NEW YORK, July 10, 2024 (GLOBE NEWSWIRE) -- Kuehn Law, PLLC, a shareholder litigation law firm, is investigating potential claims related to the below-listed proposed mergers. Kuehn Law may seek additional disclosures or other relief on behalf of the shareholders of these companies. Kuehn Law is investigating whether the Boards of the below companies 1) acted to maximize shareholder value, 2) failed to disclose material information, and 3) conducted a fair process: Morphic Holding, Inc. has agreed to be acq ...

SOUTHAMPTON, N.Y., June 05, 2024 (GLOBE NEWSWIRE) -- Kuehn Law, PLLC, a shareholder litigation law firm, is investigating potential claims related to the below-listed proposed mergers. Kuehn Law may seek additional disclosures or other relief on behalf of the shareholders of these companies. Kuehn Law is investigating whether the Boards of the below companies 1) acted to maximize shareholder value, 2) failed to disclose material information, and 3) conducted a fair process: Ambac Financial Group signed a de ...

Group 1 - Ambac Financial Group, Inc. (AMBC) is positioned well within the Insurance - Property and Casualty industry, which has a Zacks Industry Rank of 38 out of over 250 industries, indicating strong overall performance [1][2] - The company has experienced significant earnings estimate revisions, with current quarter estimates increasing from 9 cents per share to 19 cents per share, and current year estimates rising from 45 cents per share to $1.45 per share [2] - Ambac has achieved a Zacks Rank 2 (Buy), reflecting analysts' growing bullish sentiment regarding the company's short and long-term prospects [2] Group 2 - The Insurance - Property and Casualty industry is benefiting from broad trends that are positively impacting securities across the sector, suggesting a favorable environment for investments [1] - Ambac's recent earnings estimate revisions indicate a strong position within a robust industry, making it an attractive option for investors [2]

Have you been paying attention to shares of Ambac Financial Group (AMBC) ? Shares have been on the move with the stock up 22.5% over the past month. The stock hit a new 52-week high of $18.45 in the previous session. Ambac Financial Group has gained 11.2% since the start of the year compared to the 2.7% move for the Zacks Finance sector and the 14.2% return for the Zacks Insurance - Property and Casualty industry.What's Driving the Outperformance?The stock has an impressive record of positive earnings surpr ...

Financial Data and Key Metrics Changes - For Q1 2024, the company reported net income of $20 million, compared to a net loss of $33 million in Q1 2023, and adjusted net income of $38 million versus an adjusted net loss of $14 million in the prior year [6][11] - Book value per share increased to $30.19 from $30.13 at the end of Q4 2023, with adjusted book value rising to $29.03 per share from $28.74 [17] Business Line Data and Key Metrics Changes - The specialty P&C Insurance platform generated $187 million in premiums for the quarter, a 45% increase year-over-year [6] - Everspan generated gross written premiums of $96 million, an 86% increase from the previous year, and achieved its first underwriting profit with a combined ratio of 98% [8][14] - Cirrata placed over $90 million in premiums, up 17% year-over-year, and generated $5 million in EBITDA, reflecting a 10% increase from Q1 2023 [9][15] Market Data and Key Metrics Changes - The specialty P&C market reached nearly $90 billion in premiums for 2023, indicating strong growth potential [7] - The company noted a shift in its business mix, with commercial auto premiums decreasing from 93% to 8% of net premiums written at Everspan, highlighting diversification efforts [8] Company Strategy and Development Direction - The company aims to scale production in its P&C business to over $1.5 billion, targeting over $100 million in EBITDA within three years [18] - Ongoing investments are being made to enhance Specialty P&C capabilities and support MGA partners, positioning the company for long-term growth [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth opportunities across the Specialty P&C platform and indicated that 2024 is expected to be a year of transformational change [18] - The company is progressing discussions regarding strategic options for its legacy financial guaranty business and anticipates providing updates by the next earnings call [10][18] Other Important Information - Consolidated investment income for Q1 2024 was $42 million, up from $34 million in Q1 2023, driven by higher yields on fixed income securities [16] - The legacy financial guarantee segment generated net income of $20 million, a significant improvement from a net loss of $36 million in the prior year [16] Q&A Session Summary Question: Can you elaborate on the adverse development at Everspan this quarter? - The adverse development was primarily related to the nonstandard auto program, with delays in data affecting the results. Management remains optimistic about the program's future performance [20][21] Question: How do sliding scale commissions work? - Sliding scale commissions adjust acquisition costs based on loss performance, providing a protective mechanism for newer programs. This structure is maintained throughout the life of the program [22][25] Question: Can you provide details on resolving the Italian ABS exposure? - The company upgraded its exposure to Italy following positive credit developments and performance in line with expectations, leading to a reduction in adverse credit exposure [26][27] Question: What is the timeline for the strategic alternatives process? - Management confirmed that the timeline for updates on strategic options remains on track, with strong interest in the portfolio and company [29][30] Question: Are there opportunities for additional risk management or capital structure actions? - The company is maintaining a business-as-usual approach while exploring de-risking transactions and improving the quality of its book value [31][32]

Financial Performance & Strategic Priorities - Ambac Financial Group (AFG) reported net income attributable to common stockholders of $20.1 million in 1Q24, compared to a net loss of $(33.4) million in 1Q23[50] - Adjusted net income for 1Q24 was $38.5 million, compared to an adjusted net loss of $(13.8) million in 1Q23[50] - Ambac's Specialty P&C platform aims to grow Gross Premium Written (GPW) to over $400 million in 2024 and target mid-teens Return on Equity (ROE) at scale[6] - Cirrata targets over $300 million in premiums placed and over $60 million in revenue in 2024, striving for double-digit organic growth and over 20% EBITDA margins[6] Everspan: Specialty P&C Program Insurer - Everspan's Gross Premium Written (GPW) in 1Q24 was $96 million, up 86% compared to 1Q23[21] - Everspan achieved a quarterly pre-tax profit of $2 million in 1Q24, compared to a $(1) million loss in 1Q23[21] - Everspan's Combined Ratio in 1Q24 was 98.4%, improved from 121.9% in 1Q23[21, 24] Cirrata: Insurance Distribution - Cirrata placed $90 million of premium in 1Q24, a 17% increase over 1Q23[29] - Cirrata's total revenue in 1Q24 was $18 million, an increase of $3 million over 1Q23[29] - Cirrata's pre-tax income was $3.8 million with a 21.5% margin in 1Q24[29] Legacy Financial Guarantee - Legacy Financial Guarantee insured net par decreased 2.6% to $19.0 billion in 1Q24[37]

PART I. FINANCIAL INFORMATION [Item 1. Unaudited Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Unaudited%20Consolidated%20Financial%20Statements) Presents Ambac Financial Group's unaudited consolidated financial statements for Q1 2024, detailing balance sheets, income, equity, and cash flows Consolidated Balance Sheet Highlights (Unaudited) | Metric | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :--- | :--- | :--- | | **Total Assets** | **$8,429** | **$8,428** | | Total Investments | $2,682 | $2,664 | | Variable Interest Entity Assets | $4,331 | $4,394 | | **Total Liabilities** | **$6,993** | **$6,997** | | Long-term Debt | $512 | $508 | | Variable Interest Entity Liabilities | $4,340 | $4,404 | | **Total Stockholders' Equity** | **$1,418** | **$1,415** | Consolidated Statement of Total Comprehensive Income (Loss) Highlights (Unaudited) | Metric | Three Months Ended March 31, 2024 (in millions) | Three Months Ended March 31, 2023 (in millions) | | :--- | :--- | :--- | | Total Revenues | $103 | $58 | | Total Expenses | $77 | $86 | | Pretax Income (Loss) | $26 | $(29) | | **Net Income (Loss) Attributable to Common Stockholders** | **$20** | **$(33)** | | **Diluted EPS** | **$0.43** | **$(0.73)** | Consolidated Statement of Cash Flows Highlights (Unaudited) | Metric | Three Months Ended March 31, 2024 (in millions) | Three Months Ended March 31, 2023 (in millions) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $18 | $77 | | Net Cash Provided by Investing Activities | $51 | $441 | | Net Cash Used in Financing Activities | $(47) | $(276) | | **Net Cash Flow** | **$21** | **$243** | [Note 1. Background and Business Description](index=10&type=section&id=Note%201.%20Background%20and%20Business%20Description) Ambac Financial Group operates three main segments: Legacy Financial Guarantee, Specialty P&C Insurance, and Insurance Distribution - The company's operations are divided into three main segments: Legacy Financial Guarantee Insurance, Specialty Property & Casualty Insurance, and Insurance Distribution[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - The Legacy Financial Guarantee business, comprising AAC and Ambac UK, has been in run-off since 2008[19](index=19&type=chunk) - The Specialty Property & Casualty Insurance business operates through Everspan carriers, which hold an A.M. Best rating of 'A-' (Excellent)[20](index=20&type=chunk) [Note 3. Segment Information](index=12&type=section&id=Note%203.%20Segment%20Information) Q1 2024 pretax income: Legacy Financial Guarantee **$25 million** (vs. **$32 million** loss in Q1 2023), Specialty P&C **$2 million**, Insurance Distribution **$4 million** Pretax Income (Loss) by Segment (Q1 2024 vs Q1 2023) | Segment | Q1 2024 Pretax Income (Loss) (in millions) | Q1 2023 Pretax Income (Loss) (in millions) | | :--- | :--- | :--- | | Legacy Financial Guarantee Insurance | $25 | $(32) | | Specialty Property & Casualty Insurance | $2 | $(1) | | Insurance Distribution | $4 | $4 | | Corporate & Other | $(5) | $0 | | **Consolidated** | **$26** | **$(29)** | Total Assets by Segment | Segment | Total Assets as of March 31, 2024 (in millions) | Total Assets as of March 31, 2023 (in millions) | | :--- | :--- | :--- | | Legacy Financial Guarantee Insurance | $7,454 | $7,503 | | Specialty Property & Casualty Insurance | $608 | $349 | | Insurance Distribution | $156 | $140 | | Corporate & Other | $211 | $227 | | **Consolidated** | **$8,429** | **$8,219** | [Note 4. Investments](index=13&type=section&id=Note%204.%20Investments) Total available-for-sale investments were **$2.095 billion** with **$75 million** unrealized losses; net investment income rose to **$42 million** in Q1 2024 Available-for-Sale Investments (Excluding VIEs) | Metric | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :--- | :--- | :--- | | Amortized Cost | $2,135 | $2,197 | | Gross Unrealized Gains | $37 | $40 | | Gross Unrealized Losses | $(75) | $(71) | | **Estimated Fair Value** | **$2,095** | **$2,162** | - Gross unrealized losses of **$75 million** on available-for-sale securities as of March 31, 2024, were primarily caused by the impact of increasing interest rates and market spreads. Management has determined these securities are not credit impaired[51](index=51&type=chunk)[52](index=52&type=chunk) Net Investment Income Composition (Q1) | Source | 2024 (in millions) | 2023 (in millions) | | :--- | :--- | :--- | | Fixed maturity securities | $23 | $17 | | Short-term investments | $5 | $6 | | Other investments | $13 | $13 | | Investment expense | $(1) | $(2) | | **Total Net Investment Income** | **$42** | **$34** | - The investment portfolio includes **$406 million** (fair value) of securities insured by AAC or Ambac UK as of March 31, 2024[63](index=63&type=chunk)[64](index=64&type=chunk) [Note 6. Insurance Contracts](index=20&type=section&id=Note%206.%20Insurance%20Contracts) Q1 2024 net premiums written were **$28 million**, earned **$33 million**; loss reserves decreased to **$721 million**, with a **$1 million** net benefit for losses Net Premiums (Q1) | Metric | 2024 (in millions) | 2023 (in millions) | | :--- | :--- | :--- | | Net Premiums Written | $28 | $18 | | Net Premiums Earned | $33 | $14 | Loss and Loss Expense Reserves (Net) | Metric | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :--- | :--- | :--- | | Gross Loss and Loss Expense Reserves | $721 | $756 | - Favorable development in prior years' loss reserves for Q1 2024 was primarily driven by the positive impact of discount rates on the structured finance portfolio and assumption changes in the public finance and international portfolios within the legacy financial guarantee segment[119](index=119&type=chunk) [Note 12. Net Income Per Share](index=29&type=section&id=Note%2012.%20Net%20Income%20Per%20Share) Q1 2024 basic EPS was **$0.44** and diluted EPS was **$0.43**, a significant improvement from a **$0.73** loss per share in Q1 2023 Earnings Per Share (EPS) Comparison (Q1) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Basic EPS | $0.44 | $(0.73) | | Diluted EPS | $0.43 | $(0.73) | Weighted Average Shares Outstanding (Q1 2024) | Calculation | Shares | | :--- | :--- | | Basic | 45,827,076 | | Diluted | 46,348,776 | [Note 14. Commitments and Contingencies](index=30&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) The company is involved in pending legal cases, including Monterey Bay Military Housing and National Collegiate Student Loan Trusts Litigation, with no material accruals - In the Monterey Bay Military Housing case, defendants filed motions for summary judgment on March 22, 2024[181](index=181&type=chunk)[183](index=183&type=chunk) - In the National Collegiate Student Loan Trusts Litigation, parties continue to negotiate a resolution as of April 25, 2024[183](index=183&type=chunk) - Management is unable to make a meaningful estimate of the amount or range of loss for certain litigation matters but believes it has substantial defenses[188](index=188&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2024 net income of **$21 million** (vs. **$33 million** loss in Q1 2023) driven by improved loss expenses and premium growth; net par exposure declined to **$19.0 billion** - AFG (the holding company) holds **$209 million** in net assets as of March 31, 2024, to support growth, acquisitions, and capital management[197](index=197&type=chunk)[198](index=198&type=chunk) Financial Guarantee Net Par Outstanding | Metric | March 31, 2024 (in billions) | December 31, 2023 (in billions) | Change | | :--- | :--- | :--- | :--- | | Total Net Par | $19.031 | $19.541 | (2)% | | Adversely Classified Credits (ACC) | $2.776 | $3.504 | (21)% | | Watch List | $2.679 | $2.181 | 23% | - The decrease in total and ACC net par outstanding was due to active de-risking, maturities, and an upgrade of one credit with **$563 million** in net par from ACC to Watch List[211](index=211&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Q1 2024 net income of **$20 million** (vs. **$33 million** loss in Q1 2023) driven by increased gross premiums, reduced loss expenses, and higher net investment income - Gross premiums written increased by **$37 million** to **$98 million** in Q1 2024, driven by new and existing programs in the Specialty Property & Casualty Insurance segment[223](index=223&type=chunk)[225](index=225&type=chunk) - Losses and loss adjustment expenses recorded a benefit of **$1 million** in Q1 2024, compared to an expense of **$18 million** in Q1 2023. The variance was driven by positive impacts from discount rates in the legacy financial guarantee's RMBS portfolio[239](index=239&type=chunk)[240](index=240&type=chunk) - Net investment income increased by **$8 million** year-over-year, primarily due to higher portfolio yields and fair value gains on trading securities[230](index=230&type=chunk)[232](index=232&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) AFG maintains **$209 million** in net assets for liquidity; AAC's dividend payments and surplus note payments require OCI approval and remain uncertain - AFG, the holding company, has net assets of **$209 million** as of March 31, 2024, and is primarily dependent on these assets for liquidity, with secondary reliance on distributions from subsidiaries[263](index=263&type=chunk) - AAC's ability to pay dividends to AFG is uncertain. Payments of principal and interest on AAC's surplus notes require approval from the Office of the Commissioner of Insurance (OCI), which has generally been declined since 2010, with two exceptions[264](index=264&type=chunk)[267](index=267&type=chunk) - Total accrued and unpaid interest for surplus notes was **$487 million** at March 31, 2024[246](index=246&type=chunk) [Balance Sheet](index=50&type=section&id=Balance%20Sheet) Total assets stable at **$8.4 billion**; stockholders' equity increased to **$1.418 billion**; loss reserves decreased to **$721 million** due to Legacy Financial Guarantee developments - Total stockholders' equity increased by **$3 million** to **$1,418 million** as of March 31, 2024, primarily due to total comprehensive income of **$5 million** for the quarter[277](index=277&type=chunk) - Loss and loss expense reserves, net of subrogation recoverables and before reinsurance, decreased from **$756 million** at year-end 2023 to **$721 million** at March 31, 2024[286](index=286&type=chunk) - The RMBS portfolio comprises **60%** of the company's ever-to-date insurance claims recorded[288](index=288&type=chunk) [Non-GAAP Financial Measures](index=55&type=section&id=Non-GAAP%20Financial%20Measures) Q1 2024 non-GAAP results: EBITDA **$55 million**, Adjusted Net Income **$38 million** ($0.82/share), and Adjusted Book Value per share **$29.03** Non-GAAP Financial Highlights (Q1 2024) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | EBITDA (in millions) | $55 | $(5) | | Adjusted Net Income (in millions) | $38 | $(14) | | Adjusted Net Income Per Share | $0.82 | $(0.30) | Adjusted Book Value Per Share | Date | Adjusted Book Value Per Share | | :--- | :--- | | March 31, 2024 | $29.03 | | December 31, 2023 | $28.74 | PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) Details on legal proceedings are referenced to Note 14 of the financial statements, with no material accruals for current cases - For details on legal proceedings, the report directs readers to Note 14 of the Unaudited Consolidated Financial Statements[323](index=323&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from the 2023 Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K[324](index=324&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2024, Ambac purchased **42,016 shares** for tax withholdings; the **$35 million** share repurchase program expired March 31, 2024 - In Q1 2024, the company purchased **42,016 shares** at an average price of **$16.24** to satisfy employee tax withholding obligations on vested restricted stock units[326](index=326&type=chunk) - The company's share repurchase program expired on March 31, 2024. Over the life of the program, **$18.7 million** was used to repurchase **1,930,384 shares** at an average price of **$9.70**[327](index=327&type=chunk)[328](index=328&type=chunk)

Financial Performance - Ambac reported a net income of $20.1 million or $0.43 per diluted share for Q1 2024, a significant increase from a net loss of $33.4 million in Q1 2023[3] - Adjusted net income for Q1 2024 was $38.5 million, compared to a loss of $13.8 million in Q1 2023, marking a 379% improvement[3] - Net income attributable to common stockholders for Q1 2024 was $20 million, compared to a net loss of $33 million in Q1 2023, representing a significant turnaround[38] - EBITDA for Q1 2024 was $54.5 million, compared to a loss of $(5.1) million for Q1 2023[27] - The company reported a pretax income of $26 million for Q1 2024, a significant improvement from a pretax loss of $29 million in Q1 2023[38] - The company reported a pretax income of $25.5 million in Q1 2024, a significant recovery from a pretax loss of $28.8 million in Q1 2023[42] - Net income for Q1 2024 was $20.8 million, compared to a net loss of $32.7 million in Q1 2023, indicating a turnaround in profitability[42] Premiums and Revenues - Gross written premiums reached $98.1 million, up 62% from $60.7 million in Q1 2023, while net premiums earned increased by 139% to $33.1 million[3] - Total revenues and other income increased to $103 million in Q1 2024, up from $58 million in Q1 2023, reflecting a growth of approximately 77.6%[38] - Net premiums earned rose to $33 million in Q1 2024, compared to $14 million in Q1 2023, marking an increase of 135.7%[38] - Total revenues and other income reached $102.6 million in Q1 2024, up from $57.5 million in Q1 2023, marking an increase of 78.3%[42] Investment Income - Net investment income rose to $41.7 million, a 22% increase from $34.1 million in Q1 2023, driven by higher yields[3] - The company reported a decrease in net investment gains of $(0.6) million in Q1 2024, compared to gains of $4.4 million in Q1 2023[24] - Net investment income rose to $41.7 million in Q1 2024, compared to $34.1 million in Q1 2023, reflecting a growth of 22.4%[42] Expenses and Cost Management - General and administrative expenses for Q1 2024 were $36 million, unchanged from the prior year, with expenses related to P&C growth initiatives offsetting reductions elsewhere[18] - Total expenses decreased to $77 million in Q1 2024 from $86 million in Q1 2023, a reduction of approximately 10.5%[38] - General and administrative expenses totaled $35.2 million in Q1 2024, a decrease from $36.0 million in Q1 2023, showing cost management efforts[42] Equity and Assets - The company’s stockholders' equity increased to $1.37 billion, or $30.19 per share, up from $1.36 billion or $30.13 per share at the end of 2023[20] - Total Ambac Financial Group, Inc. stockholders' equity was $1,365.2 million as of March 31, 2024, compared to $1,361.7 million at December 31, 2023[29] - Adjusted book value increased to $1.31 billion, or $29.03 per share, at March 31, 2024, from $1.30 billion, or $28.74 per share, at December 31, 2023[29] - The company's total assets remained stable at $8,429 million as of March 31, 2024, compared to $8,428 million at the end of 2023[40] Segment Performance - The Specialty P&C segment (Everspan) achieved a combined ratio of 98.4%, improving from 121.9% in the same quarter last year[3] - Total Specialty P&C Insurance production was $187 million, reflecting a 45% increase compared to Q1 2023[8] - The Legacy Financial Guarantee segment generated net income of $20 million, with net premiums earned slightly increasing to $7.5 million[11] Other Notable Information - The company is actively reviewing its Legacy Financial Guarantee business and is in discussions with interested parties, expecting to provide updates in the next reporting period[3] - Watch List and Adversely Classified Credits (WLACC) decreased by 4.0% to $5.5 billion in Q1 2024 from December 31, 2023[22] - Cash and cash equivalents increased to $44 million in Q1 2024, up from $28 million in Q4 2023[40] - The company's long-term debt stood at $512 million as of March 31, 2024, slightly up from $508 million at the end of 2023[40] - The loss and loss adjustment expense reserves decreased to $851 million in Q1 2024 from $893 million in Q4 2023, indicating improved reserve management[40] - The commission income remained stable at $17.7 million in Q1 2024, consistent with $14.5 million in Q1 2023, indicating steady performance in this segment[42] - The company plans to discuss Q1 2024 results in a conference call on May 7, 2024[30] - The company is committed to providing timely and accurate information to the investing public through its website[32]

Ambac Financial Group, Inc. (NYSE:AMBC) Q4 2023 Results Conference Call February 28, 2024 8:30 AM ET Company Participants Charles Sebaski - Head of IR Claude LeBlanc - President and CEO David Trick - EVP, CFO and Treasurer Conference Call Participants Dennis Chua - Repertoire Partners Operator Greetings, and welcome to the Ambac Financial Group, Inc. Fourth Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Cha ...

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Ambac reported a Q4 2023 net loss but positive adjusted net income, driven by strong premium growth in Specialty P&C and Insurance Distribution, with increased book value [Fourth Quarter 2023 Highlights](index=1&type=section&id=Fourth%20Quarter%202023%20Highlights) Ambac reported a net loss of $(16) million for Q4 2023, but an Adjusted net income of $10 million. The Specialty P&C Insurance segment (Everspan) and Insurance Distribution segment (Cirrata) showed significant premium growth, while the Legacy Financial Guarantee segment recorded a net loss. Book value per share increased by 8% from the previous quarter - Ambac reported a net loss of **$(16) million** or **$(0.24) per diluted share** in the fourth quarter of 2023, alongside an Adjusted net income of **$10 million** or **$0.32 per diluted share**[1](index=1&type=chunk) - Specialty P&C Insurance ('Everspan') generated its second consecutive quarterly pre-tax profit and wrote gross premium of **$91 million**, a **76% increase** from Q4 2022[1](index=1&type=chunk) - Insurance Distribution ('Cirrata') placed premiums of **$50 million**, up **31%** from Q4 2022[1](index=1&type=chunk) Book Value Metrics | Metric | Q4 2023 | Change from Sep 30, 2023 | | :------------------------- | :---------- | :----------------------- | | Book Value per share | $30.13 | Up 8% | | Adjusted Book Value per share | $28.74 | Up 3% | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Claude LeBlanc highlighted the strong performance of the specialty P&C platform, exceeding targets with a 79% increase in premium production for 2023 and Everspan achieving profitability. He also noted progress in the Legacy Financial Guarantee Business, including finalizing the capital model and revised stipulation for AAC, with a strategic review underway - For 2023, the specialty P&C platform exceeded targets, generating over half a billion dollars of premium production, a **79% increase over 2022**[1](index=1&type=chunk) - Everspan achieved its second consecutive quarterly profit and generated positive net income in 2023, supported by improved underwriting results and a combined ratio of **106.5%** for the year, a **50 percentage point improvement** over the prior year[1](index=1&type=chunk) - Regarding the Legacy Financial Guarantee Business, the capital model and revised stipulation and order for AAC were finalized with AAC's regulator, and a strategic review launched last quarter is proceeding as planned[1](index=1&type=chunk) [Consolidated Financial Performance Overview](index=1&type=section&id=Consolidated%20Financial%20Performance%20Overview) Consolidated financial performance for Q4 and full year 2023 shows a decline in net income compared to prior year, alongside growth in premiums and investment income [Fourth Quarter 2023 Summary Results](index=1&type=section&id=Fourth%20Quarter%202023%20Summary%20Results) Ambac's consolidated results for Q4 2023 show a significant decrease in pretax income and net income compared to Q4 2022, primarily due to the absence of large litigation settlements seen in the prior year. However, gross written premium and net premiums earned saw substantial growth Ambac's Fourth Quarter 2023 Summary Results ($ in millions, except per share data) | Metric | 4Q2023 | 4Q2022 | Percent Change | | :---------------------------------------------- | :------ | :------ | :------------- | | Gross written premium | $93.1 | $43.7 | 113% | | Net premiums earned | 30.5 | 17.0 | 79% | | Commission income | 12.2 | 8.8 | 38% | | Program fees | 2.5 | 1.4 | 77% | | Net investment income | 40.5 | 22.6 | 79% | | Pretax income (loss) | (15.3) | 172.9 | (109)% | | Net income (loss) attributable to common stockholders | (15.7) | 175.2 | (109)% | | Net income (loss) attributable to common stockholders per diluted share | $(0.24) | $3.86 | (106)% | | EBITDA | 9.3 | 217.1 | (96)% | | Adjusted net income (loss) | 10.2 | 182.7 | (94)% | | Adjusted net income (loss) per diluted share | $0.32 | $4.03 | (92)% | | Weighted-average diluted shares outstanding (in millions) | 45.6 | 46.1 | 1% | Ambac's Fourth Quarter 2023 Balance Sheet Summary ($ in millions, except per share data) | Metric | December 31, 2023 | September 30, 2023 | B(W) Amount | Percent | | :---------------------------------------------- | :---------------- | :----------------- | :---------- | :------ | | Total Ambac Financial Group, Inc. stockholders' equity | $1,361.7 | $1,265.2 | $96.4 | 8% | | Total Ambac Financial Group, Inc. stockholders' equity per share | $30.13 | $28.00 | $2.13 | 8% | | Adjusted book value | $1,298.9 | $1,260.5 | $38.3 | 3% | | Adjusted book value per share | $28.74 | $27.90 | $0.84 | 3% | [Full Year 2023 Summary Results](index=2&type=section&id=Full%20Year%202023%20Summary%20Results) For the full year 2023, Ambac experienced a substantial decline in pretax and net income compared to 2022, largely due to the absence of significant litigation recoveries and gains on derivative contracts present in the prior year. However, gross written premium and net investment income showed strong growth Ambac's 2023 Full Year Summary Results ($ in millions, except per share data) | Metric | 2023 | 2022 | Better (Worse) Amount | Percent | | :---------------------------------------------- | :------ | :------ | :-------------------- | :------ | | Gross written premium | $288.1 | $126.9 | $161.2 | 127% | | Net premiums earned | 78.0 | 56.3 | 21.7 | 39% | | Net investment income | 140.1 | 16.8 | 123.3 | 733% | | Net investment gains (losses), including impairments | (22.5) | 31.5 | (54.0) | (171)% | | Net gains (losses) on derivative contracts | (1.0) | 128.6 | (129.5) | (101)% | | Commission income | 51.3 | 30.7 | 20.6 | 67% | | Other income | 11.2 | 9.8 | 1.4 | 14% | | Net realized gains on extinguishment of debt | — | 81.3 | (81.3) | (100)% | | Litigation recoveries | — | 125.9 | (125.9) | (100)% | | Losses and loss adjustment expenses | (32.6) | (396.5) | (363.9) | (92)% | | General and administrative expenses | 156.3 | 141.2 | (15.2) | (11)% | | Commission expense | 29.5 | 17.6 | (11.8) | (67)% | | Interest expense | 64.0 | 168.2 | 104.1 | 62% | | Intangible amortization | 28.9 | 46.8 | 18.0 | 38% | | Pretax income (loss) | 12.4 | 524.6 | (512.2) | (98)% | | Provision (benefit) for income taxes | 7.4 | 2.5 | (5.0) | (202)% | | Net income (loss) attributable to common stockholders | 3.6 | 522.4 | (518.7) | (99)% | | Net income (loss) per diluted share | 0.18 | 11.31 | (11.13) | (98)% | | EBITDA | 107.0 | 741.5 | (634.6) | (86)% | | Adjusted net income (loss) | 93.4 | 495.0 | (401.6) | (81)% | | Adjusted net income (loss) per diluted share | 2.11 | 10.72 | (8.61) | (80)% | | Weighted-average diluted shares outstanding (in millions) | 46.5 | 46.4 | — | —% | [Segment Performance Analysis](index=3&type=section&id=Segment%20Performance%20Analysis) Analysis of segment performance reveals strong growth in Specialty P&C and Insurance Distribution, while the Legacy Financial Guarantee segment experienced a pre-tax loss [Specialty Property & Casualty Insurance Segment (Everspan)](index=3&type=section&id=Specialty%20Property%20%26%20Casualty%20Insurance%20Segment%20(Everspan)) Everspan achieved positive pre-tax income for both Q4 and the full year 2023, driven by substantial growth in gross and net premiums written and earned. The segment significantly improved its combined ratio, reflecting enhanced underwriting results and scale Specialty Property & Casualty Insurance Segment Results ($ in millions) | Metric | Q4 2023 | Q4 2022 | % Change | FY 2023 | FY 2022 | % Change | | :------------------------- | :-------- | :-------- | :------- | :-------- | :-------- | :------- | | Gross premiums written | $90.7 | $51.7 | 76% | $273.3 | $146.4 | 87% | | Net premiums written | $36.7 | $10.0 | 269% | $79.8 | $28.6 | 180% | | Net premiums earned | $24.9 | $5.7 | 341% | $51.9 | $13.9 | 274% | | Program fees earned | $2.5 | $1.4 | 77% | $8.4 | $3.1 | 172% | | Losses and loss adjustment expenses | $16.8 | $3.7 | 356% | $36.7 | $9.1 | 83% | | Pretax income (loss) | $1.1 | $(0.9) | 228% | $0.4 | $(6.3) | 97% | | Combined Ratio | 100.3% | 124.3% | 2400 bps | 106.5% | 156.5% | 5000 bps | - Everspan generated **positive pre-tax income** in both the fourth quarter of 2023 and for the full year 2023[6](index=6&type=chunk) - Gross premium written (GPW) increased **76%** in Q4 2023 compared to the prior year, driven by growth and diversification of program business partners[7](index=7&type=chunk) - Net premium written (NPW) grew **269%** in Q4 2023, outpacing GPW due to an assumed reinsurance transaction[7](index=7&type=chunk) - The expense ratio for Q4 2023 was **32.9%**, down from **59.2%** in the prior year, benefiting from a sliding commission scale and normalization from scale[8](index=8&type=chunk) [Insurance Distribution Segment (Cirrata)](index=3&type=section&id=Insurance%20Distribution%20Segment%20(Cirrata)) The Insurance Distribution segment saw strong growth in premiums placed and gross/net commissions for both Q4 and the full year 2023, primarily due to recent acquisitions and growth initiatives. However, Q4 EBITDA and EBITDA margin declined due to business mix changes and growth investments Insurance Distribution Segment Results ($ in millions) | Metric | Q4 2023 | Q4 2022 | % Change | FY 2023 | FY 2022 | % Change | | :------------------------- | :-------- | :-------- | :------- | :-------- | :-------- | :------- | | Premiums placed | $50.2 | $38.3 | 31% | $230.6 | $135.5 | 70% | | Gross commissions | $12.2 | $8.8 | 38% | $51.3 | $30.7 | 67% | | Net commissions | $4.8 | $3.8 | 26% | $21.8 | $13.1 | 67% | | General and administrative expenses | $3.2 | $1.9 | 65% | $10.6 | $6.3 | 69% | | Pretax income | $0.6 | $1.2 | (50)% | $7.3 | $4.5 | 61% | | EBITDA | $1.8 | $2.1 | (16)% | $11.5 | $7.5 | 54% | | Pretax income margin | 4.9% | 13.4% | -850 bps | 14.1% | 14.4% | -30 bps | | EBITDA margin | 14.3% | 23.2% | -890 bps | 22.3% | 23.8% | -150 bps | - Premiums placed grew by **$11.8 million** in Q4 2023 over Q4 2022, primarily driven by recent acquisitions and growth initiatives[9](index=9&type=chunk) - Gross commission income increased by **$3.3 million** in Q4 2023 compared to Q4 2022[10](index=10&type=chunk) - EBITDA for Q4 2023 was down **16%** year-over-year, and the EBITDA Margin of **14.3%** was negatively impacted by business mix changes and growth initiatives[10](index=10&type=chunk) [Total Specialty P&C Insurance Production](index=4&type=section&id=Total%20Specialty%20P%26C%20Insurance%20Production) Combined Specialty P&C Insurance production, encompassing both underwriting and distribution segments, demonstrated robust growth for Q4 and the full year 2023, reflecting the overall expansion of Ambac's core P&C platform - Total Specialty P&C Insurance production reached **$141 million** in Q4 2023, a **57% increase** from Q4 2022[11](index=11&type=chunk) Total Specialty P&C Insurance Production ($ in millions) | Metric | Q4 2023 | Q4 2022 | % Change | FY 2023 | FY 2022 | % Change | | :------------------------------------- | :-------- | :-------- | :------- | :-------- | :-------- | :------- | | Specialty Property & Casualty Insurance Gross Premiums Written | $90.7 | $51.7 | 76% | $273.2 | $146.4 | 87% | | Insurance Distribution Premiums Placed | 50.2 | 38.3 | 31% | 230.6 | 135.5 | 70% | | Specialty P&C Insurance Production | $140.9 | $90.0 | 57% | $503.8 | $281.9 | 79% | [Legacy Financial Guarantee Insurance Segment](index=4&type=section&id=Legacy%20Financial%20Guarantee%20Insurance%20Segment) The Legacy Financial Guarantee segment reported a pre-tax loss in Q4 2023, a significant shift from a profit in Q4 2022, primarily due to the absence of large litigation settlements from the prior year. Net premiums earned decreased due to de-risking, while net investment income increased. Watch List and Adversely Classified Credits (WLACC) decreased Legacy Financial Guarantee Insurance Segment Results ($ in millions) | Metric | Q4 2023 | Q4 2022 | % Change | FY 2023 | FY 2022 | % Change | | :-------------------------------------- | :-------- | :-------- | :------- | :-------- | :-------- | :------- | | Net premiums earned | $5.6 | $11.4 | (51)% | $26.0 | $42.4 | (39)% | | Net investment income | $36.9 | $20.8 | 77% | $127.0 | $12.3 | 930% | | Losses and loss adjustment expenses (benefit) | $1.9 | $(58.7) | 103% | $(69.3) | $(405.5) | 83% | | General and administrative expenses | $19.2 | $38.7 | (50)% | $106.3 | $102.4 | 4% | | Pretax income (loss) | $(12.2) | $178.0 | (107)% | $17.2 | $540.1 | (97)% | | EBITDA | $11.1 | $221.2 | (95)% | $107.3 | $754.0 | (86)% | - Net premiums earned decreased by **51%** in Q4 2023, mainly due to proactive de-risking transactions, lower accelerations, and normal run-off of the insured portfolio[15](index=15&type=chunk) - Net investment income increased **77%** in Q4 2023 due to higher yields and stronger alternative investment performance[15](index=15&type=chunk) - Q4 2023 losses and loss adjustment expenses were **$1.9 million**, compared to a **$58.7 million benefit** in Q4 2022, which was favorably impacted by a litigation settlement with Nomura[15](index=15&type=chunk) - Watch List and Adversely Classified Credits (WLACC) decreased **2.2%** (**3.3%** excluding FX impact) to **$5.7 billion** in Q4 2023 from September 30, 2023[15](index=15&type=chunk) [Consolidated Financial Details](index=5&type=section&id=Consolidated%20Financial%20Details) Detailed consolidated financial analysis highlights increases in net premiums earned and investment income, alongside changes in loss expenses and stockholders' equity [Net Premiums Earned](index=5&type=section&id=Net%20Premiums%20Earned) Consolidated net premiums earned significantly increased in Q4 2023, driven by strong growth in the Specialty P&C businesses, which more than compensated for reductions in the Legacy FG segment - Net premiums earned for Q4 2023 were **$31 million**, an increase of **79%** compared to Q4 2022[16](index=16&type=chunk) - Significant growth in the Specialty P&C businesses more than offset the reduction in the Legacy FG business[16](index=16&type=chunk) [Net Investment Income](index=5&type=section&id=Net%20Investment%20Income) Consolidated net investment income saw a substantial increase in Q4 2023, primarily attributable to higher yields on fixed income investments and improved performance from alternative investments - Net investment income for Q4 2023 was **$40 million**, up from **$23 million** for Q4 2022[17](index=17&type=chunk) - The increase was driven by higher yields on the core fixed income portfolio and improved alternative investment returns[17](index=17&type=chunk) [Losses and Loss Expenses (Benefit)](index=5&type=section&id=Losses%20and%20Loss%20Expenses%20(Benefit)) Incurred losses shifted from a benefit in Q4 2022 to a loss in Q4 2023, reflecting the impact of litigation settlements in the prior year and current losses from the Specialty P&C business - Incurred Losses (Benefit) for Q4 2023 were **$19 million**, compared to a **$(55) million benefit** for Q4 2022[18](index=18&type=chunk) - Q4 2023 incurred losses were driven by the Specialty P&C business, while the Q4 2022 benefit was due to the Legacy Financial Guarantee business litigation settlement with Nomura[18](index=18&type=chunk) [General and Administrative Expenses](index=5&type=section&id=General%20and%20Administrative%20Expenses) Consolidated general and administrative expenses decreased in Q4 2023, primarily due to lower defensive litigation costs in the Legacy Financial Guarantee business, partially offset by increased headcount in the growing P&C businesses - General and administrative expenses for Q4 2023 were **$35 million**, down from **$51 million** in Q4 2022[19](index=19&type=chunk) - The decrease was mostly attributable to higher defensive litigation related expenses at the Legacy Financial Guarantee business in the prior year quarter, somewhat offset by increased headcount associated with growth in the P&C businesses[19](index=19&type=chunk) [AFG (Holding Company Only) Assets](index=5&type=section&id=AFG%20(Holding%20Company%20Only)%20Assets) Ambac Financial Group (AFG) on a standalone basis, excluding its subsidiaries, reported net assets of $211 million at the end of 2023, with a significant portion held in cash and liquid securities - AFG, on a standalone basis, had net assets of **$211 million** as of December 31, 2023[20](index=20&type=chunk) - Assets included cash and liquid securities of **$156 million** and other investments of **$32 million**[20](index=20&type=chunk) [Consolidated Ambac Financial Group, Inc. Stockholders' Equity](index=5&type=section&id=Consolidated%20Ambac%20Financial%20Group,%20Inc.%20Stockholders'%20Equity) Consolidated stockholders' equity increased from Q3 to Q4 2023, primarily driven by net unrealized investment gains and foreign exchange translation gains, despite a net loss attributable to common shareholders - Stockholders' equity at December 31, 2023, was **$1.36 billion**, or **$30.13 per share**, up from **$1.27 billion** or **$28.00 per share** as of September 30, 2023[21](index=21&type=chunk) - The increase was primarily due to net unrealized investment gains of **$69 million** and foreign exchange translation gains of **$32 million**, somewhat offset by the net loss attributable to common shareholders of **$16 million**[21](index=21&type=chunk)[22](index=22&type=chunk) [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP financial measures, including Adjusted Net Income, EBITDA, and Adjusted Book Value, provide additional insights into the company's underlying financial performance [Adjusted Net Income (Loss)](index=6&type=section&id=Adjusted%20Net%20Income%20(Loss)) Ambac presents Adjusted Net Income (Loss) as a non-GAAP measure to provide greater transparency into core operating performance by excluding certain non-recurring or non-operating items. For Q4 2023, Adjusted Net Income was $10.2 million, significantly lower than Q4 2022, primarily due to the absence of large litigation settlements - Adjusted Net Income (Loss) is defined as net income (loss) attributable to common stockholders adjusted for items such as net investment gains/losses, intangible amortization, litigation costs, foreign exchange gains/losses, workforce change costs, and net gain/loss on extinguishment of debt, along with their tax and noncontrolling interest effects[25](index=25&type=chunk) - Adjusted Net Income was **$10.2 million**, or **$0.32 per diluted share**, for Q4 2023, compared to **$182.7 million**, or **$4.03 per diluted share**, for Q4 2022[25](index=25&type=chunk) Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) (Q4 2023 vs Q4 2022, $ in millions, except per share data) | Metric | Q4 2023 $ Amount | Q4 2023 Per Share | Q4 2022 $ Amount | Q4 2022 Per Share | | :---------------------------------------------- | :--------------- | :---------------- | :--------------- | :---------------- | | Net income (loss) attributable to common shareholders | $(15.7) | $(0.24) | $175.2 | $3.86 | | Adjustments: | | | | | | Net investment (gains) losses, including impairments | 15.5 | 0.34 | (0.3) | (0.01) | | Intangible amortization | 8.3 | 0.18 | 13.2 | 0.29 | | Litigation costs | 3.5 | 0.07 | 22.5 | 0.49 | | Foreign exchange (gains) losses | (0.9) | (0.02) | (3.4) | (0.07) | | Workforce change costs | 0.2 | — | 0.5 | 0.01 | | Net (gain) loss on extinguishment of debt | — | — | (24.3) | (0.53) | | Pretax adjusted net income (loss) | 10.8 | 0.33 | 183.5 | 4.04 | | Income tax effects | (0.4) | (0.01) | (0.7) | (0.01) | | Net (gains) attributable to noncontrolling interests | (0.2) | — | (0.2) | — | | **Adjusted Net Income (Loss)** | **$10.2** | **$0.32** | **$182.7** | **$4.03** | | Weighted-average diluted shares outstanding (in millions) | | 46.5 | | 46.1 | Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) (FY 2023 vs FY 2022, $ in millions, except per share data) | Metric | FY 2023 $ Amount | FY 2023 Per Share | FY 2022 $ Amount | FY 2022 Per Share | | :---------------------------------------------- | :--------------- | :---------------- | :--------------- | :---------------- | | Net income (loss) attributable to common shareholders | $3.6 | $0.18 | $522.4 | $11.31 | | Adjustments: | | | | | | Net investment (gains) losses, including impairments | 22.5 | 0.49 | (31.5) | (0.68) | | Intangible amortization | 28.9 | 0.62 | 46.8 | 1.01 | | Litigation costs | 40.6 | 0.87 | 33.1 | 0.71 | | Foreign exchange (gains) losses | (0.8) | (0.02) | 2.7 | 0.06 | | Workforce change costs | 1.1 | 0.02 | 1.3 | 0.03 | | Net (gain) loss on extinguishment of debt | — | — | (81.3) | (1.75) | | Pretax adjusted net income (loss) | 95.8 | 2.16 | 493.6 | 10.69 | | Income tax effects | (1.6) | (0.03) | 2.0 | 0.04 | | Net (gains) attributable to noncontrolling interests | (0.8) | (0.02) | (0.6) | (0.01) | | **Adjusted Net Income (Loss)** | **$93.4** | **$2.11** | **$495.0** | **$10.72** | | Weighted average diluted shares outstanding | | 46.5 | | 46.4 | [EBITDA](index=7&type=section&id=EBITDA) EBITDA, a non-GAAP measure, is presented to show operating performance before interest, taxes, depreciation, and amortization. Consolidated EBITDA significantly decreased in Q4 and full year 2023 compared to 2022, primarily reflecting the reduced profitability of the Legacy Financial Guarantee segment - EBITDA is defined as net income (loss) before interest expense, income taxes, depreciation, and amortization of intangible assets[29](index=29&type=chunk) EBITDA Reconciliation by Segment (Q4 2023 vs Q4 2022, $ in millions) | Metric | Legacy Financial Guarantee Insurance | Specialty Property & Insurance Casualty | Insurance Distribution | Corporate & Other | Consolidated | | :------------------------- | :----------------------------------- | :-------------------------------------- | :--------------------- | :---------------- | :----------- | | **Three Months Ended December 31, 2023** | | | | | | | Net income (loss) | $(12.2) | $1.1 | $0.6 | $(5.0) | $(15.6) | | Adjustments: | | | | | | | Interest expense | 15.9 | — | — | — | 15.9 | | Income taxes | — | — | — | 0.2 | 0.3 | | Depreciation | 0.3 | — | — | 0.2 | 0.5 | | Amortization of intangible assets | 7.1 | — | 1.1 | — | 8.3 | | **EBITDA** | **$11.1** | **$1.1** | **$1.8** | **$(4.7)** | **$9.3** | | **Three Months Ended December 31, 2022** | | | | | | | Net income (loss) | $178.9 | $(0.8) | $1.2 | $(5.0) | $174.3 | | Adjustments: | | | | | | | Interest expense | 30.4 | — | — | — | 30.4 | | Income taxes | (0.9) | (0.1) | — | (0.4) | (1.3) | | Depreciation | 0.4 | — | — | — | 0.5 | | Amortization of intangible assets | 12.4 | — | 0.9 | — | 13.2 | | **EBITDA** | **$221.2** | **$(0.9)** | **$2.1** | **$(5.4)** | **$217.1** | EBITDA Reconciliation by Segment (FY 2023 vs FY 2022, $ in millions) | Metric | Legacy Financial Guarantee Insurance | Specialty Property & Insurance Casualty | Insurance Distribution | Corporate & Other | Consolidated | | :------------------------- | :----------------------------------- | :-------------------------------------- | :--------------------- | :---------------- | :----------- | | **Year Ended December 31, 2023** | | | | | | | Net income (loss) | $8.8 | $0.3 | $7.1 | $(11.3) | $5.0 | | Adjustments: | | | | | | | Interest expense | 64.0 | — | — | — | 64.0 | | Income taxes | 8.4 | — | 0.2 | (1.2) | 7.4 | | Depreciation | 1.3 | — | — | 0.3 | 1.7 | | Amortization of intangible assets | 24.7 | — | 4.2 | — | 28.9 | | **EBITDA** | **$107.3** | **$0.4** | **$11.5** | **$(12.2)** | **$107.0** | | **Year Ended December 31, 2022** | | | | | | | Net income (loss) | $537.2 | $(6.3) | $4.5 | $(13.2) | $522.1 | | Adjustments: | | | | | | | Interest expense | 168.2 | — | — | — | 168.2 | | Income taxes | 2.9 | — | — | (0.5) | 2.5 | | Depreciation | 1.8 | — | — | 0.1 | 2.0 | | Amortization of intangible assets | 43.9 | — | 2.9 | — | 46.8 | | **EBITDA** | **$754.0** | **$(6.3)** | **$7.5** | **$(13.6)** | **$741.5** | [Adjusted Book Value](index=8&type=section&id=Adjusted%20Book%20Value) Adjusted book value is a non-GAAP measure that modifies GAAP stockholders' equity by eliminating the financial guarantee insurance intangible asset, adding net unearned premiums in excess of expected losses, and removing net unrealized investment gains/losses from AOCI. This measure increased to $1.30 billion at year-end 2023, primarily due to foreign exchange translation gains - Adjusted book value is defined as Total Ambac Financial Group, Inc. stockholders' equity as reported under GAAP, adjusted for the after-tax impact of: (i) elimination of the financial guarantee insurance intangible asset; (ii) addition of the value of unearned premium revenue on financial guarantee contracts in excess of expected losses, net of reinsurance; and (iii) elimination of net unrealized investment gains/losses in Accumulated Other Comprehensive Income (AOCI)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - Adjusted book value was **$1.30 billion**, or **$28.74 per share**, at December 31, 2023, compared to **$1.26 billion**, or **$27.90 per share**, at September 30, 2023[35](index=35&type=chunk) - The increase in adjusted book value is primarily a result of F(x) translation gains[35](index=35&type=chunk) Reconciliation of Total AFG Stockholders' Equity to Adjusted Book Value ($ in millions, except per share data) | Metric | Dec 31, 2023 $ Amount | Dec 31, 2023 Per Share | Sep 30, 2023 $ Amount | Sep 30, 2023 Per Share | | :---------------------------------------------- | :-------------------- | :--------------------- | :-------------------- | :--------------------- | | Total AFG Stockholders' Equity | $1,361.7 | $30.13 | $1,265.2 | $28.00 | | Adjustments: | | | | | | Insurance intangible asset | (245.1) | (5.43) | (249.1) | (5.51) | | Net unearned premiums and fees in excess of expected losses | 162.1 | 3.59 | 154.5 | 3.42 | | Net unrealized investment (gains) losses in Accumulated Other Comprehensive Income | 20.2 | 0.45 | 89.9 | 1.99 | | **Adjusted book value** | **$1,298.9** | **$28.74** | **$1,260.5** | **$27.90** | | Shares outstanding (in millions) | | 45.2 | | 45.2 | [Company Information & Disclosures](index=9&type=section&id=Company%20Information%20%26%20Disclosures) This section provides essential company information, including earnings call details, a company overview, and important disclosures regarding forward-looking statements [Earnings Call and Webcast](index=9&type=section&id=Earnings%20Call%20and%20Webcast) Ambac announced details for its Q4 2023 earnings conference call and webcast, providing access information for investors and the public - Ambac's President and CEO, Claude LeBlanc, and EVP and CFO, David Trick, will discuss Q4 2023 results on a conference call on February 28, 2024, at 8:30am ET[38](index=38&type=chunk) - A live audio webcast will be available through the Investor Relations section of Ambac's website, with a replay archived until March 13, 2024[38](index=38&type=chunk) [About Ambac](index=9&type=section&id=About%20Ambac) Ambac Financial Group, Inc. is a financial services holding company focused on its growing specialty P&C platform, while also managing a legacy financial guaranty business in run-off. The company's common stock trades on the NYSE, and it maintains strict transfer restrictions on its common stock - Ambac Financial Group, Inc. (Ambac or AFG) is a financial services holding company headquartered in New York City[39](index=39&type=chunk) - Ambac's core business is a growing specialty P&C distribution and underwriting platform, alongside a legacy financial guaranty business in run-off[39](index=39&type=chunk) - Ambac's common stock trades on the New York Stock Exchange under the symbol 'AMBC'[39](index=39&type=chunk) - The Amended and Restated Certificate of Incorporation contains substantial restrictions on the ability to transfer Ambac's common stock, prohibiting transfers that would result in any person or group holding **5% or more** of Ambac's common stock or increasing an existing **5% ownership**[40](index=40&type=chunk) [Forward-Looking Statements](index=9&type=section&id=Forward-Looking%20Statements) This section serves as a cautionary notice regarding forward-looking statements within the report, emphasizing that actual results may differ materially due to various risks and uncertainties detailed in the company's SEC filings - Statements in this press release may constitute 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995[42](index=42&type=chunk) - Readers are cautioned that these statements are not guarantees of future performance, and actual results may differ materially from expected objectives or anticipated results[42](index=42&type=chunk)[43](index=43&type=chunk) - Important factors that could cause actual results to differ include, but are not limited to, volatility in AFG's common stock price, inadequacy of loss reserves, potential for regulatory intervention, credit risk, inability to reduce insured exposures, greater than expected underwriting losses, loss of key relationships, catastrophic events, litigation risks, and system security risks[43](index=43&type=chunk)[44](index=44&type=chunk) [Unaudited Consolidated Financial Statements](index=12&type=section&id=Unaudited%20Consolidated%20Financial%20Statements) Unaudited consolidated financial statements present detailed income statements, balance sheets, and segment-level results for comprehensive financial review [Consolidated Statements of Income (Loss)](index=12&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)) The consolidated statements of income (loss) provide a detailed breakdown of revenues and expenses for Q4 and the full year 2023 compared to 2022, showing a shift from net income to net loss attributable to common stockholders Consolidated Statements of Income (Loss) (Unaudited, $ in millions, except share data) | Metric | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------- | :---------------------- | | **Revenues:** | | | | | | Net premiums earned | 31 | 17 | 78 | 56 | | Commission income | 12 | 9 | 51 | 31 | | Program fees | 2 | 1 | 8 | 3 | | Net investment income | 40 | 23 | 140 | 17 | | Net investment gains (losses), including impairments | (16) | — | (22) | 31 | | Net gains (losses) on derivative contracts | (2) | 5 | (1) | 129 | | Net realized gains on extinguishment of debt | — | 24 | — | 81 | | Income (loss) on variable interest entities | 4 | 7 | 3 | 21 | | Other income | 4 | 7 | 11 | 10 | | Litigation recoveries | — | 126 | — | 126 | | **Total revenues and other income** | **76** | **219** | **269** | **505** | | **Expenses:** | | | | | | Losses and loss adjustment expenses | 19 | (55) | (33) | (396) | | Amortization of deferred acquisition costs, net | 6 | 1 | 11 | 3 | | Commission expense | 7 | 5 | 29 | 18 | | General and administrative expenses | 35 | 51 | 156 | 141 | | Intangible amortization | 8 | 13 | 29 | 47 | | Interest expense | 16 | 30 | 64 | 168 | | **Total expenses** | **91** | **46** | **257** | **(20)** | | **Pretax income (loss)** | **(15)** | **173** | **12** | **525** | | Provision (benefit) for income taxes | — | (1) | 7 | 2 | | **Net income (loss)** | **(16)** | **174** | **5** | **522** | | Less: net (gain) loss attributable to noncontrolling interest | — | — | (1) | (1) | | Plus: gain on purchase of auction market preferred shares | — | 1 | — | 1 | | **Net income (loss) attributable to common stockholders** | **$(16)** | **$175** | **$4** | **$522** | | Net income (loss) per basic share | $(0.24) | $3.93 | $0.18 | $11.48 | | Net income (loss) per diluted share | $(0.24) | $3.86 | $0.18 | $11.31 | | Weighted-average number of common shares outstanding: Basic | 45,589,451 | 45,341,861 | 45,636,649 | 45,719,906 | | Diluted | 45,589,451 | 46,078,826 | 46,540,706 | 46,414,830 | [Consolidated Balance Sheets](index=13&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show an increase in total assets and stockholders' equity from year-end 2022 to year-end 2023, with notable changes in investments, reinsurance recoverables, and long-term debt Consolidated Balance Sheets (Unaudited, $ in millions, except share data) | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :---------------------------------------------- | :---------------------- | :---------------------- | | **Assets:** | | | | Fixed maturity securities, at fair value | $1,710 | $1,395 | | Fixed maturity securities - trading | 27 | 59 | | Short-term investments, at fair value | 426 | 507 | | Short-term investments pledged as collateral, at fair value | 27 | 64 | | Other investments | 475 | 568 | | **Total investments** | **2,664** | **2,593** | | Cash and cash equivalents | 28 | 44 | | Premium receivables | 290 | 269 | | Reinsurance recoverable on paid and unpaid losses | 195 | 115 | | Deferred ceded premium | 204 | 124 | | Deferred acquisition costs | 11 | 3 | | Subrogation recoverable | 137 | 271 | | Intangible assets, less accumulated amortization | 307 | 326 | | Goodwill | 70 | 61 | | Other assets | 129 | 112 | | **Variable interest entity assets:** | | | | Fixed maturity securities, at fair value | 2,167 | 1,967 | | Restricted cash | 246 | 17 | | Loans, at fair value | 1,663 | 1,829 | | Derivative and other assets | 318 | 241 | | **Total assets** | **$8,428** | **$7,973** | | **Liabilities and Stockholders' Equity:** | | | | **Liabilities:** | | | | Unearned premiums | $422 | $372 | | Loss and loss adjustment expense reserves | 893 | 805 | | Ceded premiums payable | 90 | 39 | | Deferred program fees and reinsurance commissions | 6 | 5 | | Long-term debt | 508 | 639 | | Accrued interest payable | 475 | 427 | | Other liabilities | 199 | 201 | | **Variable interest entity liabilities:** | | | | Long-term debt | 2,967 | 3,107 | | Derivative liabilities | 1,197 | 1,048 | | Other liabilities | 240 | 5 | | **Total liabilities** | **6,997** | **6,647** | | Redeemable noncontrolling interest | 17 | 20 | | **Stockholders' equity:** | | | | Additional paid-in capital | 292 | 274 | | Accumulated other comprehensive income (loss) | (160) | (253) | | Retained earnings | 1,246 | 1,245 | | Treasury stock | (17) | (15) | | **Total Ambac Financial Group, Inc. stockholders' equity** | **1,362** | **1,252** | | Nonredeemable noncontrolling interest | 53 | 53 | | **Total stockholders' equity** | **1,415** | **1,305** | | **Total liabilities, redeemable noncontrolling interest and stockholders' equity** | **$8,428** | **$7,973** | [Segment Financial Results (Detailed Tables)](index=14&type=section&id=Segment%20Financial%20Results%20(Detailed%20Tables)) This section provides comprehensive segment-level financial results, including gross premiums written, net premiums earned, various revenue and expense items, and EBITDA, for both the fourth quarter and full year periods, offering a granular view of each segment's contribution to the consolidated performance Segment Financial Results (Q4 2023 vs Q4 2022, $ in millions) | Metric | Legacy Financial Guarantee Insurance | Specialty Property & Insurance Casualty | Insurance Distribution | Corporate & Other | Consolidated | | :---------------------------------------------- | :----------------------------------- | :-------------------------------------- | :--------------------- | :---------------- | :----------- | | **Three Months Ended December 31, 2023** | | | | | | | Gross premiums written | $2.3 | $90.7 | | | $93.1 | | Net premiums written | 7.3 | 36.7 | | | 44.1 | | **Revenues:** | | | | | | | Net premiums earned | 5.6 | 24.9 | | | 30.5 | | Commission income | | | $12.2 | | 12.2 | | Program fees | | 2.5 | | | 2.5 | | Net investment income | 36.9 | 1.2 | 0.1 | $2.3 | 40.5 | | Net investment gains (losses), including impairments | (15.5) | — | | — | (15.5) | | Net gains (losses) on derivative contracts | (2.3) | | | 0.1 | (2.2) | | Other income | 7.5 | — | 0.1 | — | 7.6 | | **Total revenues and other income** | **32.2** | **28.6** | **12.3** | **2.4** | **75.5** | | **Expenses:** | | | | | | | Losses and loss adjustment expenses | 1.9 | 16.8 | | | 18.7 | | Commission expense | | | 7.4 | | 7.4 | | Amortization of deferred acquisition costs, net | — | 5.9 | | | 5.8 | | General and administrative expenses | 19.2 | 4.8 | 3.2 | 7.0 | 34.3 | | **Total expenses included for EBITDA** | **21.1** | **27.5** | **10.6** | **7.0** | **66.2** | | **EBITDA** | **11.1** | **$1.1** | **$1.8** | **$(4.7)** | **$9.3** | | Less: Interest expense | 15.9 | | | | 15.9 | | Less: Depreciation expense | 0.3 | — | — | 0.2 | 0.5 | | Less: Intangible amortization | 7.1 | | 1.1 | — | 8.3 | | **Pretax income (loss)** | **(12.2)** | **$1.1** | **$0.6** | **$(4.9)** | **$(15.3)** | | Income tax expense (benefit) | — | — | — | 0.2 | 0.3 | | **Net income (loss)** | **$(12.2)** | **$1.1** | **$0.6** | **$(5.0)** | **$(15.6)** | | **Three Months Ended December 31, 2022** | | | | | | | Gross premiums written | $(8.0) | $51.7 | | | $43.7 | | Net premiums written | $(7.9) | 10.0 | | | 2.1 | | **Revenues:** | | | | | | | Net premiums earned | 11.4 | 5.7 | | | 17.0 | | Commission income | | | $8.8 | | 8.8 | | Program fees | | 1.4 | | | 1.4 | | Net investment income | 20.8 | 0.5 | | $1.2 | 22.6 | | Net investment gains (losses), including impairments | 0.3 | — | | — | 0.3 | | Net gains (losses) on derivative contracts | 5.0 | | | — | 5.0 | | Net realized gains on extinguishment of debt | 24.3 | | | | 24.3 | | Other income | 13.7 | — | 0.2 | — | 13.9 | | Litigation recoveries | 125.9 | | | | 125.9 | | **Total revenues and other income** | **201.3** | **7.5** | **9.1** | **1.2** | **219.1** | | **Expenses:** | | | | | | | Losses and loss adjustment expenses | (58.7) | 3.7 | | | (55.1) | | Amortization of deferred acquisition costs, net | — | 1.1 | | | 1.2 | | Commission expense | | | 5.1 | | 5.1 | | General and administrative expenses | 38.7 | 3.6 | 1.9 | 6.6 | 50.9 | | **Total expenses included for EBITDA** | **(20.0)** | **8.4** | **7.0** | **6.6** | **2.1** | | **EBITDA** | **221.2** | **$(0.9)** | **$2.1** | **$(5.4)** | **$217.1** | | Less: Interest expense | 30.4 | | | | 30.4 | | Less: Depreciation expense | 0.4 | — | — | — | 0.5 | | Less: Intangible amortization | 12.4 | | 0.9 | | 13.2 | | **Pretax income (loss)** | **178.0** | **$(0.9)** | **$1.2** | **$(5.4)** | **172.9** | | Income tax expense (benefit) | (0.9) | (0.1) | — | (0.4) | (1.3) | | **Net income (loss)** | **$178.9** | **$(0.8)** | **$1.2** | **$(5.0)** | **$174.3** | Segment Financial Results (FY 2023 vs FY 2022, $ in millions) | Metric | Legacy Financial Guarantee Insurance | Specialty Property & Insurance Casualty | Insurance Distribution | Corporate & Other | Consolidated | | :---------------------------------------------- | :----------------------------------- | :-------------------------------------- | :--------------------- | :---------------- | :----------- | | **Year Ended December 31, 2023** | | | | | | | Gross premiums written | $14.8 | $273.3 | | | $288.1 | | Net premiums written | (35.5) | 79.8 | | | 44.4 | | **Revenues:** | | | | | | | Net premiums earned | 26.0 | 51.9 | | | 78.0 | | Commission income | | | $51.3 | | 51.3 | | Program fees | | 8.4 | | | 8.4 | | Net investment income | 127.0 | 3.8 | 0.1 | $9.3 | 140.1 | | Net investment gains (losses), including impairments | (22.5) | — | | 0.1 | (22.5) | | Net gains (losses) on derivative contracts | (0.7) | | | (0.3) | (1.0) | | Other income | 14.5 | — | 0.2 | — | 14.7 | | **Total revenues and other income** | **144.3** | **64.1** | **51.5** | **9.1** | **269.1** | | **Expenses:** | | | | | | | Losses and loss adjustment expenses | (69.3) | 36.7 | | | (32.6) | | Amortization of deferred acquisition costs, net | — | 10.6 | | | 10.6 | | Commission expense | | | 29.5 | | 29.5 | | General and administrative expenses | 106.3 | 16.5 | 10.6 | 21.3 | 154.6 | | **Total expenses included for EBITDA** | **37.0** | **63.7** | **40.1** | **21.3** | **162.1** | | **EBITDA** |