XML 81 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
Segment Information
 6 Months Ended
Jun. 30, 2012
Segment Information [Abstract]  
Segment Information

13. Segment Information

Ambac has two reportable segments, as follows: (1) Financial Guarantee, which provided financial guarantees (including credit derivatives) for public finance, structured finance and other obligations; and (2) Financial Services, which provided investment agreements, funding conduits, interest rate and currency swaps, principally to clients of the financial guarantee business. Ambac’s reportable segments were strategic business units that offer different products and services. They are managed separately because each business required different marketing strategies, personnel skill sets and technology.

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

Information provided below for “Corporate and Other” primarily relates to corporate activities, including interest income on the investment portfolio. Corporate and Other intersegment revenue relates to payments under the Mediation Agreement between Ambac Financial Group and Ambac Assurance. For additional information on the Mediation Agreement, please refer to Note 1. The following table is a summary of financial information by reportable segment as of and for the three and six months ended June 30, 2012 and 2011:

 

 

                                         

Three months ended June 30,

   Financial
Guarantee		     Financial
Services		     Corporate
and Other		     Intersegment
Eliminations		     Total
Consolidated		  

2012:

                                        

Revenues:

                                        

Unaffiliated customers

   $ 87,665     $ (93,682 )    $ 56     $ —       $ (5,961 ) 

Intersegment

     1,397       (1,346 )      —         (51 )      —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

   $ 89,062     $ (95,028 )    $ 56     $ (51 )    $ (5,961 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations:

                                        

Unaffiliated customers

   $ (717,187 )    $ (96,257 )    $ (117 )    $ —       $ (813,561 ) 

Intersegment

     (712 )      (429 )      1,141       —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations

   $ (717,899 )    $ (96,686 )    $ 1,024     $ —       $ (813,561 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

   $ 25,771,887     $ 800,677     $ 39,227     $ —       $ 26,611,791  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

2011:

                                        

Revenues:

                                        

Unaffiliated customers

   $ 203,089     $ (54,966 )    $ 72     $ —       $ 148,195  

Intersegment

     1,407       (1,336 )      —         (71 )      —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

   $ 204,496     $ (56,302 )    $ 72     $ (71 )    $ 148,195  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations:

                                        

Unaffiliated customers

   $ (34,791 )    $ (59,697 )    $ (7,388 )    $ —       $ (101,876 ) 

Intersegment

     341       (328 )      157       (170 )      —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations

   $ (34,450 )    $ (60,025 )    $ (7,231 )    $ (170 )    $ (101,876 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

   $ 25,895,317     $ 1,447,059     $ 67,928     $ —       $ 27,410,304  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                         

Six months ended June 30,

   Financial
Guarantee		     Financial
Services		     Corporate
and Other		     Intersegment
Eliminations		     Total
Consolidated		  

2012:

                                        

Revenues:

                                        

Unaffiliated customers

   $ 357,492     $ (39,430 )    $ 113     $ —       $ 318,175  

Intersegment

     2,896       (2,789 )      645       (752 )      —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

   $ 360,388     $ (42,219 )    $ 758     $ (752 )    $ 318,175  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations:

                                        

Unaffiliated customers

   $ (510,900 )    $ (44,587 )    $ (4,452 )    $ —       $ (559,939 ) 

Intersegment

     315       (1,784 )      1,469       —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations

   $ (510,585 )    $ (46,371 )    $ (2,983 )    $ —       $ (559,939 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

   $ 25,771,887     $ 800,677     $ 39,227     $ —       $ 26,611,791  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

2011:

                                        

Revenues:

                                        

Unaffiliated customers

   $ 378,100     $ (26,771 )    $ 149     $ —       $ 351,478  

Intersegment

     24,086       (23,941 )      —         (145 )      —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

   $ 402,186     $ (50,712 )    $ 149     $ (145 )    $ 351,478  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations:

                                        

Unaffiliated customers

   $ (849,872 )    $ (36,307 )    $ (32,593 )    $ —       $ (918,772 ) 

Intersegment

     21,631       (22,154 )      693       (170 )      —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations

   $ (828,241 )    $ (58,461 )    $ (31,900 )    $ (170 )    $ (918,772 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

   $ 26,588,040     $ 1,291,736     $ 60,653     $ —       $ 27,940,429  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Included in the table above are revenues from unaffiliated customers for the three and six months ended June 30, 2012 relating to net investment income of $89,953 and $195,214 for Financial Guarantee, respectively; $3,826 and $10,625 for Financial Services, respectively; and $57 and $114 for Corporate and Other, respectively, compared with $87,964 and $159,629 for Financial Guarantee, respectively; $7,603 and $12,329 for Financial Services, respectively; and $72 and $149 for Corporate and Other, respectively, for the three and six months ended June 30, 2011. Included in the line item pre-tax loss from continuing operations—unaffiliated customers for the three and six month quarters of 2012 is interest expense, of which $30,205 and $62,254 is for Financial Guarantee, respectively; $1,650 and $3,440 for Financial Services; respectively; and $0 and $0 for Corporate and Other, respectively, compared to the three and six month quarters of 2011, of which $29,646 and $57,715 is for Financial Guarantee, respectively; $2,024 and $4,215 for Financial Services; respectively; and $0 and $0 for Corporate and Other, respectively. Interest expense for Financial Guarantee relates to the interest accrued on surplus notes and interest from a secured borrowing on a variable interest entity, and Financial Services relates to the interest on investment agreements.

The following tables summarize gross premiums written, net premiums earned and the net change in fair value of credit derivatives included in the Financial Guarantee segment, by location of risk for the three and six months ended June 30, 2012 and 2011:

 

                                                 
    Three Months Ended June 30, 2012     Three Months Ended June 30, 2011  
    Gross
Premiums
Written		     Net Premiums
Earned		     Net Change in
Fair Value of
Credit
Derivatives		     Gross
Premiums
Written		     Net
Premiums
Earned		     Net Change
in Fair Value
of Credit
Derivatives		  

United States

   $ (31,936 )    $ 70,555     $ (4,816 )    $ (210,913 )    $ 78,648     $ 17,717  

United Kingdom

     5,971       25,551       (813 )      18,151       11,853       1,535  

Other international

     (1,908 )      6,936       (1,786 )      (15,312 )      8,770       5,035  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ (27,873 )    $ 103,042     $ (7,415 )    $ (208,074 )    $ 99,271     $ 24,287  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     
    Six Months Ended June 30, 2012     Six Months Ended June 30, 2011  
    Gross
Premiums
Written		     Net Premiums
Earned		     Net Change in
Fair Value of
Credit
Derivatives		     Gross
Premiums
Written		     Net
Premiums
Earned		     Net Change
in Fair Value
of Credit
Derivatives		  

United States

   $ (124,661 )    $ 143,541     $ (8,267 )    $ (355,179 )    $ 150,129     $ 10,518  

United Kingdom

     12,385       40,592       (4,437 )      10,883       22,786       853  

Other international

     (8,191 )      13,859       (1,933 )      (23,989 )      18,155       4,013  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ (120,467 )    $ 197,992     $ (14,637 )    $ (368,285 )    $ 191,070     $ 15,384