Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
On February 3, 2020, the Company 's common stock and warrants began trading on the NYSE under the symbol “AMBC" and "AMBC WS," respectively. Prior to being listed on the NYSE, the Company's common stock and warrants were listed on NASDAQ under the symbols “AMBC” and "AMBCW," respectively.
Holders
On February 26, 2021, there were 20 stockholders of record of AFG’s common stock and 60 holders of record of AFG's warrants.
Dividends
The Company did not pay cash dividends on its common stock during 2020 and 2019. Information concerning restrictions on the payment of dividends from Ambac's insurance subsidiaries is set forth in Item 1 above under the caption “Dividend Restrictions, Including Contractual Restrictions" and in Note 9. Insurance Regulatory Restrictions to the Consolidated Financial Statements included in Part II, Item 8 in this Form 10-K.
Purchases of Equity Securities By the Issuer and Affiliated Purchasers
There were no repurchases of equity securities during the fourth quarter of 2020. Ambac does not have a stock repurchase program.
Warrants
Each warrant represents the right to purchase one share of AFG common stock. The warrants are exercisable for cash at any time on or prior to April 30, 2023 at an exercise price of $16.67 per share. The warrants also have a cashless exercise provision.
On June 30, 2015, the Board of Directors of AFG authorized the establishment of a warrant repurchase program that permits the repurchase of up to $10 million of warrants. On November 3, 2016, the Board of Directors of AFG authorized an additional $10 million to the warrant repurchase program. AFG repurchased 985,331 warrants at a cost of $8.1 million and then reissued 824,307 of the repurchased warrants on August 3, 2018 in connection with the AMPS Exchange (as defined in Note 1. Background and Business Description to the Consolidated Financial Statements included in Part II, Item 8 in this Form 10-K). The remaining aggregate authorization at December 31, 2020 is $11.9 million. Refer to Note 1. Background and Business Description to the Consolidated Financial Statements included in Part II, Item 8 in this Form 10-K for further discussion of the AMPS Exchange. Ambac currently has 4,877,749 warrants outstanding.
| Ambac Financial Group, Inc. 24 2020 FORM 10-K |
Table of Co ntents
Stock Performance Graph
The following graph compares the performance of an investment in our common stock from the close of business on December 31, 2015 through December 31, 2020, with the Russell 2000 Index and S&P Completion Index. The graph assumes $100 was invested on December 31, 2015 in our common Stock at the closing price of $14.09 per share and at the closing price for the Russell 2000 Index and S&P Completion Index. It also assumes that dividends (if any) were reinvested on the date of payment without payment of any commissions. The performance shown in the graph represents past performance and should not be considered an indication of future performance.
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December 31,
2015 2016 2017 2018 2019 2020
Ambac Financial Group, Inc. $100 $160 $113 $122 $153 $109
Russell 2000 Index $100 $120 $136 $119 $148 $175
S&P Completion Index $100 $114 $133 $119 $150 $195
| Ambac Financial Group, Inc. 25 2020 FORM 10-K |
Table of Co ntents
Item 6. Selected Financial Data
The following financial information for the five years ended December 31, 2020, has been derived from Ambac’s Consolidated Financial Statements. This information should be read in conjunction with the Consolidated Financial Statements and related notes located in Part II, Item 8 in this Form 10-K.
Year Ended December 31,
($ in millions, except per share data) 2020 2019 2018 2017 2016
Total Comprehensive Income (Loss) Highlights:
Gross premiums written $ (1) $ (28) $ (24) $ (14) $ (54)
Net premiums earned 54 66 111 175 197
Net investment income (2)
122 227 273 361 313
Net realized investment gains 22 81 108 $ (15) 17
Net gains (losses) on derivative contracts (50) (50) 7 76 (30)
Net realized (losses) gains on extinguishment of debt (2)
— — 3 5 5
Income (loss) on Variable Interest Entities ("VIEs") 5 38 3 20 (14)
Other income (3)
3 134 5 — 18
Losses and loss expenses (benefit) (1) (2)
225 13 (224) 513 (11)
Operating expenses (2)
92 103 112 122 114
Interest expense (2)
222 269 242 120 124
Insurance intangible amortization 57 295 107 151 175
Pre-tax income (loss) (440) (183) 273 (284) 105
Net income (loss) (437) (216) 267 (329) 74
Net income (loss) attributable to Common Shareholders (437) (216) 186 (329) 75
Total comprehensive income attributable to Ambac Financial Group, Inc. (400) (125) 192 (335) 21
Net income (loss) per share:
Basic $ (9.47) $ (4.69) $ 4.07 $ (7.25) $ 1.66
Diluted $ (9.47) $ (4.69) $ 3.99 $ (7.25) $ 1.64
(1) Ambac records the impact of estimated recoveries related to securitized loans in RMBS transactions that breached certain representations and warranties within losses and loss expenses (benefit). The expense (benefit) associated with changes to our estimated recoveries for the years ended December 31, 2020, 2019, 2018, 2017 and 2016 were $(23), $42, $62, $72, and $(71), respectively.
(2) On February 12, 2018, AAC executed the Rehabilitation Exit Transactions (as defined in Note 1. Background and Business Description to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K). These transactions directly resulted in: (i) a Loss and loss expense benefit of $288; (ii) operating expenses of $17 and (iii) realized gains on extinguishment of debt of $3. Additionally, changes to the investment portfolio and to the composition of long-term debt arising from the transactions significantly impacted net investment income and interest expense for 2018 compared to prior years. Refer to Results of Operations included in Item 7 of this Form 10-K for a further discussion of the Rehabilitation Exit Transactions and their impact on financial results in 2018.
(3) Other income also includes proceeds received by AAC in September 2019 in connection with an SEC action against Citigroup Global Markets Inc. in the amount of $142. Refer to Note 17. Commitments and Contingencies located in Part II Item 8 in this Form 10-K for further details on the SEC action.
| Ambac Financial Group, Inc. 26 2020 FORM 10-K |
Table of Co ntents
($ in millions) December 31 2020 2019 2018 2017 2016
Balance Sheet Highlights:
Total non-variable interest entity investments $ 3,544 $ 3,792 $ 3,937 $ 5,741 $ 6,500
Cash and cash equivalents 20 24 63 624 91
Premium receivable 370 416 495 586 661
Insurance intangible asset 409 427 719 847 962
Subrogation recoverable (1)
2,156 2,029 1,933 631 685
Deferred ceded premium 70 82 61 52 70
Total VIE assets 6,398 6,286 7,093 14,501 13,368
Total assets 13,220 13,320 14,589 23,192 22,636
Unearned premiums 456 518 630 783 967
Loss and loss expense reserves (1)
1,759 1,548 1,826 4,745 4,381
Long-term debt (2)
2,739 2,822 2,929 992 1,114
Derivative liabilities 114 90 77 83 319
Total VIE liabilities 6,328 6,212 6,981 14,366 13,235
Total liabilities 12,074 11,783 12,956 21,547 20,658
Total stockholders’ equity 1,140 1,536 1,633 1,645 1,978
Total liabilities and stockholders' equity $ 13,220 $ 13,320 $ 14,589 $ 23,192 $ 22,636
(1) Ambac records as a component of its loss reserves and subrogation recoverable, estimated recoveries related to securitized loans in RMBS transactions that breached certain representations and warranties ("R&W"). Ambac has recorded gross estimated R&W recoveries of $1,751, $1,727, $1,771, $1,834, and $1,907 at December 31, 2020, 2019, 2018, 2017 and 2016, respectively.
(2) Long-term debt includes AAC surplus notes and junior surplus notes, the Ambac Note and Tier 2 Notes issued in connection with the Rehabilitation Exit Transactions in 2018 and the Ambac UK debt issued in connection with the Ballantyne commutation in 2019. Long-term debt for all years excludes the portion of long-term debt associated with variable interest entities.