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

12 Months Ended

Dec. 31, 2016

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

($ in thousands, except share data) December 31,	2016			2015
Assets:
Fixed income securities, at fair value (amortized cost: 2016—$220,749 and 2015—$203,709)	$	214,023		$	187,979
Short-term investments, at cost (approximates fair value)	66,570			48,079
Other investments	30,003			25,339
Total investments	310,596			261,397
Cash	32,251			25
Investment in subsidiaries	1,340,442			1,349,483
Investment income due and accrued	272			123
Current taxes receivable(1)	28,722			70,848
Other assets	4,132			4,778
Total assets	$	1,716,415		$	1,686,654
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and other liabilities	2,501			1,855
Total liabilities	2,501			1,855
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: 45,194,954 and 45,044,222	452			450
Additional paid-in capital	195,267			190,813
Accumulated other comprehensive income (loss)	(38,990		)	15,215
Retained earnings	1,557,681			1,478,439
Treasury stock, shares at cost: 22,458 and 8,202	(496		)	(118		)
Total Ambac Financial Group, Inc. stockholders’ equity	1,713,914			1,684,799
Total liabilities and stockholders’ equity	$	1,716,415		$	1,686,654

(1) Of this amount, $28,691 and $70,911 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 following notes.

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

SCHEDULE II— CONDENSED FINANCIAL INFORMATION

OF REGISTRANT (PARENT COMPANY ONLY)

Condensed Statement of Comprehensive Income

($ in thousands) Year Ended December 31,	2016			2015			2014
Revenues:
Investment income	$	13,493		$	9,826		$	25,147
Other than temporary impairments	(289		)	(155		)	—
Net realized gains (losses)	(7		)	(27		)	(46		)
Total revenues	13,197			9,644			25,101
Expenses:
Operating expenses	11,486			8,922			6,458
Total expenses	11,486			8,922			6,458
Income (loss) before income taxes, reorganization costs and equity in undistributed net loss of subsidiaries	1,711			722			18,643
Reorganization items	—			—			211
Income (loss) before income taxes and equity in undistributed net loss of subsidiaries	1,711			722			18,432
Federal income tax provision (benefit)	(28,739		)	(70,811		)	221
Income before equity in undistributed net income of subsidiaries	30,450			71,533			18,211
Equity in undistributed net income of subsidiaries	44,393			421,870			465,860
Net income	$	74,843		$	493,403		$	484,071
Other comprehensive income, after tax:
Net income	$	74,843		$	493,403		$	484,071
Unrealized gains (losses) on securities, net of deferred income taxes of $0	67,900			(159,730		)	252,603
Gain (loss) on foreign currency translation, net of deferred income taxes of $0.	(122,128		)	(44,651		)	(43,165		)
Changes to postretirement benefit, net of tax	23			(687		)	(816		)
Total other comprehensive income (loss)	(54,205		)	(205,068		)	208,622
Total comprehensive income attributable to Ambac Financial Group, Inc.	$	20,638		$	288,335		$	692,693

The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the following 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
Balance at January 1, 2016	$	1,684,799		$	1,478,439		$	15,215		$	—	$	450	$	190,813		$	(118	)
Total comprehensive income	20,638			74,843			(54,205		)	—		—		—			—
Adjustment to initially apply ASU 2014-13	6,442			6,442			—			—		—		—			—
Stock-based compensation	5,253			—			—			—		—		5,253			—
Cost of shares (acquired) issued under equity plan	(505		)	(127		)	—			—		—		—			(378		)
Cost of warrants acquired	(2,717		)	(1,916		)	—			—		—		(801		)	—
Issuance of common stock	2			—			—			—		2		—			—
Warrants exercised	2			—			—			—		—		2			—
Balance at December 31, 2016	$	1,713,914		$	1,557,681		$	(38,990	)	$	—	$	452	$	195,267		$	(496	)
Balance at 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	)
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			—
Cost of shares (acquired) 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	)

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

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

SCHEDULE II— CONDENSED FINANCIAL INFORMATION

OF REGISTRANT (PARENT COMPANY ONLY)

Condensed Statements of Cash Flow

($ in thousands) Year Ended December 31,	2016			2015			2014
Cash flows from operating activities:
Net income	$	74,843		$	493,403		$	484,071
Adjustments to reconcile net income loss to net cash used in operating activities:
Equity in undistributed net income of non-debtor subsidiaries	(44,393		)	(421,870		)	(465,860		)
Amortization of bond premium and discount	(7,208		)	(4,690		)	4
Reorganization items	—			—			211
Other-than-temporary impairment charges	289			155			—
Net realized gains (losses)	7			27			46
Increase (decrease) in current income taxes payable	42,126			(71,069		)	221
Share-based compensation	5,253			3,105			3,450
Investment income due and accrued	(149		)	(69		)	11,905
(Increase) decrease in other assets	646			992			(834		)
Other, net	5,814			(4,705		)	(36,628		)
Net cash provided by (used in) operating activities	77,228			(4,721		)	(3,414		)
Cash flows from investing activities:
Proceeds from matured bonds	269,459			347,539			65,032
Purchases of bonds	(279,582		)	(312,419		)	(271,181		)
Change in short-term investments	(18,491		)	(25,143		)	(14,617		)
Other, net	(13,673		)	—			—
Net cash provided by (used in) investing activities	(42,287		)	9,977			(220,766		)
Cash flows from financing activities:
Proceeds from the sale of Junior Surplus Notes of the Segregated Account	—			—			224,262
Cost of warrants acquired	(2,717		)	(5,375		)	—
Proceeds from warrant exercise	2			3			16
Net cash provided by (used in) financing activities	(2,715		)	(5,372		)	224,278
Net cash flow	32,226			(116		)	98
Cash at beginning of period	25			141			43
Cash at end of period	$	32,251		$	25		$	141
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes	$	—		$	394		$	—
Cash payments related to reorganization items:
Professional fees paid for services rendered in connection with the Chapter 11 proceeding	$	—		$	—		$	272

The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the following 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, 2016 and 2015 and for the three years in the period ended December 31, 2016, should be read in conjunction with the consolidated financial statements of Ambac Financial Group, Inc. and Subsidiaries and the notes thereto included in this 2016 Annual Report on Form 10-K for the year ended December 31, 2016.

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 (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.

Income Taxes

Ambac files a consolidated Federal income tax return with its U.S. subsidiaries. Ambac and its subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions. As of December 31, 2016 Ambac had loss carryforwards totaling $4,027,329. This includes carryforwards of $74,094 relating to U.S. capital losses and $3,953,235 relating to U.S. federal net operating losses, which, if not utilized, will begin expiring in 2029, and will fully expire in 2033. The NOL allocable to AFG as of December 31, 2016 is $1,389,359.

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, 2016 (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 $1,086,124, which utilized all of the $479,000 allocated Tier A NOL and $607,124 of the $1,057,000 allocated Tier B NOL and resulted in accrued Tolling Payments, net of applicable credits. At December 31, 2016, $28,691 of Tolling Payments are due to Ambac no later than forty-five days after April 15, 2017 (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.