PART I. FINANCIAL INFORMATION Item 1. Unaudited Financial Statements This section presents the unaudited consolidated financial statements and related notes for the periods ended June 30, 2025, and 2024 Consolidated Balance Sheets Total assets grew to $8.52 billion, driven by an increase in assets held-for-sale from the pending AAC divestiture Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $8,522,386 | $8,058,378 | | Assets held-for-sale | $6,592,417 | $6,267,200 | | Goodwill | $451,808 | $418,234 | | Intangible assets, less accumulated amortization | $353,904 | $344,775 | | Total Liabilities | $7,303,678 | $6,862,857 | | Liabilities held-for-sale | $6,213,024 | $5,887,685 | | Short-term debt | $150,000 | $150,000 | | Total Stockholders' Equity | $1,028,361 | $1,054,661 | Consolidated Statements of Income (Loss) The company reported a Q2 2025 net loss of $72.7 million, driven by a significant loss from discontinued operations Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $54,957 | $51,037 | $117,713 | $100,588 | | Total Expenses | $77,931 | $65,786 | $155,794 | $118,576 | | Net income (loss) from continuing operations | $(20,802) | $(14,719) | $(35,292) | $(18,088) | | Net income (loss) from discontinued operations | $(52,151) | $14,182 | $(82,398) | $38,322 | | Net income (loss) attributable to shareholders | $(72,699) | $(750) | $(119,090) | $19,320 | | Diluted EPS | $(1.54) | $(0.02) | $(2.75) | $0.42 | Consolidated Statements of Cash Flows Net cash used in continuing operations was $0.9 million for the first six months of 2025, a reversal from cash provided in 2024 Cash Flow Summary - Continuing Operations (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $(10,463) | $27,481 | | Net cash from investing activities | $18,030 | $(19,826) | | Net cash from financing activities | $(9,747) | $(1,732) | | Net cash provided by (used in) continuing operations | $(892) | $5,923 | Notes to Unaudited Consolidated Financial Statements These notes detail segment performance, the discontinued operation of AAC, and key accounting policies - The company's principal businesses are organized into two segments: Insurance Distribution and Specialty Property & Casualty Insurance2229 - The pending sale of Ambac Assurance Corporation (AAC) has led to its assets and liabilities being classified as held-for-sale and its operations reported as discontinued2728 Note 2. Segment Information The Specialty P&C segment generated pre-tax income while the Insurance Distribution segment posted a pre-tax loss in Q2 2025 Segment Pretax Income (Loss) for Q2 2025 (in thousands) | Segment | Q2 2025 Pretax Income (Loss) | Q2 2024 Pretax Income (Loss) | | :--- | :--- | :--- | | Specialty Property & Casualty Insurance | $620 | $(1,097) | | Insurance Distribution | $(10,173) | $1,257 | | Corporate & Other | $(13,423) | $(14,908) | | Total | $(22,974) | $(14,749) | Note 3. Discontinued Operation Ambac agreed to sell Ambac Assurance Corporation (AAC) for $420 million, recording an additional $53.0 million loss on disposal in Q2 2025 - AFG entered into an agreement to sell all common stock of its subsidiary, Ambac Assurance Corporation (AAC), for $420 million in cash, pending regulatory approval5860 Loss on Disposal Calculation (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fair value of net consideration | $402,239 | $399,727 | | Less: estimated closing costs | $7,535 | $7,235 | | Net Proceeds | $394,704 | $392,492 | | Carrying amount of net assets held for-sale | $1,032,305 | $962,637 | | Loss on disposal | $(637,601) | $(570,145) | Note 6. Insurance Contracts Net premiums written for continuing operations decreased significantly due to the non-renewal of certain programs Premiums Written and Earned (in thousands) | Premium Type | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Direct Written | $89,849 | $90,714 | | Assumed Written | $6,399 | $20,492 | | Ceded Written | $(81,041) | $(78,917) | | Net Premiums Written | $15,207 | $32,289 | | Net Premiums Earned | $16,203 | $27,054 | Note 11. Net Income Per Share The company reported a diluted EPS loss of $1.54 for Q2 2025 and continued its share repurchase program Share Repurchase Activity (YTD 2025) | Metric | YTD 2025 | | :--- | :--- | | Shares repurchased | 292,191 | | Total cost (in thousands) | $3,301 | | Average purchase price per share | $11.29 | | Unused authorization amount (in thousands) | $35,001 | Earnings Per Share Calculation (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) attributable to common stockholders | $(72,699) | $(750) | | Adjustments for NCI | $(1,241) | $(184) | | Numerator for EPS | $(73,940) | $(934) | | Basic & Diluted EPS | $(1.54) | $(0.02) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the performance of its continuing businesses, liquidity, and the impact of the Beat acquisition and AAC sale Results of Operations The Q2 2025 net loss from continuing operations widened, influenced by acquisition costs and lower earned premiums - The Specialty P&C Insurance segment's combined ratio improved to 106.7% for Q2 2025 from 109.4% in Q2 2024, driven by a lower loss ratio194195197 - The Insurance Distribution segment's pre-tax loss of $10.2 million in Q2 2025 was primarily driven by costs related to the Beat acquisition203205 - Corporate expenses were lower in Q2 2025 due to reduced costs related to corporate development and the sale of AAC214 Liquidity and Capital Resources The holding company's net assets decreased, with future liquidity dependent on the $420 million proceeds from the AAC sale - AFG's liquidity is primarily dependent on its net assets (excluding operating subsidiaries), which totaled $84.9 million at June 30, 2025215216 - The company has a $150 million short-term credit facility related to the Beat acquisition, which it plans to repay with proceeds from the AAC sale217 - Future funding needs could be significant, with potential payments for puts, calls, and other capital commitments estimated at approximately $300 million through 2030218 Non-GAAP Financial Measures Consolidated Adjusted EBITDA was a loss of $2.5 million in Q2 2025, and the Insurance Distribution segment's organic revenue declined Adjusted EBITDA Reconciliation (in thousands) | Segment | Q2 2025 Adj. EBITDA | Q2 2024 Adj. EBITDA | | :--- | :--- | :--- | | Specialty Property & Casualty Insurance | $681 | $(1,023) | | Insurance Distribution | $4,580 | $2,404 | | Corporate & Other | $(7,771) | $(1,562) | | Consolidated | $(2,508) | $(182) | Insurance Distribution Organic Revenue Growth | Period | 2025 | 2024 | % Growth | | :--- | :--- | :--- | :--- | | Q2 Organic Revenue ($ thousands) | $11,852 | $12,165 | (2.6)% | | Six Months Organic Revenue ($ thousands) | $28,189 | $28,848 | (2.3)% | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes in its exposure to market risks since year-end 2024 - There are no material changes in the company's market risks compared to December 31, 2024271 Item 4. Controls and Procedures Management concluded that disclosure controls were effective, excluding the recently acquired Beat Capital Partners - Management concluded that disclosure controls and procedures were effective as of June 30, 2025273 - The assessment of internal control over financial reporting excluded Beat Capital Partners Limited, which was acquired in 2024274 PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 13 of the financial statements for details on ongoing legal proceedings - For information on legal proceedings, the report refers to Note 13 in Part I, Item 1276 Item 1A. Risk Factors Key risks include the potential failure to complete the AAC sale, catastrophic events, and strain from acquisition-related debt - A primary risk is that the sale of Ambac Assurance Corporation (AAC) may not be completed as anticipated due to failure to receive regulatory approvals278 - Catastrophic events could cause volatility in earnings, inadequacy of loss reserves, and declines in revenue for the company's insurance businesses283286 - The company has substantial indebtedness ($150 million Credit Facility) which could adversely affect its financial condition and operational flexibility291292 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 292,191 shares for $3.3 million year-to-date, with $35.0 million remaining under its authorization Share Repurchase Summary | Period | Shares Repurchased | Total Cost (in thousands) | Avg. Price Per Share | Unused Authorization (in thousands) | | :--- | :--- | :--- | :--- | :--- | | YTD 2025 | 292,191 | $3,300 | $11.29 | $35,001 |
Ambac(AMBC) - 2025 Q2 - Quarterly Report