Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures . Ambac’s disclosure controls and procedures are designed to ensure that information required to be disclosed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including without limitation that information required to be disclosed by Ambac in its SEC filings is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) as appropriate to allow for timely decisions regarding required disclosure.
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. 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, 2024 and, the CEO and CFO have concluded that at that date Ambac’s disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Report on Internal Control Over Financial Reporting . Management of Ambac is responsible for establishing and maintaining adequate internal control over financial reporting. Ambac’s internal control over financial reporting is a process designed under the supervision of the CEO and CFO and overseen by Ambac’s Board of Directors to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ambac’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. Ambac’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of Ambac; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. 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.
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.
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.
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.
Item 9B. Other Information
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.
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PART III
Item 10. 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 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. 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. Ambac’s corporate governance guidelines and the charters for the committees of the Board of Directors are also available on our website under the “Governance Documents” page.
Item 11. Executive Compensation
Information relating to Ambac’s executive officer and director compensation will be in the 2025 Proxy Statement and is incorporated herein by reference.
Item 12. 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, as well as information related to equity compensation plans, will be in the 2025 Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information relating to Ambac with respect to certain relationships and related transactions and director independence will be in the 2025 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
Information relating to principal accountant fees and services will be in the 2025 Proxy Statement and is incorporated herein by reference.
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) Documents filed as a part of this report:
1. Financial Statements
The consolidated financial statements included in Part II, Item 8 above are filed as part of this Annual Report on Form 10-K.
2. Financial Statement Schedules
The financial statement schedules filed herein, which are the only schedules required to be filed, are as follows:
Page
Schedule I — Summary of Investments Other Than Investments in Related Parties
104
Schedule II — Condensed Financial Information of Registrant (Parent Company Only)
105
Schedule III — Supplementary Insurance Information
110
Incorporated by Reference
Exhibit Description Form Filing Date Exhibit Number Filed Herewith
(3) Articles of Incorporation and bylaws:
3.1 A m ended and Restated Certificate of Incorporation of Ambac Fina n cial Group, Inc.
10-Q
08/04/24
3.1
3.2 Amended By-Laws of Ambac Financial Group, Inc.
8-K 01/27/23 2.1
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Incorporated by Reference
Exhibit Description Form Filing Date Exhibit Number Filed Herewith
(4) Instruments defining the rights of security holders, including indentures:
4.1 Description of Capital Stock
8-A
05/01/13
4.2 Specimen form of common stock certificate
8-A 05/01/13 4.1
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
10-K 03/03/14 4.10
4.4 Form of Surplus Note due June 7, 2020 issued by the Segregated Account of Ambac Assurance Corporation.(included in Exhibit 4. 3 )
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
8-K 06/08/10 10.3
4.6 Amendment dated as of October 3, 2014 to 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
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:
10.1 Ambac Financial Group, Inc.'s Long-Term Incentive Compensation Plan
10-Q 08/11/14 10.1
10.2 Form of Restricted Stock Unit Award Agreement for directors
X
10.3 Closing Agreement between Ambac Financial, Group, Inc. and Commissioner of Internal Revenue, dated April 30, 2013
8-K 05/03/13 10.2
10.4 Form of Expense Sharing and Cost Allocation Agreement among Ambac Assurance Corporation, Ambac Financial Group, Inc. and their respective subsidiaries and affiliates
10-K 03/01/23 10.5
10.5 Lease, dated as of March 1, 2011, by and between One State Street, LLC and Ambac Assurance Corporation
10-K 03/16/11 10.34
10.6 Settlement Agreement, dated as of June 7, 2010, by and among Ambac Assurance Corporation, Ambac Credit Products LLC, Ambac Financial Group, Inc. and the parties listed on Schedule A thereto
10-Q 11/15/10 10.1
10.7 Ambac Financial Group, Inc. Severance Pay Plan (Applicable to termination on or after December 16, 2021)
10-K 02/24/22 10.10
10.8 Lease Modification dated as of September 8, 2015 to the Lease dated as of March 1, 2011, by and between One State Street, LLC and Ambac Assurance Corporation
10-K 02/29/16 10.27
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
10.10 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
8-K 01/06/17 10.1
10.12 Second Amended Plan of Rehabilitation of the Segregated Account of Ambac Assurance Corporation dated September 25, 2017, and effective as of February 12, 2018
10-K 02/28/18 10.38
10.13 Order Granting the Rehabilitator’s Motion to Further Amend the Plan of Rehabilitation and confirming the Second Amended Plan of Rehabilitation, as amended, Case No. 10-CV-1576 (Dane County, Wisconsin) dated January 22, 2018
10-K 02/28/18 10.39
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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. and the holders of one or more series of the AAC’s outstanding Auction Market Preferred Shares
8-K 06/25/18 10.1
10.15 SUBLEASE dated as of January 30, 2019, between Advance Magazine Publishers Inc. (D/B/A CONDE NAST), and Ambac Assurance Group Corporation
10-K 03/02/20 10.45
10.16 2020 Incentive Compensation Plan
Def 14A 04/15/20 Ex. B
10.17 Purchase Agreement, by and among, Ambac Assurance Corporation, Ambac Financial Group, Inc. and certain funds or accounts affiliated with or managed by CVC Credit Partners, LLC, CVC Credit Partners Investment Management Limited and EJF Capital LLC, dated as of January 19, 2021
8-K 01/25/21 1.01
10.18 Executive Stock Deferral Plan dated June 24, 2021
8-K 06/30/21 10.1
10.19 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
10.20 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
10.21 Form of 2022 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick and Ksenak
10-Q 05/10/22 10.1
10.22 Form of 2022 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. Barranco, Eisman, McGinnis and Ms. Smith.
10-Q 05/10/22 10.2
10.23 Form of 2022 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick and Ksenak
10-Q 05/10/22 10.3
10.24 Form of 2022 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. Barranco, Eisman, McGinnis and Ms. Smith
10-Q 05/10/22 10.4
10.25 Employment Agreement dated as of October 5, 2023, by and among Ambac Financial Group, Inc., Ambac Assurance Corporation and R. Sharon Smith
8-K 10/06/23 10.1
10.26 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
10.27 Form of 2023 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick and Ksenak.
10-Q 05/09/23 10.1
10.28 Form of 2023 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. Barranco, Eisman, McGinnis and Ms. Smith.
10-Q 05/09/23 10.2
10.29 Form of 2023 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick and Ksenak.
10-Q 05/09/23 10.3
10.30 Form of 2023 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. Barranco, Eisman, McGinnis and Ms. Smith.
10-Q 05/09/23 10.4
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
10-K 02/27/24 10.38
10.32 2024 Incentive Compensation Plan
Def 14A 04/26/24 Appendix A
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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. and Messrs. LeBlanc, Trick, Ksenak, McGinnis and Ms. Smith.
10-Q 05/06/24 10.1
10.34 Form of 2024 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. 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. and Messrs. LeBlanc, Trick, Ksenak, McGinnis and Ms. Smith.
10-Q 05/06/24 10.3
10.36 Form of 2024 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. 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
X
(97) Recoupment Policy
97.1 Ambac Financial Group, Inc. - Recoupment Policy 10-K 02/27/24 97.1
(99) Additional exhibits
99.1 Second Modified Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc., effective as of May 1, 2013
10-K 03/03/14 99.3
Other exhibits, filed or furnished, as indicated:
21.1 List of Subsidiaries of Ambac Financial Group, Inc.
X
23.1 Consent of Independent Registered Public Accounting Firm
X
24.1 Power of Attorney for directors of Ambac Financial Group, Inc.
X
31.1 Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended
X
31.2 Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended
X
32.1++ Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
101.INS XBRL Instance Document.
101.SCH XBRL Taxonomy Extension Schema Document.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB XBRL Taxonomy Extension Label Linkbase Document.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.
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Incorporated by Reference
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)
++ Furnished herewith.
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SCHEDULE I
AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Summary of Investments
Other Than Investments in Related Parties
December 31, 2024
Type of Investment
($ in thousands) Cost Estimated
Fair Value
Amount at Which
Shown in the
Balance Sheet
Municipal obligations $ 14,646 $ 14,083 $ 14,083
Corporate obligations 92,990 89,192 89,192
U.S. government obligations 41,706 40,995 40,995
Residential mortgage-backed securities 2,475 2,446 2,446
Commercial mortgage-backed securities 2,127 2,101 2,101
Collateralized debt obligations 3,131 3,142 3,142
Other asset-backed securities 5,049 5,061 5,061
Short-term 127,588 127,601 127,601
Other (1)
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 $ 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.
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SCHEDULE II
AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Financial Information
Of Registrant (Parent Company Only)
Condensed Balance Sheets
($ in thousands, except share data) December 31, 2024 2023
Assets:
Fixed maturity securities, at fair value (amortized cost of $ 0 and $ 14,045 )
$ — $ 13,920
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
Investment income due and accrued 269 545
Other assets 22,703 26,258
Total assets $ 863,201 $ 1,365,173
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and other liabilities
6,294 3,515
Total liabilities 6,294 3,515
Stockholders’ equity:
Preferred stock, par value $ 0.01 per share; 20,000,000 shares authorized shares; issued and outstanding shares— none
— —
Common stock, par value $ 0.01 per share; 130,000,000 shares authorized; issued shares: 48,875,167 and 46,659,144
489 467
Additional paid-in capital 331,007 291,761
Accumulated other comprehensive income (loss) ( 188,436 ) ( 160,046 )
Retained earnings 742,185 1,246,049
Treasury stock, shares at cost: 2,368,194 and 1,463,774
( 28,339 ) ( 16,573 )
Total Ambac Financial Group, Inc. stockholders’ equity 856,906 1,361,658
Total liabilities and stockholders’ equity $ 863,201 $ 1,365,173
The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the following notes.
See the Report of Independent Registered Public Accounting Firm.
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SCHEDULE II
AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Financial Information
Of Registrant (Parent Company Only)
Condensed Statement of Comprehensive Income
($ in thousands) Year Ended December 31, 2024 2023 2022
Revenues:
Investment income $ 7,262 $ 9,298 $ 10,389
Other income ( 415 ) 6 ( 81 )
Net gains on derivative contracts 3,910 ( 348 ) 935
Net investment gains (losses), including impairments ( 498 ) 55 ( 13,664 )
Total revenues 10,259 9,011 ( 2,421 )
Expenses:
General and administrative expenses 41,519 21,597 17,435
Total expenses 41,519 21,597 17,435
Income (loss) before income taxes and net income (loss) of subsidiaries ( 31,260 ) ( 12,586 ) ( 19,856 )
Federal income tax provision (benefit) ( 1,748 ) ( 1,193 ) ( 462 )
Income (loss) before net income (loss) of subsidiaries ( 29,512 ) ( 11,393 ) ( 19,394 )
Net income (loss) of subsidiaries ( 526,937 ) 15,026 541,773
Net income (loss) $ ( 556,449 ) $ 3,633 $ 522,379
Other comprehensive income (loss), after tax:
Net income (loss) $ ( 556,449 ) $ 3,633 $ 522,379
Unrealized gains (losses) on securities, net of income tax provision (benefit) of $ 1,295 , $ 2,095 and $( 6,264 )
( 939 ) 51,184 ( 225,341 )
Gains (losses) on foreign currency translation, net of income tax provision (benefit) of $ — , $ — and $ —
( 22,156 ) 40,132 ( 84,520 )
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 $ —
( 4,939 ) 1,569 ( 933 )
Total other comprehensive income (loss) ( 28,390 ) 92,797 ( 310,454 )
Total comprehensive income (loss) attributable to Ambac Financial Group, Inc. $ ( 584,839 ) $ 96,430 $ 211,925
The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the following notes.
See the Report of Independent Registered Public Accounting Firm.
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SCHEDULE II
AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Financial Information
Of Registrant (Parent Company Only)
Condensed Statement of Stockholders' Equity
($ in thousands) Total Preferred
Stock
Common
Stock
Additional Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Common
Stock Held
in Treasury,
at Cost
Balance at January 1, 2022 $ 1,038,105 $ — $ 465 $ 256,906 $ 57,611 $ 726,054 $ ( 2,931 )
Total comprehensive income (loss) 210,794 ( 310,454 ) 521,248
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 )
Total comprehensive income (loss) 96,430 — 92,797 3,633 —
Stock-based compensation 17,275 17,275
Cost of shares (acquired) issued under equity plan ( 4,665 ) ( 7,872 ) 3,207
Cost of shares repurchased ( 4,510 ) ( 4,510 )
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 )
Total comprehensive income (loss) ( 584,839 ) ( 28,390 ) ( 556,449 )
Stock-based compensation 8,995 8,995
Cost of shares (acquired) issued under equity plan ( 701 ) ( 634 ) ( 67 )
Cost of shares repurchased ( 11,699 ) ( 11,699 )
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 )
The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the following notes.
See the Report of Independent Registered Public Accounting Firm.
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SCHEDULE II
AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Financial Information
Of Registrant (Parent Company Only)
Condensed Statements of Cash Flow
($ in thousands) Year Ended December 31, 2024 2023 2022
Cash flows from operating activities:
Net income (loss) $ ( 556,449 ) $ 3,632 $ 522,380
Adjustments to reconcile net income loss to net cash used in operating activities:
Net (income) loss of subsidiaries 526,937 ( 15,027 ) ( 541,773 )
Amortization of bond premium and discount — — ( 7,378 )
Net investment gains (losses), including impairments 498 ( 55 ) 13,664
Increase (decrease) in current income taxes payable ( 1,970 ) ( 1,674 ) ( 809 )
Share-based compensation 8,361 9,404 11,962
(Increase) decrease in other assets and liabilities 7,817 ( 4,660 ) 40,976
Distributions received from majority owned subsidiaries 10,739 8,032 5,760
Other, net 1,814 2,392 1,109
Net cash provided by (used in) operating activities ( 1,755 ) 2,044 45,891
Cash flows from investing activities:
Proceeds from sales and matured bonds 5,000 — 68,205
Purchases of bonds — ( 795 ) ( 750 )
Change in short-term investments 91,249 19,676 ( 51,069 )
Change in other investments ( 1,749 ) ( 2,715 ) ( 4,213 )
Net cash provided by (used in) investing activities 94,500 16,166 12,173
Cash flows from financing activities:
Capital contribution to subsidiaries ( 70,817 ) ( 16,050 ) ( 42,420 )
Cost of shares acquired ( 11,699 ) ( 4,510 ) ( 14,217 )
Net cash (used in) financing activities ( 82,516 ) ( 20,560 ) ( 56,637 )
Net cash flow 9,731 ( 2,350 ) 1,427
Cash at beginning of period 250 2,600 1,173
Cash at end of period $ 9,981 $ 250 $ 2,600
Supplemental disclosure of cash flow information:
Cash paid during the period for:
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.
See the Report of Independent Registered Public Accounting Firm.
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SCHEDULE II
AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Financial Information
Of Registrant (Parent Company Only)
Notes to Condensed Financial Information
(Dollar Amounts in Thousands)
The condensed financial information of Ambac Financial Group, Inc. (“AFG” or the “Registrant”) as of December 31, 2024 and 2023, and for the three years in the period ended December 31, 2024, should be read in conjunction with the consolidated financial statements of AFG Financial Group, Inc. and Subsidiaries and the notes thereto included in this Annual Report on Form 10-K for the year ended December 31, 2024. 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.
Income Taxes
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, 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 .
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SCHEDULE III
AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Supplementary Insurance Information
(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
2024
Specialty Property and Casualty Insurance 8,572 349,062 182,446 99,005 6,399 72,626 23,666 17,806 88,682
2023
Specialty Property and Casualty Insurance 10,960 197,089 154,878 51,911 3,795 36,712 10,557 16,452 79,824
2022
Specialty Property and Casualty Insurance 3,362 89,907 85,415 13,869 1,605 9,071 2,535 13,205 28,554
See the Report of Independent Registered Public Accounting Firm.
Item 16. Form 10-K Summary . — None
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMBAC FINANCIAL GROUP, INC.
Dated: March 6, 2025 By: /S/ DAVID TRICK
David Trick
Executive Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/S/ JEFFREY S. STEIN* Chairman of the Board and Director March 6, 2025
Jeffrey S. Stein
/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 March 6, 2025
David Trick (Principal Financial Officer)
/S/ ROBERT B. EISMAN Senior Managing Director and Chief Accounting Officer March 6, 2025
Robert B. Eisman (Principal Accounting Officer)
/S/ IAN D. HAFT* Director March 6, 2025
Ian D. Haft
/S/ LISA G. IGLESIAS* Director March 6, 2025
Lisa G. Iglesias
/S/ JOAN LAMM-TENNANT* Director March 6, 2025
Joan Lamm-Tennant
/S/ KRISTI A. MATUS* Director March 6, 2025
Kristi A. Matus
/S/ MICHAEL D. PRICE* Director March 6, 2025
Michael D. Price
/S/ STEPHEN M. KSENAK Attorney-in-fact March 6, 2025
*By: Stephen M. Ksenak
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