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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2025
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number:
1-10777
Ambac_Logo_286-jpg.jpg
AMBAC FINANCIAL GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware13-3621676
(State of incorporation)(I.R.S. employer identification no.)
One World Trade CenterNew YorkNY10007
(Address of principal executive offices)(Zip code)
(212)
658-7470
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock par value $0.01 per shareAMBCNew York Stock Exchange
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes ☒    No  ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act): (Check one):
Large accelerated filer☐Accelerated filer☒Non-accelerated filer☐Smaller reporting company☐Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐    No  ☒
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ☒    No  ☐
As of August 5, 2025, 46,401,736 shares of common stock, par value $0.01 per share, of the Registrant were outstanding.


AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995
Item NumberPageItem NumberPage
PART I. FINANCIAL INFORMATIONPART I (CONTINUED)
1Unaudited Consolidated Financial Statements of Ambac Financial Group, Inc. and Subsidiaries
3
4
PART II. OTHER INFORMATION
21
Overview1A
2
3
5Other Information
6Exhibits
Ambac Financial Group, Inc.i
     Second Quarter 2025 Form 10-Q
Table of Contents
CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Management has included in Parts I and II of this Quarterly Report on Form 10-Q, statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “project,” “plan,” “believe,” “anticipate,” “intend,” “planned,” “potential” and similar expressions, or future or conditional verbs such as “will,” “should,” “would,” “could,” and “may,” or the negative of those expressions or verbs, identify forward-looking statements. We caution readers that these statements are not guarantees of future performance. Forward-looking statements are not historical facts, but instead represent only our beliefs regarding future events, which may by their nature be inherently uncertain and some of which may be outside our control. These statements may relate to plans and objectives with respect to the future, among other things which may change. We are alerting you to the possibility that our actual results may differ, possibly materially, from the expected objectives or anticipated results that may be suggested, expressed or implied by these forward-looking statements. Important factors that could cause our results to differ, possibly materially, from those indicated in the forward-looking statements include, among others, those discussed under “Risk Factors” in Part I, Item 1A of the 2023 Annual Report on Form 10-K and in Part II, Item 1A of this quarterly Report on Form 10-Q.
Any or all of management’s forward-looking statements here or in other publications may turn out to be incorrect and are based on management’s current belief or opinions. Ambac Financial Group’s (“AFG”) and its subsidiaries’ (collectively, “Ambac” or the “Company”) actual results may vary materially, and there are no guarantees about the performance of Ambac’s securities. Among events, risks, uncertainties or factors that could cause actual results to differ materially are: (1) the high degree of volatility in the price of AFG’s common stock; (2) failure to consummate the proposed sale of all of the common stock of Ambac Assurance Corporation (“AAC”) and the transactions contemplated by the related stock purchase agreement (the “Sale Transactions”) in a timely manner or at all; (3) disruptions from the proposed Sale Transactions, including from litigation, that may harm Ambac’s business, including current plans and operations; (4) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed Sale Transactions; (5) uncertainty concerning the Company’s ability to achieve value for holders of its securities from the specialty property and casualty insurance business, the insurance distribution business, or related businesses; (6) inadequacy of reserves established for losses and loss expenses and the possibility that changes in loss reserves may result in further volatility of earnings or financial results; (7) risks historically reported by the Company with respect to the legacy financial guarantee business, which may continue to affect the Company if the Sale Transactions are not consummated; (8) credit risk throughout Ambac’s business, including but not limited to exposures to reinsurers and insurance distribution partners; (9) the Company’s inability to generate the significant amount of cash needed to service its debt and financial obligations, and its inability to refinance its indebtedness; (10) the Company’s substantial indebtedness could adversely affect the Company’s financial condition and operating flexibility; (11) the Company may not be able to obtain financing, refinance its outstanding indebtedness, or raise capital on acceptable terms or at all due to its substantial indebtedness and financial condition; (12) greater than expected underwriting losses in the Company’s specialty property and casualty insurance business; (13) failure of specialty insurance program partners to properly market, underwrite or administer policies; (14) inability to obtain reinsurance coverage or charge rates for insurance on expected terms; (15) loss of key relationships for production of business in specialty property and casualty and insurance distribution businesses or the inability to secure
such additional relationships to produce expected results; (16) the impact of catastrophic public health, environmental or natural events, or global or regional conflicts; (17) the risk that the Company’s risk management policies and practices do not anticipate certain risks and/or the magnitude of potential for loss; (18) restrictive covenants in agreements and instruments that impair Ambac’s ability to pursue or achieve its business strategies; (19) disagreements or disputes with the Company’s insurance regulators; (20) failure of a financial institution in which we maintain cash and investment accounts; (21) adverse impacts from changes in prevailing interest rates; (22) events or circumstances that result in the impairment of our intangible assets and/or goodwill that was recorded in connection with Ambac’s acquisitions; (23) the risk of litigation, regulatory inquiries, investigations, claims or proceedings, and the risk of adverse outcomes in connection therewith; (24) the Company’s ability to adapt to the rapid pace of regulatory change; (25) actions of stakeholders whose interests are not aligned with broader interests of Ambac's stockholders; (26) system security risks, data protection breaches and cyber attacks; (27) failures in services or products provided by third parties; (28) political developments that disrupt the economies where the Company has insured exposures or the markets in which our insurance programs operate; (29) our inability to attract and retain qualified executives, senior managers and other employees, or the loss of such personnel; (30) fluctuations in foreign currency exchange rates; (31) failure to realize our business expansion plans, including failure to effectively onboard new program partners, or failure of such plans to create value; (32) greater competition for our specialty property and casualty insurance business and/or our insurance distribution business; (33) loss or lowering of the AM Best rating for our property and casualty insurance company subsidiaries; (34) disintermediation within the insurance industry or greater competition from technology-based insurance solutions or non-traditional insurance markets; (35) adverse effects of market cycles in the property and casualty insurance industry; (36) variations in commission income resulting from timing of policy renewals and the net effect of new and lost business production; (37) variations in contingent commissions resulting from the effects insurance losses; (38) reliance on a limited number of counterparties to produce revenue in our specialty property and casualty insurance and insurance distribution businesses; (39) changes in law or in the functioning of the healthcare market that impair the business model of our accident and health managing general underwriter; (40) difficulties in identifying appropriate acquisition or investment targets, properly evaluating the business and prospects of acquired businesses, businesses in which we invest, or targets, integrating acquired businesses into our business or failures to realize expected synergies from acquisitions or new business investments; (41) failure to realize expected benefits from investments in technology; (42) harmful acts and omissions of our business counterparts; and (43) other risks and uncertainties that have not been identified at this time.
Ambac Financial Group, Inc.
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     Second Quarter 2025 Form 10-Q
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PART I.    FINANCIAL INFORMATION
Item 1.     Unaudited Financial Statements of Ambac Financial Group, Inc. and Subsidiaries
AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30,December 31,
(Dollars in thousands, except share data) (June 30, 2025 (Unaudited))20252024
Assets:
Investments:
Fixed maturity securities - available-for-sale, at fair value (amortized cost of $163,183 and $162,124)
$161,335 $157,020 
Short-term investments, at fair value (amortized cost of $102,719 and $127,588)
102,720 127,601 
Other investments (includes $7,486 and $7,499 at fair value)
28,193 28,294 
Total investments (net of allowance for credit losses of $0 and $0)
292,248 312,915 
Cash and cash equivalents (including $23,841 and $17,669 of restricted cash)
46,383 47,275 
Premium receivables (net of allowance for credit losses of $200 and $142)
71,875 57,222 
Commission and fees receivable72,619 55,377 
Reinsurance recoverable on paid and unpaid losses (net of allowance for credit losses of $100 and $100)
376,445 306,191 
Deferred ceded premium155,582 148,300 
Policy acquisition costs9,407 8,572 
Intangible assets, less accumulated amortization353,904 344,775 
Goodwill451,808 418,234 
Other assets99,698 92,317 
Assets held-for-sale6,592,417 6,267,200 
Total assets8,522,386 8,058,378 
Liabilities and Stockholders’ Equity:
Liabilities:
Unearned premiums$191,060 $182,446 
Loss and loss adjustment expense reserves383,969 349,062 
Ceded premiums payable90,557 53,002 
Deferred program fees and reinsurance commissions7,346 7,500 
Commissions payable96,875 71,431 
Deferred taxes72,003 70,135 
Short-term debt150,000 150,000 
Accrued interest payable2,944 2,560 
Other liabilities95,900 89,036 
Liabilities held-for-sale6,213,024 5,887,685 
Total liabilities7,303,678 6,862,857 
Commitments and contingencies (See Note 13)
Redeemable noncontrolling interest190,347 140,860 
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 shares: 48,875,167 and 48,875,167
489 489 
Additional paid-in capital347,939 331,007 
Accumulated other comprehensive income (loss)(66,013)(188,436)
Retained earnings607,548 742,185 
Treasury stock, shares at cost: 2,475,146 and 2,368,194
(30,124)(28,339)
Total Ambac Financial Group, Inc. stockholders’ equity 859,839 856,906 
Nonredeemable noncontrolling interest168,522 197,755 
Total stockholders’ equity 1,028,361 1,054,661 
Total liabilities, redeemable noncontrolling interest and stockholders’ equity$8,522,386 $8,058,378 
See accompanying Notes to Unaudited Consolidated Financial Statements
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     Second Quarter 2025 Form 10-Q
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AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Loss) (Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in thousands, except share data)2025202420252024
Revenues:
Commissions$30,322 $13,221 $67,093 $30,950 
Servicing and other fees4,472 — 9,436 — 
Net premiums earned16,203 27,054 31,881 52,633 
Program fees3,497 3,328 7,149 5,895 
Investment income2,609 3,763 5,424 7,403 
Other(2,146)3,671 (3,270)3,707 
Total revenues and other income54,957 51,037 117,713 100,588 
Expenses:
Commissions7,403 7,888 17,768 17,710 
Losses and loss adjustment expenses10,978 23,024 21,474 42,379 
Policy acquisition costs3,699 5,399 7,540 9,823 
General and administrative40,540 27,861 79,071 45,436 
Intangible amortization and depreciation9,741 1,614 18,917 3,228 
Interest5,570 — 11,024 — 
Total expenses77,931 65,786 155,794 118,576 
Pretax income (loss) from continuing operations(22,974)(14,749)(38,081)(17,988)
Provision (benefit) for income taxes from continuing operations(2,172)(30)(2,789)100 
Net income (loss) from continuing operations(20,802)(14,719)(35,292)(18,088)
Net income (loss) from discontinued operations, net of tax (including loss on disposal of $52,960 and $67,456 three and six months ended June 30, 2025)
(52,151)14,182 (82,398)38,322 
Net income (loss)(72,953)(537)(117,690)20,234 
Net (gain) loss attributable to noncontrolling interest254 (213)(1,400)(914)
Net income (loss) attributable to shareholders$(72,699)$(750)$(119,090)$19,320 
Net income (loss) attributable to shareholders
Continuing operations$(20,548)$(14,932)(36,692)(19,002)
Discontinued operations(52,151)14,182 (82,398)38,322 
Total$(72,699)$(750)(119,090)19,320 
Net income (loss) from continuing operations per share attributable to shareholders
Basic$(0.45)$(0.33)$(1.03)$(0.42)
Diluted$(0.45)$(0.33)$(1.03)$(0.42)
Net income (loss) from discontinued operations per share attributable to shareholders
Basic$(1.08)$0.31 $(1.73)$0.83 
Diluted$(1.08)$0.31 $(1.73)$0.83 
Net income (loss) per share attributable to shareholders
Basic$(1.54)$(0.02)$(2.75)$0.42 
Diluted$(1.54)$(0.02)$(2.75)$0.42 
Weighted average number of common shares outstanding:
Basic48,116,503 46,209,250 47,738,050 46,019,145 
Diluted48,116,503 46,209,250 47,738,050 46,019,145 
See accompanying Notes to Unaudited Consolidated Financial Statements
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     Second Quarter 2025 Form 10-Q
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AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in thousands, except share data)2025202420252024
Net income (loss)$(72,953)$(537)$(117,690)$20,234 
Unrealized gains (losses) on securities, net of income tax provision (benefit) of $503, $(197), $1,148, and $414
(4,647)3,870 13,959 (3,147)
Gains (losses) on foreign currency translation, net of income tax provision (benefit) of $0, $0, $0, and $0
97,484 1,268 133,704 (6,502)
Credit risk changes of fair value option liabilities, net of income tax provision (benefit) of $48, $(34), $195, and $(118)
144 (103)586 (356)
Changes to postretirement benefit, net of income tax provision (benefit) of $0, $0, $0, and $0
— (4,559)— (4,939)
Total other comprehensive income (loss), net of income tax92,981 476 148,249 (14,944)
Total comprehensive income (loss), net of income tax20,028 (60)30,559 5,291 
Less: net (gain) loss attributable to noncontrolling interest254 (213)(1,400)(914)
Less: (gain) loss on foreign currency translation attributable to noncontrolling interest(21,575)— (25,827)— 
Total comprehensive income (loss) attributable to shareholders$(1,293)$(273)$3,332 $4,378 
See accompanying Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc.
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     Second Quarter 2025 Form 10-Q
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AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity (Unaudited)
Three months ended June 30, 2025 and 2024
Stockholders' EquityMezzanine
Ambac Financial Group, Inc.Equity
(Dollars in thousands)TotalPreferred
Stock		Common
Stock		Additional Paid-in
Capital		Accumulated
Other
Comprehensive
Income		Retained
Earnings		Common
Stock Held
in Treasury,
at Cost
Non-
redeemable
NCI (1)
Redeemable
NCI (1)
Balance at March 31, 2025$1,026,048 $— $489 $333,356 $(133,168)$681,489 $(29,945)$173,827 $185,417 
Net income (loss) (71,953)— — — — (72,699)— 746 (1,000)
Total other comprehensive income (loss)78,756 — — — 67,155 — — 11,601 9,973 
Stock-based compensation2,437 — — 2,437 — — — — — 
Cost of shares repurchased(179)— — — — — (179)— — 
Cost of shares (acquired) issued under equity plan— — — — — — — — — 
Changes to noncontrolling interest(6,748)— — 12,146 — (1,242)— (17,652)(4,043)
Balance at June 30, 2025$1,028,361 $— $489 $347,939 $(66,013)$607,548 $(30,124)$168,522 $190,347 
Balance at March 31, 2024$1,418,165 $— $467 $291,298 $(175,466)$1,265,571 $(16,661)$52,956 $17,079 
Net income (loss) (750)— — — — (750)— — 213 
Total other comprehensive income (loss)476 — — — 476 — — — — 
Stock-based compensation2,282 — — 2,282 — — — — — 
Changes to noncontrolling interest(188)— — — — (188)— — 187 
Acquisition of noncontrolling interest in subsidiary(994)— — 1,044 — — — (2,038)— 
Balance at June 30, 2024$1,418,991 $— $467 $294,624 $(174,990)$1,264,633 $(16,661)$50,918 $17,079 
(1) NCI = Noncontrolling interest
Six months ended June 30, 2025 and 2024
Stockholders' EquityMezzanine
Ambac Financial Group, Inc.Equity
(Dollars in thousands)TotalPreferred
Stock		Common
Stock		Additional Paid-in
Capital		Accumulated
Other
Comprehensive
Income		Retained
Earnings		Common
Stock Held
in Treasury,
at Cost
Non-
redeemable
NCI (1)
Redeemable
NCI (1)
Balance at January 1, 2025$1,054,661 $— $489 $331,007 $(188,436)$742,185 $(28,339)$197,755 $140,860 
Net income (loss) (116,949)— — — — (119,090)— 2,141 (741)
Total other comprehensive income (loss)134,479 — — — 122,423 — — 12,056 13,770 
Stock-based compensation4,786 — — 4,786 — — — — — 
Cost of shares repurchased(3,301)— — — — — (3,301)— — 
Cost of shares (acquired) issued under equity plan(1,607)— — — — (3,123)1,516 — — 
Changes to noncontrolling interest(43,708)— — 12,146 — (12,424)— (43,430)36,458 
Balance at June 30, 2025$1,028,361 $— $489 $347,939 $(66,013)$607,548 $(30,124)$168,522 $190,347 
Balance at January 1, 2024$1,414,615 $— $467 $291,761 $(160,046)$1,246,048 $(16,573)$52,958 $17,079 
Net income (loss) 19,318 — — — — 19,320 — (2)916 
Total other comprehensive income (loss)(14,944)— — — (14,944)— — — — 
Stock-based compensation1,820 — — 1,820 — — — — — 
Cost of shares (acquired) issued under equity plan(684)— — — — (596)(88)— — 
Changes to noncontrolling interest(139)— — — — (139)— — (916)
Acquisition of noncontrolling interest in subsidiary(995)— — 1,043 — — — (2,038)— 
Balance at June 30, 2024$1,418,991 $— $467 $294,624 $(174,990)$1,264,633 $(16,661)$50,918 $17,079 
(1) NCI = Noncontrolling interest

See accompanying Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc.
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     Second Quarter 2025 Form 10-Q
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AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30,
(Dollars in thousands)20252024
Cash flows from operating activities:
Net income (loss)$(117,690)$20,234 
Net income (loss) from discontinued operations(82,398)38,322 
Net income (loss) from continuing operations(35,292)(18,088)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Intangible amortization and depreciation18,917 3,228 
Amortization of bond premium and discount(127)(168)
Share-based compensation16,932 1,820 
Unearned premiums, net1,332 5,902 
Losses and loss expenses, net(35,349)3,399 
Ceded premiums payable37,555 52,127 
Premium receivables(32,231)(39,109)
Corporate costs reallocated to continuing operations5,265 7,581 
Other, net12,535 10,789 
Net cash provided by (used in) operating activities from continuing operations(10,463)27,481 
Cash flows from investing activities:
Proceeds from sales of bonds— 20,639 
Proceeds from matured bonds21,816 12,320 
Purchases of bonds(22,747)(28,489)
Purchases of other investments(66)(15,802)
Change in short-term investments24,966 (8,345)
Other, net(5,939)(149)
Net cash provided by (used in) investing activities from continuing operations18,030 (19,826)
Cash flows from financing activities:
Payments for purchases of common stock held in treasury(3,301)— 
Tax payments related to shares withheld for share-based compensation plans(1,516)(682)
Distributions to noncontrolling interest holders(894)(1,050)
Acquisitions of noncontrolling interest shares(4,036)— 
Net cash provided by (used in) financing activities from continuing operations(9,747)(1,732)
Effect of foreign exchange on cash and cash equivalents - continuing operations1,288 — 
Net cash provided by (used in) continuing operations(892)5,923 
Cash, cash equivalents, and restricted cash at beginning of period - continuing operations47,275 19,223 
Cash, cash equivalents, and restricted cash at end of period - continuing operations46,383 25,146 
Net cash provided by (used in) operating activities from discontinued operations34,851 4,126 
Net cash provided by (used in) investing activities from discontinued operations57,667 (100,025)
Net cash provided by (used in) financing activities from discontinued operations(94,854)(87,492)
Effect of foreign exchange on cash and cash equivalents - discontinued operations475 (65)
Net cash provided by (used in) discontinued operations(1,861)(183,456)
Cash, cash equivalents, and restricted cash at beginning of period - discontinued operations66,077 255,183 
Cash, cash equivalents, and restricted cash at end of period - discontinued operations64,216 71,727 
See accompanying Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc.
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     Second Quarter 2025 Form 10-Q
Table of Contents

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Background and Business DescriptionNote 8. Goodwill and Intangible Assets
Note 2. Segment InformationNote 9. Revenues From Contracts with Customers
Note 3. Discontinued OperationNote 10. Comprehensive Income (Loss)
Note 4. InvestmentsNote 11. Net Income Per Share
Note 5. Fair Value MeasurementsNote 12. Income Taxes
Note 6. Insurance ContractsNote 13. Commitments and Contingencies
Note 7. Derivative Instruments
Ambac Financial Group, Inc.
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     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
1.    BACKGROUND AND BUSINESS DESCRIPTION
Business
The following description provides an update of Note 1. Background and Business Description and Note 2. Basis of Presentation and Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, and should be read in conjunction with the complete descriptions provided in the Form 10-K. Capitalized terms used, but not defined herein, and in the other footnotes to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q shall have the meanings ascribed thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Ambac Financial Group, Inc. (“AFG”), headquartered in New York City, is an insurance holding company incorporated in the state of Delaware on April 29, 1991. References to “Ambac,” the “Company,” “we,” “our,” and “us” are to AFG and its subsidiaries, as the context requires. Ambac's principal businesses include:
•Insurance Distribution — Ambac's specialty property and casualty ("P&C") insurance underwriting and distribution business, includes Managing General Agents and Underwriters (collectively "MGAs" or "MGA/Us"), an insurance broker, and other distribution and underwriting businesses. Insurance Distribution includes Beat Capital Partners Limited, which was acquired on July 31, 2024. At June 30, 2025, Ambac's insurance distribution platform operates in the following lines of business: property, niche specialty risk, accident & health, miscellaneous specialty, reinsurance, marine & energy, specialty auto, other professional and professional Directors & Officers ("D&O") .
•Specialty Property & Casualty Insurance — Ambac's Specialty Property & Casualty Insurance program business currently includes five carriers (collectively, “Everspan”). Everspan carriers have an A.M. Best rating of 'A-' (Excellent) which was last affirmed on July 17, 2025.
The Company reports these two business operations as segments; see Note 2. Segment Information for further information.
Basis of Presentation
The Company has disclosed its significant accounting policies in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The following significant accounting policies provide an update to those included in the Company’s Annual Report on Form 10-K.
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and disclosures required by GAAP for annual periods. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2024. The accompanying consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (U.S.), but in the opinion of management such financial statements include all adjustments necessary for the fair presentation of the Company’s consolidated financial position and results of operations. The results of operations for the three and six months ended June 30, 2025, may not be indicative of the results that may be expected for the year ending December 31, 2025. The December 31, 2024, consolidated balance sheet was derived from audited financial statements.
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As additional information becomes available or actual amounts become determinable, the recorded estimates are revised and reflected in operating results.
Consolidation
The consolidated financial statements include the accounts of AFG and all other entities in which AFG (directly or through its subsidiaries) has a controlling financial interest. All significant intercompany balances have been eliminated. The usual condition for a controlling financial interest is ownership of a majority of the voting interests of an entity.
Held for Sale and Discontinued Operations
The Company has separately classified the assets and liabilities of Ambac Assurance Corporation ("AAC") as held for sale as a result of AAC's pending sale and meeting specified accounting criteria. Assets and liabilities held for sale are presented separately within the Consolidated Balance Sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. The stockholders' equity section of the Consolidated Balance Sheet continues to be reported on an aggregate basis; equity components (including nonredeemable NCI (as defined below)) solely attributable to AAC are not presented separately.
The Company reports the results of operations of AAC as discontinued operations since the pending sale also represents a strategic shift that will have a major effect on the Company's operations and financial results. The results of discontinued operations are reported separately as Net income (loss) from discontinued operations within the Consolidated Statements of Total Comprehensive Income for the current and prior periods. AAC cash flows are reflected as Net cash provided by (used in) discontinued operations within the Consolidated Statements of Cash Flows for each period presented.
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     Second Quarter 2025 Form 10-Q
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Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
Refer to Sale of Ambac Assurance Corporation ("AAC") in Note 3. Discontinued Operation for further information.
Credit Agreement
On June 10, 2025, Ambac entered into an amendment (the "Amendment") to the $150,000 credit agreement dated as of August 1, 2024 (the "Credit Agreement"). Pursuant to the Amendment, the maturity date for amounts owed with respect to the loans made under the Credit Agreement was extended from July 31, 2025, to the earlier of (a) December 31, 2025, and (b) the date that is the three-month anniversary of the termination of the Stock Purchase Agreement, dated June 4, 2024, between AFG and American Acorn Corporation. The Amendment requires repayment of $10,000 of the principal amount of outstanding loans on October 31, 2025, in addition to any mandatory prepayment required under the Credit Agreement. Pursuant to the Amendment, a duration fee equal to 1.00% of the then outstanding loans shall be due on November 3, 2025. The Amendment also requires AFG and Cirrata Group, collectively, to maintain unrestricted cash and cash equivalent balances, determined in accordance with GAAP, of not less than $30,000 at any time. AFG paid an extension fee in an amount equal to 1.00% of the aggregate principal amount of loans outstanding under the Credit Agreement on June 10, 2025. Borrowing under the Credit Agreement for the extended term bears interest at three-month SOFR plus 7.50%.
Foreign Currency
The impact of non-functional currency transactions and the remeasurement of non-functional currency assets and liabilities into the respective subsidiaries' functional currency (collectively "foreign currency transactions gains/(losses)") are $(4,821) and $0 for the six months ended June 30, 2025, and 2024, respectively. Foreign currency transaction gains/(losses) are primarily the result of Beat's transactions in currencies (primarily the U.S. dollar) other than its functional currency (the British Pound Sterling).
Noncontrolling Interests ("NCI")
Nonredeemable NCI
The total Nonredeemable NCI as of June 30, 2025 and December 31, 2024 were $168,522 and $197,755, respectively.
For Beat, the Nonredeemable NCI of $117,604 and $146,837 as of June 30, 2025 and December 31, 2024 includes the NCI share in certain operating units which are minority owned by the units' respective management teams that do not have associated put options. As of December 31, 2024, there were no put options associated with any of these minority interests and as such, the aggregate amount was classified as nonredeemable NCI on the balance sheet. During the six months ended June 30, 2025, certain NCI shares were reclassified between nonredeemable and redeemable NCI as further described under "Redeemable NCI" below. The acquisition date valuation method to determine the fair value of nonredeemable NCI was the discounted cash flow approach. The significant fair value assumptions used in the model included estimated long term revenue and expense forecasts and the discount rate. When redeemable NCI shares are no longer redeemable, such as when put options expire unused,
the NCI shares are reclassified to nonredeemable NCI with no change in carrying value.
During the three months ended June 30, 2025, Ambac paid $2,967 to purchase certain nonredeemable shares from minority interest owners, resulting in a $14,362 decrease to Nonredeemable noncontrolling interest. The difference between the consideration paid and carrying value of the nonredeemable NCI is recorded as an adjustment to additional paid-in capital.
At June 30, 2025, and December 31, 2024, AAC had 4,596 shares of issued and outstanding Auction Market Preferred Shares ("AMPS") with a liquidation preference of $114,900 relative to Ambac common shareholders (reported as nonredeemable noncontrolling interest of $50,918 on Ambac's balance sheet). See Note 5. Discontinued Operation in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion of the AMPS.
Redeemable Noncontrolling Interest
The Xchange, All Trans, Capacity Marine, Riverton and Beat acquisitions resulted in a majority ownership of the acquired entities by Ambac. Under the terms of all the acquisition agreements, Ambac has call options to purchase the remaining interests from the minority owners (i.e., noncontrolling interests) and the minority owners have put options to sell their interests to Ambac. Because the exercise of the put options are outside the control of Ambac, in accordance with the Distinguishing Liabilities from Equity Topic of the ASC, Ambac reports redeemable NCI in the mezzanine section of its consolidated balance sheet. In addition, during the three months ended March 31, 2025, Ambac entered into put options with certain minority owners of the MGA/U operating entities that are majority owned by Beat. These put options are embedded in the associated NCI shares ("Option Shares"), resulting in remeasurement of the shares at fair value inclusive of the put options, and reclassification of the Option Shares from nonredeemable NCI to redeemable NCI. The change in carrying value resulting from revaluation of $10,276 is recorded as an offset to retained earnings, with a corresponding impact on earnings per share for the six months ended June 30, 2025. During the three months ended June 30, 2025, Ambac paid $1,068 as a result of exercise of put options on the Option Shares, acquiring redeemable NCI with a carrying value of $1,815. The difference between the consideration paid and carrying value of the redeemable NCI is recorded as an adjustment to additional paid-in capital.
The redeemable noncontrolling interest is remeasured on an annual basis as the greater of:
i.the carrying value under ASC 810, which attributes a portion of consolidated net income (loss) to the redeemable noncontrolling interest, and
ii.the redemption value of the put option under ASC 480 as if it were exercisable at the end of the reporting period.
Any increase (decrease) in the carrying amount of the redeemable noncontrolling interest as a result of adjusting to the redemption value of the put option is recorded as an offset to retained earnings. The impact of such differences on earnings per share are presented in Note 11. Net Income Per Share.
Ambac Financial Group, Inc.
9
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
Following is a rollforward of redeemable noncontrolling interest.
Six Months Ended June 30,20252024
Beginning balance$140,860 $17,079 
Net income (loss) attributable to redeemable noncontrolling interest (ASC 810)(741)916 
Gain (loss) on foreign currency translation attributable to redeemable NCI13,770 — 
Reclassification from nonredeemable noncontrolling interest including remeasurement at fair value42,180 — 
Reclassification to nonredeemable noncontrolling interest(5,136)— 
Put / call option exercise(1,815)— 
Distributions(919)(1,047)
Adjustment to redemption value (ASC 480)2,148 131 
Ending balance$190,347 $17,079 
Supplemental Disclosure of Cash Flow Information
Six Months Ended June 30,
20252024
Cash paid during the period for:
Income taxes7,662 $7,066 
Interest on debt12,361 — 
June 30,
20252024
Reconciliation of cash, cash equivalents, and restricted cash reported within the
Consolidated Balance Sheets to the Consolidated Statements of Cash Flows:
Cash and cash equivalents$22,542 $14,590 
Restricted cash23,841 10,556 
Total cash, cash equivalents, and restricted cash shown on the Consolidated Statements of Cash Flows$46,383 $25,146 
Restricted cash is cash that we do not have the right to use for general purposes and consists primarily of fiduciary cash held by Ambac's insurance distribution subsidiaries and Everspan state deposits.
Reclassifications and Rounding
Reclassifications may have been made to prior years' amounts to conform to the current year's presentation. Certain amounts and tables in the consolidated financial statements and associated notes may not add due to rounding.
Adopted Accounting Standards
There have been no new accounting standards adopted during the six months ended June 30, 2025.
Future Application of Accounting Standards and Required Disclosures
Income Taxes:
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The enhancements in the ASU include the following:
•Within the rate reconciliation table, disclosure of additional categories of information about federal, state, and foreign
income taxes and providing more details about the reconciling items in some categories if the items meet a quantitative threshold.
•Annual disclosure of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and disaggregation of the information by jurisdiction based on a quantitative threshold.
•Other disclosures include: i) income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and ii) income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.
The ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. Ambac will adopt this ASU for the annual reporting period ending December 31, 2025. The standard is not expected to have a consequential impact on Ambac's financial statements.
Expense Disaggregation Disclosures:
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The enhanced disclosures requirements include the following:
•Disclose the amounts of certain expense categories included in each relevant expense caption. Those categories applicable to Ambac include employee compensation, depreciation, and intangible asset amortization. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed above.
•Include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements.
•Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.
•Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.
The ASU is effective for annual periods beginning after December 15, 2026 and for interim reporting periods after December 15, 2027 with early adoption permitted. Ambac has not determined if it will early adopt this ASU and is evaluating the impact on Ambac's financial statements.
Ambac Financial Group, Inc.
10
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
2.    SEGMENT INFORMATION
The Company reports its results of continuing operations in two segments: Specialty Property and Casualty Insurance and Insurance Distribution. These reportable segments offer distinct products and services as further described in Note 1. Background and Business Description. The operating entities within each segment are wholly or majority owned by separate intermediate holding companies: Everspan Holdings, LLC for Specialty Property and Casualty Insurance and Cirrata Group, LLC for Insurance Distribution. The Company's segments have separate management teams with incentive compensation structures based on segment level performance. Financial reporting for each segment is regularly provided to the Company's Chief Executive Officer, who is the chief operating decision maker ("CODM") for purposes of monitoring the businesses, assessing performance and allocating resources.
The following tables summarize the components of the Company’s total revenues and expenses, and pretax income (loss) by reportable business segment. Information provided below for “Corporate and Other” primarily relates to the operations of AFG, which will include investment income on its investment portfolio and costs to maintain the operations of AFG, including public company reporting, capital management and business development costs for the acquisition and development of new business initiatives. As a result of the Company reporting the results of operations of AAC as discontinued operations, certain corporate costs charged to AAC totaling $2,502 and $3,636 for the three months ended June 30, 2025 and 2024 and $5,265 and $7,581 for the six months ended June 30, 2025 and 2024, respectively, have been reported in Net income from continuing operations on the Consolidated Statements of Total Comprehensive Income and included in Corporate and Other in the tables below.
Ambac Financial Group, Inc.
11
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)

Three Months Ended June 30, 2025Three Months Ended June 30, 2024
Reportable SegmentsReportable Segments
Specialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherTotalSpecialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherTotal
Revenues:
Net premiums earned$16,203 $16,203 $27,054 $27,054 
Commissions$30,322 30,322 $13,221 13,221 
Servicing and other fees4,472 4,472 — — 
Program fees3,497 3,497 3,328 3,328 
Investment income1,748 340 $521 2,609 1,465 77 $2,221 3,763 
Other(58)(2,093)5 (2,146)(19)8 3,682 3,671 
Total revenues from continuing operations (1)
21,390 33,041 526 54,957 31,828 13,306 5,904 51,037 
Less:
Losses and loss adjustment expenses10,978 10,978 23,024 23,024 
Policy acquisition costs3,699 3,699 5,399 5,399 
Commissions7,403 7,403 7,888 7,888 
Intangible amortization and depreciation9,301 440 9,741 — 1,153 461 1,614 
Interest5,570 5,570 — — 
Compensation expense2,605 14,455 5,722 22,782 3,090 2,290 5,697 11,077 
Non Compensation expense3,488 6,485 7,787 17,759 1,412 718 14,654 16,784 
Total expenses from continuing operations20,770 43,214 13,949 77,931 32,925 12,049 20,812 65,786 
Segment pretax income (loss)620 (10,173)(13,423)(22,974)(1,097)1,257 (14,908)(14,749)
Segment income tax expense (benefit)192 (2,181)(183)(2,172)(27)9 (12)(30)
Segment net income (loss)428 (7,992)(13,240)(20,802)(1,070)1,248 (14,896)(14,719)
Segment net (income) loss attributable to noncontrolling interest— 254 254 — (213)(213)
Net income (loss) attributable to Ambac shareholders$428 $(7,738)$(13,240)(20,548)$(1,070)$1,035 $(14,896)(14,932)
Reconciliation to consolidated net income (loss) attributable to Ambac stockholders
Discontinued operations(52,151)14,182 
Net income (loss) attributable to Ambac shareholders$(72,699)$(750)
Reconciliation of segment assets to consolidated total assets
Total assets$847,647 $975,843 $62,041 $1,885,531 $713,421 $155,223 $216,113 $1,084,757 
Discontinued operations6,636,855 7,099,591 
Total consolidated assets$8,522,386 $8,184,348 
EBITDA Reconciliation
Segment net income (loss)$428 $(7,992)$(13,240)$(20,802)$(1,070)$1,248 $(14,896)$(14,719)
Adjustments:
Interest expense— 5,570 — 5,570 — — — — 
Income taxes192 (2,181)(183)(2,172)(27)9 (12)(30)
Depreciation— — 440 440 — 14 461 475 
Intangible amortization— 9,301 — 9,301 — 1,139 — 1,139 
EBITDA620 4,698 (12,983)(7,663)(1,097)2,404 (14,441)(13,135)
Add: Impact of noncontrolling interests— (2,185)— (2,185)— (430)— (430)
Ambac EBITDA$620 $2,513 $(12,983)$(9,848)$(1,097)$1,974 $(14,441)$(13,565)
Ambac Financial Group, Inc.
12
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
Six Months Ended June 30, 2025Six Months Ended June 30, 2024
Reportable SegmentsReportable Segments
Specialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherTotalSpecialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherTotal
Revenues:
Net premiums earned$31,881 $31,881 $52,633 $52,633 
Commissions$67,093 67,093 $30,950 30,950 
Servicing and other fees9,436 9,436 — — 
Program fees7,149 7,149 5,895 5,895 
Investment income3,590 716 $1,118 5,424 2,864 127 $4,412 7,403 
Other(59)(3,206)(5)(3,270)(23)94 3,636 3,707 
Total revenues from continuing operations (1)
42,561 74,039 1,113 117,713 61,370 31,171 8,048 100,588 
Less:
Losses and loss adjustment expenses21,474 21,474 42,379 42,379 
Policy acquisition costs7,540 7,540 9,823 9,823 
Commissions17,768 17,768 17,710 17,710 
Intangible amortization and depreciation18,173 745 18,917 2,299 926 3,228 
Interest11,024 11,024 — — 
Compensation expense6,116 27,988 11,566 45,669 4,851 4,592 12,187 21,630 
Non Compensation expense5,309 11,502 16,590 33,402 3,595 1,301 18,910 23,806 
Total expenses from continuing operations40,439 86,455 28,901 155,794 60,649 25,902 32,025 118,576 
Segment pretax income (loss)2,122 (12,416)(27,788)(38,081)721 5,269 (23,977)(17,988)
Segment income tax expense (benefit)270 (2,681)(378)(2,789)79 127 (106)100 
Segment net income (loss)1,852 (9,735)(27,410)(35,292)642 5,142 (23,871)(18,088)
Segment net (income) loss attributable to noncontrolling interest— (1,400)(1,400)2 (916)— (914)
Net income (loss) attributable to Ambac shareholders$1,852 $(11,135)$(27,410)(36,692)$644 $4,226 $(23,871)(19,002)
Reconciliation to consolidated net income (loss) attributable to Ambac stockholders
Discontinued operations(82,398)38,322 
Net income (loss) attributable to Ambac shareholders$(119,090)$19,320 
EBITDA Reconciliation
Segment net income (loss)$1,852 $(9,735)$(27,410)$(35,292)$642 $5,142 $(23,871)$(18,088)
Adjustments:
Interest expense— 11,024 — 11,024 — — — — 
Income taxes270 (2,681)(378)(2,789)79 127 (106)100 
Depreciation— 109 744 853 — 21 926 947 
Intangible amortization— 18,064 — 18,064 — 2,278 — 2,278 
EBITDA2,123 16,781 (27,044)(8,140)721 7,565 (23,047)(14,762)
Add: Impact of noncontrolling interests— (7,205)— (7,205)— (1,350)— (1,350)
Ambac EBITDA$2,123 $9,576 $(27,044)$(15,345)$724 $6,215 $(23,048)$(16,112)
(1)Inter-segment revenues and inter-segment pre-tax income (loss) amounts are insignificant and are not presented separately.
3.    DISCONTINUED OPERATION
Sale of Ambac Assurance Corporation ("AAC")
On June 4, 2024, AFG entered into a stock purchase agreement (the "Purchase Agreement") with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., pursuant to which and subject to the conditions set forth therein, AFG will sell all of the issued and outstanding shares of common stock of AAC, a wholly-owned subsidiary of AFG, to the Buyer for aggregate consideration of $420,000 in cash (the "Sale"). The terms of the Sale as contemplated by the Purchase Agreement provide that, at the closing of the Sale (the “Closing”), Buyer will acquire complete ownership of the common stock of AAC and all of its
wholly owned subsidiaries, including Ambac Assurance UK Limited ("Ambac UK"). In connection with and pursuant to the Purchase Agreement, AFG has agreed to issue to Buyer a warrant exercisable for a number of shares of common stock, par value $0.01, of AFG representing 9.9% of the fully diluted shares of AFG’s common stock as of March 31, 2024, pro forma for the issuance of the warrant. The warrant will have an exercise price per share of $18.50 with a 6.5-year term from the date of issuance and will be immediately exercisable. On July 3, 2025, the parties to the Purchase Agreement entered into a letter agreement pursuant to which, among other things, the parties entered into a new agreement with respect to the warrant and amended certain terms of the Investor Rights Agreement (as defined in the Purchase Agreement). The Buyer continues to pursue the final outstanding regulatory approval from the Wisconsin Office of the
Ambac Financial Group, Inc.
13
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
Commissioner of Insurance ("OCI"), which would be received only after a hearing, which has been scheduled for September 3, 2025, at or prior to which third parties would have an opportunity to object to the Sale. On or prior to August 4, 2025, representatives of certain holders of surplus notes issued by AAC filed motions to intervene in the proceedings. On July 28, 2025, the OCI staff published a memorandum including its recommendation that the Sale be approved. On July 3, 2025, AFG and the Buyer entered into an agreement to, among other matters, extend the term of the Purchase Agreement from July 3, 2025, to December 31, 2025 (subject to an automatic 90-day extension if regulatory approvals have not been obtained), to facilitate the timing of the hearing. The Buyer received approval for the change in control of Ambac UK from the U.K. Prudential Regulation Authority, which expires on October 24, 2025. See Note 5. Discontinued Operation in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for further information regarding the Sale.
AFG recorded an expected loss on sale in the Statement of Comprehensive Income (Loss) for the year ended December 31, 2024 of $(570,145), equal to the difference between the sale proceeds (net of the value of the warrants to be issued) and the carrying value of AAC's net assets held-for-sale, less expected closing costs. AFG recorded losses of $(52,960) and $(67,456) in the three and six months ended June 30, 2025, reflecting remeasurement of net assets held-for-sale and the change in fair value of the warrant to be issued to Buyer during the period, bringing the valuation allowance on held-for-sale assets to $(637,601) as of June 30, 2025. The carrying value of held-for-sale assets and liabilities, and consequently the expected loss on disposal, are subject to variability through the closing date of the Sale. Changes to the carrying value of held-for-sale assets and liabilities could arise from changes in estimates of financial guarantee losses and loss adjustment expense reserves, including subrogation recoverable; changes in the valuation of invested assets and other financial instruments carried at fair value; adverse or favorable litigation outcomes; and other operating results of AAC and its subsidiaries, including consolidated variable interest entities (“VIEs”). Additionally, at closing, net
income will be impacted by the reclassification from Accumulated Other Comprehensive Income (Loss) of net unrealized gains (losses) on available-for-sale investment securities, cumulative foreign currency translation adjustments and cumulative credit risk changes of fair value option liabilities attributable to AAC and subsidiaries, which at June 30, 2025, amounted to $(86,828).
The carrying value of held-for-sale assets and liabilities could also be impacted by payments on AAC's outstanding surplus notes. Surplus note principal and interest payments require the approval of OCI. Since the issuance of the surplus notes in 2010, OCI has declined to approve regular payments of interest on surplus notes, including AAC's request to pay full or partial interest on, and full or partial principal of, surplus notes on the scheduled payment date of June 9, 2025, although the OCI has permitted two exceptional payments in the past. As a result, the scheduled payment date for interest, and the scheduled maturity date for payment of principal of the surplus notes are extended until OCI grants approval to make the payment. Interest will accrue, compounded on each anniversary of the original scheduled payment date or scheduled maturity date, on any unpaid principal or interest through the actual date of payment, at 5.1% per annum. The interest on the outstanding surplus notes were accrued for, and AAC is accruing interest on the interest amounts following each scheduled payment date.
The components of the anticipated loss on sale, reflected in the valuation allowance on assets held-for-sale as of June 30, 2025 and December 31, 2024, are summarized below:
June 30,
2025		December 31,
2024
Fair value of net consideration to be received$402,239 $399,727 
Less: estimated closing costs7,535 7,235 
394,704 392,492 
Carrying amount of net assets held-for-sale1,032,305 962,637 
Loss on disposal$(637,601)$(570,145)

Ambac Financial Group, Inc.
14
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
The following table summarizes the major classes of assets and liabilities held-for-sale on the Consolidated Balance Sheets after elimination of intercompany balances:
June 30,
2025		December 31,
2024
ASSETS:
Total investments$2,321,619 $2,226,505 
Cash and equivalents13,023 8,322 
Premiums receivable218,780 217,096 
Reinsurance recoverable on paid and unpaid losses26,359 25,274 
Deferred ceded premiums74,180 79,074 
Subrogation recoverable110,838 113,962 
Intangible assets208,424 213,457 
Other assets, net71,572 49,396 
VIE assets (including restricted cash of $57,754 and 246,031)
4,185,223 3,904,259 
Valuation allowance on assets held-for-sale (637,601)(570,145)
Total assets held-for-sale$6,592,417 $6,267,200 
LIABILITIES:
Unearned premiums$227,968 $228,177 
Loss and loss adjustment reserves600,916 577,167 
Ceded premiums payable54,712 56,404 
Long-term debt and accrued interest1,078,551 1,046,658 
Other liabilities, net105,346 105,772 
VIE liabilities4,145,531 3,873,507 
Total liabilities held-for-sale$6,213,024 $5,887,685 
The following table summarizes the major line items constituting net income (loss) from discontinued operations reconciled to net income (loss) from discontinued operations presented in the Consolidated Statement of Comprehensive Income (Loss):
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
REVENUES:
Net premiums earned$5,199 $5,569 $9,962 $13,055 
Net investment income36,107 32,419 56,807 70,450 
Net investment gains (losses), including impairments(12,514)(956)(18,468)(388)
Net gains (losses) on derivative contracts(8,834)461 (9,367)1,994 
Other revenues8,840 15,995 16,661 21,435 
Total revenues28,798 53,488 55,595 106,546 
EXPENSES:
Loss and loss adjustment expenses (benefit)(2,657)(5,270)8,078 (25,978)
Intangible amortization5,362 7,014 11,188 18,341 
General & administrative and other expenses7,523 19,063 16,607 36,732 
Interest expense15,943 15,986 31,894 31,966 
Other expenses— (5)— 19 
Total expenses26,171 36,788 67,767 61,080 
Pretax income (loss)2,627 16,700 (12,172)45,466 
Provision (benefit) for income taxes1,818 2,518 2,770 7,144 
Loss on disposal(52,960)— (67,456)— 
Net income (loss) from discontinued operations$(52,151)$14,182 $(82,398)$38,322 
4.    INVESTMENTS
Ambac’s invested assets are primarily comprised of of (i) fixed maturity securities classified as either available-for-sale, (ii) interests in pooled investment funds which are reported within Other investments on the Consolidated Balance Sheets and (iii)
preferred equity investments which are reported within Other investments on the Consolidated Balance Sheets. Interests in pooled investment funds are limited partner interests and are reported using the equity method.
Ambac Financial Group, Inc.
15
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
Fixed Maturity Securities:
The amortized cost and estimated fair value of available-for-sale investments, at June 30, 2025, and December 31, 2024, were as follows:
June 30, 2025:December 31, 2024:
Amortized
Cost		Allowance for Credit Losses Gross UnrealizedEstimated
Fair Value		Amortized
Cost		Allowance for Credit LossesGross UnrealizedEstimated
Fair Value
GainsLossesGainsLosses
Fixed maturity securities:
Municipal obligations$14,540 $— $109 $341 $14,308 $14,646 — $7 $570 $14,083 
Corporate obligations93,926 — 773 2,599 92,100 92,990 — 107 3,905 89,192 
U.S. government obligations44,244 — 496 308 44,432 41,706 — 98 809 40,995 
Residential mortgage-backed securities3,352 — 28 18 3,362 2,475 — — 29 2,446 
Commercial mortgage-backed securities1,935 — 2 17 1,920 2,127 — 8 34 2,101 
Collateralized debt obligations2,642 — 11 1 2,652 3,131 — 13 2 3,142 
Other asset-backed securities2,544 — 19 2 2,561 5,049 — 14 2 5,061 
163,183 — 1,438 3,286 161,335 162,124 — 247 5,351 157,020 
Short-term102,719 — 1 — 102,720 127,588 — 13 — 127,601 
Total available-for-sale investments$265,902 $— $1,439 $3,286 $264,055 $289,712 — $260 $5,351 $284,621 

The amortized cost and estimated fair value of available-for-sale investments, at June 30, 2025, by contractual maturity, were as follows:
Amortized
Cost		Estimated
Fair Value
Due in one year or less$138,597 $138,260 
Due after one year through five years53,212 52,386 
Due after five years through ten years62,642 61,934 
Due after ten years978 980 
255,429 253,560 
Residential mortgage-backed securities3,352 3,362 
Commercial mortgage-backed securities1,935 1,920 
Collateralized debt obligations2,642 2,652 
Other asset-backed securities2,544 2,561 
Total$265,902 $264,055 
Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.
Unrealized Losses on Fixed Maturity Securities:
The following table shows gross unrealized losses and fair values of Ambac’s available-for-sale investments, which at June 30, 2025, and December 31, 2024, did not have an allowance for credit losses. This information is aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at June 30, 2025, and December 31, 2024:
June 30, 2025December 31, 2024
Less Than 12 Months12 Months or MoreTotalLess Than 12 Months12 Months or MoreTotal
Fair 
Value		Gross
Unrealized
Loss		Fair 
Value		Gross
Unrealized
Loss		Fair 
Value		Gross
Unrealized
Loss		Fair 
Value		Gross
Unrealized
Loss		Fair 
Value		Gross
Unrealized
Loss		Fair 
Value		Gross
Unrealized
Loss
Fixed maturity securities:
Municipal obligations$1,329 $31 $6,042 $310 $7,371 $341 $6,042 $112 $6,582 $458 $12,624 $570 
Corporate obligations9,555 59 35,650 2,540 45,205 2,599 23,784 269 46,612 3,636 70,396 3,905 
U.S. government obligations4,714 43 11,932 265 16,646 308 15,919 344 14,818 465 30,737 809 
Residential mortgage-backed securities1,805 18 — — 1,805 18 2,446 29 — — 2,446 29 
Commercial mortgage-backed securities754 17 — — 754 17 738 34 — — 738 34 
Collateralized debt obligations566 1 — — 566 1 655 2 — — 655 2 
Other asset-backed securities848 2 — — 848 2 1,428 2 — — 1,428 2 
19,571 171 53,624 3,115 73,195 3,286 51,012 792 68,012 4,559 119,024 5,351 
Short-term749 — — — 749 — — — — — — — 
20,320 171 53,624 3,115 73,944 3,286 51,012 792 68,012 4,559 119,024 5,351 
Total temporarily impaired securities$20,320 $171 $53,624 $3,115 $73,944 $3,286 $51,012 $792 $68,012 $4,559 $119,024 $5,351 

Management has determined that the securities in the above table do not have credit impairment as of June 30, 2025, and December 31, 2024, based upon (i) no actual or expected principal and interest payment defaults on these securities and (ii) analysis of the creditworthiness of the issuer.
Ambac’s assessment about whether a security is credit impaired reflects management’s current judgment regarding facts and circumstances specific to the security and other factors. If that
judgment changes, Ambac may record a charge for credit impairment in future periods.
The declines in fair value and resultant unrealized losses across asset classes as of June 30, 2025, included in the above table resulted from the impact of increasing interest rates since the securities were purchased. Management has determined that the securities with unrealized losses are not credit impaired. Further
Ambac Financial Group, Inc.
16
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
discussion of management's assessment with respect to security categories with larger unrealized loss balances is below.
Corporate obligations
The gross unrealized losses on corporate obligations as of June 30, 2025, resulted primarily from an increase in interest rates since the securities were purchased. Unrealized losses of $2,599 related to 120 investment grade securities with an average unrealized loss equal to 5% of amortized cost at June 30, 2025. Management believes that the full and timely receipt of all principal and interest payment on corporate obligations with unrealized losses as of June 30, 2025, is probable.
Investment Income (Loss)
Net investment income (loss) was comprised of the following for the affected periods:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Fixed maturity securities$1,470 $1,263 $2,870 $2,434 
Short-term investments1,191 2,988 2,648 5,577 
Loans35 — 69 — 
Investment expense(87)(102)(84)(193)
Securities available-for-sale and short-term2,609 4,149 5,503 7,818 
Fixed maturity securities - trading— (386)(79)(415)
Total net investment income (loss)$2,609 $3,763 $5,424 $7,403 
Net investment income (loss) from Other investments primarily represents income from investment limited partnerships and other equity interests accounted for under the equity method.
Net Investments Gains (Losses), including Impairments:
The following table details investment gains (losses) and impairments included in earnings within Other revenues for the affected periods:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Gross realized gains on securities$2 $6,058 $2 $6,062 
Gross realized losses on securities— (43)(3)(46)
Foreign exchange gains (losses) — — — — 
Credit impairments— (1,480)— (1,480)
Intent / requirement to sell impairments— — — — 
Net investment gains (losses), including impairments$2 $4,535 $(1)$4,536 
Ambac had an allowance for credit losses of $0 and $0 at June 30, 2025, and 2024, respectively.
Ambac did not purchase any financial assets with credit deterioration for the three and six months ended June 30, 2025 and 2024.
Deposits with Regulators and Other Restrictions:
Securities carried at $32,325 and $22,861 at June 30, 2025, and December 31, 2024, respectively, were deposited by Ambac's insurance subsidiaries with governmental authorities or designated custodian banks as required by laws affecting insurance companies. Invested assets carried at $765 and $800 at June 30, 2025, and December 31, 2024, were deposited as security in connection with a letter of credit issued for an office lease. Invested assets include certain fiduciary funds held by Ambac's insurance distribution subsidiaries, carried at $1,994 and $2,845 at June 30, 2025, and December 31, 2024, respectively.
Other Investments:
Ambac's investment portfolio includes a limited partnership interest in a private equity fund which seeks to generate long-term capital appreciation through venture investments in insurtech companies. The fair value of Ambac's investment in the fund was $7,486 and $7,499 as of June 30, 2025, and December 31, 2024, determined using net asset value ("NAV") as a practical expedient. Redemptions may be made quarterly with 90 days notice subject to withdrawal limitations and/or redemption fees which vary with the timing and notification of withdrawal provided by the investor. Ambac's unfunded commitments total $1,658 on this private equity fund at June 30, 2025.
Other investments also include preferred equity investments with a carrying value of $20,618 and $20,618 as of June 30, 2025, and December 31, 2024, respectively, that do not have readily determinable fair values and are carried at cost, less any impairments as permitted under the Investments — Equity Securities Topic of the ASC. There were no impairments recorded on these investments in the three and six months ended June 30, 2025, and $1,480 and $1,480 in the three and six months ended June 30, 2024, respectively.

Ambac Financial Group, Inc.
17
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
5.    FAIR VALUE MEASUREMENTS
The Fair Value Measurement Topic of the ASC establishes a framework for measuring fair value and disclosures about fair value measurements.
Fair Value Hierarchy:
The Fair Value Measurement Topic of the ASC specifies a fair value hierarchy based on whether the inputs to valuation techniques used to measure fair value are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Company-based assumptions. The fair value hierarchy has three broad levels as follows:
lLevel 1Quoted prices for identical instruments in active markets. Assets and liabilities classified as Level 1 include US Treasury traded in highly liquid and transparent markets, and money market funds.
lLevel 2Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Assets and liabilities classified as Level 2 generally include investments in fixed maturity securities and certain derivatives valued using only market observable data.
lLevel 3Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. This hierarchy requires the use of observable market data when available. Financial instruments classified as Level 3 include certain investments in fixed maturity securities, loans and derivatives.
The Fair Value Measurement Topic of the ASC permits, as a practical expedient, the estimation of fair value of certain investments in funds using the net asset value per share of the investment or its equivalent (“NAV”). Investments in funds valued using NAV are not categorized as Level 1, 2 or 3 under the fair value hierarchy. The Investments — Equity Securities Topic of the ASC permits the measurement of certain equity securities without a readily determinable fair value at cost, less impairment, and adjusted to fair value when observable price changes in identical or similar investments from the same issuer occur (the "measurement alternative"). The fair values of investments measured under this measurement alternative are not included in the below disclosures of fair value of financial instruments.
The following table sets forth the carrying amount and fair value of Ambac’s financial assets and liabilities as of June 30, 2025, and December 31, 2024, including the level within the fair value hierarchy at which fair value measurements are categorized. As required by the Fair Value Measurement Topic of the ASC, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
June 30, 2025December 31, 2024
Carrying
Amount		Total Fair
Value		Fair Value Measurements Categorized as:Carrying
Amount		Total Fair
Value		Fair Value Measurements Categorized as:
Level 1Level 2Level 3Level 1Level 2Level 3
Financial assets:
Fixed maturity securities:
Municipal obligations$14,308 $14,308 $— $14,308 $— $14,083 $14,083 $— $14,083 $— 
Corporate obligations92,100 92,100 — 92,100 — 89,192 89,192 — 89,192 — 
U.S. government obligations44,432 44,432 44,432 — — 40,995 40,995 40,995 — — 
Residential mortgage-backed securities3,362 3,362 — 3,362 — 2,446 2,446 — 2,446 — 
Commercial mortgage-backed securities1,920 1,920 — 1,920 — 2,101 2,101 — 2,101 — 
Collateralized debt obligations2,652 2,652 — 2,652 — 3,142 3,142 — 3,142 — 
Other asset-backed securities2,561 2,561 — 2,561 — 5,061 5,061 — 5,061 — 
Short term investments102,720 102,720 102,720 — — 127,601 127,601 127,601 — — 
Other investments (1)
28,193 7,486 89 — — 28,294 7,499 — — — 
Cash, cash equivalents and restricted cash47,085 47,085 47,085 — — 47,276 47,276 47,276 — — 
Other assets-loans3,503 3,503 — — 3,503 3,434 3,434 — — 3,434 
Other assets - Derivatives:
Warrants— — — — — — — — — — 
FX forward contracts790 790 — 790 — — — — — — 
Total financial assets$343,626 $322,919 $194,326 $117,693 $3,503 $363,625 $342,830 $215,872 $116,025 $3,434 
Financial liabilities:
Short-term debt, including accrued interest$152,944 $152,944 $152,944 $— $— $152,560 $152,560 $— $— $152,560 
Other liabilities - Derivatives:
FX forward contracts— — — — — 317 317 — 317 — 
Total financial liabilities$152,944 $152,944 $152,944 $— $— $152,877 $152,877 $— $317 $152,560 
(1)Excluded from the fair value measurement categories in the table above are investment funds of $7,486 and $7,499 as of June 30, 2025, and December 31, 2024, respectively, which are measured using NAV as a practical expedient. Also excluded from the fair value amounts in the table above are equity securities with a carrying value of $20,618 and $20,618 as of June 30, 2025, and December 31, 2024, respectively, that do not have readily determinable fair values and have carrying amounts determined using the measurement alternative, and an equity method investment of $89 and $177 as of June 30, 2025, and December 31, 2024.
Ambac Financial Group, Inc.
18
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
Determination of Fair Value:
When available, Ambac uses quoted active market prices specific to the financial instrument to determine fair value, and classifies such items within Level 1. The determination of fair value for financial instruments categorized in Level 2 or 3 involves judgment due to the complexity of factors contributing to the valuation. Third-party sources from which we obtain independent market quotes also use assumptions, judgments and estimates in determining financial instrument values and different third parties may use different methodologies or provide different values for financial instruments. In addition, the use of internal valuation models may require assumptions about hypothetical or inactive markets. As a result of these factors, the actual trade value of a financial instrument in the market, or exit value of a financial instrument position by Ambac, may be significantly different from its recorded fair value.
Ambac’s financial instruments carried at fair value are mainly comprised of investments in fixed maturity securities, equity interests in pooled investment funds, and derivative instruments. Valuation of financial instruments is performed by Ambac’s finance group using methods approved by senior financial management with consultation from third-party portfolio managers as appropriate. Preliminary valuation results are discussed with senior financial management and third-party portfolio managers as necessary to assess consistency with market transactions and trends as applicable. Market transactions such as trades or negotiated settlements of similar positions, if any, are reviewed to validate fair value model results. However, financial instruments valued using significant unobservable inputs have very little or no observable market activity. Methods and significant inputs and assumptions used to determine fair values across portfolios are reviewed quarterly by senior financial management. Other valuation control procedures specific to particular portfolios are described further below.
Fixed Maturity Securities:
The fair values of fixed maturity investment securities are based primarily on market prices received independent pricing sources. Because many fixed maturity securities do not trade on a daily basis, pricing sources apply available market information through processes such as matrix pricing to calculate fair value. Such prices generally consider a variety of factors, including recent trades of the same and similar securities. In those cases, the items are classified within Level 2. For those fixed maturity investments where quotes were not available or cannot be reasonably corroborated, fair values are based on internal valuation models. Key inputs to the internal valuation models generally include maturity date, coupon and yield curves for asset-type and credit rating characteristics that closely match those characteristics of the specific investment securities being valued. Items valued using valuation models are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be significant inputs that are
readily observable. Longer (shorter) expected maturities or higher (lower) yields used in the valuation model will, in isolation, result in decreases (increases) in fair value. Generally, lower credit ratings or longer expected maturities will be accompanied by higher yields used to value a security.
Ambac performs various review and validation procedures to quoted and modeled prices for fixed maturity securities, including price variance analyses, missing and static price reviews, overall valuation analysis by portfolio managers and finance managers and reviews associated with our ongoing impairment analysis. Unusual prices identified through these procedures will be evaluated further against alternative third-party quotes (if available), internally modeled prices and/or other relevant data, and the pricing source values will be challenged as necessary. Price challenges generally result in the use of the pricing source’s quote as originally provided or as revised by the source following their internal diligence process. A price challenge may result in a determination by either the pricing source or Ambac management that the pricing source cannot provide a reasonable value for a security or cannot adequately support a quote, in which case Ambac would resort to using either other quotes or internal models. Results of price challenges are reviewed by portfolio managers and finance managers.
Other Investments:
Other investments primarily relate to investments in pooled investment funds. The fair value of pooled investment funds is determined using dealer quotes or alternative pricing sources when such investments have readily determinable fair values. When fair value is not readily determinable, pooled investment funds are valued using NAV as a practical expedient as permitted under the Fair Value Measurement Topic of the ASC. Refer to Note 4. Investments for additional information about such investments in pooled funds that are reported at fair value using NAV as a practical expedient.
Derivative Instruments:
At June 30, 2025, and December 31, 2024 Ambac has foreign currency forward contracts and holds warrants to purchase preferred stock of a development stage company. The fair value of foreign currency forwards are determined using valuation models with observable market inputs. Fair value of the warrants are determined using a standard warrant valuation model with internally developed input assumptions.
Short-term Debt:
Short-term debt consists of SOFR indexed borrowing used for partial funding of the Beat acquisition and is classified as Level 3.
Other Financial Assets:
Included in Other assets are loans carried at amortized cost, the fair values of which are estimated based upon internal valuation models and are classified as Level 3.
Ambac Financial Group, Inc.
19
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
Additional Fair Value Information for Financial Assets and Liabilities Accounted for at Fair Value:
The following tables present the changes in the Level 3 fair value category for the periods presented in 2025 and 2024. Ambac classifies financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to these unobservable inputs, the valuation models for Level 3 financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly. Thus, the gains and losses presented below include changes in the fair value related to both observable and unobservable inputs.
Level 3 - Financial Assets and Liabilities Accounted for at Fair Value
InvestmentsDerivativesTotal
Three Months Ended June 30, 2025:
Balance, beginning of period$— $— $— 
Total gains/(losses) realized and unrealized:
Included in earnings— — — 
Included in other comprehensive income— — — 
Purchases— — — 
Settlements— — — 
Balance, end of period$— $— $— 
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date$— $— $— 
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date$— $— $— 
Three Months Ended June 30, 2024:
Balance, beginning of period$13,954 $609 $14,563 
Total gains/(losses) realized and unrealized:
Included in earnings6,016 (61)5,955 
Included in other comprehensive income91 — 91 
Purchases— — — 
Settlements(20,061)— (20,061)
Balance, end of period$— $548 $548 
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date$6,016 $(61)$5,955 
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date$—$—$—
Ambac Financial Group, Inc.
20
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
Level 3 - Financial Assets and Liabilities Accounted for at Fair Value
InvestmentsDerivativesTotal
Six Months Ended June 30, 2025:
Balance, beginning of period$— $— $— 
Total gains/(losses) realized and unrealized:
Included in earnings— — — 
Included in other comprehensive income— — — 
Settlements— — — 
Balance, end of period$— $— $— 
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date$— $— $— 
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date$— $— $— 
Six Months Ended June 30, 2024:
Balance, beginning of period$13,920 $656 $14,576 
Total gains/(losses) realized and unrealized:
Included in earnings6,016 (108)5,908 
Included in other comprehensive income125 — 125 
Settlements(20,061)— (20,061)
Balance, end of period$— $548 $548 
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date$6,016 $(108)$5,908 
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date$— $— $— 
Invested assets are transferred into Level 3 when internal valuation models that include significant unobservable inputs are used to estimate fair value. All such securities that have internally modeled fair values have been classified as Level 3. Derivative instruments are transferred into Level 3 when the use of unobservable inputs becomes significant to the overall valuation. There were no transfers of financial instruments into or out of Level 3 in the periods disclosed.
Gains and losses (realized and unrealized) relating to Level 3 assets and liabilities included in earnings for the affected periods are reported as follows:
Three Months Ended June 30, 2025Three Months Ended June 30, 2024
Net
Investment
Income		Net Gains
(Losses) on
Derivative
Contracts		Other
Income or
(Expense)		Net
Investment
Income		Net Gains
(Losses) on
Derivative
Contracts		Other
Income or
(Expense)
Total gains (losses) included in earnings for the period$—$—$—$—$(61)$6,016
Changes in unrealized gains (losses) relating to financial instruments still held at the reporting date————(61)—
Six Months Ended June 30, 2025Six Months Ended June 30, 2024
Net
Investment
Income		Net Gains
(Losses) on
Derivative
Contracts		Other
Income or
 (Expense)		Net
Investment
Income		Net Gains
(Losses) on
Derivative
Contracts		Other
Income or
 (Expense)
Total gains or losses included in earnings for the period$—$—$—$—$(108)$6,016
Changes in unrealized gains or losses included in earnings relating to the assets and liabilities still held at the reporting date————(108)—
Ambac Financial Group, Inc.
21
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
6.    INSURANCE CONTRACTS
Amounts presented in this Note relate only to Ambac’s continuing operations.
Premiums:
The effect of reinsurance on premiums written and earned was as follows:
Three Months Ended June 30,
20252024
WrittenEarnedWrittenEarned
Direct$89,849 $79,600 $90,714 $70,637 
Assumed6,399 6,974 20,492 17,283 
Ceded81,041 70,371 78,917 60,866 
Net premiums
$15,207 $16,203 $32,289 $27,054 
Six Months Ended June 30,
20252024
WrittenEarnedWrittenEarned
Direct$167,040 $160,046 $169,949 $131,973 
Assumed16,123 14,503 37,679 32,805 
Ceded149,952 142,669 149,093 112,145 
Net premiums$33,211 $31,881 $58,535 $52,633 
Premium Receivables, including credit impairments:
Premium receivables at June 30, 2025, and December 31, 2024, were $71,875 and $57,222, respectively. Management evaluates premium receivables for expected credit losses ("credit impairment") in accordance with the CECL standard, which is further described in Note 2. Basis of Presentation and Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Below is a rollforward of the premium receivable allowance for credit losses for the periods presented.
Six Months Ended June 30,20252024
Beginning balance$142 $— 
Current period provision58 142 
Write-offs of the allowance— — 
Recoveries of previously written-off amounts— — 
Ending balance$200 $142 
At June 30, 2025, and December 31, 2024, $4,931 and $5,690 of premiums were past due.
Loss and Loss Adjustment Expense Reserves
Below is the loss and loss reserve expense roll-forward, net of subrogation recoverable and reinsurance, for the affected periods:
Six Months Ended June 30,20252024
Beginning gross loss and loss expense reserves$349,062 $197,089 
Reinsurance recoverable270,081 156,301 
Beginning balance of net loss and loss expense reserves78,981 40,788 
Losses and loss expenses:
Current year21,144 39,375 
Prior years330 3,003 
Total (1)
21,474 42,378 
Loss and loss expenses paid (recovered):
Current year2,745 2,460 
Prior years19,155 10,169 
Total21,900 12,629 
Ending net loss and loss expense reserves 78,555 70,537 
Reinsurance recoverable (2)
305,414 215,490 
Ending gross loss and loss expense reserves$383,969 $286,027 
(1)Total losses and loss adjustment expense (benefit) is net of $(89,957) and $(96,732) for the six months ended June 30, 2025 and 2024, respectively, related to ceded reinsurance.
(2)Represents reinsurance recoverable on future loss and loss expenses. Additionally, the Balance Sheet line "Reinsurance recoverable on paid and unpaid losses" includes reinsurance recoverables (payables) of $71,031 and $35,146 as of June 30, 2025, and 2024, respectively, related to previously paid loss and loss expenses
Prior accident years losses incurred development for the three and six months ended June 30, 2025, was primarily driven by excess liability claims, whereas prior accident years losses incurred development for the three and six months ended June 30, 2024, was primarily driven by increased commercial auto loss experience.
Specialty Property & Casualty Loss Reserves
Claims Development
The following is a summary of loss and loss adjustment expense reserves, including certain components, for the Company’s major product lines by reporting segment at June 30, 2025.
June 30, 2025Net Loss and Loss Adjustment Expense Reserves
Reinsurance Recoverables on Unpaid Losses (1)
Loss and Loss Adjustment Reserves (1)
Commercial auto$25,255 $123,361 $148,616 
Excess liability10,772 63,632 74,404 
General liability10,428 41,653 52,081 
Workers compensation16,604 — 16,604 
Non-standard personal auto6,656 395 7,051 
Professional Liability2,020 25,833 27,853 
Surety— 12,250 12,250 
Unallocated loss adjustment expense reserves5,898 8,168 14,066 
Other$922 $30,122 $31,044 
Total$78,556 $305,414 $383,969 
Ambac Financial Group, Inc.
22
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
(1)Other includes $27,629 related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company, and Consolidated Specialty Insurance Company. All legacy liabilities remain obligations of affiliates of the sellers through reinsurance and contractual indemnities.
Reinsurance Recoverables, Including Credit Impairments:
Everspan’s reinsurance assets, including deferred ceded premiums and reinsurance recoverables on losses amounted to $532,027 at June 30, 2025. Credit exposure existed at June 30, 2025, with respect to reinsurance recoverables to the extent that any reinsurer may not be able to reimburse Everspan under the terms of these reinsurance arrangements. At June 30, 2025, there were ceded reinsurance balances payable of $90,557 offsetting this credit exposure. Contractually ceded reinsurance payables can only be offset against amounts owed from the same reinsurer in the event that such reinsurer is unable to meet its obligations to reimburse Everspan.
To minimize its credit exposure to losses from reinsurer insolvencies, Everspan (i) is entitled to receive collateral from its reinsurance counterparties in certain reinsurance contracts and (ii) has certain cancellation rights that can be exercised by Everspan in the event of rating agency downgrades of a reinsurer (among other events and circumstances). Everspan held letters of credit and collateral amounting to $67,265 from its reinsurers at June 30, 2025. We believe that Everspan's reinsurance counterparties, that do not currently post collateral, are well capitalized, highly rated, authorized capacity providers. Additionally, while legacy liabilities from the Providence Washington Insurance Company acquisition and the admitted carriers previously acquired by Everspan (Greenwood Insurance Company and Consolidated Specialty Insurance Company), were fully ceded to certain reinsurers, Everspan also benefits from an unlimited, uncapped indemnity from Enstar Holdings (US) and 21st Century Premier Insurance Company, respectively, to mitigate any residual risk to these reinsurers.
At June 30, 2025, our top five reinsurers represented 62.1% of our total reinsurance recoverables on paid and unpaid losses. These reinsurance recoverables were primarily from reinsurers with applicable ratings of A or better. The following table sets forth our five most significant reinsurers by amount of reinsurance recoverable as of June 30, 2025.
Reinsurers
Rating
 (1)
Reinsurance
Recoverable
(2)
Unsecured
Recoverable
(3)
General Reinsurance CompanyA++$142,768 $120,301 
Munich Reinsurance CompanyA+33,681 6,741 
QBE Insurance CorporationA24,146 24,146 
Swiss Reinsurance America CorporationA+17,241 15,780 
Guaranty Captive Insurance CompanyNR15,929 — 
All other reinsurers
142,780 78,728 
Total recoverables
$376,545 $245,696 
(1)Represents financial strength ratings from AM Best for P&C reinsurers.
(2)Represents reinsurance recoverables on paid and unpaid losses. Unsecured amounts from QBE Insurance Corporation are also supported by an unlimited, uncapped indemnity from Enstar Holdings (US).
(3)Reinsurance recoverables reduced by ceded premiums payables due to reinsurers, letters of credit, and collateral posted for the benefit of Ambac.
Everspan has uncollateralized credit exposure of $245,696 and $232,310 and has recorded an allowance for credit losses of less than a million at June 30, 2025, and December 31, 2024. The uncollateralized credit exposure includes legacy liabilities obtained from the acquisitions of PWIC and the 21st Century Companies of $27,629 and $35,146 at June 30, 2025, and December 31, 2024, respectively. All legacy liabilities, which are fully ceded to reinsurers, also benefit from an unlimited, uncapped indemnity from the respective sellers to mitigate the Company from any residual risk from these reinsurers.
7.    DERIVATIVE INSTRUMENTS
The following tables summarize the gross fair values of individual derivative instruments and the impact of legal rights of offset as reported in the Consolidated Balance Sheets as of June 30, 2025, and December 31, 2024:
June 30, 2025December 31, 2024
Gross
Amounts of
Recognized
Assets /
Liabilities		Gross
Amounts
Offset in the
Consolidated
Balance Sheet		Net Amounts
of Assets/
Liabilities
Presented
in the Consolidated
Balance Sheet		Gross Amount
of Collateral
Received /
Pledged Not
Offset in the
Consolidated
Balance 
Sheet		Net
Amount		Gross
Amounts of
Recognized
Assets /
Liabilities		Gross
Amounts
Offset in the
Consolidated
Balance Sheet		Net Amounts
of Assets/
Liabilities
Presented
in the Consolidated
Balance Sheet		Gross Amount
of Collateral
Received /
Pledged Not
Offset in the
Consolidated
Balance 
Sheet		Net
Amount
Other assets:
FX forwards790 — 790 — 790 — — — — — 
Total derivative assets$790 $— $790 $— $790 $— $— $— $— $— 
Other liabilities:
FX forwards— — — — — 317 — 317 — 317 
Total derivative liabilities$— $— $— $— $— $317 $— $317 $— $317 
Ambac Financial Group, Inc.
23
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
The following tables summarize the location and amount of gains and losses of derivative contracts in the Unaudited Consolidated Statements of Total Comprehensive Income (Loss) for the three and six months ended June 30, 2025, and 2024:
Location of Gain (Loss)
Recognized in
Consolidated Statements of Total
Comprehensive Income (Loss)		Amount of Gain (Loss) Recognized in Consolidated Statement of Total Comprehensive Income (Loss)
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Derivatives:
WarrantsNet gains (losses) on derivative contracts— (60)— (108)
FX forwardsNet gains (losses) on derivative contracts680 (377)1,107 (377)
Total derivatives$680 $(437)1,107 (485)

Ambac holds warrants to purchase equity shares of a development stage company and US dollar/British pound sterling foreign exchange (FX) forward contracts.
Beat utilizes foreign exchange forward contracts to partially hedge its foreign currency exposure. Beat’s functional currency is the British Pound, but a significant portion of its revenues are generated in currencies other then the British Pound, particularly the US Dollar. Beat, therefore, typically enters into forward contracts to partially hedge its exposure to fluctuations in exchange rates relative to the British Pound. In connection with our acquisition of Beat and the growth profile of its business, we will be re-evaluating our exposure to foreign currency exchange rates and related hedging strategy.
Information about FX forward contracts as of June 30, 2025 and December 31, 2024, is summarized below:
Derivative TypeWeighted
Average
Remaining
Term
(years)		Face
Amount
(Buy)		Face
Amount
(Sell)		Fair Value
Asset
(Liability)
June 30, 2025
FX Forwards-Buy GBP/Sell USD0.397,853 10,000 775 
FX Forwards-Buy GBP/Sell CAD0.571,969 3,600 15 
December 31, 2024
FX Forwards-Buy GBP/Sell USD0.6115,720 20,000 (317)
FX Forwards-Buy GBP/Sell CAD0.00———
8.    GOODWILL AND INTANGIBLE ASSETS
The following table presents the Company's goodwill asset.
June 30,
2025		December 31,
2024
Beginning balance$418,234 $69,694 
Business acquisitions— 357,316 
Foreign exchange33,574 (8,776)
Impairments— — 
Ending balance$451,808 $418,234 
Intangible assets and accumulated amortization are included in the Consolidated Balance Sheets, as shown below.
Gross Carrying AmountAccumulated AmortizationNet
June 30, 2025
Finite-lived Intangible Assets:
Customer relationships$376,412 $43,493 $332,919 
Non-compete agreements1,350 1,215 135 
Trade name11,495 1,858 9,637 
Total finite lived intangible assets389,257 46,566 342,691 
Indefinite lived intangible assets:
Licenses11,213 — 11,213 
Total intangible assets400,470 46,566 353,904 
December 31, 2024
Finite-lived Intangible Assets:
Customer relationships$348,350 $24,630 $323,720 
Non-compete agreements1,350 1,080 270 
Trade name10,767 1,195 9,572 
Total finite lived intangible assets360,467 26,905 333,562 
Indefinite lived intangible assets:
Licenses11,213 — 11,213 
Total intangible assets371,680 26,905 344,775 
9.    REVENUES FROM CONTRACTS WITH CUSTOMERS
As further described in the Revenue Recognition section of Note 2. Basis of Presentation and Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, the Insurance Distribution businesses have contracts that are subject to the Revenue from Contracts with Customers Topic of the ASC ("ASC 606").
Ambac Financial Group, Inc.
24
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
The following table presents Insurance Distribution commission income recognized disaggregated by policy type for the periods presented.
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Accident & Health$5,118 $7,150 $13,269 $17,505 
Specialty Auto2,618 3,164 7,735 6,971 
Other Professional3,657 2,023 6,885 4,266 
Marine & Energy1,622 665 3,470 1,798 
Niche Specialty Risks3,533 — 7,561 — 
Property8,129 — 13,306 — 
Reinsurance3,821 130 7,936 243 
Environmental1,238 — 2,798 — 
Professional D&O1,403 — 2,929 — 
Misc. Specialty(817)89 1,204 167 
Total$30,322 $13,221 $67,093 $30,950 
For the three and six months ended June 30, 2025 and 2024, revenue of $4,472 and $—, $9,436 and $— respectively, was recognized in accordance with ASC 606 and reported in Servicing and other fees on the Consolidated Statement of Comprehensive Income (Loss).
During the six months ended June 30, 2025 and 2024, the amount of revenue recognized related to performance obligations satisfied in a previous period, inclusive of changes due to estimates was approximately $2,557 and $4,724, respectively.
Contract Assets and Liabilities
The balances of contract assets and contract liabilities with customers were as follows:
June 30, 2025December 31, 2024
Contract assets$22,813 $15,967 
Contract liabilities1,979 2,705 
Contract assets and Contract liabilities is reported in Other Assets and Other Liabilities on the Balance Sheet
Insurance Distribution
Contract assets represent estimated future consideration related to base commissions and profit-sharing commissions that were recognized as revenue upon the placement of the policy, but are not yet due. The Company does not have the right to bill or collect payment on i) base commissions until the related premiums from policyholders has been collected nor ii) profit-sharing commissions until after the contract year is completed.
Contract liabilities represent advance consideration received from customers related to employer stop loss base commissions that will be recognized over time as claims servicing is performed, which typically occurs between 17 and 20 months from contract inception. During the six months ended June 30, 2025 and 2024, the Company recognized revenue that was included in the contract liability balance as of the beginning of the period of $473 and $479, respectively.
10.    COMPREHENSIVE INCOME (LOSS)
The following tables detail the changes in the balances of each component of accumulated other comprehensive income for the affected periods:
Three Months Ended June 30, 2025:Three Months Ended June 30, 2024:
Unrealized Gains
(Losses) on
Available for Sale Securities (1)
Amortization
of
Postretirement
Benefit (1)
Gain (Loss) on Foreign 
Currency
Translation (1)
Credit Risk Changes of Fair Value Option Liabilities
 (1) (2)
Total
Unrealized Gains
(Losses) on
Available for Sale Securities (1)
Amortization
of
Postretirement
Benefit (1)
Gain (Loss) on Foreign 
Currency
Translation (1)
Credit Risk Changes of Fair Value Option Liabilities
 (1) (2)
Total
Beginning Balance$(2,530)$—$(129,971)$(667)$(133,168)$(27,214)$4,559$(151,806)$(1,006)$(175,467)
Other comprehensive income (loss) before reclassifications(13,845)—71,657—57,8127,795—1,269—9,064
Amounts reclassified from accumulated other comprehensive income (loss)9,199——1449,343(3,925)(4,559)—(103)(8,587)
Net current period other comprehensive income (loss)(4,646)—71,65714467,1553,870(4,559)1,269(103)477
Ending Balance$(7,176)$—$(58,314)$(523)$(66,013)$(23,344)$—$(150,537)$(1,109)$(174,990)
Six Months Ended June 30, 2025Six Months Ended June 30, 2024
Unrealized Gains
(Losses) on
Available for Sale Securities (1)
Amortization
of
Postretirement
Benefit (1)
Gain (Loss) on Foreign 
Currency
Translation (1)
Credit Risk Changes of Fair Value Option Liabilities
 (1) (2)
Total
Unrealized Gains
(Losses) on
Available for Sale Securities (1)
Amortization
of
Postretirement
Benefit (1)
Gain (Loss) on Foreign 
Currency
Translation (1)
Credit Risk Changes of Fair Value Option Liabilities
 (1) (2)
Total
Beginning Balance$(21,136)$— $(166,191)$(1,109)$(188,436)$(20,197)$4,939 $(144,035)$(753)$(160,046)
Other comprehensive income before reclassifications303 — 107,877 — 108,180 1,361 (67)(6,502)— (5,208)
Amounts reclassified from accumulated other comprehensive income13,657 — — 586 14,243 (4,508)(4,872)— (356)(9,736)
Net current period other comprehensive income13,960 — 107,877 586 122,423 (3,147)(4,939)(6,502)(356)(14,944)
Ending Balance$(7,176)$— $(58,314)$(523)$(66,013)$(23,344)$— $(150,537)$(1,109)$(174,990)
Ambac Financial Group, Inc.
25
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
(1)All amounts are net of tax and NCI. Amounts in parentheses indicate reductions to Accumulated Other Comprehensive Income.
(2)Represents the changes in fair value attributable to instrument-specific credit risk of liabilities for which the fair value option is elected.
The following table details the significant amounts reclassified from each component of accumulated other comprehensive income, shown in the above rollforward tables, for the affected periods:
Details about Accumulated
Other Comprehensive
Income Components		Amount Reclassified from 
Accumulated Other Comprehensive Income		Affected Line Item in the
Consolidated Statement of
Total Comprehensive Income (Loss)
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Unrealized Gains (Losses) on Available-for-Sale Securities (1)
$12,513$(3,580)$18,470 $(4,148)Net realized investment gains (losses)
(3,314)(345)(4,813)(360)Provision for income taxes
$9,199$(3,925)$13,657 $(4,508)Net of tax and noncontrolling interest
Amortization of Postretirement Benefit
Prior service cost$—$— $— $(210)
Other income 
Actuarial (losses)—— — (103)
Other income 
Curtailment gain—(4,559)— (4,559)
Other income 
—(4,559)— (4,872)Total before tax
—— — — Provision for income taxes
$—$(4,559)$— $(4,872)Net of tax and noncontrolling interest
Credit Risk Changes of Fair Value Option Liabilities
$192$(69)$781 $(406)Credit risk changes of fair value option liabilities
(48)(34)(195)50 Provision for income taxes
$144$(103)$586 $(356)Net of tax and noncontrolling interest
Total reclassifications for the period$9,343$(8,587)$14,243 $(9,736)Net of tax and noncontrolling interest 
(1)    Net unrealized investment gains (losses) on available for sale securities are included in Ambac's Consolidated Statements of Comprehensive Income (Loss) as a component of Accumulated Other Comprehensive Income (Loss). Changes in these amounts include reclassification adjustments to exclude from "Other Comprehensive Income (Loss)" those items that are included are part or ":Net income for a period that has been par of "Other comprehensive income *loss) in earlier periods.
11.    NET INCOME PER SHARE
As of June 30, 2025, 46,400,021 shares of AFG's common stock (par value $0.01) were issued and outstanding. Common shares outstanding decreased by 106,952 during the six months ended June 30, 2025, primarily due to share repurchases partially offset by shares issued in connection with employee stock compensation.
Share Repurchases
On November 12, 2024, Ambac’s Board of Directors authorized a share repurchase program, under which Ambac may opportunistically repurchase up to $50,000 of the Company’s common shares at management’s discretion over the period ending on December 31, 2026.
The following table shows shares repurchased by year.
($ in thousands,
except per share)
Year Ended December 31,
YTD
2025
202220232024
Shares repurchased1,605,316325,068937,141292,191
Total cost$14,217 $4,510 $11,698 $3,301 
Average purchase price per share$8.86 $13.88 $12.48 $11.29 
Unused authorization amount$35,001 
Earnings Per Share Calculation
The numerator of the basic and diluted earnings per share computation represents net income (loss) attributable to common stockholders adjusted by the retained earnings impacts of the noncontrolling adjustment to redemption value under ASC 480, or amendments resulting in revaluation to fair value and reclassification of NCI shares to redeemable NCI. Adjustments to the carrying value of redeemable noncontrolling interest are further described in the Redeemable NCI section of Note 1. Background and Business Description.
The following table provides a reconciliation of net income attributable to common stockholders to the numerator in the basic and diluted earnings per share calculation, together with the resulting earnings per share amounts:
Ambac Financial Group, Inc.
26
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Net income (loss) attributable to common stockholders$(72,699)$(750)$(119,090)19,320 
Adjustment of NCI to fair value— — (10,276)— 
Adjustment to redemption value (ASC 480)(1,241)(184)(2,148)(131)
Numerator of basic and diluted EPS$(73,940)$(934)$(131,514)19,189 
Per Share:
Basic$(1.54)$(0.02)$(2.75)$0.42 
Diluted$(1.54)$(0.02)$(2.75)$0.42 
The denominator of the basic earnings per share computation represents the weighted average common shares outstanding plus vested performance and restricted stock units (together, "Basic Weighted Average Shares Outstanding"). The denominator of diluted earnings per share adjusts the Basic Weighted Average Shares Outstanding for all potential dilutive common shares outstanding during the period. All potential dilutive common shares outstanding consider common stock deliverable pursuant to warrants, unvested restricted stock units and performance stock units granted under existing compensation plans. Additionally, as further described in the Redeemable NCI section of Note 1, the acquisition agreements and other agreements related to certain majority-owned subsidiaries include call and put options that, if exercised, would result in Ambac purchasing all or a portion of the remaining interests from the minority owners. Under the terms of certain of those agreements, Ambac may elect to settle a portion of its purchase with Ambac shares, which have also been considered in potential dilutive common shares outstanding.
The following table provides a reconciliation of the weighted average shares denominator used for basic net income per share to the denominator used for diluted net income per share:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Basic weighted average shares outstanding denominator48,116,503 46,209,250 47,738,050 46,019,145 
Effect of potential dilutive shares :
Restricted stock units— — — — 
Performance stock units (1)
— — — — 
Diluted weighted average shares outstanding denominator 48,116,503 46,209,250 47,738,050 46,019,145 
Anti-dilutive shares excluded from the above reconciliation:
Restricted stock units
359,550 471,541 210,483 44,362 
Performance stock units (1)
109,914 464,272 — — 
(1)    Performance stock units are reflected based on the performance metrics through the balance sheet date. Vesting of these units is contingent upon meeting certain performance metrics. Although a portion of these performance metrics have been achieved as of the
respective period end, it is possible that awards may no longer meet the metric at the end of the performance period.
12.    INCOME TAXES
AFG files a consolidated U.S. Federal income tax return with its 80% or more owned domestic subsidiaries ("Consolidated Tax Subsidiaries"). Beat's US subsidiaries file separate U.S. Federal income tax returns as they are not 80% owned by AFG for tax purposes. AFG and its Consolidated Tax Subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions. The following are the major jurisdictions in which Ambac and its subsidiaries, including its foreign subsidiaries, operate and the earliest tax years subject to examination:
JurisdictionTax Year
United States2010
New York State2015
New York City2018
United Kingdom2021
In accordance with the Income Tax Topic of the ASC, a valuation allowance is recognized if, based on the weight of available evidence, it is more-likely-than-not that some, or all, of the deferred tax asset will not be realized. As a result of the risks and uncertainties associated with future operating results, management believes it is more likely than not that the Company will not generate sufficient U.S. federal, state and/or local taxable income to recover its deferred tax operating assets and therefore maintains a full valuation allowance.
Consolidated Pretax Income (Loss)
U.S. and foreign components of pre-tax income (loss) were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
U.S.$(14,424)$(14,749)$(25,577)$(17,988)
Foreign(8,550)— (12,504)— 
Total$(22,974)$(14,749)$(38,081)$(17,988)
Provision (Benefit) for Income Taxes
The components of the provision for income taxes were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2025202420242023
Current taxes
U.S. state and local$— $— — 100 
Foreign1,622 — 2,776 — 
Total Current taxes1,622 — 2,776 100 
Deferred taxes
U.S.federal(1,111)(30)(2,153)— 
Foreign(2,683)— (3,412)— 
Total Deferred taxes(3,794)(30)(5,565)— 
Provision (benefit) for income taxes
$(2,172)$(30)$(2,789)$100 
Ambac Financial Group, Inc.
27
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
As of June 30, 2025, the Company has approximately (i) $1,676,924 of federal net operating loss carryforwards, which if not utilized will begin expiring in 2030. Of this amount, $155,636 will carryforward indefinitely.
On July 4, 2025, President Trump signed into law a reconciliation bill, known informally as the One Big Beautiful Bill Act ("OBBBA" or "the Act"), which contains a number of business tax provisions, including favorable treatment for capital investment and research expenditures, expansion of the limitations on deductibility of executive compensation and modifications to U.S. taxation of foreign derived income.
The Company does not expect this legislation to have a significant impact on the Company's current operations or financial condition. As required by ASC 740, any effects of this legislation will be reflected in the Company's financial statements during the period of enactment, which will be the nine months ending September 30, 2025.
13.    COMMITMENTS AND CONTINGENCIES
The Company periodically receives various regulatory inquiries and requests for information with respect to investigations and inquiries that such regulators are conducting. The Company has complied with all such inquiries and requests for information.
The Company is involved from time to time in various routine legal proceedings, including proceedings related to litigation with present or former employees. Although such litigation is routine and incidental to the conduct of its business, such litigation can potentially result in large monetary awards when a civil jury is allowed to determine compensatory and/or punitive damages.
Everspan may be subject to disputes with policyholders or other third parties regarding the scope and extent of coverage offered under Everspan's policies, including disputes relating to Everspan’s course of conduct in the handling of claims and settling or failing to settle claims (which can lead to bad faith and other forms of extra-contractual liability); be required to defend claimants in suits against its policyholders for covered liability claims; or enter into commercial disputes with its reinsurers, MGA/Us or third party claims administrators regarding their respective contractual obligations and rights. Under some circumstances, the results of such disputes or suits may lead to liabilities beyond those which are anticipated or reserved, including liabilities in excess of applicable policy limits.
In the ordinary course of their businesses, certain of Ambac’s subsidiaries assert claims in legal proceedings against third parties to recover losses already paid and/or mitigate future losses. The amounts recovered and/or losses avoided which may result from these proceedings is uncertain, although recoveries and/or losses avoided in any one or more of these proceedings during any quarter or fiscal year could be material to Ambac’s results of operations in that quarter or fiscal year.
From time to time, Ambac is subject to allegations concerning its corporate governance, including the manner in which it exercises control and oversight of its subsidiaries, that may lead to litigation, including derivative litigation. While the monetary impacts of addressing such allegations outside of litigation may
not be material, these charges may distract management and the Board of Directors from their principal focus on Ambac's business, strategy and objectives.
It is not reasonably possible to predict whether suits in addition to those described below will be filed or whether additional inquiries or requests for information will be made, and it is also not possible to predict the outcome of litigation, inquiries or requests for information. It is possible that there could be unfavorable outcomes in these or other proceedings. Legal accruals for litigation against the Company with losses that are probable and reasonably estimable are not material to the operating results or financial position of the Company. For the litigation matters the Company is defending that do not meet the “probable and reasonably estimable” accrual threshold and where no loss estimates have been provided below, management is unable to make a meaningful estimate of the amount or range of loss that could result from unfavorable outcomes. Under some circumstances, adverse results in any such proceedings could be material to our business, operations, financial position, profitability or cash flows. The Company believes that it has substantial defenses to the claims described below and, to the extent that these actions proceed, the Company intends to defend itself vigorously; however, the Company is not able to predict the outcomes of these actions.
Current Litigation
Dwight Jereczek and Stanley Elliott, individually and on behalf of all others similarly situated v. MBIA Inc., Ambac Financial Group, Inc., Ambac Assurance Corporation, MBIA Insurance Corporation, and National Public Finance Guarantee Corporation (United States District Court for the District of Connecticut, filed on February 12, 2025) (the "COFINA Case"). This putative class action complaint is brought by alleged former holders of bonds issued by the Puerto Rico Sales Tax Financing Corporation (“COFINA”) allegedly insured by defendants under financial guaranty insurance policies. On behalf of themselves and all persons and entities that owned such bonds between October 19, 2018, and February 12, 2019, plaintiffs allege that, in connection with the restructuring of COFINA under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act, defendants orchestrated a scheme to improperly use their role in the Title III process to alter contracts with insured COFINA bondholders, resulting in such bondholders receiving less than what they contracted for under the financial guaranty insurance policies. Plaintiffs assert claims for breach of contract, unjust enrichment, and bad faith refusal to pay first-party benefits under an insurance contract. Plaintiffs seek an unspecified amount of damages with interest thereon, disgorgement of profits, a declaratory judgment of plaintiffs’ rights and defendants’ responsibilities, and a permanent injunction against violations of law. Plaintiffs filed an amended complaint on May 6, 2025. The amended complaint includes an additional claim against Ambac for breach of the implied covenant of good faith and fair dealing, and seeks punitive damages from all defendants. On May 8, 2025, the summons and amended complaint were served on Ambac. On May 29, 2025, Ambac filed a motion to dismiss the amended complaint or, in the alternative, to transfer venue to the Title III court. MBIA Inc., MBIA Insurance Corporation, and National Public Finance Guarantee Corporation (together, "National") filed
Ambac Financial Group, Inc.
28
     Second Quarter 2025 Form 10-Q
Table of Contents
Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
a joinder to Ambac’s request for transfer on the same day, and subsequently filed their own motion to dismiss on June 18, 2025. Plaintiffs filed their opposition to Ambac’s motion to dismiss or transfer on July 5, 2025. The deadline to file a reply in support of Ambac’s motion is August 8, 2025. Plaintiffs filed their opposition to National’s motion to dismiss on July 25, 2025; the deadline to file a reply in support of National’s motion is August 14, 2025.
CQS (UK) LLP, CQS (US), LLC, Deutsche Bank Securities Inc., FFI Fund Ltd., FYI Fund Ltd., Intermarket Corporation, Deltroit Asset Management (UK) LLP, Mudrick Stressed Credit Master Fund, L.P., Olifant Fund, Ltd., Shenkman Tactical Credit Master Fund LP, Shenkman Opportunistic Credit Master Fund LP, Four Points Multi-Strategy Master Fund, Inc., Shenkman Multi-Asset Credit Select Master Fund LP, and Three Court Master, LP v. Ambac Assurance Corporation and Ambac Financial Group, Inc. (Supreme Court of the State of New York, County of New York, Index No. 651400/2025, filed March 12, 2025) (the "Surplus Note Case"). Plaintiffs, purported owners of surplus notes issued by AAC, filed a complaint alleging that AAC and AFG breached the Settlement Agreement because AAC co-invested in Cirrata V LLC, the acquisition vehicle for Beat, without approval of the OCI. Plaintiffs sought damages in an unspecified amount allegedly sustained as a result of AAC's and AFG's breaches of the Settlement Agreement. On April 7, 2025, defendants filed a motion to dismiss the claims with prejudice. In response to defendants’ motion, the plaintiffs sought leave from the court to amend their complaint, and the amended complaint was filed on April 23, 2025. On May 7, 2025, defendants again filed a motion to dismiss the claims with prejudice, which was fully briefed on May 30, 2025. After oral argument on June 5, 2025, the court ruled from the bench in favor of AAC and AFG, dismissing plaintiffs’ amended complaint in its entirety and with prejudice. Plaintiffs’ deadline to file notice of an appeal was July 18, 2025, and no such notice was filed.
Monterey Bay Military Housing, LLC, et al. v. Ambac Assurance Corporation, et al. (United States District Court, Southern District of New York, Case No. 1:19-cv-09193-PGG, transferred on October 4, 2019 from the United States District Court, Northern District of California, San Jose Division, Case No. 17-cv-04992-BLF, filed August 28, 2017). Plaintiffs, the corporate developers of various military housing projects, filed an amended complaint on October 27, 2017 against AAC, a former employee of AAC, and certain unaffiliated persons and entities, asserting claims for (i) violation of 18 U.S.C §§ 1962(c) and 1962(d) (civil Racketeer Influenced and Corrupt Organizations Act (“RICO”) and conspiracy to commit civil RICO), (ii) breach of fiduciary duty, (iii) aiding and abetting breach of fiduciary duty, (iv) fraudulent misrepresentation, (v) fraudulent concealment and (vi) conspiracy to commit fraud. The claims relate to bonds and debt certificates (insured by AAC) that were issued to finance the renovation and construction of housing at certain military bases. Plaintiffs allege that defendants secretly conspired to overcharge plaintiffs for the financing of the projects and directed the excess profits to themselves. Plaintiffs allege defendants generated these excess profits by supposedly charging inflated interest rates, manipulating “shadow ratings,” charging unnecessary fees, and hiding evidence of their alleged wrongdoing. Plaintiffs seek,
among other things, compensatory damages, disgorgement of profits and fees, punitive damages, trebled damages and attorneys’ fees. AAC and the other defendants filed motions to dismiss the amended complaint on November 13, 2017. On July 17, 2018, the court granted AAC’s and the other defendants’ motion to dismiss the first amended complaint without prejudice. On December 17, 2018, Plaintiffs filed a second amended complaint. On February 15, 2019, AAC and the other defendants filed a motion to dismiss the second amended complaint. On September 26, 2019, the court issued a decision denying defendants’ motion to dismiss and sua sponte reconsidering its previous denial of defendants’ motion to transfer venue to the Southern District of New York (“SDNY”). On October 10, 2019, after the case was transferred to the SDNY, the defendants filed motions to vacate or reconsider the decision by the Northern District of California on the defendants’ motion to dismiss. On March 31, 2021, the court granted defendants’ motions for reconsideration and, upon reconsideration, dismissed the claims against AAC and its former employee for breach of fiduciary duty and for aiding and abetting breach of AAC’s or its former employee’s fiduciary duty; dismissed two plaintiffs’ RICO claims against AAC and its former employee; and in all other respects denied defendants’ motions. Defendants served answers to the second amended complaint on April 21, 2021, asserting several affirmative defenses, including a defense for unclean hands focused on the plaintiffs’ failure to maintain the project properties and falsification of maintenance records. On May 24, 2021, plaintiffs moved to strike defendants’ unclean hands defenses. On September 14, 2021, Magistrate Judge Sarah L. Cave, to whom plaintiffs’ motion to strike was referred for a Report and Recommendation, issued an opinion and order denying plaintiffs’ motion. On April 6, 2022, certain co-defendants filed a motion to sever the plaintiffs’ claims and to dismiss all claims except for claims asserted by the Monterey Bay plaintiffs. On January 26, 2024, the court granted the parties leave to file motions for summary judgment; opening briefs were due March 22, 2024, while oppositions are due May 31, 2024 and replies on July 12, 2024. On February 29, 2024, the court denied co-defendants’ motion to sever plaintiffs’ claims. On March 22, 2024, defendants served opening motions for summary judgment against plaintiffs’ claims in their entirety on multiple grounds, and plaintiffs served cross-motions for summary judgment on defendants’ unclean hands defenses. The parties’ summary judgment motions were fully briefed as of July 12, 2024 and are currently awaiting a decision from the Court. On December 11, 2024, the Court denied Plaintiffs’ motion for oral argument on Defendants’ motions for summary judgment, stating that it would “notify the parties if it concludes that oral argument concerning the motions for summary judgment would be productive.”
In re National Collegiate Student Loan Trusts Litigation (Delaware Court of Chancery, Consolidated C.A. No. 12111, filed November 1, 2019). On November 1, 2019, AAC became aware of a new declaratory judgment action filed by certain residual equity interest holders (“NC Owners” or “Plaintiffs”) in fourteen National Collegiate Student Loan Trusts (the “Trusts”) against Wilmington Trust Company, the Owner Trustee for the Trusts; U.S. Bank National Association, the Indenture Trustee; GSS Data Services, Inc., the Administrator; and AAC. Through this action, Plaintiffs seek a number of judicial determinations.
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Notes to Unaudited Consolidated Financial Statements
Ambac Financial Group, Inc. and Subsidiaries
(Dollar Amounts in Thousands, Except Per Share Amounts)
On January 21, 2020, the presiding Vice Chancellor entered an order consolidating the action with previously filed litigation relating to the Trusts. On February 13, 2020, AAC, the Owner Trustee, the Indenture Trustee, and other parties filed declaratory judgment counterclaims. Several parties, including Plaintiffs and AAC, filed motions for judgment on the pleadings in support of their requested judicial determinations. On August 27, 2020, the Vice Chancellor issued an opinion addressing all of the pending motions for judgment on the pleadings, which granted certain of the parties’ requested judicial determinations and denied others. He deferred judgment on still other declarations pending further factual development. The Vice Chancellor entered a series of stays to facilitate good-faith settlement discussions, the most recent of which was entered on May 2, 2023, and stayed the matter through May 5, 2023. On July 9, 2025, the Administrator filed a status report stating that certain parties continue to negotiate a resolution to some of the pending claims.
Potential Litigation
AAC’s estimates of projected losses for RMBS transactions consider, among other things, the RMBS transactions’ payment waterfall structure, including the application of interest and principal payments and recoveries, and depend in part on our interpretations of contracts and other bases of our legal rights. From time to time, bond trustees and other transaction participants have employed different contractual interpretations and have commenced, or threatened to commence, litigation to resolve these differences. From time to time AAC is also subject to allegations that it has failed to fulfill a contractual obligation or duty in respect of securities that it has issued. It is not possible to predict whether additional disputes will arise, nor the outcomes of any potential litigation. It is possible that there could be unfavorable outcomes in these or other disputes or proceedings and that our interpretations may prove to be incorrect, which could lead to changes to our estimate of loss reserves.
In the ordinary course of its businesses, AAC asserts claims in legal proceedings against third parties to recover losses already paid and/or mitigate future losses. The amounts recovered and/or losses avoided which may result from these proceedings is uncertain, although recoveries and/or losses avoided in any one or more of these proceedings during any quarter or fiscal year could be material to Ambac’s results of operations in that quarter or fiscal year.
Impact of the AAC Sale on Litigation
AAC is involved in litigation as described above. These actual and potential cases may continue after the AAC Sale is completed. Following completion of the AAC Sale, AFG will no longer have any exposure to these matters other than those in which it is a named defendant, currently the COFINA Case and the Surplus Note Case so long as it remains a defendant.
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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations ($ and £ in thousands)
The objectives of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are to provide users of our consolidated financial statements with the following:
•A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results;
•Context to the unaudited consolidated financial statements; and
•Information that allows assessment of the likelihood that past performance is indicative of future performance.
The following discussion should be read in conjunction with our consolidated financial statements in Part I, Item 1 and the matters described under Part II, Item 1A Risk Factors in this Quarterly Report and under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024. Refer to Item 1. Business and Note 1. Background and Business Description in our Annual Report on Form 10-K for the year ended December 31, 2024 for a description of our business and our key strategies to achieve our primary goal to maximize shareholder value.
Unless otherwise noted, this Management's Discussion and Analysis of Financial Condition and Results of Operations relates solely to our continuing operations and does not include the operations of the Legacy Financial Guarantee business. See "Sale of AAC" below and "Sale of Ambac Assurance Corporation" in Note 5. Discontinued Operation of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2024 for additional information about the divestiture of the Legacy Financial Guarantee business.
Organization of Information
MD&A includes the following sections:
Page
Strategies to Enhance Shareholder Value
Overview
Critical Accounting Estimates
Results of Operations
Liquidity and Capital Resources
Balance Sheet
Accounting Standards
U.S. Insurance Statutory Basis Financial Results
Non-GAAP Financial Measures
Strategies to Enhance Shareholder Value
The Company's primary goal is to maximize long-term shareholder value through the execution of targeted strategies for its Insurance Distribution and Specialty Property and Casualty Insurance businesses.
Insurance Distribution and Specialty Property and Casualty Insurance strategic priorities include:
•Expanding our Insurance Distribution business based on deep domain knowledge in specialty and niche classes of risk which generate attractive margins at scale. This will be achieved through acquisitions, strategic investments, establishing new businesses “de-novo,” and organic growth and diversification supported by a centralized technology led shared services offering
•Growing our Specialty Property and Casualty Insurance business to generate underwriting profits from a diversified portfolio of commercial and personal liability risks accessed primarily through program administrators.
Ambac continuously evaluates, and is currently evaluating, opportunities to acquire businesses and assets for its Insurance Distribution business, and is currently in ongoing discussions to potentially acquire one or more businesses. These acquisitions may be material to our business, financial condition and operations and may involve raising capital to finance the acquisition(s). There can be no assurance, including with respect to the acquisitions under discussion, that we will agree to acquire any business or assets, obtain necessary financing or complete any acquisition in a timely manner or at all.
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OVERVIEW
AFG's subsidiaries/businesses are divided into two reportable segments with results for the three and six months ended June 30, 2025, and 2024, as follows:
Three Months Ended June 30, 2025Three Months Ended June 30, 2024
($ in thousands)Specialty Property and Casualty InsuranceInsurance
Distribution		Corporate & OtherConsoli-datedSpecialty Property and Casualty InsuranceInsurance
Distribution		Corporate & OtherConsoli-dated
Gross premiums written$96,247 96,247 $111,206 111,206 
Net premiums written15,207 15,207 32,289 32,289 
Premiums placed$249,912 $249,912 $53,418 $53,418 
Total revenues21,390 33,041 $526 54,957 31,828 13,306 $5,904 51,037 
Total expenses20,770 43,214 13,949 77,931 32,925 12,049 20,812 65,786 
Pretax income (loss)620 (10,173)(13,423)(22,974)(1,097)1,257 (14,908)(14,749)
EBITDA(2)
620 4,698 (12,983)(7,663)(1,097)2,404 (14,441)(13,135)
Adjusted EBITDA681 4,580 (7,771)(2,508)(1,023)2,404 (1,562)(182)
Net income (loss) attributable to Ambac shareholders428 $(7,738)$(13,240)(20,548)(1,070)$1,035 $(14,896)(14,932)
EBITDA attributable to Ambac shareholders620 2,513 (12,983)(9,848)(1,097)1,974 (14,441)(13,565)
Adjusted EBITDA attributable to Ambac common stockholders$681 2,519 $(7,771)(4,569)$(1,023)1,974 $(1,562)(612)
Six Months Ended June 30, 2025Six Months Ended June 30, 2024
Specialty Property and Casualty InsuranceInsurance
Distribution		Corporate & OtherConsoli-datedSpecialty Property and Casualty InsuranceInsurance
Distribution		Corporate & OtherConsoli-dated
Premiums placed$480,518 $480,518 $143,514 $143,514 
Gross premiums written$183,162 $183,162 $207,628 $207,628 
Net premiums written$33,212 $33,212 $58,536 $58,536 
Total revenues$42,561 $74,039 $1,113 $117,713 $61,370 $31,171 $8,048 $100,588 
Total expenses$40,439 $86,455 $28,901 $155,794 $60,649 $25,902 $32,025 $118,576 
Pretax income (loss)$2,122 $(12,416)$(27,788)$(38,081)$721 $5,269 $(23,977)$(17,988)
EBITDA (2)
$2,123 $16,781 $(27,044)$(8,140)$721 $7,565 $(23,047)$(14,762)
Adjusted EBITDA$2,270 $16,692 $(17,759)$1,205 $849 $7,526 $(7,289)$1,122 
Net income (loss) attributable to Ambac shareholders$1,852 $(11,135)$(27,410)$(36,692)$644 $4,226 $(23,871)$(19,002)
EBITDA attributable to Ambac shareholders$2,123 $9,576 $(27,044)$(15,345)$724 $6,215 $(23,048)$(16,112)
Adjusted EBITDA attributable to Ambac common stockholders$2,270 $9,611 $(17,759)$(5,876)$849 $6,176 $(7,289)$(228)

Sale of AAC
On June 4, 2024, AFG entered into a stock purchase agreement (the "Purchase Agreement") with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., pursuant to which and subject to the conditions set forth therein, AFG will sell all of the issued and outstanding shares of common stock of AAC, a wholly-owned subsidiary of AFG, to Buyer for aggregate consideration of $420 in cash (the "Sale"). The terms of the Sale as contemplated by the Purchase Agreement provide that, at the closing of the Sale (the “Closing”), Buyer will acquire complete common equity ownership of AAC and all of its wholly owned subsidiaries, including Ambac Assurance UK Limited ("Ambac UK"). In connection with and pursuant to the Purchase Agreement, AFG has agreed to issue to Buyer a warrant exercisable for a number of shares of common stock, par value $0.01, of AFG representing 9.9% of the fully diluted shares of AFG’s common stock as of March 31, 2024, pro forma for the issuance of the warrant. The warrant will have an exercise price per share of $18.50 with a six and a half-year term from the date of issuance and will be immediately exercisable. Payment of the exercise price may be settled, at AFG’s option, by way of a cash exercise or by net share settlement. On July 3, 2025, the parties to the Purchase Agreement entered into a letter agreement pursuant
to which, among other things, the parties entered into a new agreement with respect to the warrant and amended certain terms of the Investor Rights Agreement (as defined in the Purchase Agreement). The Buyer continues to pursue the final outstanding regulatory approval for the Sale, which would be received only after a hearing, currently scheduled for September 3, 2025, at or prior to which third parties would have an opportunity to object to the Sale. On or prior to August 4, 2025, representatives of certain holders of surplus notes issued by AAC filed motions to intervene in the proceedings. On July 28, 2025, the OCI staff published a memorandum including its recommendation that the Sale be approved. On July 3, 2025, AFG and the Buyer entered into an agreement to, among other matters, extend the term of the Purchase Agreement from July 3, 2025 to December 31, 2025 (subject to an automatic 90-day extension if regulatory approvals have not been obtained), to facilitate the timing of the hearing. The Buyer received approval for the change in control of Ambac UK from the U.K. Prudential Regulation Authority, which expires on October 24, 2025. Refer to Note 5. Discontinued Operation of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2024, for further details on the pending sale of AAC.
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The anticipated loss on sale included within Net income (loss) from discontinued operations before tax on the Consolidated Statement of Comprehensive Income (Loss) for the six months ended June 30, 2025, and year ended December 31, 2024, was (67,456) and $(570,145), respectively. See Note 3. Discontinued Operation in this report on Form 10-Q for further information.
At Closing, net income will be impacted by reclassification from Accumulated Other Comprehensive Income (Loss) of net unrealized gains (losses) on available-for-sale investment securities, cumulative foreign currency translation adjustments and cumulative credit risk changes of fair value option liabilities attributable to AAC and subsidiaries, which at June 30, 2025, amounted to $(86,828).
SEC Final Rules on Climate Related Information
On March 6, 2024, the U.S. Securities and Exchange Commission (“SEC”) adopted The Enhancement and Standardization of Climate-Related Disclosures for Investors ("Final Rule"), which will require registrants to disclose extensive climate-related information in their Form 10-K annual reports and registration statements. The Final Rule was scheduled to become effective May 28, 2024; however, the SEC has voluntarily stayed the rule’s effective date pending judicial review of legal challenges. In March 2025, the SEC ended its defense of the Final Rule, though judicial review of legal challenges continues.
The compliance dates for accelerated filers for annual reports or registration statements that include financial statements for the year ending December 31 are phased in from 2026 through 2031. Depending on when the legal challenges are resolved, the compliance dates may be retained or delayed.
Ambac is reviewing the Final Rule and is currently assessing our related compliance obligations and other effects on our operations.
CRITICAL ACCOUNTING ESTIMATES
Ambac’s Unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which require the use of material estimates and assumptions. For a discussion of Ambac’s critical accounting policies and estimates, see “Critical Accounting Policies and Estimates” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Ambac’s Annual Report on Form 10-K for the year ended December 31, 2024.
Results of Operations
Consolidated Results
A summary of our financial results is shown below:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Gross premiums written$96,247 $111,206 $183,162 $207,628 
Net premiums written15,207 32,289 33,212 58,536 
Revenues:
Net premiums earned$16,203 $27,054 $31,881 $52,633 
Commissions30,322 13,221 67,093 30,950 
Servicing and other fees4,472 — 9,436 — 
Program fees3,497 3,328 7,149 5,895 
Investment income2,609 3,763 5,424 7,403 
Other(2,146)3,671 (3,270)3,707 
Expenses:
Losses and loss adjustment expenses10,978 23,024 21,474 42,379 
Policy acquisition costs3,699 5,399 7,540 9,823 
Commissions7,403 7,888 17,768 17,710 
General and administrative40,540 27,861 79,071 45,436 
Intangible amortization and depreciation9,741 1,614 18,917 3,228 
Interest5,570 — 11,024 — 
Total expenses77,931 65,786 155,794 118,576 
Provision (benefit) for income taxes from continuing operations(2,172)(30)(2,789)100 
Net income (loss) from continuing operations(20,802)(14,719)(35,292)(18,088)
Net income (loss) from discontinued operations, net of income taxes(52,151)14,182 
Net income (loss)(72,953)(537)
Net (gain) loss attributable to noncontrolling interest254 (213)(1,400)(914)
Net income (loss) attributable to shareholders$(72,699)$(750)$(119,090)$19,320 
Ambac's results for the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024 were impacted by the following:
•Ambac's acquisition of its interests in Beat on August 1, 2024.
•In the fourth quarter of 2024, the pending sale of AAC was determined to qualify for discontinued operations presentation, resulting in its results being reported within discontinued operations. Refer to Note 1. Background and Business Description and Note 5. Discontinued Operation of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2024, and Note 3. Discontinued Operations to the Unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further details on the pending sale and results for the three and six months ended June 30, 2025, and 2024.
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The following paragraphs describe the consolidated results of continuing operations of Ambac and its subsidiaries for the three and six months ended June 30, 2025, and 2024, respectively.
Gross Premiums Written. Gross premiums written decreased $14,959 and $24,466 for the three and six months ended June 30, 2025, compared to the same period in the prior year.
The reduction is primarily driven by the non-renewal of certain programs, including the non-renewal of an assumed non-standard personal auto program, partially offset by growth in existing programs and the addition of new programs.
Net Premiums Written. Net premiums written decreased $17,082 and $25,325 for the three and six months ended June 30, 2025, compared to the same period in the prior year.
The reduction is primarily driven by the non-renewal of certain programs, including an assumed non-standard personal auto program, partially offset by growth in existing programs and the addition of new programs.
Net Premiums Earned. Net premiums earned decreased $10,851 and $20,752 for the three and six months ended June 30, 2025, compared to the same period in the prior year.
The decrease was primarily driven by the non-renewal of certain programs, including an assumed non-standard personal auto program, partially offset by growth in existing programs and the addition of new programs.
Commission Income and Commission Expense. Commission income for the three and six months ended June 30, 2025, was $30,322 and $67,093 compared to $13,221 and $30,950 for the three and six months ended June 30, 2024. Commission income included profit commissions (based on underwriting performance) of $2,266 and $6,957 for the three and six months ended June 30, 2025, and $1,141 $2,323 and for the three and six months ended June 30, 2024, respectively. The increase was primarily driven by the inclusion of profit commissions earned by Beat following the acquisition in August 2024.
For the three and six months ended June 30, 2025, commission expense of $7,403 and $17,768 compared to $7,888 and $17,710 in three and six months ended June 30, 2024, representing approximately 43% and 74% of commission income in each respective period. The decrease in commission expense relative to commission income in 2025 relative to 2024 is primarily a result of the acquisition of Beat. When third parties are paid commissions to obtain business, the majority of Beat's commission income is reported net of any distribution and commission expenses, due to the nature of its program agreements. The majority of the Insurance Distribution Segment's other MGA/Us report their commission income gross of distribution and commission expenses.
Program Fees. Program fee revenues were $3,497 and $3,328 for the three and six months ended June 30, 2025, and 2024, respectively. Program fee revenues represent the recognition of ceding commissions in excess of direct acquisition costs received from reinsurers and minimum fees received from MGA/Us until
related programs reach certain levels of premium ceded. Program fees are charged as a percentage of premiums ceded to reinsurers as a component of total ceding commissions. The growth is a function of growth of business and related premiums ceded to reinsurers.
Net Investment Income. Net investment income consists of interest income, including the net effect of discount accretion and premium amortization, from fixed maturity securities classified as available-for-sale and net gains (losses) on pooled investment funds which are reported under the equity method. These funds and certain other investments are reported in Other investments on the Consolidated Balance Sheets. For further information about investment funds held, refer to Note 4. Investments to the Unaudited Consolidated Financial Statements, included in Part I, Item 1 in this Form 10-Q.
Net investment income decreased $1,154 and $1,979 for the three and six months ended June 30, 2025 compared to the prior year periods due to lower Corporate short-term investment balances resulting primarily from the acquisition of Beat, partially offset by higher investment income on short-term investments at the Cirrata companies with the addition of Beat, and growth of the Everspan investment portfolio.
Servicing and Other Fees. Includes revenues earned for providing operational and administrative services to the Lloyd's syndicates managed by Beat as well as certain policy and brokerage fees.
Other Revenues. Other revenues includes (i) net investment gains (losses) on securities sold or called; (ii) investment impairment charges; (iii) foreign exchange gains (losses) from the Insurance Distribution segment; (iv) net gains on derivative contracts resulting from the change in fair value of FX forward contracts used to manage currency risk within the Insurance Distribution segment and (v) fair value changes on warrants to purchase equity of certain development stage companies held by AFG. The net loss for the three and six months ended June 30, 2025, of $(2,146) and $(3,270) was driven primarily by foreign exchange losses on non-functional currency operations. Net gains for the three and six months ended June 30, 2025 were driven by gains from the conversion and early settlement of certain convertible notes, including make-whole payments, partially offset by a write-down in carrying value on an investment in preferred securities that are carried at cost less impairments and net foreign exchange losses.
Losses and Loss Adjustment Expenses (Benefit). Loss and loss adjustment expenses incurred decreased $12,046 and $20,905 for the three and six months ended June 30, 2025, compared to the same period in the prior year.
The lower loss and loss adjustment expenses is primarily due to the shift in mix of business driven by the non-renewal of certain programs, including an assumed non-standard personal auto program in which Everspan was a reinsurer and certain commercial auto programs, partially offset by growth in existing programs and the addition of new programs.
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General and Administrative Expenses (G&A). The following table provides a summary of G&A expenses for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Compensation$22,782 $11,083 $45,669 $21,630 
Non-compensation17,756 16,792 33,401 23,932 
Total G&A expenses$40,539 $27,875 $79,070 $45,562 
The increase in Compensation G&A expenses during the three and six months ended June 30, 2025, was due to higher compensation costs due to Insurance Distribution acquisitions; offset by lower current year period expenses for performance incentive compensation.
Non-Compensation G&A expenses for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, were driven up by integration expenses related to the acquisition of Beat offset by lower Corporate segment expenses related to M&A transactions. Cost related to restructuring due to the sale of AAC for the three and six months ended June 30, 2025 were $2,918 and $4,737, respectively, and for the three and six months ended June 30, 2024 were $5,203 and $5,337, respectively.
Intangible Amortization and Depreciation. Intangible amortization for the three and six months ended June 30, 2025, was $9,212 and $17,975 compared to $967 and $2,278 in the comparable prior year periods. The increase in other intangible amortization for the three and six months ended June 30, 2025 related to the Beat acquisition.
Interest Expense. Interest expense for the three and six months ended June 30, 2025 was $5,570 and $11,024, related to the short-term debt used in funding the Beat acquisition, entered into during the third quarter of 2024. The company had no debt or interest expenses during the three and six months ended June 30, 2024.
Provision for Income Taxes. The provision (benefit) for income taxes primarily relates to international operations and was $(2,172) and $(2,789) for the three and six months ended June 30, 2025, compared to $(30) and $100 for the three and six months ended June 30, 2024.

Results of Operations by Segment
Specialty Property and Casualty Insurance
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Gross premiums written$96,247 $111,206 $183,162 $207,628 
Net premiums written15,207 32,289 33,212 58,536 
Revenues:
Net premiums earned$16,203 $27,054 $31,881 $52,633 
Program fees3,497 3,328 7,149 5,895 
Investment income 1,748 1,465 3,590 2,864 
Other income(58)(19)(59)(22)
Total21,390 31,828 42,561 61,370 
Expenses:
Losses and loss expenses incurred10,978 23,024 21,474 42,379 
Amortization of deferred acquisition costs, net3,699 5,399 7,540 9,823 
General and administrative expenses6,093 4,502 11,425 8,446 
Total20,770 32,925 40,439 60,648 
EBITDA$620 $(1,097)$2,122 $722 
Pretax income (loss)$620 $(1,097)$2,122 $721 
Retention Ratio (1)
15.8%29.0%18.1%28.2%
Loss and LAE Ratio (2)
67.8%85.1%67.4%80.5%
Expense Ratio (3)
38.9%24.3%37.1%23.5%
Combined Ratio (4)
106.7%109.4%104.5%104.0%
Ambac's stockholders equity (5)
$140,919 $119,775 
(1)Retention ratio is defined as net premiums written divided by gross premiums written
(2)Loss and LAE ratio is defined as losses and loss expenses incurred divided by net premiums earned
(3)Expense Ratio is defined as acquisition costs and general and administrative expenses, reduced by program fees divided by net premiums earned
(4)Combined ratio is defined as Loss and LAE ratio plus Expense Ratio
(5)Represents Ambac stockholders equity in the Specialty Property and Casualty Insurance segment, including intercompany eliminations.
The Specialty Property and Casualty Insurance segment has grown significantly since underwriting its first program in May 2021. Twenty-four programs were authorized to issue policies as of June 30, 2025, including Everspan participating on certain programs as a reinsurer. As part of Everspan's focus on improving profitability and capital utilization, Everspan non-renewed certain programs, including a commercial auto program and an assumed non-standard personal auto program in the latter half of 2024, and a commercial auto and a general liability program in 1Q2025. The non-renewals resulted in a reduction in gross and net written premiums, net premiums earned, losses and loss expenses incurred, and a shift in Everspan's retention ratio in the three and six months ended June 30, 2025, compared to three and six months ended June 30, 2024. Partially offsetting these non-renewals are the continued growth in existing programs and addition of new programs. EBITDA and pre-tax income increased in the three and six months ended June 30, 2025
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compared to June 30, 2024, primarily resulting from lower losses incurred due the non-renewal of certain programs in 2025 and lower loss reserve strengthening in 2025 versus 2024. This is partially offset by a reduction in earned premium related to the non-renewal of these programs.
Consistent with its strategy to generate sustainable and profitable, long-term specialty property and casualty program insurance business with a focus on diverse classes of risks, Everspan may source select programs as a reinsurer. Accessing programs as a reinsurer provides Everspan the ability to diversify its risk profile (temporarily or long-term), efficiently manage its exposure limits and underwrite programs in a cost efficient manner, amongst other benefits. Everspan may participate as a reinsurer on up to 30% of a program, which is in line with its strategy to generally retain up to 30% per program. Participation as a reinsurer will affect the retention ratio as Everspan's portion of assumed premiums is reflected fully in both Gross and Net Premiums Written.
The change in the loss ratio was driven by the shift in mix of business. The three and six months ended June 30, 2025, contained minimal prior years loss strengthening of 1.0% and 1.0%, respectively driven primarily by excess liability loss experience, whereas the three and six months ended June 30, 2024, contained prior years loss strengthening of 6.9% and 5.7%, respectively, which was primarily driven by commercial auto loss experience on programs which have since been non-renewed.
Loss and loss expenses incurred, and Everspan's associated Loss and LAE ratio, may be adversely impacted by economic and social inflation. The impact of inflation on ultimate loss reserves is difficult to estimate, particularly in light of recent disruptions to the judicial system, supply chains and labor markets. Going forward, we may not be able to offset the impact of inflation on our loss costs with sufficient price increases. The estimation of loss reserves may also be more difficult during extreme events, such as a pandemic, or during the persistence of volatile or uncertain economic conditions, due to, amongst other reasons, unexpected changes in behavior of judiciaries, claimants and policyholders, including fraudulent reporting of exposures and/or losses. Due to the inherent uncertainty underlying loss reserve estimates, the final resolution of the estimated liability for loss and loss adjustment expenses will likely be higher or lower than the related loss reserves at the reporting date. In addition, our estimate of losses and loss expenses may change. These additional liabilities or increases in estimates, or a range of either, could vary significantly from period to period.
In addition to the decrease in the Loss and LAE ratio for the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024, there was a decrease in the benefit to acquisition costs resulting from sliding scale commission arrangements with program partners. Such benefit reduced the Specialty Property and Casualty Insurance segments expense ratio by 2.6% and 5.6% for the three months ended June 30, 2025 and 2024, respectively and 1.3% and 5.9% for the six months ended June 30, 2025 and 2024, respectively. Certain Everspan programs were structured to include sliding scale commission arrangements within a loss ratio range. These sliding scale arrangements help mitigate losses, protect underwriting results and limit earnings volatility.
General and administrative costs were higher for the three and six months ended June 30, 2025, relative to the three and six months ended June 30, 2024, due to the mix and net increase of headcount movement, the impact of changes to premium tax accruals ($0.9 million for the three and six months ended June 30, 2026) and legal expenses partially offset by reduced performance on long term incentive compensation.
Insurance Distribution
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Premiums placed$249,912 $53,418 $480,518 $143,514 
Commission income$30,322 $13,221 $67,093 $30,950 
Commission expense7,403 7,888 17,768 2,278 
Net commissions22,919 5,333 49,325 28,672 
Servicing and other fees4,472 — 9,436 — 
Investment income340 77 716 127 
Other revenue(2,093)8 94
Expenses:
General and administrative expenses20,940 3,008 39,489 5,893 
EBITDA4,698 2,410 16,782 7,568 
Interest expense5,570 — 11,024 — 
Depreciation— 14 8 — 
Intangible amortization9,301 1,139 18,064 1,301 
Pretax income (loss)$(10,173)$1,257 $(12,416)$7,283 
Ambac's stockholders
equity (1)
$302,273 $104,618 
(1)    Represents the share of Ambac stockholders equity for each subsidiary within the Insurance Distribution segment, including intercompany eliminations.
Ambac's Insurance Distribution businesses are compensated for their services primarily by commissions paid by insurance carriers for underwriting, structuring and/or administering polices. Commission revenues are usually based on a percentage of the premiums placed. In addition, we are eligible to receive profit sharing contingent commissions on certain programs based on the underwriting results of the policies placed with carriers, which may cause some variability in revenue and earnings.
Insurance Distribution pre-tax loss for the three and six months ended June 30, 2025, was $(10,173) and $(12,416) compared to $1,257 and $5,269 for the three and six months ended June 30, 2024. The decrease was primarily driven by an increase in intangible amortization and interest expense related to the Beat acquisition.
During the three months and six months ended June 30, 2025, Insurance Distribution results were negatively impacted by foreign exchange losses, intangible amortization and interest expense related to the Beat acquisition. Post the sale of AAC, which is expected to close in the third quarter of 2025, the short-term debt used to partially finance the Beat acquisition will be repaid and the associated interest expense will no longer be incurred.
The Insurance Distribution segment placed premiums for its carriers are shown below:
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Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Premiums Placed$249,912 $53,418 $480,518 $143,514 
Increase over prior period$196,494 $337,004 
As a percent367.8 %234.8 %
Higher premiums placed were mostly driven by the acquisition of Beat effective July 31, 2024.
For the three months ended June 30, 2025, the increase in premiums placed and changes to the mix of business written led to the growth in commission income and commission expense of 129% and (6)%, respectively.
Business underwritten within our Insurance Distribution business can be seasonal which may result in revenue and earnings concentrations from period to period. As the Insurance Distribution business grows, we make additional acquisitions and launch additional de novo underwriting units, revenue and earnings concentrations may increase or may shift, perhaps meaningfully.
G&A expenses for the three and six months ended June 30, 2025, are $20,940 and $39,489 an increase over three and six months ended June 30, 2024 of 17,932 and $33,596, respectively, as a result of the Beat acquisition in the third quarter of 2024.
Corporate
Corporate consists of our holding company and shared services operations ("Corporate"). Corporate provides financial, technological and human resources to Ambac's two segments and is responsible for the function of AFG as a publicly traded company.
Corporate revenues totaled $526 and $5,904 for the three months ended June 30, 2025 and 2024, respectively and $1,113 and $8,048 for the six months ended June 30, 2025 and 2024, respectively. Corporate revenue is mostly generated from investment of AFG's liquid resources and investment results from its previously made strategic investments, including certain minority investments in MGA/Us and an insurtech fund. Investment revenues comprised of net investment income and net investment gains (losses), including impairments were $521 and $6,757 for the three months ended June 30, 2025 and 2024, respectively and $1,118 and $8,949 for the six months ended June 30, 2025 and 2024, respectively. The declines from 2024 to 2025 are attributable to the use of liquid resources for the acquisition of Beat and net investment gains of $4,536 in the three and six months ended June 30, 2024 related to certain of AFG's strategic investments in MGA/Us..
As a result of the Company reporting the results of operations of AAC as discontinued operations, certain corporate costs charged to AAC have been reported in Net income from continuing operations and included in Corporate expenses for all years presented. Corporate expenses were $13,506 and $20,351 for the three months ended June 30, 2025 and 2024, respectively and $28,901 and $32,025 for the six months ended June 30, 2025 and
2024. Corporate expenses were lower for the three and six months ended June 30, 2025 compared to three and six months ended June 30, 2024 mainly due to lower expenses related to corporate development and the sale of AAC.
LIQUIDITY AND CAPITAL RESOURCES
Holding Company Liquidity
AFG is organized as a legal entity separate and distinct from its operating subsidiaries. AFG's liquidity is primarily dependent on its net assets, excluding the operating subsidiaries that it owns, totaling $84,922 as of June 30, 2025, and secondarily on investment income, distributions, tax and expense sharing payments from its operating subsidiaries and third party capital (e.g. from credit facilities and equity issuance).
June 30,
2025		December 31, 2024
Cash and short-term investments$44,863 $74,423 
Other investments (1)
29,560 28,117 
Other net (liabilities) assets10,499 16,674 
Total$84,922 $119,214 
(1)Includes strategic minority investments in insurance services businesses of $20,618 at June 30, 2025, and December 31, 2024..
The decrease in AFG net assets, excluding its equity investments in subsidiaries, during the first six months of 2025 was driven primarily by net cash outflows from operating and interest expenses in addition to treasury stock purchases, partially offset by interest income and net distributions received from subsidiaries.
•Effective July 31, 2024, AFG closed the acquisition of a 60% controlling interest in Beat. In connection with the acquisition, Cirrata incurred $150,000 of debt maturing in 364 days funded by a global bank (the "Credit Facility"). Repayment of debt under the Credit Facility is guaranteed by AFG. AFG is required to repay this debt upon the closing of the sale of AAC or otherwise refinance such short-term debt with longer-term debt. On June 10, 2025, AFG entered into an agreement to extend the maturity date of the Credit Facility from July 31, 2025, to the earlier of (a) December 31, 2025, and (b) the date that is the three-month anniversary of the termination of the Purchase Agreement.
•AFG's acquisition of Beat was partially funded by AAC's co-investment in the amount of $62,000. Upon the close of the AAC sale, AFG will purchase AAC's co-investment at a price resulting in a 7.5% rate of return per annum to AAC.
•If AFG were to not sell AAC, its ability to receive dividends from AAC and the timing of any such potential dividends would depend on regulatory approval and the satisfaction of certain obligations senior to AFG's equity interest (e.g. surplus notes).
•Subject to the satisfaction of the conditions required for the sale of AAC as described in Note 5. Discontinued Operation in the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, AFG will receive $420,000 of proceeds at closing less applicable legal, advisory and other expenses incurred in connection with the Sale.
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•Everspan's ability to make future dividend payments will mostly depend on its future profitability relative to its capital needs to support growth. Everspan is not expected to pay dividends in 2025. Everspan makes tax payments to AFG in accordance with a Tax Sharing Agreement. For the six months ended June 30, 2025, Everspan paid $1,744 in tax payments to AFG.
•Cirrata does not have any regulatory restrictions on its ability to make distributions. AFG received distributions from Cirrata of $3,118 and $4,650 during the six months ended June 30, 2025 and 2024, respectively.
AFG's principal uses of liquidity are: (i) the payment of G&A expenses, including costs to explore opportunities to grow and diversify Ambac, (ii) making capital investments to acquire, grow and/or capitalize new and/or existing businesses, including through the acquisition of noncontrolling interests as a result of the exercise of outstanding puts and/or calls, and (iii) making investments in technology and other operational infrastructure to improve the operational effectiveness and efficiency of our business and to support its growth. Funding puts, calls and other capital commitments could require payments from AFG, the magnitude of which will ultimately depend on the performance of the underlying businesses, whether or not the puts or calls are exercised, FX rates and other considerations of approximately $300,000 through 2030. AFG seeks to fund these potential puts and calls from internal resources, but may seek to raise additional short-term or long-term funding or capital sources depending on a number of considerations, including distribution levels from subsidiaries, the potential for additional acquisitions, other capital investment demands, and other considerations. AFG may also provide short-term financial support, primarily in the form of loans, to its operating subsidiaries to support their operating requirements.
In the opinion of the Company’s management the net assets and expected funding sources of AFG are currently sufficient to meet AFG’s current liquidity requirements. However, events, opportunities, acquisitions, the exercise of puts and calls, the need to refinance outstanding debt, or other circumstances could require AFG to seek additional capital (e.g. through the issuance of debt, equity or hybrid securities).
The Credit Facility includes covenants that restrict our ability to manage capital resources by limiting, among other actions, the issuance of debt or capital stock; the creation of liens; the disposition of assets; engaging in transactions with affiliates; making restricted payments, including dividends and the purchase or redemption of capital stock; and making acquisitions and other investments. The Credit Facility also requires the prepayment of the borrowings thereunder with proceeds of certain debt or equity issuances and certain asset sales. These requirements will impact our financial and operational flexibility while the Credit Facility remains in place.
Operating Companies' Liquidity
Insurance
Sources of liquidity for Everspan are primarily through funds generated from premiums, reinsurance recoveries, fees, investment income and maturities and sales of investments.
Cash provided from these sources is used primarily for claim payments, loss expenses, acquisition costs, operating expenses, reinsurance payments and purchases of securities and other investments.
Everspan manages its liquidity risk by projecting cash flows and maintaining specified levels of cash and short-term investments at all times. It is the opinion of the Company’s management that the insurance subsidiaries’ near term liquidity needs will be adequately met from the sources described above.
Insurance Distribution
The liquidity requirements of our Insurance Distribution subsidiaries are met primarily by funds generated from commission (both base and profit commissions) and fees. Base commissions and fees are generally received monthly, whereas profit commissions are received only if the business underwritten is profitable. Cash provided from these sources is used primarily for commissions paid to sub-producers, operating expenses and distributions to AFG and other members.
Cash Held at Banks
Ambac maintains cash and investment accounts, including premium trust accounts, at depository institutions in amounts in excess of the limits insured by the FDIC and in countries other than the U.S. Ambac's cash balances held at banks were $36,407 as of June 30, 2025, including cash of Ambac's insurance distribution subsidiaries held in regional banks of $35,085 as of June 30, 2025.
Consolidated Cash Flow Statement Discussion
The following table summarizes the net cash flows for the periods presented.
Six Months Ended June 30,20252024
Cash provided by (used in):
Operating activities$(10,463)$27,481 
Investing activities18,030 (19,826)
Financing activities(9,747)(1,732)
Foreign exchange impact on cash and cash equivalents475 (65)
Net cash flow$(1,705)$5,858 
Operating Activities for Continuing Operations
Operating cash flows during the six months ended June 30, 2025 and 2024, was $(10,463) and $27,481, respectively. Operating cash flows for the six months ended June 30, 2025, were adversely impacted by G&A expenses paid and interest on short-term borrowing, an increase in reinsurance recoverable, partially offset by cash collections from both the specialty P&C and insurance distribution businesses.
Future operating flows will primarily be impacted by net premium collections, commission and fee income and investment income receipts, G&A expenses, commission expenses, net claim and loss expense payments and interest payments on debt.
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Investing Activities for Continuing Operations
Investing activities for the six months ended June 30, 2025 were primarily driven by changes in short-term investments.
Future investing cash flows will be primarily dependent on the sale of AAC, potential acquisitions, the exercise of puts and calls related to non-controlling interests and the purchase and sale of securities.
Financing Activities for Continuing Operations
Financing activities for the six months ended June 30, 2025, included purchases of common stock of $3,301.
Future financing cash flows will be primarily impacted by paydowns and maturities of debt, new borrowings, capital management activity and distributions to noncontrolling interests.
Cash Flows from Discontinued Operations
Cash flows pertaining to discontinued operations are reported separately on the Consolidated Statements of Cash Flows. The primary driver of the cash flows from discontinued operations was the continued run-off of the financial guarantee business. Since the agreement to sell AAC, the operations have been substantially separated and the potential impacts on future liquidity to the continuing operations are expected to be insignificant.
BALANCE SHEET
Total assets increased by $464,008 from December 31, 2024, to $8,522,386 at June 30, 2025, primarily due to the increase in reinsurance recoverables associated with the growth of the specialty P&C businesses and the increase in Assets held-for-sale as further described below.
Total liabilities increased by approximately $440,821 from December 31, 2024, to $7,303,678 as of June 30, 2025, primarily due to an increase in loss and loss adjustment expense reserve and ceded premium payables from the specialty P&C businesses and liabilities held-for-sale as further described below.
As of June 30, 2025, total Ambac Financial Group stockholders’ equity was $859,839, compared with total stockholders’ equity of $856,906 at December 31, 2024. The increase was primarily driven by foreign currency translation gains of $107,877 (net of the NCI impact of $25,827) and unrealized fixed maturity securities gains of $13,959, offset by a net loss of $119,090.
Discontinued Operation:
Assets and Liabilities Held-for-Sale. Assets held-for-sale increased to $6,592,417 at June 30, 2025, from $6,267,200 as December 31, 2024. The increase is primarily due to the impact of exchange rates as the British Pound Sterling strengthened driving an increased value in British Pound Sterling assets partially offset by an increase in the valuation allowance for the loss on disposal of AAC of $67,456. Liabilities held-for-sale increased to $6,213,024 at June 30, 2025, from $5,887,685 as December 31, 2024, primarily due to a the impact of exchange rates on balances denominated in British Pound Sterling.
Continuing Operations:
The following discusses changes in assets, liabilities and stockholders' equity, excluding assets and liabilities held-for-sale related to the pending sale of AAC, as of June 30, 2025, compared to December 31, 2024.
Investment Portfolio
Ambac's investment portfolio is managed under established guidelines designed to meet the investment objectives of Everspan Group and AFG. The Insurance Distribution businesses investments are limited to money market funds and U.S. Government Treasury bonds. Refer to "Description of the Business – Investments and Investment Policy" located in Part I. Item 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for further description of Ambac's investment policies and applicable regulations.
The following table summarizes the composition of Ambac’s investment portfolio, at carrying value at June 30, 2025, and December 31, 2024:
June 30, 2025December 31, 2024
Specialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsolidatedSpecialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsolidated
Fixed maturity securities$159,879 $— $1,456 $161,335 $157,020 $— $— $157,020 
Short-term34,998 32,949 34,773 102,720 35,727 27,435 64,439 127,601 
Other investments— 89 28,104 28,193 — 176 28,117 28,293 
Total investments$194,877 $33,038 $64,333 $292,248 $192,247 $27,611 $92,556 $312,914 

Ambac invests in various asset classes in its fixed maturity securities portfolio. Refer to Note 4. Investments to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Form 10-Q for information about fixed maturity securities and other investments by asset class.
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The following charts provide the ratings distribution of the fixed maturity investment portfolio based on fair value at June 30, 2025, and December 31, 2024. Ratings represent the lower of ratings provided by S&P and Moody's when ratings are available from both agencies.
2743    2745
Premium Receivables
Ambac's premium receivables increased to $71,875 at June 30, 2025, from $57,222 at December 31, 2024. The increase is primarily due to growth in the Specialty P&C Insurance Segment, including receivables related to the programs where Everspan participates as a reinsurer.
Commission and fees receivable
Ambac's commission and fee receivables increased to $72,619 at June 30, 2025, from $55,377 at December 31, 2024. The increase is primarily due to growth in the Insurance Distribution Segment and the Beat acquisition.
Reinsurance Recoverable on Paid and Unpaid Losses
Ambac has reinsurance in place pursuant to surplus share treaty and facultative agreements. As of June 30, 2025, and December 31, 2024, reinsurance recoverable on paid and unpaid losses were $376,445 and $306,191, respectively, increasing primarily due to growth in the Specialty P&C Insurance Segment. To minimize its exposure to losses from reinsurers, Ambac (i) monitors the
financial condition of its reinsurers; (ii) is entitled to receive collateral from its reinsurance counterparties under certain reinsurance contracts; and (iii) has certain cancellation rights that can be exercised in the event of rating agency downgrades of a reinsurer (among other events and circumstances). Those reinsurance counterparties that do not currently post collateral are well capitalized, highly rated, authorized capacity providers. Ambac benefited from letters of credit and collateral amounting to approximately $67,265 from its reinsurers at June 30, 2025.  Additionally, while legacy liabilities from Specialty P&C acquisitions were fully ceded to certain reinsurers, Everspan also benefits from an unlimited, uncapped indemnity from the respective sellers to mitigate any residual risk to these reinsurers.
Intangible Assets, net of Accumulated Depreciation
Intangible assets primarily include (i) intangible assets established as part of acquisitions in the Insurance Distribution business of $324,636 at June 30, 2025 and (iii) indefinite-lived intangible assets in the Specialty P&C business as part of its acquisitions of $11,213 at June 30, 2025.
As of June 30, 2025, and December 31, 2024, intangible assets were $353,904 and $344,775, respectively. The increase is driven by foreign exchange rates (appreciation of the British pound), partially offset by amortization of $17,975.
Goodwill
As of June 30, 2025, and December 31, 2024, goodwill totaled $451,808 and $418,234 respectively. The increase is primarily driven by foreign exchange rates (appreciation of the British pound). All of the goodwill was assigned to the Insurance Distribution segment.
Liabilities
Loss and Loss Adjustment Expense Reserves
Loss and loss adjustment expense reserves are estimates of the ultimate liability for unpaid losses and loss expenses for claims that have been reported and claims that have been incurred, but not yet reported as of the balance sheet date.
Loss and loss adjustment expense reserves by line of business were as follows as of June 30, 2025, and December 31, 2024
June 30,
2025		December 31,
2024
LineGrossNetGrossNet
Commercial auto$148,616 $25,255 $158,472 $28,720 
Excess liability74,404 10,772 50,248 6,571 
General liability52,081 10,428 35,211 8,286 
Workers compensation16,604 16,604 14,465 14,465 
Non-standard personal auto7,051 6,656 12,689 12,185 
Professional Liability27,853 2,020 17,698 1,807 
Surety12,250 — 11,217 6 
Unallocated loss adjustment expense reserves14,066 5,898 12,238 6,578 
Other (1)
31,044 922 36,826 363 
Loss and Loss Expense Reserves$383,969 $78,555 $349,064 $78,980 
(1)Includes $27,629 and $0 loss and loss expense reserves on a gross and net of reinsurance basis at June 30, 2025 and $35,146 and $0 loss and loss expense reserves on a gross and net of reinsurance basis at December 31, 2024 related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company and Consolidated
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Specialty Insurance Company. All legacy liabilities remain obligations of affiliates of the sellers through reinsurance.
The process for determining the level of loss and loss adjustment reserves is subject to certain estimates and judgments. Refer to the "Critical Accounting Policies and Estimates" and “Results of Operations” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations, in addition to Basis of Presentation and Significant Accounting Policies and Loss Reserves sections included in Note 2. Basis of Presentation and Significant Accounting Policies and Note 8. Insurance Contracts, respectively, of the Consolidated Financial Statements included in Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for further information on loss and loss expenses.
Short and Long-term Debt
Ambac borrowed under a short-term credit facility to provide partial funding of the acquisition of Beat in 2024. The carrying value of this short term debt is $150,000 as of June 30, 2025, and December 31, 2024. This short-term debt will be repaid from the proceeds of the sale of AAC.
Commission Payable
Commission payables are commissions due to sub producers for placing insurance contracts on behalf of the MGAs and amounts due to UK Syndicates that provide advanced commissions to fund short term liquidity needs for MGAs. Commission payable at June 30, 2025, and December 31, 2024 was $96,875 and $71,431, respectively. The increase is primarily due to higher advance commissions due to Syndicates.
Redeemable Noncontrolling Interest (NCI)
The minority equity interests of Beat's majority owned MGA/Us were classified within nonredeemable NCI at December 31, 2024. During the three months ended March 31, 2025, Ambac entered into put options on certain of these minority interests that are embedded in the underlying equity instruments. As a result, the minority interests were reclassified from nonredeemable to redeemable and remeasured at fair value including the put options, increasing redeemable NCI by $42,180. Other changes to redeemable NCI during the three and six months ended June 30, 2025, relate primarily to the allocation of financial results to the minority interests, revaluation to redemption value where applicable, reclassification of certain interests to nonredeemable due to the expiration of related put options, the exercise of certain put options and the impact of foreign currency translation.
ACCOUNTING STANDARDS
Please refer to Note 1. Business and Basis of Presentation to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Form 10-Q for a discussion of new accounting pronouncements and the potential impact on Ambac’s financial condition and results of operations.
U.S. STATUTORY BASIS FINANCIAL RESULTS
AFG's U.S. insurance subsidiaries prepare financial statements under accounting practices prescribed or permitted by its domiciliary state regulator (“SAP”) for determining and reporting the financial condition and results of operations of an insurance
company. The National Association of Insurance Commissioners (“NAIC”) Accounting Practices and Procedures manual (“NAIC SAP”) is adopted as a component of prescribed practices by each domiciliary state. For further information, see "Everspan Indemnity Insurance Company," in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Note 9. Insurance Regulatory Restrictions to the Consolidated Financial Statements included in Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Everspan Indemnity Insurance Company
Everspan Indemnity Insurance Company’s (EIIC) statutory policyholder surplus was $126,488 at June 30, 2025, as compared to $125,202 at December 31, 2024. The increase in surplus was driven by net income at Everspan Indemnity Insurance Company, including its subsidiaries, of $1,093 during the six months ended June 30, 2025. Each of Everspan's insurance carriers are a direct or indirect wholly-owned subsidiary of EIIC and therefore are included in EIIC's statutory policyholder surplus.
NON-GAAP FINANCIAL MEASURES
In addition to reporting the Company’s quarterly financial results in accordance with GAAP, the Company is reporting non-GAAP financial measures: EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, Organic Revenue Growth Rate (Insurance Distribution segment only), Adjusted Net Income and Adjusted Net Income Margin. These amounts are derived from our consolidated financial information, but are not presented in our consolidated financial results.
We present non-GAAP supplemental financial information because we believe such information is of interest to the investment community, and that it provides greater transparency and enhanced visibility into the underlying drivers and performance of our businesses on a basis that may not be otherwise apparent on a GAAP basis. We view these non-GAAP financial measures as important indicators when assessing and evaluating our performance on a segmented and consolidated basis and they are presented to improve the comparability of our results between periods by eliminating the impact of the items that may not be representative of our core operating performance. These non-GAAP financial measures are not substitutes for the Company’s GAAP reporting, should not be viewed in isolation and may differ from similar reporting provided by other companies, which may define non-GAAP measures differently.
Beginning December 31, 2024, Ambac replaced the non-GAAP measure Adjusted Net Income with new non-GAAP measures Adjusted Net Income and Adjusted Net Income Margin and added Adjusted EBITDA and Adjusted EBITDA Margin to better align with other participants in the Property & Casualty insurance industry, including insurance carriers and other peers in the insurance distribution business.
The following paragraphs define each non-GAAP financial measure. A tabular reconciliation of the non-GAAP financial measure and the most comparable GAAP financial measure is also presented below.
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EBITDA — EBITDA is net income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization of intangible assets.
EBITDA Margin — EBITDA divided by total revenues.
Adjusted EBITDA and Adjusted EBITDA Margin — We define Adjusted EBITDA as net income (loss) from continuing operations before interest expense, income taxes, depreciation, amortization of intangible assets, change in fair value of contingent consideration and certain items of income and
expense, including share-based compensation expense, acquisition and integration related expenses, severance, and other exceptional or non-recurring items, including those related to raising capital. We believe that adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of income and expenses that may obfuscate business performance, and that the presentation of this measure enhances an investor's understanding of our financial performance.
Three Months Ended June 30, 2025Three Months Ended June 30, 2024
Specialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-datedSpecialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-dated
Net income (loss) (Continuing Operations)$428 $(7,992)$(13,240)$(20,802)$(1,070)$1,248 $(14,896)$(14,719)
Adjustments:
Add: Interest expense— 5,570 — 5,570 — — — — 
Add: Income tax expense192 (2,181)(183)(2,172)(27)9 (12)(30)
Add: Depreciation— — 440 440 — 14 461 475 
Add: Intangible amortization— 9,301 — 9,301 — 1,139 — 1,139 
EBITDA620 4,698 (12,983)(7,663)(1,097)2,404 (14,441)(13,135)
Add: Impact of noncontrolling interests— (2,185)— (2,185)— (430)— (430)
EBITDA to shareholders620 2,513 (12,983)(9,848)(1,097)1,974 (14,441)(13,565)
Net income margin2.0 %(24.2)%(2517.1)%(37.9)%(3.4)%9.4 %(252.3)%(28.8)%
Net income margin to Ambac shareholders2.0 %(23.4)%(2517.1)%(37.4)%(3.4)%9.4 %(252.3)%(28.8)%
EBITDA margin2.9 %14.2 %(2468.3)%(13.9)%(3.4)%18.1 %(244.6)%(25.7)%
EBITDA margin to Ambac shareholders2.9 %7.6 %(2468.3)%(17.9)%(3.4)%14.8 %(244.6)%(26.6)%
Add: Acquisition and integration related expenses— 375 399 774 — — 10,404 10,404 
Add: Equity-based compensation expense61 67 1,895 2,023 74 — 1,747 1,821 
Add: Severance and restructuring expense— 31 2,918 2,949 — — 5,203 5,203 
Add: Other non-operating (income) losses— (591)— (591)— — (4,475)(4,475)
Adjusted EBITDA$681 $4,580 $(7,771)$(2,508)$(1,023)$2,404 $(1,562)$(182)
Adjusted EBITDA attributable to Ambac shareholders$681 $2,519 $(7,771)$(4,569)$(1,023)$1,974 $(1,562)$(612)
Adjusted EBITDA Margin 3.2 %13.9 %(1477.4)%(4.6)%(3.2)%18.1 %(26.5)%(0.4)%
Adjusted EBITDA Margin to Ambac shareholders3.2 %7.6 %(1477.4)%(8.3)%(3.2)%14.8 %(26.5)%(1.2)%
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Six Months Ended June 30, 2025Six Months Ended June 30, 2024
Specialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-datedSpecialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-dated
Net income (loss) (Continuing Operations)$1,852 $(9,735)$(27,410)$(35,292)$642 $5,142 $(23,871)$(18,088)
Adjustments:
Add: Interest expense— 11,024 — 11,024 — — — — 
Add: Income tax expense270 (2,681)(378)(2,789)79 127 (106)100 
Add: Depreciation— 109 744 853 — 21 926 947 
Add: Intangible amortization— 18,064 — 18,064 — 2,278 — 2,278 
EBITDA2,123 16,781 (27,044)(8,140)721 7,565 (23,047)(14,762)
Add: Impact of noncontrolling interests— (7,205)— (7,205)— (1,350)— (1,350)
EBITDA to shareholders2,123 9,576 (27,044)(15,345)724 6,215 (23,048)(16,112)
Net income margin4.4 %(13.1)%(2462.9)%(30.0)%1.0 %16.5 %(296.6)%(18.0)%
Net income margin to Ambac shareholders4.4 %(15.0)%(2462.9)%(31.2)%1.1 %16.4 %(296.6)%(18.0)%
EBITDA margin5.0 %22.7 %(2430.0)%(6.9)%1.2 %24.3 %(286.4)%(14.7)%
EBITDA margin to Ambac shareholders5.0 %12.9 %(2430.0)%(13.0)%1.2 %19.9 %(286.4)%(16.0)%
Add: Acquisition and integration related expenses— 375 1,081 1,456 — — 10,973 10,973 
Add: Equity-based compensation expense147 67 3,469 3,683 125 — 3,876 4,001 
Add: Severance and restructuring expense— 60 4,737 4,797 — — 5,337 5,337 
Add: Other non-operating (income) losses— (591)— (591)— — (4,427)(4,427)
Adjusted EBITDA$2,270 $16,692 $(17,759)$1,205 $849 $7,526 $(7,289)$1,122 
Adjusted EBITDA attributable to Ambac shareholders$2,270 $9,611 $(17,759)$(5,876)$849 $6,176 $(7,289)$(228)
Adjusted EBITDA Margin 5.3 %22.5 %NM(4.6)%1.4 %24.1 %NM1.1 %
Adjusted EBITDA Margin to Ambac shareholders5.3 %13.0 %NM(8.3)%1.4 %19.8 %NM(0.2)%
Organic Revenue Growth & Rate (Insurance Distribution Only.) — Organic revenue is based on commissions and fees for the relevant period by excluding (i) the first twelve months of commissions and fees generated from acquisitions and (ii) commissions and fees from divestitures (iii) and other items such as contingent commissions and the impact of changes in foreign exchange rates.
Organic revenue growth is the change in organic revenue period-to-period, with prior period results adjusted to (i) include commissions and fees that were excluded from organic revenue in the prior period and reached the twelve-month owned mark in the current period, and (ii) exclude commissions and fees related to divestitures from organic revenue.
Organic revenue growth rate to Total revenue growth rate, the most directly comparable GAAP measure, for each of the periods indicated is as follows (in percentages):
Three Months Ended June 30,20252024
% Growth
Total Insurance Distribution revenue & growth percentage (1)
$33,041 $13,306 148.3 %
Less: Acquired revenues(18,923)
Less: Profit commission and contingent commission income(2,266)(1,141)
Total Organic Revenue & Growth Percentage$11,852 $12,165 (2.6)%
Six Months Ended June 30,20252024
% Growth
Total Insurance Distribution revenue & growth percentage (1)
$74,039 $31,171 137.5 
Less: Acquired revenues(38,893)— 
Less: Profit commission and contingent commission income(6,957)(2,323)
Total Organic Revenue & Growth Percentage$28,189 28,848 (2.3)%
(1)Total Insurance Distribution revenue includes investment income.
Adjusted Net Income and Adjusted Net Income Margin — We define Adjusted net income as net income (loss) from continuing operations attributable to Ambac adjusted for amortization of intangible assets, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, acquisition and integration related expenses, severance and non-recurring income and loss items that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments. Per share amounts exclude any impact of revaluing non-controlling interests as otherwise reported under GAAP earnings per share. We believe that adjusted net income is an appropriate measure of operating performance because it eliminates the impact of income and expenses that may obfuscate business performance.
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Three Months Ended June 30,
20252024
Specialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-datedSpecialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-dated
Net income (loss) (Continuing Operations)$428 $(7,992)$(13,240)$(20,802)$(1,070)$1,248 $(14,896)$(14,719)
Adjustments:
Add: Acquisition and integration related expenses— 375 399 774 — — 10,404 10,404 
Add: Intangible amortization— 9,301 — 9,301 — 1,139 — 1,139 
Add: Equity-based compensation expense61 67 1,895 2,023 74 — 1,747 1,821 
Add: Severance and restructuring expense— 31 2,918 2,949 — — 5,203 5,203 
Add: Other non-operating (income) losses— (591)— (591)— — (4,475)(4,475)
Adjusted net income (loss) before tax and NCI489 1,191 (8,028)(6,348)(996)2,387 (2,017)(627)
Income tax effects(15)(1,892)15 (1,892)— — — — 
Adjusted net income (loss) before NCI474 (701)(8,013)(8,240)(996)2,387 (2,017)(627)
Net (income) loss attributable to noncontrolling interest— (2,312)— (2,312)— (430)— (430)
Adjusted net income (loss) attributable to shareholders$474 $(3,013)$(8,013)$(10,552)$(996)$1,957 $(2,017)$(1,057)
Three Months Ended June 30,
20252024
Specialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-datedSpecialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-dated
Net income (loss) margin 1.9 %(24.0)%(11927.9)%(37.4)%(3.4)%9.4 %(252.3)%(28.8)%
Adjusted Net income (loss) attributable to Ambac stockholders margin 2.1 %(9.0)%(7218.9)%(19.0)%(3.1)%14.7 %(34.2)%(2.1)%

Six Months Ended June 30,
20252024
Specialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-datedSpecialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-dated
Net income (loss) (Continuing Operations)$1,852 $(9,735)$(27,410)$(35,292)$642 $5,142 $(23,871)$(18,088)
Adjustments:
Add: Acquisition and integration related expenses— 375 1,081 1,456 — — 10,973 10,973 
Add: Intangible amortization— 18,064 — 18,064 — 2,278 — 2,278 
Add: Equity-based compensation expense147 67 3,469 3,683 125 — 3,876 4,001 
Add: Severance and restructuring expense— 60 4,737 4,797 — — 5,337 5,337 
Add: Other non-operating (income) losses— (591)— (591)— — (4,427)(4,427)
Adjusted net income (loss) before tax and NCI2,000 8,240 (18,123)(7,883)770 7,308 (8,113)(36)
Income tax effects(15)(1,892)15 (1,892)— — — — 
Adjusted net income (loss) before NCI1,985 6,348 (18,108)(9,775)770 7,308 (8,113)(36)
Net (income) loss attributable to noncontrolling interest— (6,812)— (6,812)— (1,350)— (1,350)
Adjusted net income (loss) attributable to common shareholders$1,985 $(464)$(18,108)$(16,587)$770 $5,958 $(8,113)$(1,386)
Six Months Ended June 30,
20252024
Specialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-datedSpecialty Property & Casualty InsuranceInsurance DistributionCorporate & OtherConsoli-dated
Net income (loss) margin 8.3 %(29.2)%(24695.5)%(63.4)%1.1 %16.1 %(296.6)%(18.1)%
Adjusted Net income (loss) attributable to Ambac stockholders margin 8.9 %(1.4)%(16315.3)%(29.8)%1.3 %19.1 %(100.8)%(1.4)%
Item 3.    Quantitative and Qualitative Disclosure About Market Risk
As of June 30, 2025, there are no material changes in the market risks that the Company is exposed to compared to December 31, 2024.
Item 4.     Controls and Procedures
In connection with the preparation of this second quarter Form 10-Q, an evaluation was carried out by Ambac’s management, with the participation of Ambac’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of Ambac’s disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form
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10-Q. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Based on its evaluation, Ambac’s Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2025, Ambac’s disclosure controls and procedures were effective.
Under guidelines established by the SEC, companies are permitted to exclude certain acquisitions from their first assessment of internal control over financial reporting following the date of acquisition. Based on those guidelines, management’s assessment of the effectiveness of Ambac Financial Group Inc.'s internal control over financial reporting at June 30, 2025, excluded certain processes of Beat Capital Partners Limited which were not integrated into the Company’s existing internal control over financial reporting environment at June 30, 2025. The excluded Beat Capital Partners Limited processes represented approximately 6% of the Company’s total assets at June 30, 2025 and approximately 41% of the Company’s total revenue for the six months ended June 30, 2025. Management has formally incorporated Beat into Ambac's program for internal control over financial reporting effective August 1, 2025. Accordingly, Beat will be in the scope of management's control assessments beginning with the third quarter of 2025.
Effective January 1, 2025, Ambac Financial Group, Inc. changed the general ledger and consolidation system and certain related processes used for a substantial portion of its continuing operations. As part of its implementation, the Company evaluated the impact of this new system on its internal control over financial reporting and made changes to controls and procedures where necessary. There were no other changes in our internal control over financial reporting during the first six months of 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1.    Legal Proceedings
Please refer to Note 13. Commitments and Contingencies of the Unaudited Consolidated Financial Statements located in Part I, Item 1 in this Form 10-Q and Note 19: Commitments and Contingencies in Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion on legal proceedings against Ambac and its subsidiaries.
Item 1A.    Risk Factors
You should carefully consider the risk factors set forth in the “Risk Factors” section, Item 1A to Part I in our Annual Report on Form 10-K for the year ended December 31, 2024, which is hereby incorporated by reference. These important factors may cause our actual results to differ materially from those indicated by our forward-looking statements, including those contained in this report. Please also see the section entitled “Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995” in this quarterly report on Form 10-Q. There have been no material changes to the risk factors we have disclosed in the “Risk Factors” section of our aforementioned Annual Report on Form 10-K, except as noted below.
Risks Related to the Sale of AAC
The sale of the common stock of Ambac Assurance Corporation may not be completed as anticipated, or at all.
The closing of the AAC Sale is conditioned on, among other things, the receipt of specified regulatory approvals. Regulatory approvals may not be received or may lapse, or the receipt or renewal of such approvals may be substantially delayed, due to objections, litigation, the need for additional process, information or review, or other factors. It is also possible that one or more other conditions to the closing of the AAC Sale is not satisfied, or that the parties are prevented from closing by law or by order of a court or other governmental authority.
In addition, the purchase agreement relating to the AAC Sale (the "Purchase Agreement") provides for certain termination rights. Buyer and AFG may terminate the Purchase Agreement by mutual written agreement at any time prior to the closing date. In addition, either Buyer or AFG may terminate the Purchase Agreement at any time prior to the closing by giving written notice to the other party if
•the closing has not been consummated on or before December 31, 2025 (the "End Date"); provided, however, that if the closing has not occurred solely due to the failure to obtain applicable governmental and regulatory approvals from the authorities including, but not limited to, the OCI, the End Date will be automatically extended for an additional ninety (90) days and the parties agree to continue to use their respective reasonable best efforts to satisfy such conditions to closing; provided, further, that the right to terminate the Purchase Agreement for the foregoing is not available to any party whose breach of any provision of the Purchase Agreement results in the failure of the closing to be consummated; or
•(i) applicable law makes the consummation of the closing illegal or otherwise prohibited or (ii) any judgment, injunction, order or decree of any governmental authority enjoins Buyer and AFG from consummating the closing.
The Purchase Agreement may be terminated by Buyer by written notice to AFG if a breach of any representation or warranty or failure to perform any covenant or agreement shall have occurred that would cause certain conditions not to be satisfied, and such breach is not cured within sixty (60) days of written notice to AFG or is incapable of being cured by the End Date. Additionally, the Purchase Agreement may be terminated by Buyer if at any time the AFG Board of Directors effects an Ambac Board Recommendation Change (as defined in the Purchase Agreement).
The Purchase Agreement may be terminated by AFG by written notice if a breach of any representation or warranty or failure to perform any covenant or agreement shall have occurred that would cause certain conditions not to be satisfied, and such breach is not cured within sixty (60) days of written notice to Buyer or is incapable of being cured by the End Date.
The total proceeds realized from the AAC Sale are contingent upon satisfaction of various closing conditions. There can be no assurance that the conditions will be satisfied. Any delay in satisfying the closing conditions may increase the risk that the
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AAC Sale will be terminated or reduce the benefits we expect to achieve.
Risks Related to the Company's Business
Catastrophic events may cause volatility of net income and comprehensive income primarily through changes to loss reserves, which may not be adequate to cover potential losses, and declines in revenues. Revenue may be adversely impacted by reduced business activity and lower sliding scale and profit commissions.
Catastrophic events, whether natural or man-made, including natural disasters and environmental and public health events that result in material disruption of economic activity, loss of human life or significant property damage, can have a materially negative impact on our financial and operational performance.
Public health crises and/or natural disasters can cause economic and financial disruptions that may adversely affect our business and results of operations.
The objective of establishing loss reserve estimates is not to, and our loss reserves do not, reflect worst possible outcomes. As a result of inherent uncertainties in the estimates and judgments made to determine loss reserves, there can be no assurance that either actual losses will not exceed such reserves or that our reserves will not materially change over time as circumstances, events, our assumptions, or our models change.
Everspan may be exposed to losses arising out of unpredictable catastrophic events both natural and man-made. These events include hurricanes, earthquakes, windstorms, floods, wildfires, and severe winter weather, terrorist attacks, wars, political unrest, explosions, cyber-attacks, nuclear, biological, chemical or radiological events and infrastructure failures. A severe single catastrophe or a series of such events could result in losses exceeding Everspan’s reinsurance protection and may have a material adverse impact on our results of operations or financial condition.
Catastrophic events can lead to significant volatility in the markets in which we operate in addition to the global financial markets. Disruptions to these markets could result in a decline in business activity, increased claims, reduced underwriting capacity from insurance companies, reinsurers and other capital providers upon which our P&C businesses are reliant. Catastrophic events may also interrupt the operations of our agents and business partners that distribute our P&C insurance products. Profit commissions and contingent commissions related to certain of our P&C business lines may also be adversely impacted by catastrophic losses. Individually and/or collectively, these results may have a material adverse impact on our results of operations and financial condition.
These events could result in decreased business activity, increased claims and losses, and reduced underwriting capacity from our capacity providers potentially making it more difficult for Everspan and our MGAs to place coverage. Moreover, such disasters may disrupt public and private infrastructure, including communication networks and financial systems, which could disrupt our normal business operations. Any increases in loss ratios due to natural or man-made disasters could impact our profit or contingent commissions.
Further, we use internally developed and third-party vendor tools and models to assess exposure to losses, including catastrophic losses. However, these tools are subject to inherent limitations and may not accurately predict future losses or loss development. Limitations in these tools and models may adversely affect our results of operations and financial condition.
Our Insurance Distribution businesses, results of operations, financial condition and liquidity may be materially adversely affected by certain potential claims or proceedings.
Our owned MGA/Us and insurance brokerage operating subsidiaries are subject to various potential claims and other proceedings, including those relating to alleged errors and omissions in connection with the placement or servicing of insurance and/or the provision of services in the ordinary course of business, of which we cannot, and likely will not be able to, predict the outcome with certainty. Because our MGA/Us and insurance brokerage operating subsidiaries often assist customers with matters involving substantial amounts of money, including the placement of insurance and the handling of related claims, customers may assert, errors and omissions and, other claims against all or part of the amounts in question. Also, the failure of an insurer with whom our MGA/Us and insurance brokerage operating subsidiaries place business could result in errors and omissions claims against it by its customers, which could adversely affect Ambac’s results of operations and financial condition. Claimants may seek large damage awards, and these claims may involve potentially significant legal costs and damages. In addition, regardless of monetary costs, these matters could have a material adverse effect on our reputation and cause harm to carrier, customer or employee relationships, or divert personnel and management resources.
Risks Related to the Capital, Liquidity and Credit Markets
AFG and the Insurance Distribution business have substantial indebtedness, which could adversely affect our financial condition, operational flexibility and our ability to obtain financing in the future
We financed the acquisition of Beat in part through the issuance of $150,000 of new indebtedness, which is guaranteed by AFG (the “Credit Facility”). The debt incurred under the Credit Facility matures on December 31, 2025. The obligations of AFG and its subsidiaries under the Credit Facility are secured on a first-priority basis by (i) a pledge of all of the capital stock of Everspan Holdings, LLC and (ii) a pledge of all of the capital stock of Beat.
The Company intends to pay off the Credit Facility with the proceeds of the AAC Sale. In the event that the AAC Sale did not occur, due to factors described elsewhere in these Risk Factors or for any other reason, the Company would need to seek to refinance the Credit Facility through the public or private credit markets. Alternatively the Company would seek to raise additional capital or restructure the debt. There is no guaranty that the Company could refinance or restructure the Credit Facility or raise additional capital at commercially reasonable terms or at all. In addition, if the Company were able to refinance or restructure the Credit Facility or raise additional capital it may incur a higher rate of interest or suffer more restrictive covenants,
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which could cause a material adverse impact on the Company’s results of operations and financial condition.
Furthermore, raising additional capital through the issuance of equity would depend on market and economic conditions, dilute the ownership of existing stockholders and potentially diminish the ability of the Company to access the capital markets in the future. Moreover, raising additional capital through the sale of assets would depend on market and economic conditions; the availability of buyers; the requirements and conditions of local law, including regulatory restrictions; and other factors that may result in the Company or a party enforcing rights against the Company to be unable to receive proceeds sufficient to discharge the Company’s obligations. Because of these and other factors beyond our control, the Company may be unable to pay or discharge the principal or interest on the indebtedness incurred under the Credit Facility on economic terms or at all, which would materially impair the value of the Company.
The Credit Facility includes covenants that restrict our ability to manage capital resources by limiting, among other actions, the issuance of additional debt or capital stock; the creation of liens; the disposition of assets; engaging in transactions with affiliates; making restricted payments, including dividends and the purchase or redemption of capital stock; and making acquisitions and other investments. The Credit Facility also requires the prepayment of the borrowings thereunder with proceeds of certain debt or equity issuances and certain asset sales, including the AAC Sale. These requirements will impact our financial and operational flexibility while the Credit Facility remains in place.
The Company’s substantial indebtedness could have other significant consequences for our financial condition and operational flexibility. For example, it could:
•increase our vulnerability to general adverse economic, competitive and industry conditions;
•limit our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes on satisfactory terms or at all;
•require the Company to dedicate a substantial portion of its cash flow from operations to the payment of interest on its indebtedness, thereby reducing the funds available for operations and to fund the execution of key strategies;
•limit or restrict the Company from making strategic acquisitions or cause us to make non-strategic divestitures;
•limit the Company's ability, or increase the costs, to refinance its indebtedness or repay indebtedness due to ongoing interest payment obligations; and
•limit our ability to attract and retain key employees.
While restrictive covenants in the Credit Facility may limit the amount of additional indebtedness the Company may incur, we may obtain waivers of those restrictions and incur additional indebtedness in the future. In addition, if the Company incurred indebtedness, its ability to make scheduled payments on, or refinance, any such indebtedness may depend on the ability of our subsidiaries to make distributions or pay dividends, which in turn will depend on their future operating performance and contractual, legal and regulatory restrictions on the payment of
distributions or dividends to which they may be subject. There can be no assurance that any such dividends or distributions would be made. This could further exacerbate the risks associated with the Company’s substantial leverage.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
(a)    Unregistered Sales of Equity Securities — No matters require disclosure.
(b)    Purchases of Equity Securities By the Issuer and Affiliated Purchasers
When restricted stock unit awards issued by Ambac vest or settle, they become taxable compensation to employees. Shares may be withheld to cover the employee's portion of withholding taxes. In the second quarter of 2025, Ambac purchased shares from employees that settled restricted stock units to meet employee tax withholdings.
Apr-2025May-2025Jun-2025Second Quarter 2025
Total Shares Purchased (1)
— — — — 
Average Price Paid Per Share$— $— $— $— 
Total Number of Shares Purchased as Part of Publicly Announced Plan— 27,400 — 27,400 
Maximum Dollar Value That may Yet be Purchased Under the Plan$35,001 

On November 12, 2024, Ambac’s Board of Directors authorized a share repurchase program, under which Ambac may opportunistically repurchase up to $50,000 of the Company’s common shares at management’s discretion over the period ending on December 31, 2026.
The following table shows shares repurchased by year.
($ in thousands,
except per share)
Year Ended December 31,
YTD
2025
202220232024
Shares repurchased1,605,316 325,068937,141292,191
Total cost$14.2 $4.5 $11.7 $3.3 
Average purchase price per share$8.86 $13.88 $12.48 $11.29 
Unused authorization amount$35,001 
Item 3.    Defaults Upon Senior Securities — No matters require disclosure.
Item 5.    Other Information — In the last fiscal quarter, none of our directors or executive officers adopted, terminated, or modified any Rule 10b5-1 trading arrangement, or any non-Rule 10b5-1 trading arrangement.
At the 2025 Annual Meeting of Stockholders held on May 28, 2025, the Company's stockholders recommended, by a non-binding advisory vote, that a stockholder vote to approve the
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compensation of our named executive officers should occur every year. In accordance with the stockholders' recommendation, the Company has determined that an advisory vote on the compensation of our named executive officers will be conducted every year, until the next required vote on the frequency of
stockholder votes on the compensation of our named executive officers.
No other matters require disclosure.
Item 6.    Exhibits
Exhibit
Number		Description
Other exhibits, filed or furnished, as indicated:
10.1
10.2
10.3+
10.4+
10.5+
31.1+
31.2+
32.1++
101.INS
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101.SCH
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101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
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101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
104
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+ Filed herewith. ++ Furnished herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMBAC FINANCIAL GROUP, INC.
Dated:August 7, 2025By:/s/ DAVID TRICK
Name:David Trick
Title:Chief Financial Officer and Treasurer
(Duly Authorized Officer and
Principal Financial Officer)
Ambac Financial Group, Inc.
48
     Second Quarter 2025 Form 10-Q