What changed in this filing

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Item 9A. Controls and Procedures

2025-03-06 compared with 2024-02-27 · 110 added, 78 removed, 354 unchanged (35% of the section changed)

12 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,

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.

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.

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

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become

inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Ambac management conducted an assessment of the effectiveness of Ambac’s internal control over financial reporting based on the criteria established in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Ambac management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.

Based on its evaluations, Ambac's management have concluded that, as of December 31, 2023, our internal control over financial reporting was effective based on the criteria articulated in the 2013 Internal Control - Integrated Framework.

Under guidelines established by the SEC, companies are permitted to exclude certain acquisitions from their first assessment of internal control over financial reporting following the date of acquisition.

Based on those guidelines, management’s assessment of the effectiveness of Ambac Financial Group Inc.’s internal control over financial reporting at December 31, 2024 excluded certain processes of Beat Capital Partners Limited which were not integrated into the Company’s existing internal control over financial reporting environment at December 31, 2024.

The excluded Beat Capital Partners Limited processes represented approximately 1% of the Company's total assets and approximately 17% of the Company’s total revenues, respectively.

Based on its evaluations, Ambac's management have concluded that, as of December 31, 2024, our internal control over financial reporting was effective based on the criteria articulated in the 2013 Internal Control - Integrated Framework, excluding the above noted processes of Beat Capital Partners Limited.

The effectiveness of our internal control over financial reporting as of December 31, 2024 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.

Changes in Internal Control Over Financial Reporting .

Ambac expects to complete the assessment of the design of Beat's internal controls over financial reporting by July 31, 2025.

There were no changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of 2024 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

2 unchanged sentences

No other matters require disclosure.

Ambac Financial Group, Inc.

2024 Form 10-K

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 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.

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 2025 Annual Meeting of Stockholders which will be filed within 120 days of the end of our fiscal year ended December 31, 2024 (the “2025 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.

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

Ambac Financial Group, Inc 123

2023 Form 10-K

Financial Statement Schedules

6 unchanged sentences

(3) Articles of Incorporation and bylaws:

3.1 Amended and Restated Certificate of Incorporation of Ambac Financial Group, Inc.

3.1 A m ended and Restated Certificate of Incorporation of Ambac Fina n cial Group, Inc.

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

8-K 01/27/23 2.1

Ambac Financial Group, Inc.

2024 Form 10-K

Incorporated by Reference

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

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

9 unchanged sentences

10-Q 11/09/15 4.1

4.7 Form of Warrant Agreement to be entered into at the closing of the sale of Ambac Assurance Corporation to funds managed by Oaktree Capital Management, L.P.

8-K 06/05/24 4.1

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

1 unchanged sentence

10-Q 08/11/14 10.1

10.2 Form of Amended and Restated Restricted Stock Unit Award Letter for executive officers

10-K 03/03/14 10.4

10.3 Form of Equity Award Letter for directors

10-K 03/03/14 10.5

10.2 Form of Restricted Stock Unit Award Agreement for directors

10.3 Closing Agreement between Ambac Financial, Group, Inc.

6 unchanged sentences

10-K 03/16/11 10.34

10.7 Settlement, Discontinuance and Release Agreement, dated as of March 1, 2011, by and among One State Street, LLC, Ambac Financial Group, Inc., Ambac Assurance Corporation and the Segregated Account of Ambac Assurance Corporation

10-K 03/16/11 10.33

10.6 Settlement Agreement, dated as of June 7, 2010, by and among Ambac Assurance Corporation, Ambac Credit Products LLC, Ambac Financial Group, Inc.

6 unchanged sentences

10-K 02/29/16 10.27

Ambac Financial Group, Inc 124

2023 Form 10-K

Incorporated by Reference

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

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

10-Q 11/03/16 10.2

10.12 Employment Agreement dated as of December 8, 2016, by and among Ambac Financial Group, Inc., Ambac Assurance Corporation and Claude LeBlanc

8-K 12/13/16 10.1

10.10 Amended and Restated Employment Agreement dated August 3, 2020 by and among Ambac Financial Group, Inc, Ambac Assurance Corporation and Claude LeBlanc.

10-Q 08/06/20 10.2

10.11 Employment Agreement dated as of January 4, 2017 by and among Ambac Financial Group, Inc., Ambac Assurance Corporation and Stephen Ksenak

5 unchanged sentences

10-K 02/28/18 10.39

Ambac Financial Group, Inc.

2024 Form 10-K

Incorporated by Reference

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

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

4 unchanged sentences

10-K 03/02/20 10.45

10.18 Amended and Restated Employment Agreement dated as of February 27, 2020, by and among Ambac Financial Group, Inc., Ambac Assurance Corporation and Claude LeBlanc

10-K 03/02/20 10.46

10.16 2020 Incentive Compensation Plan

3 unchanged sentences

8-K 01/25/21 1.01

10.21 Form of 2021 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc.

LeBlanc, Trick and Ksenak

10-Q 05/10/21 10.1

10.22 Form of 2021 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc.

Barranco, Eisman, Reilly and Ms.

10-Q 05/10/21 10.2

10.23 Form of 2021 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc.

LeBlanc, Trick and Ksenak

10-Q 05/10/21 10.3

10.24 Form of 2021 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc.

Barranco, Eisman, Reilly and Ms.

10-Q 05/10/21 10.4

10.18 Executive Stock Deferral Plan dated June 24, 2021

9 unchanged sentences

10-Q 05/10/22 10.1

Ambac Financial Group, Inc 125

2023 Form 10-K

Incorporated by Reference

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

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

24 unchanged sentences

10.31 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 22, 2024

(97) Recoupment Policy

10-K 02/27/24 10.38

10.32 2024 Incentive Compensation Plan

Def 14A 04/26/24 Appendix A

Ambac Financial Group, Inc.

2024 Form 10-K

Incorporated by Reference

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

10.33 Form of 2024 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc.

LeBlanc, Trick, Ksenak, McGinnis and Ms.

10-Q 05/06/24 10.1

10.34 Form of 2024 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc.

Barranco and Eisman.

10-Q 05/06/24 10.2

10.35 Form of 2024 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc.

LeBlanc, Trick, Ksenak, McGinnis and Ms.

10-Q 05/06/24 10.3

10.36 Form of 2024 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc.

Barranco and Eisman.

10-Q 05/06/24 10.4

10.37 Stock Purchase Agreement, by and between Ambac Financial Group, Inc.

and American Acorn Corporation, dated as of June 4, 2024 .

8-K 06/05/24 2.2

10.38 Shareholders’ Agreement by and among Ambac Financial Group, Inc., Cirrata V LLC, Beat Capital Partners Limited and the sellers set forth therein, dated as of August 1, 2024 .

8-K 08/02/24 10.1

10.39 Credit Agreement, by and between Ambac Financial Group, Cirrata V LLC, Cirrata Group, LLC, Cirrata V UK Ltd and UBS AG, dated as of August 1, 2024.

8-K 08/02/24 10.2

10.40 Share Purchase Agreement, by and among Ambac Financial Group, Inc., Cirrata V LLC, Beat Capital Partners Limited and the sellers set forth therein, dated as of June 4, 2024 .

8-K 06/05/24 2.2

10.41 Form of Investor Rights Agreement to be entered into at the closing of the sale of Ambac Assurance Corporation to funds managed by Oaktree Capital Management, L.P.

8-K 06/05/24 10.2

10.42 Form of Shareholders’ Agreement by and among Ambac Financial Group, Inc., Cirrata V LLC, Beat Capital Partners Limited and the sellers set forth therein.

8-K 06/05/24 10.4

10.43 Commitment Letter dated June 4, 2024, by UBS AG, Stamford Branch and UBS Securities LLC to Cirrata V LLC.

8-K 06/05/24 10.5

(19) Insider Trading Policy

19.1 Ambac Insider Trading Policy

(97) Recoupment Policy

97.1 Ambac Financial Group, Inc.

- Recoupment Policy 10-K 02/27/24 97.1

(99) Additional exhibits

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101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF XBRL Taxonomy Extension Definition Linkbase Document.

Ambac Financial Group, Inc.

2 unchanged sentences

Exhibit Description Form Filing Date Exhibit Number Filed Herewith

101.DEF XBRL Taxonomy Extension Definition Linkbase Document.

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

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Type of Investment

($ in millions)

Cost Estimated

($ in thousands) Cost Estimated

Amount at Which

2 unchanged sentences

Corporate obligations 92,990 89,192 89,192

Foreign obligations 105 100 100

government obligations 41,706 40,995 40,995

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Short-term 127,588 127,601 127,601

Fixed income - trading 24 27 27

28,170 7,499 28,118

Total $ 317,882 $ 292,120 $ 312,739

(1) Excluded from the estimated fair value amount are equity securities with a carrying value of $ 13 as of December 31, 2023, that do not have readily determinable fair values and are carried on the balance sheet at cost, less impairment, and adjusted to fair value when observable price changes in identical or similar investments from the same issuer occur, as permitted under the Investments — Equity Securities Topic of the ASC

(1) Excluded from the estimated fair value amount are equity securities with a carrying value of $ 20,618 as of December 31, 2024, that do not have readily determinable fair values and are carried on the balance sheet at cost, less impairment, and adjusted to fair value when observable price changes in identical or similar investments from the same issuer occur, as permitted under the Investments — Equity Securities Topic of the ASC, and an equity method investment of $ 177 as of December 31, 2024.

See the Report of Independent Registered Public Accounting Firm.

6 unchanged sentences

Condensed Balance Sheets

($ in millions, except share data) December 31, 2023 2022

($ in thousands, except share data) December 31, 2024 2023

Fixed maturity securities, at fair value (amortized cost of $ 0 and $ 14,045 )

Short-term investments, at fair value (amortized cost of $ 64,439 and $ 155,687 )

64,439 155,688

Other investments 28,117 18,317

Total investments (net of allowance for credit losses of $ 0 and $ 0 )

92,556 187,925

Cash and cash equivalents 9,981 250

Investment in subsidiaries 737,692 1,150,195

3 unchanged sentences

Liabilities and Stockholders' Equity:

Current taxes $ — $ 1

Accounts payable and other liabilities

26 unchanged sentences

Condensed Statement of Comprehensive Income

($ in millions) Year Ended December 31, 2023 2022 2021

($ in thousands) Year Ended December 31, 2024 2023 2022

Investment income $ 7,262 $ 9,298 $ 10,389

17 unchanged sentences

Credit risk changes of fair value option liabilities, net of income tax provision (benefit) of $( 118 ), $ 177 and $ 79

( 356 ) ( 88 ) 340

Changes to postretirement benefit, net of income tax provision (benefit) of $ — , $ — and $ —

12 unchanged sentences

Condensed Statement of Stockholders' Equity

($ in millions) Total Preferred

($ in thousands) Total Preferred

Additional Paid-in

3 unchanged sentences

Total comprehensive income (loss) 210,794 ( 310,454 ) 521,248

Adjustment to initially apply ASU 2016-13 — — — — — — —

Stock-based compensation 17,408 17,408

Cost of shares (acquired) issued under equity plan ( 3,568 ) ( 5,446 ) 1,878

Cost of shares repurchased ( 14,217 ) ( 14,217 )

Changes to redeemable NCI 2,504 — — — — 2,504 —

Cost of warrants acquired 172 — — 172 — — —

Issuance of common stock 2 — 2 — — — —

Purchase of Ambac Assurance auction market preferred shares 1,131 — — — — 1,131 —

Balance at December 31, 2022 1,252,331 — 467 274,486 ( 252,843 ) 1,245,491 ( 15,270 )

3 unchanged sentences

Cost of shares repurchased ( 4,510 ) ( 4,510 )

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

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

Changes to NCI 4,797 4,797

Balance at December 31, 2023 1,361,658 — 467 291,761 ( 160,046 ) 1,246,048 ( 16,573 )

3 unchanged sentences

Cost of shares repurchased ( 11,699 ) ( 11,699 )

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

Changes to NCI 54,264 — — 1,044 — 53,220 —

Issuance of common stock 29,229 — 22 29,207 — — —

Balance at December 31, 2024 $ 856,906 $ — $ 489 $ 331,007 $ ( 188,436 ) $ 742,185 $ ( 28,339 )

8 unchanged sentences

Condensed Statements of Cash Flow

($ in millions) Year Ended December 31, 2023 2022 2021

($ in thousands) Year Ended December 31, 2024 2023 2022

Cash flows from operating activities:

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(Increase) decrease in other assets and liabilities 7,817 ( 4,660 ) 40,976

Distributions received from majority owned subsidiary 8 6 6

Distributions received from majority owned subsidiaries 10,739 8,032 5,760

Other, net 1,814 2,392 1,109

16 unchanged sentences

Income taxes $ — $ — $ —

Non-cash financing activity:

Ambac common stock issued as partial consideration to acquire Beat $ 29,229 $ — $ —

The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the following notes.

7 unchanged sentences

Notes to Condensed Financial Information

(Dollar Amounts in Millions)

(Dollar Amounts in Thousands)

The condensed financial information of Ambac Financial Group, Inc.

1 unchanged sentence

and Subsidiaries and the notes thereto included in this Annual Report on Form 10-K for the year ended December 31, 2024.

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

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

Investments in subsidiaries are accounted for using the equity method of accounting.

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

AFG files a consolidated U.S.

Federal income tax return with its 80% or greater owned U.S.

subsidiaries.

Beat's US subsidiaries file separate U.S.

Federal income tax returns as they are not directly owned by AFG for tax purposes.

AFG and its subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions.

As of December 31, 2023, the Company has (i) $ 3,400 of NOLs, which if not utilized will begin expiring in 2030, and will fully expire in 2042, and (ii) $ 274 of interest expense tax deduction carryover, which has an indefinite carryforward period but is limited in any particular year based on certain provisions.

The NOLs allocated to AFG as of December 31, 2023, were $ 1,640 , and begin expiring in 2030 and fully expire in 2043.

As of December 31, 2024, the Company has $ 1,663,087 of NOLs, which if not utilized will begin expiring in 2030, and $ 158,663 of NOLs that carryforward indefinitely.

Discontinued Operations

On June 4, 2024, AFG entered into a stock purchase agreement (the "Purchase Agreement") with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., pursuant to which and subject to the conditions set forth therein, AFG will sell all of the issued and outstanding shares of common stock of AAC owned by AFG to the Buyer for aggregate consideration of $ 420,000 in cash, and will issue to the Buyer a warrant to purchase AFG common stock representing 9.9 % of the fully diluted shares of AFG’s common stock as of March 31, 2024, pro forma for the issuance of the Warrant (the "AAC Sale").

The terms of the AAC Sale as contemplated by the Purchase Agreement provide that, at the closing of the AAC Sale (the “Closing”), Buyer will acquire complete ownership of the common stock of AAC and all of its wholly owned subsidiaries, including Ambac UK.

For further information, see Note 5.

Discontinued Operation included in Part II, Item 8 of this Form 10-K .

Ambac Financial Group, Inc.

3 unchanged sentences

Supplementary Insurance Information

(Dollar Amounts in Millions)

(Dollar Amounts in Thousands)

Segment Deferred Acquisition Costs Loss and Loss Adjustment Expense Reserves Unearned Premium Earned Premiums Net Investment Income Loss and Loss Adjustment Expenses (Benefit) Amortization of Deferred Amortization Costs Other Operating Expenses Net Written Premiums

Legacy Financial Guarantee Insurance $ — $ 696 $ 267 $ 26 $ 127 $ ( 69 ) $ — $ 108 $ ( 35 )

Specialty Property and Casualty Insurance 8,572 349,062 182,446 99,005 6,399 72,626 23,666 17,806 88,682

Legacy Financial Guarantee Insurance $ — $ 715 $ 287 42 $ 12 $ ( 406 ) $ — $ 104 $ ( 6 )

Specialty Property and Casualty Insurance 10,960 197,089 154,878 51,911 3,795 36,712 10,557 16,452 79,824

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

Specialty Property and Casualty Insurance 3,362 89,907 85,415 13,869 1,605 9,071 2,535 13,205 28,554

5 unchanged sentences

AMBAC FINANCIAL GROUP, INC.

February 27, 2024 By:

March 6, 2025 By:

/S/ DAVID TRICK

3 unchanged sentences

/S/ JEFFREY S.

STEIN* Chairman of the Board and Director February 27, 2024

/S/ CLAUDE LEBLANC President, Chief Executive Officer and Director February 27, 2024

STEIN* Chairman of the Board and Director March 6, 2025

/S/ CLAUDE LEBLANC President, Chief Executive Officer and Director March 6, 2025

Claude LeBlanc (Principal Executive Officer)

/S/ DAVID TRICK Executive Vice President and Chief Financial Officer February 27, 2024

/S/ DAVID TRICK Executive Vice President and Chief Financial Officer March 6, 2025

David Trick (Principal Financial Officer)

/S/ ROBERT B.

EISMAN Senior Managing Director and Chief Accounting Officer February 27, 2024

EISMAN Senior Managing Director and Chief Accounting Officer March 6, 2025

Eisman (Principal Accounting Officer)

HAFT* Director February 27, 2024

IGLESIAS* Director February 27, 2024

/S/ JOAN LAMM-TENNANT* Director February 27, 2024

HAFT* Director March 6, 2025

IGLESIAS* Director March 6, 2025

/S/ JOAN LAMM-TENNANT* Director March 6, 2025

Joan Lamm-Tennant

/S/ KRISTI A.

MATUS* Director February 27, 2024

MATUS* Director March 6, 2025

/S/ MICHAEL D.

PRICE* Director February 27, 2024

PRICE* Director March 6, 2025

/S/ STEPHEN M.

KSENAK Attorney-in-fact February 27, 2024

KSENAK Attorney-in-fact March 6, 2025

Ambac Financial Group, Inc.

1 unchanged sentence

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