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Item 2. Management’s Discussion and Analysis

2025-11-10 compared with 2025-08-07 · 275 added, 272 removed, 355 unchanged (61% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations ($ and £ in thousands)

Management’s Discussion and Analysis of Financial Condition and Results of Operations ($ in thousands)

The objectives of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are to provide users of our consolidated financial statements with the following:

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• Information that allows assessment of the likelihood that past performance is indicative of future performance.

The following discussion should be read in conjunction with our consolidated financial statements in Part I, Item 1 and the matters described under Part II, Item 1A Risk Factors in this Quarterly Report and under Item 1A.

The following discussion should be read in conjunction with our consolidated financial statements in Part I, Item 1 and the matters described under Part II, Item 1A.

Risk Factors in this Quarterly Report and under Item 1A.

Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024.

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• Growing our Specialty Property and Casualty Insurance business to generate underwriting profits from a diversified portfolio of commercial and personal liability risks accessed primarily through program administrators.

Ambac continuously evaluates, and is currently evaluating, opportunities to acquire businesses and assets for its Insurance Distribution business, and is currently in ongoing discussions to potentially acquire one or more businesses.

Ambac continuously evaluates opportunities to acquire businesses and assets for its Insurance Distribution business.

These acquisitions may be material to our business, financial condition and operations and may involve raising capital to finance the acquisition(s).

There can be no assurance, including with respect to the acquisitions under discussion, that we will agree to acquire any business or assets, obtain necessary financing or complete any acquisition in a timely manner or at all.

There can be no assurance that we will agree to acquire any business or assets, or that we can obtain the necessary financing or complete any acquisition in a timely manner or at all.

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

AFG's subsidiaries/businesses are divided into two reportable segments with results for the three and six months ended June 30, 2025, and 2024, as follows:

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024

($ in thousands) Specialty Property and Casualty Insurance Insurance

Distribution Corporate & Other Consoli-dated Specialty Property and Casualty Insurance Insurance

Third Quarter 2025 Form 10-Q

AFG's subsidiaries/businesses are divided into two reportable segments with results for the three and nine months ended September 30, 2025, and 2024, as follows:

Three Months Ended September 30, 2025 Three Months Ended September 30, 2024

Reportable Segments Reportable Segments

($ in thousands) Specialty Property & Casualty Insurance Insurance

Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance

Distribution Corporate & Other Consoli-dated

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Adjusted EBITDA attributable to Ambac common stockholders $ 49 5,988 $ (8,893) (2,856) $ 1,591 2,116 $ (1,802) 1,905

Six Months Ended June 30, 2025 Six Months Ended June 30, 2024

Specialty Property and Casualty Insurance Insurance

Distribution Corporate & Other Consoli-dated Specialty Property and Casualty Insurance Insurance

Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024

Reportable Segments Reportable Segments

Specialty Property & Casualty Insurance Insurance

Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance

Distribution Corporate & Other Consoli-dated

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Adjusted EBITDA attributable to Ambac common stockholders $ 2,319 $ 15,599 $ (26,652) $ (8,734) $ 2,439 $ 8,160 $ (8,921) $ 1,678

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, a wholly-owned subsidiary of AFG, to Buyer for aggregate consideration of $420 in cash (the "Sale").

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

In connection with and pursuant to the Purchase Agreement, AFG has agreed to issue to Buyer a warrant exercisable for a number of shares of common stock, par value $0.01, of AFG 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 warrant will have an exercise price per share of $18.50 with a six and a half-year term from the date of issuance and will be immediately exercisable.

Payment of the exercise price may be settled, at AFG’s option, by way of a cash exercise or by net share settlement.

On July 3, 2025, the parties to the Purchase Agreement entered into a letter agreement pursuant

to which, among other things, the parties entered into a new agreement with respect to the warrant and amended certain terms of the Investor Rights Agreement (as defined in the Purchase Agreement).

The Buyer continues to pursue the final outstanding regulatory approval for the Sale, which would be received only after a hearing, currently scheduled for September 3, 2025, at or prior to which third parties would have an opportunity to object to the Sale.

On or prior to August 4, 2025, representatives of certain holders of surplus notes issued by AAC filed motions to intervene in the proceedings.

On July 28, 2025, the OCI staff published a memorandum including its recommendation that the Sale be approved.

On July 3, 2025, AFG and the Buyer entered into an agreement to, among other matters, extend the term of the Purchase Agreement from July 3, 2025 to December 31, 2025 (subject to an automatic 90-day extension if regulatory approvals have not been obtained), to facilitate the timing of the hearing.

The Buyer received approval for the change in control of Ambac UK from the U.K.

Prudential Regulation Authority, which expires on October 24, 2025.

On September 29, 2025 the Company completed the sale of AAC pursuant to the June 4, 2024, 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 AFG sold all of the issued and outstanding shares of common stock of AAC, a whol ly-owned subsidiary of AFG, to Buyer for $420,000 in c ash (the "Sale").

The Buyer also made an additional payment to AFG in an amount of $4,300.

In the Sale, Buyer acquired complete common equity ownership of AAC and all of its wholly owned subsidiaries, including Ambac Assurance UK Limited.

In connection with and pursuant to the Purchase Agreement, AFG issued to Buyer a warrant exercisable for 5,092,707 shares of common stock, par value $0.01, of AFG.

Refer to Note 3.

Discontinued Operation of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2024, for further details on the pending sale of AAC.

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

The anticipated loss on sale included within Net income (loss) from discontinued operations before tax on the Consolidated Statement of Comprehensive Income (Loss) for the six months ended June 30, 2025, and year ended December 31, 2024, was (67,456) and $(570,145), respectively.

Discontinued Operation of the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q and Note 5.

Discontinued Operation of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2024, for further details on the sale of AAC.

For all periods leading up to the Sale, AAC's results of operations and AFG's loss on sale are reported within Net income (loss) from discontinued operations before tax on the Consolidated

Statement of Comprehensive Income (Loss).

Discontinued Operation in this report on Form 10-Q for further information.

At Closing, net income will be impacted by reclassification from Accumulated Other Comprehensive Income (Loss) of net unrealized gains (losses) on available-for-sale investment securities, cumulative foreign currency translation adjustments and cumulative credit risk changes of fair value option liabilities attributable to AAC and subsidiaries, which at June 30, 2025, amounted to $(86,828).

Acquisition of ArmadaCare

On October 31, 2025, the Company closed on the acquisition of ArmadaCare for a purchase price of $250,000.

The Company purchased all of the issued and outstanding limited liability company interests in ArmadaCare from Sirius Re Holdings, Inc.

and Sirius Acquisitions Holding Company, funded in part by $120,000 of loans obtained under new credit facilities.

Business and Basis of Presentation to the Consolidated Financial Statements included in this Quarterly Report for further detail about the credit facility.

ArmadaCare includes an MGA/U that focuses on supplemental health and benefit products for C-suite executives and other key talent.

ArmadaCare creates and distributes supplemental benefit solutions and insurance products.

ArmadaCare's differentiated product offering in the A&H market will provide both line of business and product diversification to the Company, while also increasing exposure to non-correlated A&H business lines.

ArmadaCare also provides clients with tools to navigate the healthcare system and finds physicians to match personal needs,

Ambac Financial Group, Inc.

Third Quarter 2025 Form 10-Q

and include a provider of third-party administration services for insurance carriers that distribute the benefit products and handle claims.

Effective September 1, 2025, AFG's wholly owned subsidiary, Cirrata Group, LLC ("Cirrata Group"), exercised its option to convert its $3,500 convertible note investment in Pivix Specialty Insurance Services ("Pivix"), an excess and surplus lines MGA/U, into common stock.

As a result, Cirrata Group now has an approximately 74% controlling stake in Pivix when combined with its previous 17% minority equity interest and includes Pivix in its consolidated financial statements.

SEC Final Rules on Climate Related Information

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A summary of our financial results is shown below:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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Net income (loss) attributable to shareholders $ (112,620) $ (27,503) $ (231,710) $ (8,183)

Ambac's results for the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024 were impacted by the following:

• Ambac's acquisition of its interests in Beat on August 1, 2024.

• In the fourth quarter of 2024, the pending sale of AAC was determined to qualify for discontinued operations presentation, resulting in its results being reported within discontinued operations.

Ambac's results for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, were impacted by the following:

• Ambac's acquisition of its interests in Beat Capital Partners Limited ("Beat") on August 1, 2024.

Ambac's results for the three months ended September 30, 2024 included two months of Beat's results whereas our results for the three months ended September 30, 2025, include a full quarter of Beat results.

• On September 29, 2025, Ambac completed the sale of AAC.

AAC's results, including Ambac's loss on the sale of AAC are reported within discontinued operations.

Refer to Note 1.

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Discontinued Operation of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2024, and Note 3.

Discontinued Operations to the Unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further details on the pending sale and results for the three and six months ended June 30, 2025, and 2024.

Discontinued Operations to the Unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further details on the Sale and results for the three and nine months ended September 30, 2025, and 2024.

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

The following paragraphs describe the consolidated results of continuing operations of Ambac and its subsidiaries for the three and six months ended June 30, 2025, and 2024, respectively.

Gross Premiums Written.

Gross premiums written decreased $14,959 and $24,466 for the three and six months ended June 30, 2025, compared to the same period in the prior year.

Third Quarter 2025 Form 10-Q

result of the Sale, Ambac repaid all of the outstanding debt used to acquire Beat, amounting to $150,000, and purchased AAC's co-investment in Beat of $62 million.

Concurrent with the Sale, AFG entered into a number of transactions as discussed herein, including transactions intended to lower the long term run-rate of corporate operating expenses.

The following paragraphs describe the consolidated results of continuing operations of Ambac and its subsidiaries for the three and nine months ended September 30, 2025, and 2024, respectively.

Gross Premiums Written Gross premiums written decreased $17,969 and $42,435 for the three and nine months ended September 30, 2025, compared to the same period in the prior year.

The reduction is primarily driven by the non-renewal of certain programs, including the non-renewal of an assumed non-standard personal auto program, partially offset by growth in existing programs and the addition of new programs.

Net Premiums Written.

Net premiums written decreased $17,082 and $25,325 for the three and six months ended June 30, 2025, compared to the same period in the prior year.

Net Premiums Written Net premiums written decreased $14,977 and $40,302 for the three and nine months ended September 30, 2025, compared to the same period in the prior year.

The reduction is primarily driven by the non-renewal of certain programs, including an assumed non-standard personal auto program, partially offset by growth in existing programs and the addition of new programs.

Net Premiums Earned.

Net premiums earned decreased $10,851 and $20,752 for the three and six months ended June 30, 2025, compared to the same period in the prior year.

Net Premiums Earned Net premiums earned decreased $10,414 and $31,166 for the three and nine months ended September 30, 2025, compared to the same period in the prior year.

The decrease was primarily driven by the non-renewal of certain programs, including an assumed non-standard personal auto program, partially offset by growth in existing programs and the addition of new programs.

Commission Income and Commission Expense.

Commission income for the three and six months ended June 30, 2025, was $30,322 and $67,093 compared to $13,221 and $30,950 for the three and six months ended June 30, 2024.

Commission income included profit commissions (based on underwriting performance) of $2,266 and $6,957 for the three and six months ended June 30, 2025, and $1,141 $2,323 and for the three and six months ended June 30, 2024, respectively.

The increase was primarily driven by the inclusion of profit commissions earned by Beat following the acquisition in August 2024.

For the three and six months ended June 30, 2025, commission expense of $7,403 and $17,768 compared to $7,888 and $17,710 in three and six months ended June 30, 2024, representing approximately 43% and 74% of commission income in each respective period.

Commission Income and Commission Expense Commission income for the three and nine months ended September 30, 2025, was $36,059 and $103,152 compared to $23,064 and $54,014 for the three and nine months ended September 30, 2024.

The increase was primarily driven by the inclusion of an additional month (July) of Beat's results and organic growth, including from the launch of new de-novo MGAs.

Commission income included profit commissions (based on underwriting performance) of $1,940 and $8,896 for the three and nine months ended September 30, 2025, and $1,319 and $3,641 and for the three and nine months ended September 30, 2024, respectively.

The increase for the three months ended September 30, 2025, was driven by higher A&H profit commissions earned and for the nine months ended September 30, 2025, was driven by the acquisition of Beat in August 2024.

For the three and nine months ended September 30, 2025, commission expense of $11,167 and $28,935 compared to $9,499 and $27,209 in three and nine months ended September 30, 2024, representing approximately 50% and 72% of commission income

in each respective period.

The decrease in commission expense relative to commission income in 2025 relative to 2024 is primarily a result of the acquisition of Beat.

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The majority of the Insurance Distribution Segment's other MGA/Us report their commission income gross of distribution and commission expenses.

Program Fees.

Program fee revenues were $3,497 and $3,328 for the three and six months ended June 30, 2025, and 2024, respectively.

Program fee revenues represent the recognition of ceding commissions in excess of direct acquisition costs received from reinsurers and minimum fees received from MGA/Us until

related programs reach certain levels of premium ceded.

Program Fees Program fee revenues were $3,590 and $3,622 for the three months ended September 30, 2025 and 2024, respectively, and $10,739 and $9,517 for the nine months ended September 30, 2025 and 2024, respectively.

Program fee revenues represent the recognition of ceding commissions in excess of direct acquisition costs received from reinsurers and minimum fees received from MGA/Us until related programs reach certain levels of premium ceded.

Program fees are charged as a percentage of premiums ceded to reinsurers as a component of total ceding commissions.

The growth is a function of growth of business and related premiums ceded to reinsurers.

Net Investment Income.

Net investment income consists of interest income, including the net effect of discount accretion and premium amortization, from fixed maturity securities classified as available-for-sale and net gains (losses) on pooled investment funds which are reported under the equity method.

The growth for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 is driven by a shift in mix of premium written and related premium ceded to reinsurers.

Net Investment Income Net investment income consists of interest income, including the net effect of discount accretion and premium amortization, from fixed maturity securities classified as available-for-sale and net gains (losses) on pooled investment funds which are reported under the equity method.

These funds and certain other investments are reported in Other investments on the Consolidated Balance Sheets.

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Investments to the Unaudited Consolidated Financial Statements, included in Part I, Item 1 in this Form 10-Q.

Net investment income decreased $1,154 and $1,979 for the three and six months ended June 30, 2025 compared to the prior year periods due to lower Corporate short-term investment balances resulting primarily from the acquisition of Beat, partially offset by higher investment income on short-term investments at the Cirrata companies with the addition of Beat, and growth of the Everspan investment portfolio.

Servicing and Other Fees.

Includes revenues earned for providing operational and administrative services to the Lloyd's syndicates managed by Beat as well as certain policy and brokerage fees.

Other Revenues.

Other revenues includes (i) net investment gains (losses) on securities sold or called;

(ii) investment impairment charges;

(iii) foreign exchange gains (losses) from the Insurance Distribution segment;

(iv) net gains on derivative contracts resulting from the change in fair value of FX forward contracts used to manage currency risk within the Insurance Distribution segment and (v) fair value changes on warrants to purchas e equity of certain development stage companies held by AFG.

The net loss for the three and six months ended June 30, 2025, of $(2,146) and $(3,270) was driven primarily by foreign exchange losses on non-functional currency operations.

Net gains for the three and six months ended June 30, 2025 w ere driven by gains from the conversion and early settlement of certain convertible notes, including make-whole payments, partially offset by a write-down in carrying value on an investment in preferred securities that are carried at cost less impairments and net foreign exchange losses.

Losses and Loss Adjustment Expenses (Benefit).

Loss and loss adjustment expenses incurred decreased $12,046 and $20,905 for the three and six months ended June 30, 2025, compared to the same period in the prior year.

The lower loss and loss adjustment expenses is primarily due to the shift in mix of business driven by the non-renewal of certain programs, including an assumed non-standard personal auto program in which Everspan was a reinsurer and certain commercial auto programs, partially offset by growth in existing programs and the addition of new programs.

Net investment income decreased $822 and $2,801 for the three and nine months ended September 30, 2025, compared to the prior year periods due to lower Corporate short-term investment balances resulting primarily from the acquisition of Beat, partially offset by higher investment income on short-term investments at the Cirrata companies with the addition of Beat and, for the nine months ended September 30, 2025, growth of the Everspan investment portfolio.

Servicing and Other Fees Servicing and Other Fees increased $2,589 and $12,025 for the three and nine months ended September 30, 2025.

Servicing and Other Fees includes revenues earned for providing operational and administrative services to the Lloyd's syndicates managed by Beat as well as certain policy and brokerage fees.

Other Revenues Other revenues includes (i) net investment gains (losses) on securities sold or called, net of investment impairment charges;

(ii) foreign exchange gains (losses) from the Insurance Distribution segment;

and (iii) net gains on derivative contracts including FX forward contracts used to manage currency risk within the Insurance Distribution segment.

Other revenues for the three and nine months ended September 30, 2025, of $2,408 and $(862) was driven primarily by foreign exchange gains (losses) including on the FX forward contracts.

The decreases in Other revenue compared to the three and nine months ended September 30, 2024, resulted primarily from

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

General and Administrative Expenses (G&A).

The following table provides a summary of G&A expenses for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,

Third Quarter 2025 Form 10-Q

certain items impacting the 2024 periods, including:

gains on FX forward contracts used by Ambac to mitigate currency risk leading up to the acquisition of Beat, and a gain on Everspan's sale of one of its shell insurance companies and its licenses.

The nine months ended September 30, 2024, also benefited from Corporate gains related to the conversion and early settlement of certain convertible notes, including make-whole payments, partially offset by a write-down in carrying value on an investment in preferred securities that are carried at cost less impairments.

Losses and Loss Adjustment Expenses (Benefit) Loss and loss adjustment expenses incurred decreased $6,035 and $26,940 for the three and nine months ended September 30, 2025, compared to the same period in the prior year.

The lower loss and loss adjustment expenses is primarily due to lower net retained premiums and the shift in mix of business retained driven by the non-renewal of certain programs, including an assumed non-standard personal auto program in which Everspan was a reinsurer and certain commercial auto programs, partially offset by the growth in existing and addition of new programs and reserve strengthening primarily related to commercial auto liability loss experience and increased loss costs related to excess liability exposures.

General and Administrative Expenses (G&A) The following table provides a summary of G&A expenses for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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Total G&A expenses $ 53,710 $ 42,118 $ 132,780 $ 87,679

The increase in Compensation G&A expenses during the three and six months ended June 30, 2025, was due to higher compensation costs due to Insurance Distribution acquisitions;

offset by lower current year period expenses for performance incentive compensation.

Non-Compensation G&A expenses for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, were driven up by integration expenses related to the acquisition of Beat offset by lower Corporate segment expenses related to M&A transactions.

Cost related to restructuring due to the sale of AAC for the three and six months ended June 30, 2025 were $2,918 and $4,737, respectively, and for the three and six months ended June 30, 2024 were $5,203 and $5,337, respectively.

The increase in Compensation G&A expenses during the three and nine months ended September 30, 2025, was largely driven by higher compensation costs due to inclusion of Beat expenses for only two months in the 2024 periods.

In addition, for the three months and nine months ended September 2025, compensation expense was increased due to the impact of severance, special one-time cash and equity awards and accelerated equity compensation totaling $6,764 all of which were incurred in connection with the sale of AAC.

Non-Compensation G&A expenses for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, were driven by integration expenses related to the acquisition of Beat, lease termination costs related to our former corporate headquarters, and the write off of certain capitalized legacy software costs;

offset by lower Corporate segment expenses related to M&A transactions.

Ambac has also provided notice of early termination of its current corporate headquarters, the associated expenses for which will be recognized in the fourth quarter of 2025.

Restructuring costs related to the sale of AAC for the three and nine months ended September 30, 2025, were $778 and $5,162, respectively, and for the three and nine months ended September 30, 2024, were $1,653 and $13,980, respectively.

Intangible Amortization and Depreciation.

Intangible amortization for the three and six months ended June 30, 2025, was $9,212 and $17,975 compared to $967 and $2,278 in the comparable prior year periods.

The increase in other intangible amortization for the three and six months ended June 30, 2025 related to the Beat acquisition.

Interest Expense.

Interest expense for the three and six months ended June 30, 2025 was $5,570 and $11,024, related to the short-term debt used in funding the Beat acquisition, entered into during the third quarter of 2024.

The company had no debt or interest expenses during the three and six months ended June 30, 2024.

Provision for Income Taxes.

The provision (benefit) for income taxes primarily relates to international operations and was $(2,172) and $(2,789) for the three and six months ended June 30, 2025, compared to $(30) and $100 for the three and six months ended June 30, 2024.

Intangible amortization and depreciation for the three and nine months ended September 30, 2025, was $9,746 and $28,663 compared to $7,104 and $10,332 in the comparable prior year periods.

The increases are due to intangible amortization for the three and nine months ended September 30, 2025 related to the Beat acquisition.

Interest Expense Interest expense for the three and nine months ended September 30, 2025 was $6,185 and $17,209, compared to $3,745 and $3,745 for the three and nine months ended September 30, 2024, which was primarily related to the short-term debt used in funding the Beat acquisition, entered into during the third quarter of 2024.

This debt was repaid on September 29, 2025.

Provision for Income Taxes The provision (benefit) for income taxes primarily relates to international operations and was $(1,241) and $(4,030) for the three and nine months ended September 30, 2025, compared to $(867) and $(767) for the three and nine months ended September 30, 2024.

The tax benefit recognized in the current year includes current tax expense associated with Beat UK operations offset by deferred tax benefit related to the recognition of deferred tax assets generated by Beat US and amortization of finite lived intangible assets associated with Beat UK and US operations.

Results of Operations by Segment

Insurance Distribution

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Premiums placed $ 245,394 $ 144,949 $ 728,493 $ 288,463

Commission income $ 36,059 $ 23,064 $ 103,152 $ 54,014

Commission expense 11,167 9,499 28,935 8,701

Net commissions 24,892 13,565 74,217 45,313

Servicing and other fees 4,855 2,266 14,291 2,266

Investment income 401 300 1,117 427

Other revenue 1,906 (1,635) -1541

General and administrative expenses 22,197 12,065 61,686 18,132

EBITDA 9,858 2,431 26,640 9,825

Interest expense 6,185 — 17,209 —

Depreciation 145 212 8 —

Intangible amortization 9,272 6,423 27,247 4,665

Pretax income (loss) $ (5,747) $ (7,949) $ (18,159) $ 7,283

Ambac's stockholders

$ 447,327 $ 410,997

(1) Represents the share of Ambac stockholders equity for each subsidiary within the Insurance Distribution segment, including intercompany eliminations.

Ambac's Insurance Distribution businesses are compensated for their services primarily by commissions paid by insurance carriers for underwriting, structuring and/or administering polices.

Commission revenues are usually based on a percentage of the premiums placed.

In addition, we are eligible to receive profit sharing contingent commissions on certain programs based on the underwriting results of the policies placed with carriers and

Ambac Financial Group, Inc.

Third Quarter 2025 Form 10-Q

other capacity providers, which may cause some variability in revenue and earnings.

Insurance Distribution pre-tax loss for the three and nine months ended September 30, 2025, was $(5,747) and $(18,159) compared to $(7,949) and $(2,851) for the three and nine months ended September 30, 2024.

The lower pre-tax loss for the three months ended September 30, 2025, compared to 2024 mostly related to the acquisition of and organic growth at Beat.

The higher pre-tax loss for the nine months ended September 30, 2025, compared to September 30, 2024, higher general and administrative expenses, intangible amortization and interest expense related to Beat acquisition.

In connection with the AAC sale, on September 29, 2025, the short-term debt used to partially finance the Beat acquisition was repaid, therefore the associated interest expense will no longer be incurred.

The Insurance Distribution segment placed premiums for its carriers are shown below:

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Premiums Placed $ 245,394 $ 144,949 $ 728,493 $ 288,463

Increase over prior period 100,445 440,030

As a percent 69.3 % 152.5 %

Higher premiums placed were mostly driven by the acquisition of Beat, effective August 1, 2024, the inclusion of an additional month of Beat's production and growth of Beat's business.

For the three months ended September 30, 2025, the increase in premiums placed and changes to the mix of business written led to the growth in commission income and commission expense of 56% and (18)%, respectively.

Business underwritten within our Insurance Distribution business can be seasonal which may result in revenue and earnings concentrations from period to period.

As the Insurance Distribution business grows, we make additional acquisitions and launch additional de novo underwriting units, revenue and earnings concentrations may increase or may shift, perhaps meaningfully.

G&A expenses for the three and nine months ended September 30, 2025, were $22,197 and $61,686 an increase over three and nine months ended September 30, 2024 of $10,132 and $43,554, respectively, as a result of the Beat acquisition in the third quarter of 2024 as well as increase in staffing for the build out of new business.

Specialty Property and Casualty Insurance

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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The Specialty Property and Casualty Insurance segment has grown significantly since underwriting its first program in May 2021.

Twenty-four programs were authorized to issue policies as of June 30, 2025, including Everspan participating on certain programs as a reinsurer.

Twenty-five programs were authorized to issue policies as of September 30, 2025, including Everspan participating on certain programs as a reinsurer.

As part of Everspan's focus on improving profitability and capital utilization, Everspan non-renewed certain programs, including a commercial auto program and an assumed non-standard personal auto program in the latter half of 2024, and a commercial auto and a general liability program in 1Q2025.

The non-renewals resulted in a reduction in gross and net written premiums, net premiums earned, losses and loss expenses incurred, and a shift in Everspan's retention ratio in the three and six months ended June 30, 2025, compared to three and six months ended June 30, 2024.

Partially offsetting these non-renewals are the continued growth in existing programs and addition of new programs.

EBITDA and pre-tax income increased in the three and six months ended June 30, 2025

The non-renewals resulted in a reduction in gross and net written premiums, net premiums earned, nominal losses and loss expenses incurred, and a shift in Everspan's retention ratio in the three and nine months ended September 30, 2025, compared to three and nine months ended September 30, 2024.

Partially offsetting these non-renewals was the continued growth in existing programs and addition of new programs.

EBITDA and pre-tax income decreased in the three and nine months ended September 30, 2025 compared to September 30, 2024, primarily due to the gain related to the sale of Consolidated

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

compared to June 30, 2024, primarily resulting from lower losses incurred due the non-renewal of certain programs in 2025 and lower loss reserve strengthening in 2025 versus 2024.

This is partially offset by a reduction in earned premium related to the non-renewal of these programs.

Third Quarter 2025 Form 10-Q

National Insurance Company recognized in 3Q2024, a reduction in earned premium related to program non-renewals and adverse prior period reserve development in 2025 versus 2024, partially offset by lower losses incurred due the program non-renewals.

Consistent with its strategy to generate sustainable and profitable, long-term specialty property and casualty program insurance business with a focus on diverse classes of risks, Everspan may source select programs as a reinsurer.

Accessing programs as a reinsurer provides Everspan the ability to diversify its risk profile (temporarily or long-term), efficiently manage its exposure limits and underwrite programs in a cost efficient manner, amongst other benefits.

Everspan may participate as a reinsurer on up to 30% of a program, which is in line with its strategy to generally retain up to 30% per program.

Everspan may participate as a reinsurer on up to 30% of a program, which is in line with its strategy to retain up to 30% per program.

Participation as a reinsurer will affect the retention ratio as Everspan's portion of assumed premiums is reflected fully in both Gross and Net Premiums Written.

The change in the loss ratio was driven by the shift in mix of business.

The three and six months ended June 30, 2025, contained minimal prior years loss strengthening of 1.0% and 1.0%, respectively driven primarily by excess liability loss experience, whereas the three and six months ended June 30, 2024, contained prior years loss strengthening of 6.9% and 5.7%, respectively, which was primarily driven by commercial auto loss experience on programs which have since been non-renewed.

The change in the loss ratio was driven by the shift in mix of business in addition to reserve strengthening.

The three and nine months ended September 30, 2025, contained prior years loss strengthening equating to 23.2% and 8.8%, respectively, driven primarily by commercial auto liability loss experience on programs which are in runoff, and excess liability loss experience, whereas the three and nine months ended September 30, 2024, contained prior years loss strengthening equating to 0.2% and 3.8%, respectively, which was primarily driven by commercial auto loss experience on programs which have since been non-renewed.

Loss and loss expenses incurred, and Everspan's associated Loss and LAE ratio, may be adversely impacted by economic and social inflation.

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These additional liabilities or increases in estimates, or a range of either, could vary significantly from period to period.

In addition to the decrease in the Loss and LAE ratio for the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024, there was a decrease in the benefit to acquisition costs resulting from sliding scale commission arrangements with program partners.

Such benefit reduced the Specialty Property and Casualty Insurance segments expense ratio by 2.6% and 5.6% for the three months ended June 30, 2025 and 2024, respectively and 1.3% and 5.9% for the six months ended June 30, 2025 and 2024, respectively.

Certain Everspan programs were structured to include sliding scale commission arrangements within a loss ratio range.

In addition to the increase in the Loss and LAE ratio for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, there was a benefit to acquisition costs resulting from sliding scale commission arrangements with program partners.

Such benefit reduced the Specialty Property and Casualty Insurance segments expense ratio by 6.9% and 1.9% for the three months ended September 30, 2025 and 2024, respectively and 3.3% and 4.5% for the nine months ended September 30, 2025 and 2024, respectively.

Certain Everspan programs were structured to include sliding scale commission arrangements within a loss ratio

These sliding scale arrangements help mitigate losses, protect underwriting results and limit earnings volatility.

General and administrative costs were higher for the three and six months ended June 30, 2025, relative to the three and six months ended June 30, 2024, due to the mix and net increase of headcount movement, the impact of changes to premium tax accruals ($0.9 million for the three and six months ended June 30, 2026) and legal expenses partially offset by reduced performance on long term incentive compensation.

Insurance Distribution

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Premiums placed $ 249,912 $ 53,418 $ 480,518 $ 143,514

Commission income $ 30,322 $ 13,221 $ 67,093 $ 30,950

Commission expense 7,403 7,888 17,768 2,278

Net commissions 22,919 5,333 49,325 28,672

Servicing and other fees 4,472 — 9,436 —

Investment income 340 77 716 127

Other revenue (2,093) 8 94

General and administrative expenses 20,940 3,008 39,489 5,893

EBITDA 4,698 2,410 16,782 7,568

Interest expense 5,570 — 11,024 —

Depreciation — 14 8 —

Intangible amortization 9,301 1,139 18,064 1,301

Pretax income (loss) $ (10,173) $ 1,257 $ (12,416) $ 7,283

Ambac's stockholders

$ 302,273 $ 104,618

(1) Represents the share of Ambac stockholders equity for each subsidiary within the Insurance Distribution segment, including intercompany eliminations.

Ambac's Insurance Distribution businesses are compensated for their services primarily by commissions paid by insurance carriers for underwriting, structuring and/or administering polices.

Commission revenues are usually based on a percentage of the premiums placed.

In addition, we are eligible to receive profit sharing contingent commissions on certain programs based on the underwriting results of the policies placed with carriers, which may cause some variability in revenue and earnings.

Insurance Distribution pre-tax loss for the three and six months ended June 30, 2025, was $(10,173) and $(12,416) compared to $1,257 and $5,269 for the three and six months ended June 30, 2024.

The decrease was primarily driven by an increase in intangible amortization and interest expense related to the Beat acquisition.

During the three months and six months ended June 30, 2025, Insurance Distribution results were negatively impacted by foreign exchange losses, intangible amortization and interest expense related to the Beat acquisition.

Post the sale of AAC, which is expected to close in the third quarter of 2025, the short-term debt used to partially finance the Beat acquisition will be repaid and the associated interest expense will no longer be incurred.

The Insurance Distribution segment placed premiums for its carriers are shown below:

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Premiums Placed $ 249,912 $ 53,418 $ 480,518 $ 143,514

Increase over prior period $ 196,494 $ 337,004

As a percent 367.8 % 234.8 %

Higher premiums placed were mostly driven by the acquisition of Beat effective July 31, 2024.

For the three months ended June 30, 2025, the increase in premiums placed and changes to the mix of business written led to the growth in commission income and commission expense of 129% and (6)%, respectively.

Business underwritten within our Insurance Distribution business can be seasonal which may result in revenue and earnings concentrations from period to period.

G&A expenses for the three and six months ended June 30, 2025, are $20,940 and $39,489 an increase over three and six months ended June 30, 2024 of 17,932 and $33,596, respectively, as a result of the Beat acquisition in the third quarter of 2024.

General and administrative costs were higher for the three and nine months ended September 30, 2025, relative to the three and nine months ended September 30, 2024, due to a net increase in headcount and in legal expenses, partially offset by reduced performance on long term incentive compensation.

Corporate consists of our holding company and shared services operations ("Corporate").

Corporate provides financial, technological and human resources to Ambac's two segments and is responsible for the function of AFG as a publicly traded company.

Corporate revenues totaled $526 and $5,904 for the three months ended June 30, 2025 and 2024, respectively and $1,113 and $8,048 for the six months ended June 30, 2025 and 2024, respectively.

Corporate provides financial, legal, technological and human resources to Ambac's two segments and is responsible for the function of AFG as a publicly traded company.

Corporate revenues totaled $610 and $5,878 for the three months ended September 30, 2025 and 2024, respectively and $1,723 and $13,925 for the nine months ended September 30, 2025 and 2024, respectively.

Corporate revenue is mostly generated from investment of AFG's liquid resources and investment results from its previously made strategic investments, including certain minority investments in MGA/Us and an insurtech fund.

Investment revenues comprised of net investment income and net investment gains (losses), including impairments were $521 and $6,757 for the three months ended June 30, 2025 and 2024, respectively and $1,118 and $8,949 for the six months ended June 30, 2025 and 2024, respectively.

The declines from 2024 to 2025 are attributable to the use of liquid resources for the acquisition of Beat and net investment gains of $4,536 in the three and six months ended June 30, 2024 related to certain of AFG's strategic investments in MGA/Us..

Investment revenues comprised of net investment income and net investment gains (losses), including impairments were $617 and $938 for the three months ended September 30, 2025 and 2024, respectively and $1,735 and $5,928 for the nine months ended September 30, 2025 and 2024, respectively.

The declines from 2024 to 2025 are attributable to the use of liquid resources for the acquisition of Beat and third quarter 2024 gains on FX forward contracts used to mitigate currency risk leading up to the acquisition of Beat.

The decline for the nine month period also reflected net investment gains of $3,958 in the nine months ended September 30, 2024 primarily related to the conversion and early settlement of certain convertible notes, including make-whole payments, partially offset by a write-down in carrying value on an investment in preferred securities that are carried at cost less impairment.

As a result of the Company reporting the results of operations of AAC as discontinued operations, certain corporate costs charged to AAC have been reported in Net income from continuing operations and included in Corporate expenses for all years presented.

Corporate expenses were $13,506 and $20,351 for the three months ended June 30, 2025 and 2024, respectively and $28,901 and $32,025 for the six months ended June 30, 2025 and

Corporate expenses were lower for the three and six months ended June 30, 2025 compared to three and six months ended June 30, 2024 mainly due to lower expenses related to corporate development and the sale of AAC.

Corporate expenses were $26,571 and $27,151 for the three months ended September 30, 2025 and 2024, respectively and $55,801 and $59,474 for the nine months ended September 30, 2025 and 2024.

Corporate expenses were lower for the three and nine months ended September 30, 2025 compared to three and nine months ended September 30, 2024 mainly due to lower expenses related to corporate development and the sale of AAC.

LIQUIDITY AND CAPITAL RESOURCES

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AFG is organized as a legal entity separate and distinct from its operating subsidiaries.

AFG's liquidity is primarily dependent on its net assets, excluding the operating subsidiaries that it owns, totaling $84,922 as of June 30, 2025, and secondarily on investment income, distributions, tax and expense sharing payments from its operating subsidiaries and third party capital (e.g.

AFG's liquidity is primarily dependent on its net assets, excluding the operating subsidiaries that it owns, totaling $255,951 as of September 30, 2025, and secondarily on investment income, distributions, tax and expense sharing payments from its operating subsidiaries and third party capital (e.g.

from credit facilities and equity issuance).

Ambac Financial Group, Inc.

Third Quarter 2025 Form 10-Q

September 30,

2025 December 31, 2024

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Total $ 255,951 $ 104,431

(1) Includes strategic minority investments in insurance services businesses of $20,618 at June 30, 2025, and December 31, 2024..

The decrease in AFG net assets, excluding its equity investments in subsidiaries, during the first six months of 2025 was driven primarily by net cash outflows from operating and interest expenses in addition to treasury stock purchases, partially offset by interest income and net distributions received from subsidiaries.

• Effective July 31, 2024, AFG closed the acquisition of a 60% controlling interest in Beat.

In connection with the acquisition, Cirrata incurred $150,000 of debt maturing in 364 days funded by a global bank (the "Credit Facility").

Repayment of debt under the Credit Facility is guaranteed by AFG.

AFG is required to repay this debt upon the closing of the sale of AAC or otherwise refinance such short-term debt with longer-term debt.

On June 10, 2025, AFG entered into an agreement to extend the maturity date of the Credit Facility from July 31, 2025, to the earlier of (a) December 31, 2025, and (b) the date that is the three-month anniversary of the termination of the Purchase Agreement.

(1) Includes strategic minority investments in insurance services businesses of $20,618 at September 30, 2025, and December 31, 2024..

The increase in AFG net assets, excluding its equity investments in subsidiaries, during the first nine months of 2025 was driven primarily by net cash received at the closing of the sale of AAC on September 29, 2025 and related transactions.

Additionally, AFG's change in assets reflects net cash outflows from operating and interest expenses in addition to treasury stock purchases, partially offset by interest income and net distributions received from subsidiaries.

• AFG received $420,000 of proceeds from the sale of AAC, plus an additional $4,300, less applicable legal, advisory and other expenses incurred in connection with the Sale.

• In connection with the Beat acquisition, Cirrata incurred $150,000 of debt funded by a global bank.

Upon the closing of the sale of AAC, AFG repaid the $150,000 loan.

• AFG's acquisition of Beat was partially funded by AAC's co-investment in the amount of $62,000.

Upon the close of the AAC sale, AFG will purchase AAC's co-investment at a price resulting in a 7.5% rate of return per annum to AAC.

• If AFG were to not sell AAC, its ability to receive dividends from AAC and the timing of any such potential dividends would depend on regulatory approval and the satisfaction of certain obligations senior to AFG's equity interest (e.g.

surplus notes).

• Subject to the satisfaction of the conditions required for the sale of AAC as described in Note 5.

Discontinued Operation in the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, AFG will receive $420,000 of proceeds at closing less applicable legal, advisory and other expenses incurred in connection with the Sale.

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

Upon the close of the AAC sale, AFG purchased AAC's co-investment at a price resulting in a 7.5% rate of return per annum to AAC.

Everspan's ability to make future dividend payments will mostly depend on its future profitability relative to its capital needs to support growth.

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Everspan makes tax payments to AFG in accordance with a Tax Sharing Agreement.

For the six months ended June 30, 2025, Everspan paid $1,744 in tax payments to AFG.

For the nine months ended September 30, 2025, Everspan paid $2,014 in tax payments to AFG.

Cirrata does not have any regulatory restrictions on its ability to make distributions.

AFG received distributions from Cirrata of $3,118 and $4,650 during the six months ended June 30, 2025 and 2024, respectively.

AFG received distributions from Cirrata of $5,536 and $7,354 during the nine months ended September 30, 2025 and 2024, respectively.

AFG's principal uses of liquidity are:

(i) the payment of G&A expenses, including costs to explore opportunities to grow and diversify Ambac, (ii) making capital investments to acquire, grow and/or capitalize new and/or existing businesses, including through the acquisition of noncontrolling interests as a result of the exercise of outstanding puts and/or calls, and (iii) making investments in technology and other operational infrastructure to improve the operational effectiveness and efficiency of our business and to support its growth.

Funding puts, calls and other capital commitments could require payments from AFG, the magnitude of which will ultimately depend on the performance of the underlying businesses, whether or not the puts or calls are exercised, FX rates and other considerations of approximately $300,000 through 2030.

AFG seeks to fund these potential puts and calls from internal resources, but may seek to raise additional short-term or long-term funding or capital sources depending on a number of considerations, including distribution levels from subsidiaries, the potential for additional acquisitions, other capital investment demands, and other considerations.

Funding puts, calls and other capital commitments would require payments from AFG, the magnitude of which will ultimately depend on the performance of the underlying businesses, whether or not the puts or calls are exercised, FX rates and other considerations.

AFG would expect the funding requirements for such obligations not to exceed approximately $50,000 in 2026, but such amount could be higher based on those considerations outlined above.

acquisitions, other capital investment demands, stock repurchases and other considerations.

AFG may also provide short-term financial support, primarily in the form of loans, to its operating subsidiaries to support their operating requirements.

In the opinion of the Company’s management the net assets and expected funding sources of AFG are currently sufficient to meet AFG’s current liquidity requirements.

However, events, opportunities, acquisitions, the exercise of puts and calls, the need to refinance outstanding debt, or other circumstances could require AFG to seek additional capital (e.g.

However, events, opportunities, acquisitions, the exercise of puts and calls, the need to refinance outstanding debt, share repurchases or other circumstances could require AFG to seek additional capital (e.g.

through the issuance of debt, equity or hybrid securities).

The Credit Facility includes covenants that restrict our ability to manage capital resources by limiting, among other actions, the issuance of debt or capital stock;

the creation of liens;

the disposition of assets;

engaging in transactions with affiliates;

making restricted payments, including dividends and the purchase or redemption of capital stock;

and making acquisitions and other investments.

The Credit Facility also requires the prepayment of the borrowings thereunder with proceeds of certain debt or equity issuances and certain asset sales.

In connection with the ArmadaCare acquisition on October 31, 2025, the Company borrowed $120,000 in the form of a five-year $100,000 term loan and a five-year $20,000 revolving credit facility (together, the "Credit Facilities").

The Credit Facilities include covenants that restrict our ability to manage capital resources by requiring maintenance of certain financial ratios and restricting indebtedness, liens, mergers, sales of assets, investments, restricted payments (such as dividends), and affiliate transactions, among other restrictions.

The Credit Facility also requires the prepayment of the borrowings thereunder with proceeds of certain asset sales, recovery events, issuances of indebtedness and indemnity payments.

These requirements will impact our financial and operational flexibility while the Credit Facility remains in place.

Business and Basis of Presentation to the Consolidated Financial Statements included in this Quarterly Report for further detail about the Credit Facilities.

Operating Companies' Liquidity

Sources of liquidity for Everspan are primarily through funds generated from premiums, reinsurance recoveries, fees, investment income and maturities and sales of investments.

Sources of liquidity for Everspan are primarily funds generated from premiums, reinsurance recoveries, fees, investment income and maturities and sales of investments.

Cash provided from these sources is used primarily for claim payments, loss expenses, acquisition costs, operating expenses, reinsurance payments and purchases of securities and other investments.

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Cash Held at Banks

Ambac maintains cash and investment accounts, including premium trust accounts, at depository institutions in amounts in excess of the limits insured by the FDIC and in countries other than the U.S.

Ambac's cash balances held at banks were $36,407 as of June 30, 2025, including cash of Ambac's insurance distribution subsidiaries held in regional banks of $35,085 as of June 30, 2025.

Ambac maintains cash and investment accounts, including premium trust accounts, at depository institutions in amounts in excess of the limits insured by the FDIC and in countries other

Ambac Financial Group, Inc.

Third Quarter 2025 Form 10-Q

than the U.S.

Ambac's cash balances held at banks were $51,767 as of September 30, 2025, including cash of Ambac's insurance distribution subsidiaries held in regional banks of $17,002 as of September 30, 2025.

Consolidated Cash Flow Statement Discussion

The following table summarizes the net cash flows for the periods presented.

Six Months Ended June 30, 2025 2024

Nine Months Ended September 30, 2025 2024

Cash provided by (used in):

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Operating Activities for Continuing Operations

Operating cash flows during the six months ended June 30, 2025 and 2024, was $(10,463) and $27,481, respectively.

Operating cash flows for the six months ended June 30, 2025, were adversely impacted by G&A expenses paid and interest on short-term borrowing, an increase in reinsurance recoverable, partially offset by cash collections from both the specialty P&C and insurance distribution businesses.

Future operating flows will primarily be impacted by net premium collections, commission and fee income and investment income receipts, G&A expenses, commission expenses, net claim and loss expense payments and interest payments on debt.

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

Operating cash flows during the nine months ended September 30, 2025 and 2024, was $(51,617) and $76,394, respectively.

Operating cash flows for the nine months ended September 30, 2025, were adversely impacted by G&A expenses paid relating to acquisition and restructuring costs of $9,283 and interest on short-term borrowing, an increase in reinsurance recoverable, partially offset by cash collections from both the specialty P&C and insurance distribution businesses.

Future operating flows will primarily be impacted by net premium collections, commission and fee income and investment income receipts, offset by G&A expenses, commission expenses, net claim and loss expense payments and interest payments on debt.

Investing Activities for Continuing Operations

Investing activities for the six months ended June 30, 2025 were primarily driven by changes in short-term investments.

Future investing cash flows will be primarily dependent on the sale of AAC, potential acquisitions, the exercise of puts and calls related to non-controlling interests and the purchase and sale of securities.

Investing activities for the nine months ended September 30, 2025 were primarily driven by the proceeds from the sale of AAC and changes in short-term investments.

Future investing cash flows will be primarily dependent on acquisition activity and the purchase and sale of securities.

Financing Activities for Continuing Operations

Financing activities for the six months ended June 30, 2025, included purchases of common stock of $3,301.

Future financing cash flows will be primarily impacted by paydowns and maturities of debt, new borrowings, capital management activity and distributions to noncontrolling interests.

Financing activities for the nine months ended September 30, 2025, included purchases of common stock of $3,301 and repayment of the Company's short-term borrowing of $150,000.

Future financing cash flows will be primarily impacted by financing for the ArmadaCare acquisition, which closed in October 2025;

new debt or other capital raising activity;

paydowns and maturities of debt;

share repurchases, including those executed in October 2025;

acquisitions of noncontrolling interest shares;

other capital management activity and distributions to noncontrolling interests.

Cash Flows from Discontinued Operations

Cash flows pertaining to discontinued operations are reported separately on the Consolidated Statements of Cash Flows.

The primary driver of the cash flows from discontinued operations was the continued run-off of the financial guarantee business.

Since the agreement to sell AAC, the operations have been substantially separated and the potential impacts on future liquidity to the continuing operations are expected to be insignificant.

The primary driver of the cash flows from discontinued operations was the continued run-off of the financial guarantee business, including the collection of premiums, interest income and subrogation, and the payment of claims, expenses and foreign taxes.

Since the agreement to sell AAC, the operations were substantially separated and with the Sale having been completed in September 2025 future reporting period will exclude any discontinued operations activity after September 30, 2025.

BALANCE SHEET

Total assets increased by $464,008 from December 31, 2024, to $8,522,386 at June 30, 2025, primarily due to the increase in reinsurance recoverables associated with the growth of the specialty P&C businesses and the increase in Assets held-for-sale as further described below.

Total liabilities increased by approximately $440,821 from December 31, 2024, to $7,303,678 as of June 30, 2025, primarily due to an increase in loss and loss adjustment expense reserve and ceded premium payables from the specialty P&C businesses and liabilities held-for-sale as further described below.

As of June 30, 2025, total Ambac Financial Group stockholders’ equity was $859,839, compared with total stockholders’ equity of $856,906 at December 31, 2024.

The increase was primarily driven by foreign currency translation gains of $107,877 (net of the NCI impact of $25,827) and unrealized fixed maturity securities gains of $13,959, offset by a net loss of $119,090.

Total assets decreased by $5,910,488 from December 31, 2024, to $2,147,890 at September 30, 2025, primarily due to the closing of the sale of AAC on September 29, 2025, including net cash consideration received and repayment of the Company's short-term debt.

Additionally, reinsurance recoverables increased due to growth and loss reserve strengthening in the specialty P&C business.

Total liabilities decreased by approximately $5,862,388 from December 31, 2024, to $1,000,469 as of September 30, 2025, primarily due to the closing of the sale of AAC, repayment the Company's short-term debt, partially offset by an increase in loss and loss adjustment expense reserve and ceded premium payables from the specialty P&C businesses.

As of September 30, 2025, total Ambac Financial Group stockholders’ equity was $843,384, compared with total stockholders’ equity of $856,906 at December 31, 2024.

The decrease was primarily driven by a total comprehensive loss of $31,495 partially offset by the impact of the issuance of warrants in connection with the sale of AAC.

Discontinued Operation:

Assets and Liabilities Held-for-Sale.

Assets held-for-sale increased to $6,592,417 at June 30, 2025, from $6,267,200 as December 31, 2024.

The increase is primarily due to the impact of exchange rates as the British Pound Sterling strengthened driving an increased value in British Pound Sterling assets partially offset by an increase in the valuation allowance for the loss on disposal of AAC of $67,456.

Liabilities held-for-sale increased to $6,213,024 at June 30, 2025, from $5,887,685 as December 31, 2024, primarily due to a the impact of exchange rates on balances denominated in British Pound Sterling.

Assets held-for-sale decreased to $— at September 30, 2025, from $6,267,200 as December 31, 2024 as a result of the closing of the Sale.

Liabilities held-for-sale increased to $— at September 30, 2025, from $5,887,685 as December 31, 2024 also as a result of the closing of the Sale.

Continuing Operations:

The following discusses changes in assets, liabilities and stockholders' equity, excluding assets and liabilities held-for-sale related to the pending sale of AAC, as of June 30, 2025, compared to December 31, 2024.

The following discusses changes in assets, liabilities and stockholders' equity, excluding assets and liabilities held-for-sale related to the pending sale of AAC, as of September 30, 2025, compared to December 31, 2024.

Ambac Financial Group, Inc.

Third Quarter 2025 Form 10-Q

Investment Portfolio

Ambac's investment portfolio is managed under established guidelines designed to meet the investment objectives of Everspan Group and AFG.

Ambac's investment portfolio is managed under established guidelines designed to meet the investment objectives of the Everspan Group and AFG.

The Insurance Distribution businesses investments are limited to money market funds and U.S.

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Item 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for further description of Ambac's investment policies and applicable regulations.

The following table summarizes the composition of Ambac’s investment portfolio, at carrying value at June 30, 2025, and December 31, 2024:

June 30, 2025 December 31, 2024

The following table summarizes the composition of Ambac’s investment portfolio, at carrying value at September 30, 2025, and December 31, 2024:

September 30, 2025 December 31, 2024

Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consolidated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consolidated

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Investments to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Form 10-Q for information about fixed maturity securities and other investments by asset class.

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

The following charts provide the ratings distribution of the fixed maturity investment portfolio based on fair value at June 30, 2025, and December 31, 2024.

The following charts provide the ratings distribution of the fixed maturity investment portfolio based on fair value at September 30, 2025, and December 31, 2024.

Ratings represent the lower of ratings provided by S&P and Moody's when ratings are available from both agencies.

Ambac Financial Group, Inc.

Third Quarter 2025 Form 10-Q

Premium Receivables

Ambac's premium receivables increased to $71,875 at June 30, 2025, from $57,222 at December 31, 2024.

Ambac's premium receivables increased to $74,760 at September 30, 2025, from $57,222 at December 31, 2024.

The increase is primarily due to growth in the Specialty P&C Insurance Segment, including receivables related to the programs where Everspan participates as a reinsurer.

Commission and fees receivable

Ambac's commission and fee receivables increased to $72,619 at June 30, 2025, from $55,377 at December 31, 2024.

Ambac's commission and fee receivables increased to $75,480 at September 30, 2025, from $55,377 at December 31, 2024.

The increase is primarily due to growth in the Insurance Distribution Segment and the Beat acquisition.

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Ambac has reinsurance in place pursuant to surplus share treaty and facultative agreements.

As of June 30, 2025, and December 31, 2024, reinsurance recoverable on paid and unpaid losses were $376,445 and $306,191, respectively, increasing primarily due to growth in the Specialty P&C Insurance Segment.

To minimize its exposure to losses from reinsurers, Ambac (i) monitors the

financial condition of its reinsurers;

As of September 30, 2025, and December 31, 2024, reinsurance recoverable on paid and unpaid losses were $440,462 and $306,191, respectively, increasing primarily due to growth in the Specialty P&C Insurance Segment.

To minimize its exposure to losses from reinsurers, Ambac (i) monitors the financial condition of its reinsurers;

(ii) is entitled to receive collateral from its reinsurance counterparties under certain reinsurance contracts;

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Those reinsurance counterparties that do not currently post collateral are well capitalized, highly rated, authorized capacity providers.

Ambac benefited from letters of credit and collateral amounting to approximately $67,265 from its reinsurers at June 30, 2025.

Ambac benefited from letters of credit and collateral amounting to approximately $72,454 from its reinsurers at September 30, 2025.

Additionally, while legacy liabilities from Specialty P&C acquisitions were fully ceded to certain reinsurers, Everspan also benefits from an unlimited, uncapped indemnity from the respective sellers to mitigate any residual risk to these reinsurers.

Intangible Assets, net of Accumulated Depreciation

Intangible assets primarily include (i) intangible assets established as part of acquisitions in the Insurance Distribution business of $324,636 at June 30, 2025 and (iii) indefinite-lived intangible assets in the Specialty P&C business as part of its acquisitions of $11,213 at June 30, 2025.

As of June 30, 2025, and December 31, 2024, intangible assets were $353,904 and $344,775, respectively.

Intangible assets primarily include (i) intangible assets established as part of acquisitions in the Insurance Distribution business of $327,986 at September 30, 2025 and (iii) indefinite-lived intangible assets in the Specialty P&C business as part of its acquisitions of $11,213 at September 30, 2025.

As of September 30, 2025, and December 31, 2024, intangible assets were $339,197 and $344,775, respectively.

The increase is driven by foreign exchange rates (appreciation of the British pound), partially offset by amortization of $27,247.

As of June 30, 2025, and December 31, 2024, goodwill totaled $451,808 and $418,234 respectively.

As of September 30, 2025, and December 31, 2024, goodwill totaled $445,382 and $418,234 respectively.

The increase is primarily driven by foreign exchange rates (appreciation of the British pound).

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Loss and loss adjustment expense reserves are estimates of the ultimate liability for unpaid losses and loss expenses for claims that have been reported and claims that have been incurred, but not yet reported as of the balance sheet date.

Loss and loss adjustment expense reserves by line of business were as follows as of June 30, 2025, and December 31, 2024

Loss and loss adjustment expense reserves by line of business were as follows as of September 30, 2025, and December 31, 2024

September 30,

2025 December 31,

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Loss and Loss Expense Reserves $ 437,539 $ 82,764 $ 349,064 $ 78,980

(1) Includes $27,629 and $0 loss and loss expense reserves on a gross and net of reinsurance basis at June 30, 2025 and $35,146 and $0 loss and loss expense reserves on a gross and net of reinsurance basis at December 31, 2024 related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company and Consolidated

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

Specialty Insurance Company.

(1) Includes $28,999 and $0 loss and loss expense reserves on a gross and net of reinsurance basis at September 30, 2025 and $35,146 and $0 loss and loss expense reserves on a gross and net of reinsurance basis at December 31, 2024 related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company and Consolidated Specialty Insurance Company.

All legacy liabilities remain obligations of affiliates of the sellers through reinsurance.

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Ambac borrowed under a short-term credit facility to provide partial funding of the acquisition of Beat in 2024.

The carrying value of this short term debt is $150,000 as of June 30, 2025, and December 31, 2024.

This short-term debt will be repaid from the proceeds of the sale of AAC.

This short-term debt was repaid from the proceeds of the sale of AAC in the amount of $150,000.

In connection with the acquisition of ArmadaCare on October 31, 2025, Cirrata Group LLC and certain of its subsidiaries (including ArmadaCare) entered into the Credit Facilities, which were fully drawn to pay part of the purchase price for ArmadaCare.

Background and Business Description to the Consolidated Financial Statements included in this Quarterly Report for further detail about the Credit Facilities.

Commission Payable

Commission payables are commissions due to sub producers for placing insurance contracts on behalf of the MGAs and amounts due to UK Syndicates that provide advanced commissions to fund short term liquidity needs for MGAs.

Commission payable at June 30, 2025, and December 31, 2024 was $96,875 and $71,431, respectively.

Commission payable at September 30, 2025, and December 31, 2024 was $109,317 and $71,431, respectively.

The increase is primarily due to higher advance commissions due to Syndicates.

Ambac Financial Group, Inc.

Third Quarter 2025 Form 10-Q

Redeemable Noncontrolling Interest (NCI)

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As a result, the minority interests were reclassified from nonredeemable to redeemable and remeasured at fair value including the put options, increasing redeemable NCI by $42,180.

Other changes to redeemable NCI during the three and six months ended June 30, 2025, relate primarily to the allocation of financial results to the minority interests, revaluation to redemption value where applicable, reclassification of certain interests to nonredeemable due to the expiration of related put options, the exercise of certain put options and the impact of foreign currency translation.

Other changes to redeemable NCI during the three and nine months ended September 30, 2025, relate primarily to the allocation of financial results to the minority interests, revaluation to redemption value where applicable, reclassification of certain interests to nonredeemable due to the expiration of related put options, the exercise of certain put options and the impact of foreign currency translation.

ACCOUNTING STANDARDS

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STATUTORY BASIS FINANCIAL RESULTS

insurance subsidiaries prepare financial statements under accounting practices prescribed or permitted by its domiciliary state regulator (“SAP”) for determining and reporting the financial condition and results of operations of an insurance

The National Association of Insurance Commissioners (“NAIC”) Accounting Practices and Procedures manual (“NAIC SAP”) is adopted as a component of prescribed practices by each domiciliary state.

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Everspan Indemnity Insurance Company

Everspan Indemnity Insurance Company’s (EIIC) statutory policyholder surplus was $126,488 at June 30, 2025, as compared to $125,202 at December 31, 2024.

The increase in surplus was driven by net income at Everspan Indemnity Insurance Company, including its subsidiaries, of $1,093 during the six months ended June 30, 2025.

Everspan Indemnity Insurance Company’s (EIIC) statutory policyholder surplus was $126,460 at September 30, 2025, as compared to $125,202 at December 31, 2024.

The increase in surplus was driven by net income at Everspan Indemnity Insurance Company, including its subsidiaries, of $1,163 during the nine months ended September 30, 2025.

Each of Everspan's insurance carriers are a direct or indirect wholly-owned subsidiary of EIIC and therefore are included in EIIC's statutory policyholder surplus.

NON-GAAP FINANCIAL MEASURES

In addition to reporting the Company’s quarterly financial results in accordance with GAAP, the Company is reporting non-GAAP financial measures:

In addition to reporting the Company’s quarterly financial results in accordance with GAAP, the Company is reporting non-GAAP

financial measures:

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, Organic Revenue Growth Rate (Insurance Distribution segment only), Adjusted Net Income and Adjusted Net Income Margin.

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A tabular reconciliation of the non-GAAP financial measure and the most comparable GAAP financial measure is also presented below.

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

EBITDA — EBITDA is net income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization of intangible assets.

EBITDA Margin — EBITDA divided by total revenues.

expense, including share-based compensation expense, acquisition and integration related expenses, severance, and other exceptional or non-recurring items, including those related to raising capital.

Adjusted EBITDA and Adjusted EBITDA Margin — We define Adjusted EBITDA as net income (loss) from continuing operations before interest expense, income taxes, depreciation, amortization of intangible assets, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, acquisition and integration related expenses, severance, and other exceptional or non-recurring items, including those related to raising capital.

We believe that adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of income and expenses that may obfuscate business performance, and that the presentation of this measure enhances an investor's understanding of our financial performance.

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024

Ambac Financial Group, Inc.

Third Quarter 2025 Form 10-Q

Three Months Ended September 30, 2025 Three Months Ended September 30, 2024

Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated

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Impact of noncontrolling interests — (3,927) — (3,927) — (557) — (557)

EBITDA to shareholders 620 2,513 (12,983) (9,848) (1,097) 1,974 (14,441) (13,565)

Net income margin 2.0 % (24.2) % (2517.1) % (37.9) % (3.4) % 9.4 % (252.3) % (28.8) %

Net income margin to Ambac shareholders 2.0 % (23.4) % (2517.1) % (37.4) % (3.4) % 9.4 % (252.3) % (28.8) %

EBITDA margin 2.9 % 14.2 % (2468.3) % (13.9) % (3.4) % 18.1 % (244.6) % (25.7) %

EBITDA margin to Ambac shareholders 2.9 % 7.6 % (2468.3) % (17.9) % (3.4) % 14.8 % (244.6) % (26.6) %

EBITDA attributable to shareholders (45) 5,928 (25,958) (20,075) 8,934 1,868 (21,267) (10,465)

Net income margin (0.2) % (10.4) % NM (46.3) % 19.9 % (29.4) % NM (28.4) %

Net income margin attributable to shareholders (0.2) % (12.5) % NM (47.6) % 19.9 % (22.1) % NM (25.9) %

EBITDA margin (0.2) % 22.8 % NM (24.2) % 22.3 % 10.1 % NM (14.2) %

EBITDA margin attributable to shareholders (0.2) % 13.7 % NM (30.1) % 22.3 % 7.8 % NM (14.9) %

Acquisition and integration related expenses — — 229 229 — — 14,854 14,854

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Adjusted EBITDA $ 49 $ 9,955 $ (8,893) $ 1,111 $ 1,591 $ 2,673 $ (1,802) $ 2,462

Adjusted EBITDA attributable to Ambac shareholders $ 681 $ 2,519 $ (7,771) $ (4,569) $ (1,023) $ 1,974 $ (1,562) $ (612)

Adjusted EBITDA Margin 3.2 % 13.9 % (1477.4) % (4.6) % (3.2) % 18.1 % (26.5) % (0.4) %

Adjusted EBITDA Margin to Ambac shareholders 3.2 % 7.6 % (1477.4) % (8.3) % (3.2) % 14.8 % (26.5) % (1.2) %

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

Six Months Ended June 30, 2025 Six Months Ended June 30, 2024

Adjusted EBITDA attributable to shareholders $ 49 $ 5,988 $ (8,893) $ (2,856) $ 1,591 $ 2,116 $ (1,802) $ 1,905

Adjusted EBITDA Margin 0.2 % 23.0 % NM 1.7 % 4.0 % 11.1 % NM 3.5 %

Adjusted EBITDA Margin attributable to shareholders 0.2 % 13.9 % NM (4.3) % 4.0 % 8.8 % NM 2.7 %

Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024

Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated

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Impact of noncontrolling interests — (11,132) — (11,132) — (1,907) — (1,907)

EBITDA to shareholders 2,123 9,576 (27,044) (15,345) 724 6,215 (23,048) (16,112)

Net income margin 4.4 % (13.1) % (2462.9) % (30.0) % 1.0 % 16.5 % (296.6) % (18.0) %

Net income margin to Ambac shareholders 4.4 % (15.0) % (2462.9) % (31.2) % 1.1 % 16.4 % (296.6) % (18.0) %

EBITDA margin 5.0 % 22.7 % (2430.0) % (6.9) % 1.2 % 24.3 % (286.4) % (14.7) %

EBITDA margin to Ambac shareholders 5.0 % 12.9 % (2430.0) % (13.0) % 1.2 % 19.9 % (286.4) % (16.0) %

EBITDA attributable to shareholders 2,077 15,508 (53,004) (35,418) 9,655 7,918 (44,146) (26,573)

Net income margin 2.8 % (12.1) % NM (35.9) % 8.5 % (3.8) % NM (22.3) %

Net income margin attributable to shareholders — % — % NM — % 8.5 % (2.2) % NM (21.8) %

EBITDA margin 3.2 % 22.7 % NM (13.2) % 9.5 % 17.8 % NM (14.5) %

EBITDA margin attributable to shareholders 3.2 % 13.2 % NM (19.2) % 9.5 % 14.4 % NM (15.6) %

Acquisition and integration related expenses — 375 1,310 1,685 — — 25,827 25,827

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Adjusted EBITDA $ 2,319 $ 26,647 $ (26,652) $ 2,314 $ 2,439 $ 10,067 $ (8,921) $ 3,585

Adjusted EBITDA attributable to Ambac shareholders $ 2,270 $ 9,611 $ (17,759) $ (5,876) $ 849 $ 6,176 $ (7,289) $ (228)

Adjusted EBITDA attributable to shareholders $ 2,319 $ 15,599 $ (26,652) $ (8,734) $ 2,439 $ 8,160 $ (8,921) $ 1,678

Adjusted EBITDA Margin 3.5 % 22.7 % NM 1.3 % 2.4 % 18.2 % NM 2.1 %

Adjusted EBITDA Margin to Ambac shareholders 5.3 % 13.0 % NM (8.3) % 1.4 % 19.8 % NM (0.2) %

Organic Revenue Growth & Rate (Insurance Distribution Only.) — Organic revenue is based on commissions and fees for the relevant period by excluding (i) the first twelve months of commissions and fees generated from acquisitions and (ii) commissions and fees from divestitures (iii) and other items such as contingent commissions and the impact of changes in foreign exchange rates.

Organic revenue growth is the change in organic revenue period-to-period, with prior period results adjusted to (i) include commissions and fees that were excluded from organic revenue in the prior period and reached the twelve-month owned mark in the current period, and (ii) exclude commissions and fees related to divestitures from organic revenue.

Adjusted EBITDA Margin attributable to shareholders 3.5 % 13.3 % NM (4.7) % 2.4 % 14.8 % NM 1.0 %

as contingent commissions and the impact of changes in foreign exchange rates.

Organic revenue growth is the change in organic revenue period-to-period, with prior period results adjusted to (i) include

Ambac Financial Group, Inc.

Third Quarter 2025 Form 10-Q

commissions and fees that were excluded from organic revenue in the prior period and reached the twelve-month owned mark in the current period, and (ii) exclude commissions and fees related to divestitures from organic revenue.

Organic revenue growth rate to Total revenue growth rate, the most directly comparable GAAP measure, for each of the periods indicated is as follows (in percentages):

Three Months Ended June 30, 2025 2024 % Growth

Three Months Ended September 30, 2025 2024 % Growth

Total Insurance Distribution revenue & growth percentage (1)

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Profit commission and contingent commission income (1,940) (1,319)

impact of F.X.

rates (1,041) 1,636

Total Organic Revenue & Growth Percentage $ 34,035 $ 24,312 40.0 %

Six Months Ended June 30, 2025 2024 % Growth

Nine Months Ended September 30, 2025 2024 % Growth

Total Insurance Distribution revenue & growth percentage (1)

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Profit commission and contingent commission income (8,897) (3,642)

impact of F.X.

rates 2,643 1,636

Total Organic Revenue & Growth Percentage $ 67,052 53,160 26.1 %

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We believe that adjusted net income is an appropriate measure of operating performance because it eliminates the impact of income and expenses that may obfuscate business performance.

Ambac Financial Group, Inc.

Second Quarter 2025 Form 10-Q

Table o f Contents

Three Months Ended June 30,

Three Months Ended September 30,

Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated

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Adjusted net income (loss) attributable to shareholders $ 41 $ (784) $ (9,214) $ (9,957) $ 647 $ (952) $ (1,349) $ (1,654)

Three Months Ended June 30,

Three Months Ended September 30,

Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated

Net income (loss) margin 1.9 % (24.0) % (11927.9) % (37.4) % (3.4) % 9.4 % (252.3) % (28.8) %

Adjusted Net income (loss) attributable to Ambac stockholders margin 2.1 % (9.0) % (7218.9) % (19.0) % (3.1) % 14.7 % (34.2) % (2.1) %

Six Months Ended June 30,

Net income (loss) margin (0.2) % (10.4) % NM (46.3) % 19.9 % (29.4) % NM (28.4) %

Adjusted Net income (loss) attributable to Ambac stockholders margin 0.2 % (1.8) % NM (14.9) % 1.6 % (4.0) % NM (2.4) %

Ambac Financial Group, Inc.

Third Quarter 2025 Form 10-Q

Nine Months Ended September 30,

Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated

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Adjusted net income (loss) attributable to common shareholders $ 2,026 $ (1,248) $ (27,324) $ (26,546) $ 1,416 $ 4,947 $ (9,292) $ (2,929)

Six Months Ended June 30,

Nine Months Ended September 30,

Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated

Net income (loss) margin 8.3 % (29.2) % (24695.5) % (63.4) % 1.1 % 16.1 % (296.6) % (18.1) %

Adjusted Net income (loss) attributable to Ambac stockholders margin 8.9 % (1.4) % (16315.3) % (29.8) % 1.3 % 19.1 % (100.8) % (1.4) %

Net income (loss) margin 7.9 % (32.9) % NM (99.3) % 8.5 % (3.8) % NM (22.3) %

Adjusted Net income (loss) attributable to Ambac stockholders margin 8.9 % (2.9) % NM (39.9) % 1.4 % 9.0 % NM (1.7) %

Quantitative and Qualitative Disclosure About Market Risk

As of June 30, 2025, there are no material changes in the market risks that the Company is exposed to compared to December 31, 2024.

As of September 30, 2025, there are no material changes in the market risks that the Company is exposed to compared to December 31, 2024.

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-Q

Item 2. Management’s Discussion and Analysis