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Item 5. Market for Registrant’s Common Equity

2022-02-24 compared with 2021-03-01 · 14 added, 80 removed, 29 unchanged (76% of the section changed)

1 unchanged sentence

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.

Since February 3, 2020, the Company 's common stock and warrants have been 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.

4 unchanged sentences

Purchases of Equity Securities By the Issuer and Affiliated Purchasers

There were no repurchases of equity securities during the fourth quarter of 2020.

The following table summarized Ambac's share purchases during the fourth quarter of 2021.

When restricted stock unit awards issued by Ambac vest or settle, they become taxable compensation to employees.

For certain awards, shares may be withheld to cover the employee's portion of withholding taxes.

In the fourth quarter of 2021, Ambac purchased shares from employees that settled restricted stock units to meet employee tax withholdings.

| Ambac Financial Group, Inc.

27 2021 FORM 10-K |

October 2021 November 2021 December 2021 Fourth Quarter 2021

Total Shares Purchased (1)

8,057 1,342 — 9,399

Average Price Paid Per Share $ 14.38 16.49 — $ 14.68

Total Number of Shares Purchased as Part of Publicly Announced Plan — — — —

Maximum Number of Shares That may Yet be Purchased Under the Plan — — — —

(1) There were no other repurchase of equity securities made during the three months ended December 31, 2021.

Ambac does not have a stock repurchase program.

4 unchanged sentences

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, 2021, 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 4,877,617 warrants outstanding.

| Ambac Financial Group, Inc.

24 2020 FORM 10-K |

Table of Co ntents

Stock Performance Graph

10 unchanged sentences

28 2021 FORM 10-K |

Table of Co ntents

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)

Income (loss) on Variable Interest Entities ("VIEs") 5 38 3 20 (14)

Other income (3)

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity