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]

Financial Performance 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 year-over-year[9] - Adjusted EBITDA was $12 million with a margin of 29%[9] - Adjusted EBITDA to shareholders was $7 million with a margin of 17%[9] - Net loss of $(2) million with a margin of (4)%[9] Everspan (Specialty P&C Program Insurer) - Gross Written Premium (GPW) was $87 million, a decrease of 10% compared to Q1 2024[12] - 67% of Q1 2025 GPW is E&S lines[12] - Loss ratio was 66.9% compared to 75.7% for Q1 2024[12] - Combined ratio was 102.1% compared to 98.4% for Q1 2024[12]

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]

Financial Data and Key Metrics Changes - Ambac generated a net loss from continuing operations of $16 million or $0.58 per share in Q1 2025, compared to a loss of $4 million or $0.09 per share in Q1 2024 [10] - Total revenues from continuing operations increased by 27% to $63 million in Q1 2025, driven primarily by the acquisition of Beat [11] - Adjusted EBITDA from continuing operations was a loss of $1 million, compared to a slight profit in Q1 2024 [11] Business Line Data and Key Metrics Changes - The insurance distribution and specialty program business produced $318 million of premium, up 70%, and generated $63 million of revenue, up 27% from the prior period last year [5] - Serata generated over $230 million of premium for the quarter, up 156% [5] - Everspan's gross premiums written were approximately $87 million, down 10% from the prior year, while the loss ratio improved nearly 9% [8] Market Data and Key Metrics Changes - Organic growth, excluding the Beat acquisition, contracted by 2%, primarily due to a pullback in ESL and short-term medical business [6] - If FEED had been included in the organic growth computation, consolidated organic growth would have been approximately 17% across all lines [6] Company Strategy and Development Direction - The company aims to maintain profitable underwriting results and believes market conditions are stabilizing for growth [7] - Focus areas for enhancing organic growth include risk capacity enhancement, product expansion, and distribution expansion [7] - The company is building its business for the long term, targeting $80 million to $90 million of adjusted EBITDA for common shareholders by 2028 [16][17] Management's Comments on Operating Environment and Future Outlook - Management noted that the competitive environment is growing, but the company's unique business model allows it to attract top talent [24] - The company sees significant opportunities in the specialty P&C business and is focused on scaling its platform [16] Other Important Information - The OCI approval process for the sale of the legacy business is ongoing, which is expected to transform the company into a pure play specialty P&C insurance business [9] Q&A Session Summary Question: Importance of staffing for MGA ramp-up 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 the business model [19][20] Question: Update on property versus casualty mix and growth outlook - Management indicated that liability business will be the primary source of growth, while property remains critical, with a focus on diversifying the property segments [21][23] Question: Comments on the competitive environment - Management acknowledged growing competition but believes their differentiated model allows them to attract top talent and maintain a competitive edge [24]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-10777 AMBAC FINANCIAL GROUP, INC. (Exact name of Registrant as specified in its charter) (State of incorporation) Delaware 13-3621676 (I.R.S. employer identification no.) One Wo ...

```markdown [Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [CEO Commentary & Business Outlook](index=1&type=section&id=CEO%20Commentary%20%26%20Business%20Outlook) CEO Claude LeBlanc highlighted a strong start for the P&C business in Q1 2025, with significant premium and revenue growth, partly due to the Beat acquisition, emphasizing a diversified portfolio for long-term growth and resilience, and positive early indications from new MGAs, with the Legacy business sale nearing completion awaiting Wisconsin regulatory approval - P&C business premium production up **70%** to **$318 million** and revenue up **27%** to **$63 million** in Q1 2025, bolstered by Beat acquisition[3](index=3&type=chunk) - Diversified portfolio built for long-term growth and market cyclicality, with new MGAs showing early profitability trends[3](index=3&type=chunk) - Completed pre-closing conditions for Legacy business sale, awaiting Wisconsin regulatory approval[3](index=3&type=chunk) [First Quarter 2025 Key Highlights](index=1&type=section&id=First%20Quarter%202025%20Key%20Highlights) Total revenue from continuing P&C operations increased 27% to $63 million, and total P&C premium production rose 70% to $318 million, with the Insurance Distribution segment seeing revenue grow 129% to $41 million and Adjusted EBITDA increase 136% to $12 million, while the Specialty P&C Insurance segment improved its loss ratio by 880 bps to 66.9%, though its combined ratio increased | Metric | Q1 2025 | Q1 2024 | % Change | | :----------------------------------- | :------ | :------ | :------- | | Total revenue from continuing P&C operations | $63 million | N/A | 27% | | Total P&C premium production | $318 million | N/A | 70% | | **Insurance Distribution (Cirrata):** | | | | | Total revenue | $41 million | N/A | 129% | | Net loss to Shareholders | $(2) million | N/A | (145)% | | Adjusted EBITDA | $12 million | N/A | 136% | | Adjusted EBITDA to Shareholders | $7 million | N/A | 69% | | **Specialty P&C Insurance (Everspan):** | | | | | Loss ratio | 66.9% | N/A | -880 bps | | Combined ratio | 102.1% | N/A | 370 bps | | Net income to Shareholders | >$1 million | N/A | down slightly | | Adjusted EBITDA to Shareholders | <$2 million | N/A | down slightly | [Consolidated Financial Performance](index=2&type=section&id=Consolidated%20Financial%20Performance) [Summary of Continuing Operations](index=2&type=section&id=Summary%20of%20Continuing%20Operations) Total revenue from continuing operations increased 27% to $63 million, primarily due to the Beat Capital acquisition, offsetting reductions at Everspan, while total expenses rose 48% to $78 million, driven by G&A from Beat, transaction-related fees, and intangible amortization, resulting in a significant net loss from continuing operations to shareholders of $(16) million and Adjusted EBITDA to shareholders of $(1) million, impacted by higher holding company expenses despite Cirrata's growth | Metric (in thousands) | Q1 2025 | Q1 2024 | % Change | | :------------------------------------------ | :------ | :------ | :------- | | Total revenues from continuing operations | $62,756 | $49,551 | 27% | | Total expenses from continuing operations | $77,863 | $52,790 | 47% | | Pretax income (loss) from continuing operations | $(15,107) | $(3,239) | 366% | | Net income (loss) from continuing operations attributable to Ambac shareholders | $(16,144) | $(4,070) | 297% | | Adjusted EBITDA to shareholders | $(1,287) | $384 | (435)% | - Revenue increase primarily due to Beat Capital acquisition, offsetting Everspan's managed reduction[6](index=6&type=chunk) - Expense increase driven by G&A from Beat, professional fees, and intangible amortization/interest related to Beat acquisition[7](index=7&type=chunk) [Key Financial Metrics (GAAP & Non-GAAP)](index=2&type=section&id=Key%20Financial%20Metrics%20(GAAP%20%26%20Non-GAAP)) Ambac reported a net loss attributable to shareholders of $(46) million, a significant decrease from a $20 million net income in Q1 2024, with diluted EPS at $(1.22), down from $0.44, and adjusted net loss attributable to shareholders at $(6) million, compared to $(0.3) million in the prior year | Metric (in thousands, except per share) | Q1 2025 | Q1 2024 | % Change | | :------------------------------------------ | :------ | :------ | :------- | | Net income (loss) attributable to Ambac shareholders | $(46,391) | $20,070 | (331)% | | Net income (loss) attributable to common stockholders per diluted share | $(1.22) | $0.44 | (377)% | | Adjusted net income (loss) attributable to shareholders | $(6,037) | $(329) | 1735% | | Adjusted net income (loss) to shareholders per diluted share | $(0.13) | $(0.01) | NM | [Earnings Call Information](index=3&type=section&id=Earnings%20Call%20Information) [Webcast and Replay Details](index=3&type=section&id=Webcast%20and%20Replay%20Details) Ambac will host an earnings call on May 13, 2025, at 8:30 AM ET to discuss Q1 2025 results, with a live audio webcast available on Ambac's investor relations website and a replay accessible until May 27, 2025 - Earnings call on **May 13, 2025**, at **8:30 AM ET**, accessible via webcast on Ambac's investor relations website[11](index=11&type=chunk) - Replay available until **May 27, 2025**, via phone or archived webcast[12](index=12&type=chunk) [Segment Performance Analysis](index=3&type=section&id=Segment%20Performance%20Analysis) [Insurance Distribution Segment (Cirrata)](index=3&type=section&id=Insurance%20Distribution%20Segment%20(Cirrata)) The Insurance Distribution segment experienced substantial growth, with total revenues increasing 129% to $41 million, Adjusted EBITDA to shareholders growing 69% to $7.1 million, and Adjusted EBITDA increasing 136% to $12.1 million, despite reporting a pretax loss to shareholders of $(3.9) million, a significant decline from a $3.3 million pretax income in the prior year, and negative organic growth of (2.1)% | Metric (in thousands) | Q1 2025 | Q1 2024 | % Change | | :-------------------------------- | :------ | :------ | :------- | | Total revenues | $40,998 | $17,865 | 129% | | Pretax income (loss) to shareholders | $(3,897) | $3,270 | (219)% | | Adjusted EBITDA to shareholders | $7,112 | $4,202 | 69% | | Adjusted EBITDA | $12,112 | $5,122 | 136% | | Organic Growth | (2.1)% | 7.7% | N/A | [Specialty Property & Casualty Insurance Segment (Everspan)](index=3&type=section&id=Specialty%20Property%20%26%20Casualty%20Insurance%20Segment%20(Everspan)) The Specialty P&C Insurance segment saw a decrease in gross premiums written by 10% to $86.9 million and net premiums earned by 39% to $15.7 million, with total revenue declining 28% to $21.2 million, yet the loss ratio improved by 880 bps to 66.9%, though the expense ratio increased by 1250 bps, leading to a combined ratio of 102.1% (up 370 bps), and net income from continuing operations decreased 17% to $1.4 million | Metric (in thousands) | Q1 2025 | Q1 2024 | % Change | | :-------------------------------- | :------ | :------ | :------- | | Gross premium written | $86,915 | $96,422 | (10)% | | Net premiums earned | $15,678 | $25,579 | (39)% | | Total revenue | $21,171 | $29,542 | (28)% | | Net income (loss) from continuing operations | $1,425 | $1,715 | (17)% | | Loss Ratio | 66.9% | 75.7% | -880 bps | | Expense Ratio | 35.2% | 22.7% | 1250 bps | | Combined Ratio | 102.1% | 98.4% | 370 bps | [AFG Corporate (Holding Company)](index=3&type=section&id=AFG%20Corporate%20(Holding%20Company)) As of March 31, 2025, AFG Corporate had net assets of $104 million, including $54 million in cash and liquid securities and $29 million in other investments | Metric | March 31, 2025 | | :-------------------------------- | :------------- | | Net assets | $104 million | | Cash and liquid securities | $54 million | | Other investments | $29 million | [Capital & Equity](index=4&type=section&id=Capital%20%26%20Equity) [Capital Activity](index=4&type=section&id=Capital%20Activity) Ambac repurchased 264,791 shares at an average price of $11.79 per share during Q1 2025, with approximately $35.2 million remaining on the current repurchase authorization - Repurchased **264,791 shares** at an average price of **$11.79 per share** in Q1 2025[18](index=18&type=chunk) - Approximately **$35.2 million** remains on the current share repurchase authorization[18](index=18&type=chunk) [Stockholders' Equity](index=4&type=section&id=Stockholders'%20Equity) Stockholders' equity decreased slightly to $852 million ($18.36 per share) at March 31, 2025, from $857 million ($18.43 per share) at December 31, 2024, with the net loss attributable to common shareholders partially offset by net unrealized investment gains and foreign exchange translation gains | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Stockholders' equity | $852 million | $857 million | | Stockholders' equity per share | $18.36 | $18.43 | - Net loss attributable to common shareholders of **$(46) million** was offset by **$19 million** in net unrealized investment gains and **$36 million** in foreign exchange translation gains[19](index=19&type=chunk) [Earnings Per Share Calculation](index=4&type=section&id=Earnings%20Per%20Share%20Calculation) The diluted EPS calculation for Q1 2025 shows a diluted net loss per share of $(1.22), a significant decline from $0.44 in Q1 2024, including adjustments for redeemable noncontrolling interests | Metric (in thousands, except share data) | Q1 2025 | Q1 2024 | | :------------------------------------------ | :------ | :------ | | Net income (loss) from continuing operations attributable to shareholders | $(16,144) | $(4,070) | | Adjustment for Redeemable NCI | $(11,183) | $53 | | Numerator of diluted EPS (Continuing Ops) | $(27,327) | $(4,017) | | Per Share — Diluted (Continuing Ops) | $(0.58) | $(0.09) | | Net income (loss) attributable to Ambac shareholders | $(46,391) | $20,070 | | Numerator of diluted EPS (Total) | $(57,574) | $20,123 | | Per Share — Diluted (Total) | $(1.22) | $0.44 | | Weighted-average diluted shares outstanding (in millions) | 47,313 | 45,827 | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statements of Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)) The consolidated income statement shows total revenues of $62.8 million for Q1 2025, up from $49.6 million in Q1 2024, with total expenses significantly increasing to $77.9 million from $52.8 million, resulting in a pretax loss from continuing operations of $(15.1) million and a net loss attributable to Ambac shareholders of $(46.4) million, compared to a net income of $20.1 million in the prior year | Metric (in thousands) | Q1 2025 | Q1 2024 | | :-------------------------------- | :------ | :------ | | Net premiums earned | $15,678 | $25,579 | | Commission income | $36,771 | $17,729 | | Total revenues and other income | $62,756 | $49,551 | | Losses and loss adjustment expenses | $10,496 | $19,355 | | General and administrative expenses | $38,531 | $17,575 | | Intangible amortization and depreciation | $9,176 | $1,614 | | Interest expense | $5,454 | — | | Total expenses | $77,863 | $52,790 | | Pretax income (loss) from continuing operations | $(15,107) | $(3,239) | | Net income (loss) from discontinued operations | $(30,247) | $24,140 | | Net income (loss) attributable to Ambac shareholders | $(46,391) | $20,070 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were $8.25 billion, up from $8.06 billion at December 31, 2024, with assets held-for-sale increasing to $6.39 billion, and total liabilities also increasing to $7.04 billion from $6.86 billion, with liabilities held-for-sale remaining constant at $5.89 billion, while stockholders' equity slightly decreased to $852 million | Metric (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Total investments | $291,393 | $312,915 | | Cash and cash equivalents | $51,660 | $47,275 | | Intangible assets, less accumulated amortization | $345,061 | $344,775 | | Goodwill | $429,314 | $418,234 | | Assets held-for-sale | $6,392,004 | $6,267,200 | | Total assets | $8,253,282 | $8,058,378 | | Unearned premiums | $181,387 | $182,446 | | Loss and loss adjustment expense reserves | $373,105 | $349,062 | | Liabilities held-for-sale | $5,887,685 | $5,887,685 | | Total liabilities | $7,041,817 | $6,862,857 | | Total Ambac Financial Group, Inc. stockholders' equity | $852,221 | $856,906 | [Non-GAAP Financial Measures & Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Non-GAAP Definitions](index=7&type=section&id=Non-GAAP%20Definitions) This section defines key non-GAAP financial measures used by Ambac, including Organic Revenue Growth & Rate (Insurance Distribution Only), Total Specialty P&C Insurance Production, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, and Adjusted Net Income and Adjusted Net Income Margin, presented to provide greater transparency into business performance by excluding certain non-core or non-recurring items - Non-GAAP measures like **EBITDA**, **Adjusted EBITDA**, **Adjusted Net Income**, and **Organic Revenue Growth** are used to provide greater transparency and comparability of underlying business performance[25](index=25&type=chunk)[26](index=26&type=chunk) - **Organic Revenue Growth** excludes the first twelve months of acquisition-generated commissions/fees, divestitures, contingent commissions, and foreign exchange impacts[27](index=27&type=chunk)[28](index=28&type=chunk) - **Adjusted EBITDA** excludes interest, taxes, depreciation, amortization, fair value changes of contingent consideration, share-based compensation, acquisition/integration expenses, severance, and other exceptional items[31](index=31&type=chunk) [Segment-wise Non-GAAP Reconciliations](index=8&type=section&id=Segment-wise%20Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP to non-GAAP financial measures for each segment (Specialty P&C Insurance, Insurance Distribution, and Corporate & Other) for Q1 2025 and Q1 2024, covering metrics like Pretax income, Net income, EBITDA, and Adjusted EBITDA [Three Months Ended March 31, 2025](index=8&type=section&id=Three%20Months%20Ended%20March%2031%2C%202025) For Q1 2025, Specialty P&C Insurance reported $1.4 million in net income and $1.6 million in Adjusted EBITDA to shareholders, while Insurance Distribution had a net loss of $(1.7) million but a strong Adjusted EBITDA to shareholders of $7.1 million, and Corporate & Other reported a significant net loss of $(14.2) million and Adjusted EBITDA to shareholders of $(10.0) million | Metric (in thousands) | Specialty P&C Insurance | Insurance Distribution | Corporate & Other | Consolidated | | :------------------------------------------ | :---------------------- | :--------------------- | :---------------- | :----------- | | Net income (loss) from Continuing Operations | $1,425 | $(1,743) | $(14,172) | $(14,490) | | Adjusted EBITDA from Continuing Operations attributable to Ambac shareholders | $1,589 | $7,112 | $(9,988) | $(1,287) | | Adjusted net income (loss) attributable to common shareholders | $1,511 | $2,549 | $(10,097) | $(6,037) | [Three Months Ended March 31, 2024](index=9&type=section&id=Three%20Months%20Ended%20March%2031%2C%202024) In Q1 2024, Specialty P&C Insurance reported $1.7 million in net income and $1.9 million in Adjusted EBITDA to shareholders, while Insurance Distribution had $3.9 million in net income and $4.2 million in Adjusted EBITDA to shareholders, and Corporate & Other reported a net loss of $(8.9) million and Adjusted EBITDA to shareholders of $(5.7) million | Metric (in thousands) | Specialty P&C Insurance | Insurance Distribution | Corporate & Other | Consolidated | | :------------------------------------------ | :---------------------- | :--------------------- | :---------------- | :----------- | | Net income (loss) from Continuing Operations | $1,715 | $3,855 | $(8,938) | $(3,369) | | Adjusted EBITDA from Continuing Operations attributable to Ambac shareholders | $1,872 | $4,202 | $(5,689) | $384 | | Adjusted net income (loss) attributable to common shareholders | $1,766 | $4,001 | $(6,096) | $(329) | [Organic Growth & Specialty P&C Production](index=10&type=section&id=Organic%20Growth%20%26%20Specialty%20P%26C%20Production) Total Insurance Distribution revenue grew 129% to $41 million, but organic revenue growth was negative (2.1)% for Q1 2025, while total Specialty P&C Insurance Production increased 70% to $317.5 million, driven by a 156% increase in Insurance Distribution Premiums Placed, despite a 10% decrease in Specialty P&C Insurance Gross Premiums Written | Metric (in thousands) | Q1 2025 | Q1 2024 | % Growth | | :------------------------------------------ | :------ | :------ | :------- | | Total Insurance Distribution revenue | $40,998 | $17,865 | 129% | | Total Organic Revenue | $16,336 | $16,683 | (2.1)% | | Metric (in thousands) | Q1 2025 | Q1 2024 | % Change | | :------------------------------------------ | :------ | :------ | :------- | | Specialty Property & Casualty Insurance Gross Premiums Written | $86,915 | $96,422 | (10)% | | Insurance Distribution Premiums Placed | $230,606 | $90,096 | 156% | | Specialty P&C Insurance Production | $317,521 | $186,518 | 70% | [Company Information & Disclosures](index=10&type=section&id=Company%20Information%20%26%20Disclosures) [About Ambac](index=10&type=section&id=About%20Ambac) Ambac Financial Group, Inc. is an insurance holding company focused on a growing specialty P&C distribution and underwriting platform, also managing a legacy financial guarantee business in run-off pending sale, with its common stock trading on the NYSE under "AMBC" - Ambac is an insurance holding company with a core business in **specialty P&C distribution and underwriting**[40](index=40&type=chunk) - Legacy financial guarantee business is in run-off and pending sale to **Oaktree Capital Management**[40](index=40&type=chunk) [Stock Transfer Restrictions](index=10&type=section&id=Stock%20Transfer%20Restrictions) Ambac's Certificate of Incorporation includes substantial restrictions on common stock transfers, prohibiting and voiding transfers that would result in any person or group holding 5% or more of Ambac's common stock, or increasing an existing 5% holder's interest, subject to limited exceptions - Ambac's common stock transfers are restricted to prevent any person or group from acquiring or increasing a **5% or more** ownership interest, with limited exceptions[41](index=41&type=chunk) [Forward-Looking Statements & Risk Factors](index=10&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) The report contains forward-looking statements regarding future performance, which are subject to inherent uncertainties and risks, cautioning readers that actual results may differ materially due to various factors, including those discussed under "Risk Factors" in SEC filings, such as volatility in stock price, failure to consummate the Legacy business sale, inadequacy of loss reserves, credit risk, substantial indebtedness, and greater than expected underwriting losses - Forward-looking statements are not guarantees of future performance and are subject to inherent **uncertainties and risks**[42](index=42&type=chunk) - Important factors that could cause actual results to differ materially include **failure to consummate the Legacy business sale**, **disruptions from the sale**, **uncertainty in achieving value from specialty P&C and insurance distribution**, **inadequacy of loss reserves**, **credit risk**, **substantial indebtedness**, and **greater than expected underwriting losses**[43](index=43&type=chunk) ```

Core Viewpoint - Ambac Financial Group, Inc. (NYSE: AMBC) is currently trading at a substantial undervalue following a reported loss from the disposal of its legacy financial guarantee business, with expectations of receiving close to $420 million from the sale of these business units [1]. Company Summary - The company has reported a loss due to the disposal of its legacy financial guarantee business [1]. - If the company successfully sells these business units, it is projected to receive approximately $420 million [1]. Investment Strategy - The analysis emphasizes a focus on value investments, particularly in companies trading at around 10 times earnings and offering dividend yields [1]. - The research primarily targets small-cap and mid-cap companies across various regions including the United States, Canada, South America, the UK, France, and Germany [1].

Revenue and Growth - Total revenues for the year ended December 31, 2024, were $235,815, an increase from $124,728 in 2023, representing a growth of 88.9%[272] - Gross premiums written for Specialty Property & Casualty Insurance segment increased to $382,771 in 2024 from $273,287 in 2023, reflecting a growth of 40%[272] - Net premiums earned for 2024 increased by $47,094 or 90.7%, totaling $99,005, compared to $51,911 in 2023 and $13,869 in 2022, driven by growth in net premiums written[324] - Premiums placed for the year ended December 31, 2024, were $493,372, an increase of $262,766 or 114% compared to 2023[352] - Total Insurance Distribution revenue for 2024 reached $99,236 million, representing a 48.1% growth from $51,546 million in 2023[418] - Organic Revenue for 2024 was $49,761 million, with a growth rate of 5.4% compared to $47,057 million in 2023[418] Income and Losses - Net income for the year ended December 31, 2024, was a loss of $58,921, compared to a loss of $23,232 in 2023, indicating a worsening of 153%[272] - The company reported a net loss of $556,088 in 2024, significantly impacted by discontinued operations, compared to a net income of $4,951 in 2023[318] - Net loss from continuing operations for 2024 was $58,921, compared to $23,232 in 2023 and $35,244 in 2022, primarily due to higher acquisition costs of $26,821 and restructuring costs of $7,600[316] - The company reported a total loss from continuing operations of $(62,509) million in 2024, compared to $(58,921) million in 2023[420] Acquisitions and Disposals - AFG entered into a stock purchase agreement to sell AAC for $420 in cash, with a warrant for 9.9% of AFG's common stock at an exercise price of $18.50[273] - AFG acquired approximately 60% of Beat for total consideration of approximately $281,493, with $252,264 paid in cash[276] - The sale of Consolidated National Insurance Company resulted in a gain of approximately $7,504, with no adverse impact on the group's operations[277] - Investing activities for 2024 included net cash used in the acquisition of Beat of $243,776[378] Reserves and Loss Estimates - Loss and loss adjustment expense reserves totaled $349,062 as of December 31, 2024, compared to $78,797 in 2023, indicating a significant increase in reserves[284] - The company recorded a range of estimated losses, with low-end losses being approximately $33,400 million below recorded gross reserves and high-end losses exceeding recorded gross reserves by approximately $4,500 million[289] - The estimated loss reserves for financial guarantee insurance policies could be understated due to unforeseen market conditions, with a possible increase in loss reserves estimated at approximately $265,000 million[306] - The company’s loss reserves are based on significant estimates regarding the probability of default and expected loss severity, which can be impacted by economic and market conditions[299] Financial Performance Metrics - EBITDA for the year ended December 31, 2024, was $19,653, an increase of $8,170 or 71% compared to 2023[354] - Adjusted EBITDA is defined as net income from continuing operations before interest, taxes, depreciation, amortization, and certain exceptional items, providing a clearer view of operating performance[413] - The adjusted EBITDA margin for 2024 is 4.1%, down from 20.1% in 2023, reflecting challenges in maintaining profitability[414] - The net income margin for 2024 stands at 8.3%, a recovery from a negative margin of 609.2% in 2023[414] Expenses and Liabilities - General and administrative expenses totaled $129,166 in 2024, significantly up from $66,985 in 2023, primarily due to acquisitions and growth in the Insurance Distribution segment[343] - Interest expense for 2024 was $9,379, related to short-term debt for the Beat acquisition, with no interest expense in 2023 and 2022[344] - Total liabilities decreased by approximately $133,770 from December 31, 2023, to $6,862,857 as of December 31, 2024[382] Investments and Assets - Cash and short-term investments as of December 31, 2024, were $74,423, down from $96,563 in 2023[363] - Total assets decreased by approximately $369,942 from December 31, 2023, to $8,058,378 at December 31, 2024, with a decrease of $1,249,256 related to discontinued operations[382] - The total fixed maturity available-for-sale investments decreased from $335,734 thousand in 2023 to $284,621 thousand in 2024, representing a decline of approximately 15.2%[89] Employee and Corporate Governance - As of December 31, 2024, Ambac had 195 employees in the United States and 185 employees in the United Kingdom and Bermuda, with a voluntary turnover rate of approximately 6.5%[90] - The company has established a Disclosure Committee to assist the CEO and CFO in maintaining effective disclosure controls and procedures[77] - Ambac's focus on employee retention includes compensation components such as long-term incentive plan awards and performance metrics as part of the annual short-term incentive bonus offering[91]

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