Segment Information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Information

19. SEGMENT INFORMATION

Ambac has two reportable segments, as follows: (i) Financial Guarantee, which provides financial guarantees (including credit derivatives) for public finance, structured finance and international obligations; and (ii) Financial Services, which provides investment agreements, funding conduits, interest rate swaps, principally to clients of the financial guarantee business. Ambac’s reportable segments were strategic business units that offered different products and services. They are managed separately because each business required different marketing strategies, personnel skill sets and technology.

Ambac Assurance guarantees the swap and investment agreement obligations of its Financial Services subsidiaries. Additionally, Ambac Assurance provides loans to the Financial Services businesses. Inter-segment revenues include the premiums and investment income earned under those agreements. Such premiums are determined as if they were premiums paid by third parties, that is, at current market prices.

Information provided below for unaffiliated “Corporate and Other” primarily relates to investment income on Ambac's investment portfolio as well as assets allocated for future purchase of residential real estate properties from Ambac Assurance insured transactions. Equity in net income of investees accounted for by the equity method relates to the Owner Trust Certificate received when Ambac deposited its Segregated Account junior surplus note into a Trust (see Note 1. Background and Business Description for further information relating to the sale by Ambac of a junior surplus note issued to it by the Segregated Account). Inter-segment for "Corporate and Other" relates to amounts received by Ambac under the Mediation Agreement dated September 21, 2011 (as more fully described in Note 1. Background and Business Description), including accrual of interest on the junior surplus notes issued by the Segregated Account prior to Ambac's deposit into a Trust.

The following table is a summary of financial information by reportable segment for the affected periods:

Successor Ambac - Year Ended December 31, 2015	Financial Guarantee			Financial Services			Corporate and Other			Inter-segment Eliminations			Consolidated
Revenues:
Unaffiliated customers (1)	$	679,662		$	(44,003	)	$	4,663		$	—		$	640,322
Equity in net income of investees accounted for by equity method	—			—			4,336			—			4,336
Inter-segment	349			(849		)	645			(145		)	—
Total revenues	680,011			(44,852		)	9,644			(145		)	644,658
Pre-tax income (loss):
Unaffiliated customers (1)(2)(3)	560,332			(46,869		)	(7,741		)	—			505,722
Equity in net income of investees accounted for by equity method	—			—			4,336			—			4,336
Inter-segment	(2,744		)	(1,383		)	4,127			—			—
Pre-tax income (loss)	557,588			(48,252		)	722			—			510,058
Total assets as of December 31, 2015	23,108,387			348,130			268,388			3,165			23,728,070
Net investment income	256,636			548			9,105			—			266,289
Insurance intangible amortization	169,557			—			—			—			169,557
Interest expense	115,630			907			—			—			116,537
Goodwill impairment	514,511			—			—			—			514,511
Reorganization items (4)	$	—		$	—		$	—		$	—		$	—

Successor Ambac - Year Ended December 31, 2014	Financial Guarantee			Financial Services			Corporate and Other			Inter-segment Eliminations			Consolidated
Revenues:
Unaffiliated customers (1)	$	506,559		$	(179,691	)	$	407		$	—		$	327,275
Equity in net income of investees accounted for by equity method	—			—			1,395			—			1,395
Inter-segment	1,243			(1,197		)	23,299			(23,345		)	—
Total revenues	507,802			(180,888		)	25,101			(23,345		)	328,670
Pre-tax income (loss):
Unaffiliated customers (1)(2)(3)	684,750			(182,941		)	(9,951		)	—			491,858
Equity in net income of investees accounted for by equity method	—			—			1,395			—			1,395
Inter-segment	(25,443		)	(1,545		)	26,988			—			—
Pre-tax income (loss)	659,307			(184,486		)	18,432			—			493,253
Total assets as of December 31, 2014	24,448,346			412,510			284,278			14,730			25,159,864
Net investment income	298,020			1,123			1,803			—			300,946
Insurance intangible amortization	151,830			—			—			—			151,830
Interest expense	125,892			1,584			—			—			127,476
Reorganization items (4)	$	—		$	—		$	211		$	—		$	211

Successor Ambac – Period from May 1 through December 31, 2013	Financial Guarantee			Financial Services			Corporate and Other			Inter-segment Eliminations			Consolidated
Revenues:
Unaffiliated customers (1)	$	464,701		$	116,177		$	170		$	—		$	581,048
Inter-segment	1,837			(1,210		)	219,181			(219,808		)	—
Total revenues	466,538			114,967			219,351			(219,808		)	581,048
Pre-tax income (loss):
Unaffiliated customers (1) (2) (3)	405,004			113,347			(6,035		)	—			512,316
Inter-segment	(220,218		)	(1,644		)	221,862			—			—
Pre-tax income (loss)	184,786			111,703			215,827			—			512,316
Total assets as of December 31, 2013	26,590,873			448,473			53,908			(777		)	27,092,477
Net investment income	145,269			1,115			62			—			146,446
Insurance intangible amortization	99,658			—			—			—			99,658
Interest expense	83,595			1,355			—			—			84,950
Reorganization items (4)	$	—		$	—		$	493		$	—		$	493

Predecessor Ambac - Period from Jan 1 through April 30, 2013	Financial Guarantee			Financial Services			Corporate and Other			Inter-segment Eliminations			Consolidated
Revenues:
Unaffiliated customers (1)	$	633,010		$	7,339		$	39		$	—		$	640,388
Inter-segment	940			(882		)	—			(58		)	—
Total revenues	633,950			6,457			39			(58		)	640,388
Pre-tax income (loss):
Unaffiliated customers (1) (2) (3)	1,831,237			3,394			1,513,402			—			3,348,033
Inter-segment	(132		)	(1,101		)	1,233			—			—
Pre-tax income (loss)	1,831,105			2,293			1,514,635			—			3,348,033
Total assets as of April 30, 2013	28,302,214			512,021			31,070			8,130			28,853,435
Net investment income	115,129			1,572			39			—			116,740
Interest expense	29,718			1,307			—			—			31,025
Reorganization items (4)	$	(1,231,550	)	$	1,505		$	(1,515,135	)	$	—		$	(2,745,180	)

(1) Included in both revenues from unaffiliated customers and in pre-tax income (loss) from continuing operations from unaffiliated customers is net investment income.

(2) Included in pre-tax income (loss) from continuing operations from unaffiliated customers is interest expense.

(3) Included in pre-tax income (loss) from continuing operations from unaffiliated customers is amortization of intangible asset arising from financial guarantee contracts that were set to fair value upon adoption of Fresh Start.

(4) Refer to Note 1. Background and Business Description, Chapter 11 Reorganization of Ambac for a further discussion of Ambac's Reorganization.

The following table summarizes gross premiums written, net premiums earned and the net change in fair value of credit derivatives included in the Financial Guarantee segment by location of risk for the affected periods:

	Successor Ambac
	2015							2014
Year Ended December 31	Gross Premiums Written			Net Premiums Earned		Net Change in Fair Value of Credit Derivatives		Gross Premiums Written			Net Premiums Earned		Net Change in Fair Value of Credit Derivatives
United States	$	(13,028	)	$	229,658	$	39,633	$	(46,279	)	$	197,154	$	8,669
United Kingdom	3,652			68,799		—		(221,516		)	31,672		—
Other international	(28,196		)	14,138		2,068		(20,515		)	17,534		15,237
Total	$	(37,572	)	$	312,595	$	41,701	$	(288,310	)	$	246,360	$	23,906

	Successor Ambac							Predecessor Ambac
	Period from May 1 through December 31, 2013							Period from Jan1 through April 30, 2013
	Gross Premiums Written			Net Premiums Earned		Net Change in Fair Value of Credit Derivatives		Gross Premiums Written			Net Premiums Earned		Net Change in Fair Value of Credit Derivatives
United States	$	(61,255	)	$	165,099	$	122,696	$	(16,102	)	$	104,594	$	(31,134	)
United Kingdom	(7,368		)	35,387		22,548		10,673			18,071		(5,861		)
Other international	(11,686		)	13,032		47,625		(8,696		)	7,335		(23,389		)
Total	$	(80,309	)	$	213,518	$	192,869	$	(14,125	)	$	130,000	$	(60,384	)