Schedule II - Condensed Financial Information of Registrant (Parent Company Only) [Schedule] (Notes)

12 Months Ended

Dec. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Parent Company Only Disclosure

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

SCHEDULE II— CONDENSED FINANCIAL INFORMATION

OF REGISTRANT (PARENT COMPANY ONLY)

Condensed Balance Sheets

	December 31,
($ in Thousands, except share data)	2015			2014
Assets:
Fixed income securities, at fair value (amortized cost: 2015—$203,709 and 2014—$234,294)	$	187,979		$	234,310
Short-term investments, at cost (approximates fair value)	48,079			22,936
Other investments	25,339			21,003
Total investments	261,397			278,249
Cash	25			141
Investment in subsidiaries	1,349,483			1,116,044
Investment income due and accrued	123			54
Current taxes (1)	70,848			—
Other assets	4,778			5,770
Total assets	$	1,686,654		$	1,400,258
Liabilities and Stockholders' Equity:
Liabilities:
Current taxes	—			221
Accounts payable and other liabilities	1,855			932
Total liabilities	1,855			1,153
Stockholders’ equity:
Preferred stock, par value $0.01 per share; 20,000,000 shares authorized shares; issued and outstanding shares—none	—			—
Common stock, par value $0.01 per share; 130,000,000 shares authorized, issued and outstanding shares; 45,044,222 and 45,005,932	450			450
Additional paid-in capital	190,813			189,138
Accumulated other comprehensive income	15,215			220,283
Retained earnings	1,478,439			989,290
Treasury stock, shares at cost: 8,202 and 2,459	(118		)	(56		)
Total Ambac Financial Group, Inc. stockholders’ equity	1,684,799			1,399,105
Total liabilities and stockholders’ equity	$	1,686,654		$	1,400,258

(1) Of this amount, $70,911 is receivable from the Registrant's wholly-owned subsidiary, Ambac Assurance Corporation, pursuant to the Amended TSA.

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

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

SCHEDULE II— CONDENSED FINANCIAL INFORMATION

OF REGISTRANT (PARENT COMPANY ONLY)

Condensed Statement of Comprehensive Income (Loss)

	Successor Ambac									Predecessor Ambac
							Period from May 1			Period from Jan 1
	Year Ended December 31,						through			through
($ in Thousands)	2015			2014			December 31, 2013			April 30, 2013
Revenues:
Investment income	$	9,826		$	25,147		$	22,227		$	39
Other income	—			—			197,122			—
Other than temporary impairments	(155		)	—			—			—
Net realized gains (losses)	(27		)	(46		)	2			—
Total revenues	9,644			25,101			219,351			39
Expenses:
Operating expenses	8,922			6,458			3,018			539
Total expenses	8,922			6,458			3,018			539
Income (loss) before income taxes, reorganization costs and equity in undistributed net loss of subsidiaries	722			18,643			216,333			(500		)
Reorganization items	—			211			493			(2,745,180		)
Income (loss) before income taxes and equity in undistributed net loss of subsidiaries	722			18,432			215,840			2,744,680
Federal income tax provision (benefit)	(70,811		)	221			—			(703		)
Income before equity in undistributed net income of subsidiaries	71,533			18,211			215,840			2,745,383
Equity in undistributed net income of subsidiaries	421,870			465,860			289,379			603,666
Net income	$	493,403		$	484,071		$	505,219		$	3,349,049
Other comprehensive income, after tax:
Net income	$	493,403		$	484,071		$	505,219		$	3,349,049
Unrealized gains (losses) on securities, net of deferred income taxes of $0	(159,730		)	252,603			(41,910		)	175,347
Gain (loss) on foreign currency translation, net of deferred income taxes of $0.	(44,651		)	(43,165		)	42,724			(657		)
Changes to postretirement benefit, net of tax	(687		)	(816		)	10,847			185
Total other comprehensive income (loss)	(205,068		)	208,622			11,661			174,875
Total comprehensive income attributable to Ambac Financial Group, Inc.	$	288,335		$	692,693		$	516,880		$	3,523,924

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

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

SCHEDULE II— CONDENSED FINANCIAL INFORMATION

OF REGISTRANT (PARENT COMPANY ONLY)

Condensed Statement of Stockholders' Equity

($ in Thousands)	Total			Retained Earnings			Accumulated Other Comprehensive Income			Preferred Stock		Common Stock			Additional Paid-in Capital			Common Stock Held in Treasury, at Cost
Successor Ambac
Balance at January 1, 2015	$	1,399,105		$	989,290		$	220,283		$	—	$	450		$	189,138		$	(56	)
Total comprehensive income	288,335			493,403			(205,068		)	—		—			—			—
Stock-based compensation	3,105			—			—			—		—			3,105			—
Cost of shares (acquired) issued under equity plan	(374		)	(312		)	—			—		—			—			(62		)
Cost of warrants acquired	(5,375		)	(3,942		)	—			—		—			(1,433		)	—
Warrants exercised	3			—			—			—		—			3			—
Balance at December 31, 2015	$	1,684,799		$	1,478,439		$	15,215		$	—	$	450		$	190,813		$	(118	)
Successor Ambac
Balance at January 1, 2014	$	702,983		$	505,219		$	11,661		$	—	$	450		$	185,672		$	(19	)
Total comprehensive income	692,693			484,071			208,622			—		—			—			—
Stock based compensation	3,450			—			—			—		—			3,450			—
Shares issued under equity plan	(37		)	—			—			—		—			—			(37		)
Warrants exercised	16			—			—			—		—			16			—
Balance at December 31, 2014	$	1,399,105		$	989,290		$	220,283		$	—	$	450		$	189,138		$	(56	)
Successor Ambac
Balance at May 1, 2013	$	—		$	—		$	—		$	—	$	—		$	—		$	—
Issuance of new equity in connection with emergence from Chapter 11	185,000			—			—			—		450			184,550			—
Balance at May 1, 2013	185,000			—			—			—		450			184,550			—
Total comprehensive income	516,880			505,219			11,661			—		—			—			—
Stock based compensation	1,106			—			—			—		—			1,106			—
Cost of shares acquired	(19		)	—			—			—		—			—			(19		)
Warrants exercised	16			—			—			—		—			16			—
Balance at December 31, 2013	$	702,983		$	505,219		$	11,661		$	—	$	450		$	185,672		$	(19	)
Predecessor Ambac
Balance at January 1, 2013	$	(3,907,527	)	$	(6,297,264	)	$	625,385		$	—	$	3,080		$	2,172,027		$	(410,755	)
Total comprehensive income	3,523,924			3,349,049			174,875			—		—			—			—
Stock-based compensation	(60		)	(60		)	—			—		—			—			—
Shares issued under equity plans	60			—			—			—		—			—			60
Elimination of Predecessor Ambac Shareholder equity accounts	383,603			2,948,275			(800,260		)	—		(3,080		)	(2,172,027		)	410,695
Balance at April 30, 2013	$	—		$	—		$	—		$	—	$	—		$	—		$	—

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

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

SCHEDULE II— CONDENSED FINANCIAL INFORMATION

OF REGISTRANT (PARENT COMPANY ONLY)

Condensed Statements of Cash Flow

	Successor Ambac									Predecessor Ambac
							Period from May 1			Period from Jan 1
	Year Ended December 31,						through			through
($ in Thousands)	2015			2014			December 31, 2013			April 30, 2013
Cash flows from operating activities:
Net income (loss)	$	493,403		$	484,071		$	505,219		$	3,349,049
Adjustments to reconcile net income loss to net cash used in operating activities:
Equity in undistributed net (income) loss of non-debtor subsidiaries	(421,870		)	(465,860		)	(289,379		)	(603,666		)
Amortization of bond premium and discount	(4,690		)	4			—			—
Reorganization items	—			211			493			(2,745,180		)
Junior surplus notes received from Ambac Assurance Corporation Segregated Account	—			—			(167,020		)	—
Other-than-temporary impairment charges	155			—			—			—
Net realized gains (losses)	27			46			(2		)	—
Increase (decrease) in current income taxes payable	(71,069		)	221			—			(1,900		)
Share-based compensation	3,105			3,450			1,106			—
Investment income due and accrued	(69		)	11,905			(11,942		)	(6		)
(Increase) decrease in other assets	992			(834		)	(1,677		)	3,182
Other, net	(4,705		)	(36,628		)	(28,030		)	(4,107		)
Net cash provided by (used in) operating activities	(4,721		)	(3,414		)	8,768			(2,628		)
Cash flows from investing activities:
Proceeds from matured bonds	347,539			65,032			14,355			—
Purchases of bonds	(312,419		)	(271,181		)	(42,506		)	—
Change in short-term investments	(25,143		)	(14,617		)	19,360			2,637
Net cash provided by (used in) investing activities	9,977			(220,766		)	(8,791		)	2,637
Cash flows from financing activities:
Proceeds from the sale of Junior Surplus Notes of the Segregated Account	—			224,262			—			—
Cost of warrants acquired	(5,375		)	—			—			—
Proceeds from warrant exercise	3			16			16			—
Net cash provided by financing activities	(5,372		)	224,278			16			—
Net cash flow	(116		)	98			(7		)	9
Cash at beginning of period	141			43			50			41
Cash at end of period	$	25		$	141		$	43		$	50
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes	$	394		$	—		$	—		$	1,900
Cash payments related to reorganization items:
Professional fees paid for services rendered in connection with the Chapter 11 proceeding	$	—		$	272		$	15,546		$	3,860

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

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

SCHEDULE II— CONDENSED FINANCIAL INFORMATION

OF REGISTRANT (PARENT COMPANY ONLY)

Notes to Condensed Financial Information

(Dollar Amounts in Thousands)

The condensed financial information of Ambac Financial Group, Inc. (“Ambac” or the “Registrant”) as of December 31, 2015 and 2014 and for the years ended December 31, 2015 and 2014, eight month period ended December 31, 2013 (Successor Company), and the four month period ended April 30, 2013 (Predecessor Company), should be read in conjunction with the consolidated financial statements of Ambac Financial Group, Inc. and Subsidiaries and the notes thereto included in the Registrants 2015 Annual Report on Form 10-K for the year ended December 31, 2015 ("2015 Annual Report on Form 10-K") filed with the Securities and Exchange Commission on February 29, 2016. Investments in subsidiaries are accounted for using the equity method of accounting.

Ambac, headquartered in New York City, is a financial services holding company incorporated in the state of Delaware on April 29, 1991. On May 1, 2013 (the “Effective Date”), Ambac emerged from Chapter 11 bankruptcy protection when the Second Modified Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc. (the “Reorganization Plan”) became effective. On December 26, 2013, the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) entered an order of final decree closing Ambac’s Chapter 11 case. Ambac filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court on November 8, 2010 as a result of losses incurred since the beginning of the financial crisis in 2007.

Chapter 11 Reorganization of Ambac:

See Note 1. Background and Business Description — Chapter 11 Reorganization of Ambac included in Part II, Item 8 in this Form 10-K for a discussion of the Chapter 11 Reorganization of Ambac.

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Income Taxes

Ambac files a consolidated Federal income tax return with its subsidiaries. Ambac and its subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions. As of December 31, 2015 Ambac had loss carryforwards totaling $4,298,770. This includes carryforwards of $129,048 relating to U.S. capital losses, $14,936 of Ambac UK loss carryforwards, and an ordinary U. S. federal net operating tax carryforward of approximately $4,154,786, which, if not utilized, will begin expiring in 2029, and will fully expire in 2034.

As discussed more fully in Note 1. Background and Business Description — Chapter 11 Reorganization of Ambac, under the Amended Plan Settlement, the Registrant, Ambac Assurance and certain affiliates entered into an amended and restated tax sharing agreement (the “Amended TSA”). Pursuant to the Amended TSA, to the extent Ambac Assurance generated taxable income after September 30, 2011, which offset the allocated $3,650,000 of NOLs, (or the proportionate amount of AMT NOL (as defined)), it is obligated to make payments (“Tolling Payments”), subject to certain credits, to the Registrant in accordance with a four Tier, A through D, NOL usage table. NOLs in excess of the allocated $3,650,000 may be utilized beginning in 2016, subject to the Registrant's consent, not to be unreasonably withheld, for a payment of 25% of the benefit received.

Ambac Assurance has utilized all of its current post determination date NOLs generated from September 30, 2011 through December 31, 2015 (post determination date NOLs); however, additional post determination date NOLs may be generated in the future. During this time period, Ambac Assurance's cumulative net taxable income was approximately $877,313, which utilized all of the $479,000 allocated Tier A NOL and $398,313 of the $1,057,000 allocated Tier B NOL and resulted in accrued Tolling Payments, net of applicable credits, of $70,911 payable to Ambac no later than forty-five days after March 15, 2016 (subject to review by the Rehabilitator). Of the bankruptcy related credits available to offset the first $5,000 of payments due under each of the NOL usage Tiers A, B, and C, Ambac Assurance has fully utilized the combined $10,000 of Tier A and Tier B credits.

The NOL allocable to AFG as of December 31, 2015 is $1,382,109.