Long-Term Debt (Notes)

9 Months Ended

Sep. 30, 2014

LONG-TERM DEBT

The carrying value of long-term debt was as follows:



	September 30, 2014		December 31, 2013
Ambac Assurance Corporation:
5.1% surplus notes, general account, due 2020	$	934,812	$	909,186
5.1% surplus notes, segregated account, due 2020	40,919		39,797
5.1% junior surplus notes, segregated account, due 2020	243,579		14,195
Ambac Assurance long-term debt	$	1,219,310	$	963,178

Variable Interest Entities:
Long-term debt	$	13,159,174	$	14,091,753

At September 30, 2014 junior surplus notes, segregated account, due 2020 include $350,000 face amount that Ambac sold to a newly formed Trust on August 28, 2014 (as further described in Note 1). The notes were recorded at a discount to par based on their fair value on August 28, 2014. These junior surplus notes have a scheduled maturity of June 7, 2020, subject to restrictions including that principal and interest payments may not be made until other indebtedness is paid in full, which includes senior surplus notes and Segregated Account policy claims. Repayment of the junior surplus notes is also subject to the approval of the Wisconsin Office of the Commissioner of Insurance (“OCI”). Ambac is accreting the discount on the junior surplus notes into earnings using the effective interest method, based on an imputed interest rate of 8.38%.