What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-27 compared with 2023-03-01 · 60 added, 105 removed, 372 unchanged (31% of the section changed)

3 unchanged sentences

Ambac’s Disclosure Committee assists the CEO and CFO in their responsibilities to design, establish, maintain and evaluate the effectiveness of disclosure controls and procedures.

The Disclosure Committee is responsible for, among other things,

the oversight, maintenance and implementation of the disclosure controls and procedures, subject to the supervision and oversight of the CEO and CFO.

The Disclosure Committee is responsible for, among other things, the oversight, maintenance and implementation of the disclosure controls and procedures, subject to the supervision and oversight of the CEO and CFO.

Ambac’s management, with the participation of its CEO and CFO, has evaluated the effectiveness of Ambac’s disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of December 31, 2023 and, the CEO and CFO have concluded that at that date Ambac’s disclosure controls and procedures were effective at the reasonable assurance level.

6 unchanged sentences

generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of Ambac;

and (iii) provide reasonable assurance regarding the prevention or timely detection and remediation of unauthorized acquisition, use or disposition of Ambac’s assets that could have a material effect on the financial statements.

and (iii) provide reasonable assurance regarding the prevention or timely detection and remediation of unauthorized acquisition,

Ambac Financial Group, Inc 122

2023 Form 10-K

use or disposition of Ambac’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements.

4 unchanged sentences

The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which expressed an unqualified opinion on the effectiveness of Ambac’s internal control over financial reporting.

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133 2022 FORM 10-K

Changes in Internal Control Over Financial Reporting.

1 unchanged sentence

Other Information

On February 22, 2023, Mr.

James Prieur resigned as a member of the Board of Directors of each of Ambac Financial Group, Inc.

and Ambac Assurance Corporation.

In the last fiscal quarter, none of our directors or executive officers adopted , terminated , or modified any Rule 10b5-1 trading arrangement, or any non-Rule 10b5-1 trading arrangement.

No other matters require disclosure.

Directors, Executive Officers and Corporate Governance

Information relating to AFG’s executive officers and directors, including its audit committee and audit committee financial experts, will be in AFG’s definitive Proxy Statement for its 2023 Annual Meeting of Stockholders which will be filed within 120 days of the end of our fiscal year ended December 31, 2022 (the “2023 Proxy Statement”) and is incorporated herein by reference.

Ambac has a Code of Business Conduct and Ethics which promotes management’s commitment to integrity and expresses

Ambac’s standards for ethical behavior by providing guidelines for handling business situations appropriately.

Information relating to AFG’s executive officers and directors, including its audit committee and audit committee financial

experts, will be in AFG’s definitive Proxy Statement for its 2024 Annual Meeting of Stockholders which will be filed within 120 days of the end of our fiscal year ended December 31, 2023 (the “2024 Proxy Statement”) and is incorporated herein by reference.

Ambac has a Code of Business Conduct and Ethics which promotes management’s commitment to integrity and expresses Ambac’s standards for ethical behavior by providing guidelines for handling business situations appropriately.

This code can be found on Ambac’s website at www.ambac.com on the “Environmental, Social & Governance” page under "Governance Documents." Ambac will disclose on its website any amendment to, or waiver from, a provision of its Code of Business Conduct and Ethics that applies to its Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer.

3 unchanged sentences

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information relating to security ownership of certain beneficial owners of AFG’s common stock and information relating to the security ownership of AFG’s management will be in the 2023 Proxy Statement and is incorporated herein by reference.

Equity Compensation Plan Information

The following table provides information as of December 31, 2022, regarding securities issued under our 2013 Incentive Compensation Plan and 2020 Incentive Compensation Plan.

Number of Securities

to be Issued Upon

Outstanding Options,

Warrants and Rights

Weighted-Average

Exercise Price of

Warrants and Rights

Number of Securities

Remaining Available

for Future Issuance

Compensation Plans

(Excluding Securities

Reflected in the

Third Column)

Equity compensation plans approved by security holders 2013 Incentive

Compensation Plan (1)

2020 Incentive

Compensation Plan (1)

2,755,432 $0.00 74,907 (4)

Equity compensation plans not approved by security holders None --- --- ---

Total 3,825,071 (2) (3)

(1) Our 2020 Incentive Compensation Plan ("2020 Plan") was approved by the stockholders of AFG on June 2, 2020, as a successor to our 2013 Incentive Compensation Plan ("2013 Plan") which was approved on December 18, 2013.

Effective June 2, 2020, awards may no longer be granted under the 2013 Plan;

authorized and unissued shares under the 2013 Plan are available for issuance under the 2020 Plan.

(2) Represents, as of December 31, 2022, the number of outstanding restricted stock unit awards and the maximum number of performance stock units that may be issued if certain performance goals are achieved.

Refer to Note 18.

Employment Benefit Plans to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for a description of the grants made under our 2013 and 2020 Incentive Compensation Plans.

This amount includes 983,016 restricted stock units and 2,842,055 performance stock units which are based on the maximum number of shares potentially payable under the awards.

Maximum number of shares potentially payable under performance awards is 240% of target.

(3) Each restricted stock unit and performance stock unit awarded under our 2013 and 2020 Incentive Compensation Plans was granted at no cost to the persons receiving them.

Restricted stock units represent the contingent right to receive the equivalent number of shares of AFG common stock and may vest after the passage of time.

Performance stock units represent the contingent right to receive a number of shares of AFG common stock up to 240%

| Ambac Financial Group, Inc.

134 2022 FORM 10-K

of the number of units granted depending upon the achievement of certain company-wide performance goals at the end of a specified performance period.

(4) Represents the number of securities remaining available for future issuance under compensation plans assuming the maximum number of shares are issued on settlement of performance stock units.

The number of securities remaining available for future issuance under compensation plans assuming the probable number of shares are issued on settlement of performance stock units would be 1,145,243 .

(5) There are no outstanding options as of December 31, 2020.

Performance shares and restricted stock units are not included in determining weighted-average price as they have no exercise price.

Information relating to security ownership of certain beneficial owners of AFG’s common stock and information relating to the security ownership of AFG’s management, as well as information related to equity compensation plans, will be in the 2024 Proxy Statement and is incorporated herein by reference.

Certain Relationships and Related Transactions, and Director Independence

6 unchanged sentences

The consolidated financial statements included in Part II, Item 8 above are filed as part of this Annual Report on Form 10-K.

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2023 Form 10-K

Financial Statement Schedules

2 unchanged sentences

Schedule II — Condensed Financial Information of Registrant (Parent Company Only)

Schedule I II — Supplementary Insurance Information

Schedule III — Supplementary Insurance Information

Incorporated by Reference

3 unchanged sentences

3.2 Amended By-Laws of Ambac Financial Group, Inc.

8-K 01/27/23 2.1

(4) Instruments defining the rights of security holders, including indentures:

2 unchanged sentences

8-A 05/01/13 4.1

4.3 Warrant Agreement between Ambac Financial Group, Inc.

and Computershare Inc.

8-A 05/01/13 4.2

4.4 Specimen form of warrant certificate (included in Exhibit 4.2)

4.3 Fiscal Agency Agreement, dated as of July 19, 2010, by and between the Segregated Account of Ambac Assurance Corporation and The Bank of New York Mellon, as fiscal agent

1 unchanged sentence

4.4 Form of Surplus Note due June 7, 2020 issued by the Segregated Account of Ambac Assurance Corporation.(included in Exhibit 4.9)

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135 2022 FORM 10-K

Incorporated by Reference

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

4.5 Fiscal Agency Agreement, dated as of June 7, 2010, by and between Ambac Assurance Corporation and The Bank of New York Mellon, as fiscal agent

2 unchanged sentences

10-Q 11/09/15 4.1

4.9 Indenture (including the form of Notes), dated as of July 6, 2021, between Sitka Holdings, LLC and The Bank of New York Mellon, as trustee and note collateral agent

8-K 07/06/21 4.1

4.10 Promissory Note and Security Agreement issued by Ambac Assurance Corporation in favor of Sitka Holdings, LLC

8-K 07/06/21 4.3

(10) Material contract and management compensation plans and arrangements:

10 unchanged sentences

and their respective subsidiaries and affiliates

10-K 03/01/23 10.5

10.6 Lease, dated as of March 1, 2011, by and between One State Street, LLC and Ambac Assurance Corporation

10 unchanged sentences

10-K 02/29/16 10.27

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2023 Form 10-K

Incorporated by Reference

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

10.11 Employment Agreement dated as of November 1, 2016 by and among Ambac Financial Group, Inc., Ambac Assurance Corporation and David Trick

9 unchanged sentences

10-K 02/28/18 10.39

10.16 Stipulation and Order - Office of the Commissioner of Insurance of the State of Wisconsin, in the Matter of the Rehabilitation of the Segregated Account of Ambac Assurance Corporation effective as of February 12, 2018

10-K 02/28/18 10.40

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Incorporated by Reference

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

10.17 Amendment No.

1 to the Stipulation and Order - Office of the Commissioner of Insurance of the State of Wisconsin, in the Matter of the Rehabilitation of the Segregated Account of Ambac Assurance Corporation effective as of February 12, 2018

10-K 02/28/19 10.37

10.16 Preferred Stock Repurchase and Support Agreement dated as of June 22, 2018, by and among Ambac Assurance Corporation (“AAC”), Ambac Financial Group, Inc.

23 unchanged sentences

10-Q 05/10/21 10.4

10.25 Executive Stock Deferral Plan dated June 24, 2021

8-K 06/30/21 10.1

10.26 Settlement Agreement and Release dated as of October 6, 2022 by and among Bank of America Corporation and certain affiliates and Ambac Assurance Corporation (Portions of this exhibit have been omitted in reliance on Regulation S-K Item 601(b)(10)(iv))

10-K 03/01/23 10.34

10.27 Settlement Agreement and Release dated as of December 29, 2022 by and among Nomura Credit & Capital, Inc.

and Ambac Assurance Corporation.

(Portions of this exhibit have been omitted in reliance on Regulation S-K Item 601(b)(10)(iv))

10-K 03/01/23 10.35

10.28 Form of 2022 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc.

1 unchanged sentence

10-Q 05/10/22 10.1

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2023 Form 10-K

Incorporated by Reference

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

10.29 Form of 2022 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc.

Barranco, Eisman, Reilly and Ms.

Barranco, Eisman, McGinnis and Ms.

10-Q 05/10/22 10.2

3 unchanged sentences

10.31 Form of 2022 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc.

Barranco, Eisman, Reilly and Ms.

Barranco, Eisman, McGinnis and Ms.

10-Q 05/10/22 10.4

10.31 Executive Stock Deferral Plan dated June 24, 2021

8-K 06/30/21 10.1

10.32 Financial Guaranty Insurance Policy, dated July 6, 2021, issued by Ambac Assurance Corporation

8-K 07/06/21 10.1

10.33 Collateral Agreement, dated as of July 6, 2021, made by Sitka Holdings, LLC in favor of The Bank of New York Mellon, as note collateral agent and trustee

10.32 Employment Agreement dated as of October 5, 2023, by and among Ambac Financial Group, Inc., Ambac Assurance Corporation and R.

8-K 10/06/23 10.1

10.34 Settlement Agreement and Release dated as of October 6, 2022 by and among Bank of America Corporation and certain affiliates and Ambac Assurance Corporation (Portions of this exhibit have been omitted in reliance on Regulation S-K Item 601(b)(10)(iv))

10.35 Settlement Agreement and Release dated as of December 29, 2022 by and among Nomura Credit & Capital, Inc.

and Ambac Assurance Corporation.

(Portions of this exhibit have been omitted in reliance on Regulation S-K Item 601(b)(10)(iv))

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137 2022 FORM 10-K

Incorporated by Reference

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

10.33 Employment Agreement dated as of October 5, 2023, by and among Ambac Financial Group, Inc., Ambac Assurance Corporation and Daniel McGinnis

10-Q 11/07/23 10.2

10.34 Form of 2023 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc.

10 unchanged sentences

10-Q 05/09/23 10.4

10.38 Stipulation and Order - Office of the Commissioner of Insurance of the State of Wisconsin, in the Matter of Ambac Assurance Corporation effective as of February 2 2 , 20 24

(97) Recoupment Policy

97.1 Ambac Financial Group, Inc.

- Recoupment Policy

(99) Additional exhibits

15 unchanged sentences

101.DEF XBRL Taxonomy Extension Definition Linkbase Document.

104 Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags or embedded within the Inline XBRL document

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2023 Form 10-K

Incorporated by Reference

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

++ Furnished herewith.

57 unchanged sentences

1,463,774 and 1,685,233

( 17 ) ( 15 )

Total Ambac Financial Group, Inc.

18 unchanged sentences

Total expenses 22 17 19

Income (loss) before income taxes and equity in undistributed net gain (loss) of subsidiaries ( 20 ) ( 14 ) ( 7 )

Income (loss) before income taxes and net income (loss) of subsidiaries ( 13 ) ( 20 ) ( 14 )

Federal income tax provision (benefit) ( 1 ) — 2

Income (loss) before net income (loss) of subsidiaries ( 11 ) ( 19 ) ( 16 )

Net gain (loss) of subsidiaries 542 ( 1 ) ( 430 )

Net income (loss) of subsidiaries 15 542 ( 1 )

Net income (loss) $ 4 $ 522 $ ( 17 )

20 unchanged sentences

Condensed Statement of Stockholders' Equity

($ in millions) Total Retained

($ in millions) Total Preferred

Additional Paid-in

Comprehensive

Income (Loss)

Additional Paid-in

Balance at January 1, 2021 $ 1,080 $ — $ — $ 242 $ 79 $ 759 $ ( 1 )

7 unchanged sentences

Cost of shares (acquired) issued under equity plan ( 4 ) — — — — ( 5 ) 2

Cost of shares repurchased (14) — — — — — (14)

Changes to redeemable noncontrolling interest 3 — — — — 3 —

Purchase of Ambac Assurance auction market preferred shares 1 — — — — 1 —

Balance at December 31, 2022 1,252 — — 274 ( 253 ) 1,245 ( 15 )

4 unchanged sentences

Change in redeemable noncontrolling interest 5 — — — — 5 —

Purchase of Ambac Assurance auction market preferred shares 1 1 — — — — —

Balance at December 31, 2023 $ 1,362 $ — $ — $ 292 $ ( 160 ) $ 1,246 $ ( 17 )

26 unchanged sentences

Change in other investments ( 3 ) ( 4 ) ( 8 )

Acquisitions, net of cash acquired — — ( 74 )

Net cash provided by (used in) investing activities 16 12 95

23 unchanged sentences

AFG, headquartered in New York City, is a financial services holding company incorporated in the state of Delaware on April 29, 1991 .

Business Combinations

Effective November 1, 2022, Ambac completed the acquisition of 85 % of All Trans Risk Solutions, LLC ("All Trans") and 80 % of Capacity Marine Corporation ("Capacity Marine") for a combined purchase price of $ 26 in cash.

All Trans is a full service managing general underwriter specializing in commercial automobile insurance for specific "for-hire" auto classes, and (iii) Capacity Marine is a wholesale retail brokerage and reinsurance intermediary specializing in marine and international risk.

Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company's Consolidated Financial Statements may be provisional and thus subject to further adjustments within the permitted measurement period as defined by ASC 805.

On December 31, 2020, Ambac completed the acquisition of 80 % of the membership interests of Xchange for a purchase price of $ 81 in cash.

Xchange is a property and casualty Managing General Underwriter focused on accident and health products.

Business Combination to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for further information.

AFG files a consolidated Federal income tax return with its U.S.

14 unchanged sentences

Specialty Property and Casualty Insurance 3 90 85 14 2 9 3 13 29

Legacy Financial Guarantee Insurance $ — $ 1,538 $ 385 46 $ 138 $ ( 89 ) $ — $ 77 $ ( 35 )

Specialty Property and Casualty Insurance — 32 10 1 1 — — 9 13

See the Report of Independent Registered Public Accounting Firm.

Form 10-K Summary .

Ambac Financial Group, Inc 134

17 unchanged sentences

HAFT* Director February 27, 2024

HERZOG* Director February 28, 2023

IGLESIAS* Director February 27, 2024

1 unchanged sentence

Joan Lamm-Tennant

/S/ KRISTI A.

MATUS* Director February 27, 2024

/S/ MICHAEL D.

PRICE* Director February 27, 2024

/S/ STEPHEN M.

3 unchanged sentences

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 9A. Controls and Procedures