, 2024, was $19 million, a significant recovery from a loss of $47 million in the same period of 2023[9]. - Total expenses for the three months ended June 30, 2024, were $103 million, compared to $73 million for the same period in 2023, reflecting a 41% increase[9]. - The company reported a pretax income of $2 million for the three months ended June 30, 2024, compared to a loss of $11 million in the prior year[9]. - Basic net income per share attributable to common stockholders for the three months ended June 30, 2024, was $(0.02), an improvement from $(0.29) in the same quarter of 2023[9]. - Total revenues for the six months ended June 30, 2024, were $207 million, an increase from $120 million for the same period in 2023, representing a 72.5% growth[55]. - Net premiums earned were $66 million for the first half of 2024, compared to $29 million in the same period of 2023, reflecting a 127.6% increase[55]. - The company reported a pretax income of $27 million for the first half of 2024, a significant improvement from a pretax loss of $40 million in the same period of 2023[55]. - The total comprehensive income (loss) for the three months ended June 30, 2024, was a loss of $175 million, compared to a loss of $209 million for the same period in 2023[174]. Assets and Liabilities - Total assets as of June 30, 2024, decreased to $8,184 million from $8,428 million as of December 31, 2023, representing a decline of approximately 2.9%[8]. - Total investments decreased to $2,632 million from $2,664 million, a reduction of about 1.2%[8]. - Long-term debt increased slightly to $515 million from $508 million, a change of approximately 1.4%[8]. - Stockholders' equity increased to $1,419 million from $1,415 million, reflecting a marginal increase of about 0.3%[8]. - Total financial assets amounted to $6,626 million as of June 30, 2024, a decrease from $7,022 million in the previous period[84]. - Total financial liabilities were reported at $5,258 million, slightly down from $5,474 million[84]. - The total gross loss and loss expense reserves as of June 30, 2024, were $762 million, compared to $724 million as of June 30, 2023, reflecting an increase of 5.2%[125]. - The ending balance of the premium receivable allowance for credit losses was $3 million as of June 30, 2024, unchanged from the previous year[121]. Investments - The amortized cost of fixed maturity securities was $2,078 million as of June 30, 2024, with an estimated fair value of $2,043 million[60]. - The company holds $240 million in residential mortgage-backed securities with an estimated fair value of $253 million[60]. - The company has a diversified investment portfolio, including municipal, corporate, and foreign obligations, with a total amortized cost of $1,737 million[60]. - The total fair value of fixed maturity securities was $1,113 million, with gross unrealized losses of $77 million[63]. - Total equity investments in pooled funds increased to $533 million as of June 30, 2024, up from $463 million at December 31, 2023, representing a growth of approximately 15.1%[75]. - The fair value of high-yield and leveraged loans products was $89 million as of June 30, 2024, compared to $39 million at December 31, 2023, reflecting a significant increase of 128.2%[75]. Cash Flow - Total cash provided by operating activities was $32 million for the six months ended June 30, 2024, down from $101 million in the same period of 2023[14]. - The company reported net cash used in investing activities of $120 million for the six months ended June 30, 2024, compared to cash provided of $489 million in the same period of 2023[14]. - Cash, cash equivalents, and restricted cash at the end of the period on June 30, 2024, were $97 million, down from $309 million at the end of June 30, 2023[14]. Reinsurance - Reinsurance recoverable on paid and unpaid losses rose to $277 million from $195 million, marking an increase of approximately 42.1%[8]. - The company ceded approximately 70% or more of its gross liability under all policies issued to capacity providers through quota share reinsurance agreements[134]. - The allowance for credit losses is based on ongoing reviews, with the top three reinsurers representing 66.1% of total reinsurance recoverables on paid and unpaid losses as of June 30, 2024[137]. Legal and Regulatory Matters - The company is involved in various legal proceedings, including litigation related to RMBS transactions, which may impact its financial position[192]. - The company is currently awaiting decisions on several pending litigation cases, including those related to student loan trusts and claims against the Puerto Rico government[190][201]. - The company has complied with all regulatory inquiries and requests for information regarding ongoing investigations[193]. - The company’s litigation matters are not expected to materially impact its operating results or financial position, although adverse outcomes could be material[196]. Miscellaneous - Ambac's liquidity and capital resources were discussed, highlighting the importance of maintaining adequate cash flow to meet financial obligations[6]. - The company is evaluating the impact of new accounting standards on its financial statements, with early adoption permitted for certain standards[44][48]. - Ambac's management and Board have approved the sale of Ambac Assurance Corporation, pending shareholder and regulatory approvals[27].

Filed by Ambac Financial Group, Inc. pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Ambac Financial Group, Inc. Commission File No.: 1-10777 Date: August 5,2024 Exhibit 99.1 Ambac Reports Second Quarter 2024 Results Closes the acquisition of Beat Capital Partners NEW YORK, NY, August 5, 2024 (BUSINESS WIRE) -- Ambac Financial Group, Inc. (NYSE: AMBC) ("Ambac" or "AFG"), a financial services holding company, today reported its results for the quarter ended June 30, 2024. S ...