Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Major Jurisdictions

The following are the major jurisdictions in which Ambac and its subsidiaries operate and the earliest tax years subject to examination:

Jurisdiction	Tax Year
United States	2010
New York State	2013
New York City	2017
United Kingdom	2018
Italy	2017

Significant Portions of Deferred Tax Liabilities and Deferred Tax Assets

The tax effects of temporary differences that give rise to significant portions of the deferred tax liabilities and deferred tax assets at December 31, 2021 and 2020, are presented below:

December 31,	2021		2020
Deferred tax liabilities:
Insurance intangible	$	67	$	78
Unearned premiums and credit fees	32		32
Investments	14		22
Variable interest entities	15		13
Other	6		7
Total deferred tax liabilities	134		152
Deferred tax assets:
Net operating loss carryforward	786		764
Loss reserves	180		218
State capital loss carryforward	7		—
Debentures	7		22
Compensation	8		9
Other	4		5
Subtotal deferred tax assets	993		1,019
Valuation allowance	886		891
Total deferred tax assets	106		128
Net deferred tax liability	$	28	$	24

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

U.S. and foreign components of pre-tax income (loss) were as follows:

Year Ended December 31,	2021		2020		2019
U.S.	$	(32)	$	(441)	$	(174)
Foreign	34		1		(9)
Total	$	2	$	(440)	$	(183)

Schedule of Components of Income Tax Expense (Benefit)

The components of the provision (benefit) for income taxes were as follows:

Year Ended December 31,	2021		2020		2019
Current taxes
U.S. state and local	$	2	$	—	$	(3)
Foreign	10		8		37
Total current taxes	12		8		34
Deferred taxes
Foreign	6		(10)		(1)
Total deferred taxes	$	6	$	(10)	$	(1)
Provision for income taxes	$	18	$	(3)	$	32

Schedule Of Income Taxes Charged Credited Directly To Equity

The total effect of income taxes on net income and stockholders’ equity for the years ended December 31, 2021, 2020 and 2019 is as follows:

Year Ended December 31,	2021		2020		2019
Total income taxes charged to net income	$	18	$	(3)	$	32
Income taxes charged (credited) to stockholders’ equity:
Unrealized gains (losses) on investment securities	(3)		3		14
Unrealized gains (losses) on foreign currency translations	—		—		—
Valuation allowance to equity	1		(3)		(23)
Total charged to stockholders’ equity:	(2)		1		(8)
Total effect of income taxes	$	16	$	(1)	$	24

Schedule of Effective Income Tax Rate Reconciliation

Year Ended December 31,	2021		2020		2019
Total income taxes charged to net income	$	18	$	(3)	$	32
Income taxes charged (credited) to stockholders’ equity:
Unrealized gains (losses) on investment securities	(3)		3		14
Unrealized gains (losses) on foreign currency translations	—		—		—
Valuation allowance to equity	1		(3)		(23)
Total charged to stockholders’ equity:	(2)		1		(8)
Total effect of income taxes	$	16	$	(1)	$	24

Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate

The tax provisions in the accompanying Consolidated Statements of Total Comprehensive Loss reflect effective tax rates differing from prevailing Federal corporate income tax rates. The following is a reconciliation of these differences:

Year Ended December 31,	2021				2020				2019
Tax on income (loss) at statutory rate	$	—	21	%	$	(92)	21	%	$	(38)	21	%
Changes in expected tax resulting from:
Tax-exempt interest	(2)		(114)	%	(2)		—	%	(3)		2	%
Foreign taxes	8		448	%	6		(1)	%	40		(22)	%
State Income Taxes	14		794	%	—		—	%	(2)		1	%
Substantiation adjustment	—		—	%	(29)		7	%	28		(15)	%
Valuation allowance	(4)		(230)	%	113		(26)	%	8		(4)	%
Other, net	1		72	%	2		—	%	—		—	%
Tax expense on income (loss)	$	18	991	%	$	(3)	1	%	$	32	(18)	%

Schedule of Net Operating Loss And Tax Credit Carryovers

Pursuant to a 2013 Closing Agreement between Ambac and the United States Internal Revenue Service ("IRS"), AAC could have to pay amount to as much as $8 to the IRS should AAC utilize NOLs available to it as of December 31, 2019.