Ambac Financial Group, Inc. (NYSE: AMBC) ("Ambac" or "AFG"), a
financial services holding company, today reported its results for
the second quarter ended June 30, 2023.
- Net loss of $(13) million or $(0.29) per diluted share and
Adjusted net income of $3 million or $0.07 per diluted share
- Specialty P&C Insurance ("Everspan") gross written premium
of $53 million, up 30% from the second quarter of 2022
- Insurance Distribution ("Cirrata") premiums placed of $41
million, up 71% from the second quarter of 2022
- Legacy Financial Guarantee Net Par Outstanding ("NPO") reduced
9.3%; Watch List and Adversely Classified Credits ("WLACC") reduced
19.6%
- Book Value per share of $27.59 was relatively unchanged from
March 31, 2023, and Adjusted Book Value per share of $26.97 was
down 3% on account of a significant reinsurance de-risking
transaction
Claude LeBlanc, President and Chief Executive Officer, stated,
“This quarter we continued to make great strides in our P&C
business growth strategy. Everspan and Cirrata's combined premium
production grew by 45% over last year to $94 million in the quarter
and premium production has now exceeded $370 million over the last
four quarters. Our growth is supported by the overall pricing
increase in U.S. casualty insurance which is keeping up with loss
cost trends in the lines we are writing and is supportive of strong
growth in the program sector."
LeBlanc continued, "During the quarter, we also made significant
progress towards de-risking the Legacy Financial Guarantee business
through a reinsurance transaction that reduced net par by over 9%
and WLACC by nearly 20%. We also met with AAC's insurance regulator
to help support the development of a revised operating and capital
framework for Ambac Assurance, a process which has materially
advanced and is expected to be completed in the near term. In
parallel, we continue to progress our review of strategic options
for the legacy business and have initiated discussions with key
stakeholders in order to begin our preliminary evaluation."
Ambac's Second Quarter 2023
Summary Results
B (W)
Percent
($ in millions, except per share
data)1
2Q2023
2Q2022
Gross written premium
$
54.7
$
36.6
49
%
Net premiums earned
15.3
13.8
11
%
Commission income
10.0
6.2
61
%
Program fees
2.1
0.5
301
%
Net investment income (loss)
35.2
(21.4
)
264
%
Pretax income (loss)
(11.1
)
6.3
NA
Net income (loss) attributable to common
stockholders
(13.1
)
5.2
NA
Net income (loss) attributable to common
stockholders per diluted share2,3
$
(0.29
)
$
0.11
NA
EBITDA2,4
11.8
65.3
(82
)%
Adjusted net income (loss) 2
3.4
(38.0
)
NA
Adjusted net income (loss) per diluted
share 2, 3
$
0.07
$
(0.84
)
NA
Weighted-average diluted shares
outstanding (in millions)
45.8
45.7
—
%
June 30,
2023
March 31,
2023
B(W)
Amount
Percent
Total Ambac Financial Group, Inc.
stockholders' equity
$
1,249.9
$
1,253.6
$
(3.6
)
—
%
Total Ambac Financial Group, Inc.
stockholders' equity per share
$
27.59
$
27.66
$
(0.07
)
—
%
Adjusted book value1,2
$
1,222.0
$
1,264.2
$
(42.2
)
(3
)%
Adjusted book value per share 1,2
$
26.97
$
27.89
$
(0.92
)
(3
)%
(1)
Some financial data in this press
release may not add up due to rounding
(2)
See Non-GAAP Financial Data
section of this press release for further information
(3)
Per diluted share includes the
impact of adjusting redeemable noncontrolling interests to current
redemption value
(4)
EBITDA is prior to the impact of
noncontrolling interests, relating to subsidiaries where Ambac does
not own 100%, of $0.3 and $0.2 for the three months ended June 30,
2023 and 2022, respectively.
Results of Operations by
Segment
Specialty Property & Casualty
Insurance Segment
Three Months Ended
June 30,
($ in millions)
2023
2022
% Change
Gross premiums written
$
53.2
$
40.9
30
%
Net premiums written
$
9.1
$
8.1
13
%
Net premiums earned
$
7.8
$
2.8
173
%
Program fees earned
$
2.1
$
0.6
250
%
Losses and loss expense
$
5.7
$
1.9
203
%
Pretax income (loss)
$
(0.1
)
$
(1.5
)
92
%
EBITDA
$
(0.1
)
$
(1.5
)
92
%
- MGA programs partners increased to 16 from 15 in the first
quarter of 2023 and 11 in second quarter of 2022.
- Gross premium written of $53.2 million in the second quarter of
2023 increased 30% compared to the prior year period as the size
and number of program partners continues to expand.
- Net premiums earned of $7.8 million in the second quarter of
2023 was up 173% over the second quarter of 2022 reflecting the net
premium written growth at Everspan over the last year.
- The losses and loss expense ratio for the second quarter of
2023 was 73.7% compared to 66.5% for the second quarter of 2022.
This increase stemmed from both an increase to Everspan's selected
loss ratio for the second quarter to approximately 69% (including
ULAE) and a catch up for prior periods to the revised selected loss
ratio. The increase in the loss ratio for the quarter was almost
entirely offset by a change to sliding scale commissions recognized
as a benefit through acquisition costs.
- Expense ratio of 51.8% for the second quarter of 2023 was down
from 95.2% in the prior year period. Expenses continue to normalize
as net premium earned grows as the business scales.
Insurance Distribution Segment
Three Months Ended
June 30,
($ in millions)
2023
2022
% Change
Premiums placed
$
40.9
$
23.9
72
%
Gross commissions
$
10.0
$
6.2
61
%
Net commissions
$
4.0
$
2.4
70
%
General and administrative expenses
$
2.4
$
1.6
53
%
Pretax income
$
0.7
$
0.3
116
%
EBITDA1
$
1.6
$
1.0
64
%
Pretax income margin2
6.6
%
4.9
%
1.70 bps
EBITDA margin 3
16.3
%
15.5
%
0.80 bps
- Premium placed of $40.9 million grew 72% over the second
quarter of 2022 driven by the inclusion of All Trans and Capacity
Marine (which were acquired effective November 1, 2022) and growth
at Xchange.
- Gross commission income, which is generated as a percentage of
premium placed, grew 61% in the second quarter 2023 to $10.0
million from $6.2 million in the second quarter of 2022.
- Net commission income, which is gross commission income less
sub-producer commissions paid, grew 70% over last year to $4.0
million; largely in-line with the change in premiums placed.
- General and administrative expenses of $2.4 million in the
second quarter of 2023 compared to $1.6 million in the prior year
period. The change between the periods is largely due to the
acquisitions of All Trans and Capacity Marine and other new product
related investments.
- EBITDA of $1.6 million for the quarter was up 64% over second
quarter of 2022; EBITDA Margin of 16.3% for the quarter compared to
15.5% last year. The increase in EBITDA compared to the same period
last year is primarily attributable to the acquisition of All Trans
and Capacity Marine in the fourth quarter of 2022. The increase in
EBITDA margin compared to the second quarter of 2022 related to
change in business mix.
(1)
EBITDA is prior to the impact of
noncontrolling interests, relating to subsidiaries where Ambac does
not own 100%, of $0.3 and $0.2 for the three months ended June 30,
2023 and 2022, respectively.
(2)
Represents Pretax income divided
by total revenues
(3)
See Non-GAAP Financial Data
section of this press release for further information
Total Specialty P&C Insurance Production
Specialty P&C Insurance production, which includes gross
premiums written by Ambac's Specialty P&C Insurance segment and
premiums placed by the Insurance Distribution segment, totaled $94
million in the second quarter of 2023, an increase of 45% from the
second quarter of 2022.
Specialty P&C Insurance revenues are dependent on gross
premiums written as specialty program insurance companies earn
premiums based on the portion of gross premiums written retained
(i.e. net premiums written) and fees on gross premiums written that
are ceded to reinsurers. Insurance Distribution revenues are
dependent on premium volume as Managing General Agents/Underwriters
and brokers receive commissions based on the amount of premiums
placed (i.e. gross premiums written on behalf of insurance
carriers) with insurance carriers.
Three Months Ended June
30,
($ in millions)
2023
2022
Change
Specialty Property & Casualty
Insurance Gross Premiums Written
$
53.2
$
40.9
30
%
Insurance Distribution Premiums Placed
40.9
23.9
72
%
Specialty P&C Insurance Production
$
94.1
$
64.8
45
%
Legacy Financial Guarantee Insurance Segment
Three Months Ended
June 30,
($ in millions)
2023
2022
% Change
Normal Net Premiums Earned
$
7.5
$
8.6
(13
)%
Accelerated Net Premiums Earned
$
—
$
2.3
(100
)%
Net premiums earned
$
7.5
$
11.0
(31
)%
Net investment income
$
32.2
$
(22.3
)
244
%
Losses and loss adjustment expenses
$
1.6
$
(13.9
)
(112
)%
General and administrative expenses
$
23.5
$
23.4
—
%
Pretax income (loss)
$
(7.7
)
$
6.9
(212
)%
EBITDA1
$
14.2
$
65.2
(78
)%
(1) See Non-GAAP Financial Data section of
this press release for further information
- Net premiums earned of $7.5 million in the second quarter of
2023 decreased from $11.0 million in the prior year period. This
reduction is mainly on account of $2.3 million of de-risking
related accelerations in 2Q22 and the continued run-off of the
insured portfolio.
- Losses and loss adjustment expenses ("Incurred Losses") for the
second quarter of 2023 were $1.6 million, compared to $(13.9)
million in the second quarter of 2022. Last year's benefit was
driven by a $29 million improvement from the impact of higher
discount rates somewhat off-set by R&W and other incurred
losses.
- General and administrative expenses for the second quarter of
2023 included a $5 million increase in litigation costs compared to
second quarter 2022. In addition, the second quarter of 2022
included $4 million of intercompany expense reimbursements which
for 2023 were expensed in the first quarter.
- WLACC decreased 19.6% (20.0%, excluding the impact of FX) to
$6.1 billion in second quarter of 2023, from March 31, 2023.
- NPO declined 9.3% (10.2%, excluding the impact of FX) during
the quarter to $20.4 billion from $22.4 billion at March 31,
2023.
- AAC entered into a reinsurance transaction in 2Q23 ceding over
$2.1 billion of net par outstanding. There was an upfront premium
consideration of $6 million for this transaction with the vast
majority of the transaction funded by transferring future
installment premium, which had a present value of $42 million. The
transaction had no impact on GAAP book value or AAC statutory
capital, but did reduce Adjusted Book Value by $48 million or $1.06
per diluted share.
Consolidated Financial Information
Net Premiums Earned
During the second quarter of 2023, net premiums earned of $15
million increased 11% compared to the second quarter of 2022 where
significant growth in the Specialty P&C businesses was off-set
by the reduction in the Legacy FG business due to de-risking and
natural run-off.
Net Investment Income
Net investment income for the second quarter of 2023 was $35
million compared to net investment loss of $(21) million for the
second quarter of 2022.
The increase in net investment income in the second quarter of
2023 compared to the second quarter of 2022 was mostly attributable
to income from alternative investments which increased $32 million
over last year. Available-for-sale and short term investment income
increased $9 million compared to second quarter 2023, driven by
higher yields. In addition, the second quarter of 2022 included a
$(11) million net loss from assets classified as trading (related
to Puerto Rico recoveries) compared to a $4 million net gain in the
second quarter of 2023.
Losses and Loss Expenses
Incurred Losses for the second quarter of 2023 were $7 million,
compared to a $12 million benefit for the second quarter of
2022.
Incurred Losses for the second quarter of 2023 were driven
primarily by the growth in the Specialty P&C business compared
to the second quarter of 2022 which benefited from the impact of
higher discount rates that more than offset losses in the Legacy
Financial Guarantee business. Specialty P&C loss reserves are
not discounted and therefore are not impacted by fluctuations in
interest (discount) rates.
Net Gains (Losses) on Derivative Contracts
During the second quarter of 2023, the macro interest rate hedge
was terminated and had minimal effect on the quarter compared to
$29 million of gains for the second quarter of 2022. The interest
rate derivatives portfolio was previously positioned to benefit
from rising interest rates as a partial economic hedge against
interest rate exposure in AAC's insured and investment
portfolios.
General and Administrative Expenses
General and administrative expenses for the second quarter 2023
were $36 million compared to $30 million in the second quarter of
2022. The increase was attributable to litigation related expenses
at the Legacy Financial Guarantee business and higher headcount
associated with growth in the P&C businesses.
AFG (holding company only) Assets
AFG on a standalone basis, excluding its ownership interests in
its Specialty P&C Insurance, Insurance Distribution, and Legacy
Financial Guarantee businesses, had net assets of $223 million as
of June 30, 2023. Assets included cash and liquid securities of
$177 million and other investments of $29 million.
Capital Activity
During the quarter 205,000 shares were repurchased at an average
price of $14.42 per share for approximately $3 million.
On April 30, 2023, all of our remaining outstanding equity
warrants which had a strike price of $16.67 expired without being
exercised.
Consolidated Ambac Financial Group, Inc. Stockholders'
Equity
Stockholders’ equity at June 30, 2023, was $1,250 million, or
$27.59 per share compared to $1,254 million or $27.66 per share as
of March 31, 2023. The change was primarily due to the net loss
attributable to common shareholders of $13 million and net
unrealized investment losses of $13 million, partially offset by
foreign exchange translation gains of $21.0 million.
Non-GAAP Financial Data
In addition to reporting the Company’s quarterly financial
results in accordance with GAAP, the Company is reporting non-GAAP
financial measures: EBITDA, Adjusted Net Income, Adjusted Book
Value and EBITDA Margin. These amounts are derived from our
consolidated financial information, but are not presented in our
consolidated financial statements prepared in accordance with
GAAP.
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.
Adjusted Net Income (Loss) —
We define Adjusted Net Income (Loss) as net income (loss)
attributable to common stockholders adjusted to reflect the
following items: (i) net investment (gains) losses, including
impairments; (ii) amortization of intangible assets; (iii)
litigation costs, including attorneys fees and other expenses to
defend litigation against the Company, excluding loss adjustment
expenses; (iv) foreign exchange (gains) losses; (v) workforce
change costs, which primarily include severance and other costs
related to employee terminations; and (vi) net (gain) loss on
extinguishment of debt. Adjusted Net Income is also adjusted for
the effect of the above items on both income taxes and
noncontrolling interests. The income tax effects are determined by
applying the statutory tax rate in each jurisdiction that generate
these adjustments. The noncontrolling interest adjustments relate
to subsidiaries where Ambac does not own 100%
Adjusted Net Income was $3.4 million, or $0.07 per diluted
share, for the second quarter 2023 compared to an Adjusted Net Loss
of ($38.0) million, or ($0.84) per diluted share, for the second
quarter of 2022.
The following table reconciles net income (loss) attributable to
common stockholders to the non-GAAP measure, Adjusted Net Income
(Loss), for the three-month periods ended June 30, 2023 and 2022,
respectively:
Three Months Ended June
30,
2023
2022
($ in millions, other than per share
data)
$ Amount
Per Share
$ Amount
Per Share
Net income (loss) attributable to
common shareholders
$
(13.1
)
$
(0.29
)
$
5.2
$
0.11
Adjustments:
Net investment (gains) losses, including
impairments
3.4
0.07
(6.8
)
(0.15
)
Intangible amortization
6.5
0.14
13.5
0.29
Litigation costs
7.6
0.17
3.0
0.07
Foreign exchange (gains) losses
(0.1
)
—
2.7
0.06
Workforce change costs
(0.1
)
—
0.6
0.01
Net (gain) loss on extinguishment of
debt
—
—
(57.0
)
(1.25
)
4.3
0.09
(38.8
)
(0.86
)
Income tax effects
(0.7
)
(0.02
)
1.0
0.02
Net (gains) attributable to noncontrolling
interests
(0.2
)
—
(0.1
)
—
Adjusted Net Income (Loss)
$
3.4
$
0.07
$
(38.0
)
$
(0.84
)
Weighted-average diluted shares
outstanding (in millions)
45.8
45.7
(1)
Per Diluted share includes the
impact of adjusting the Insurance Distribution segment related
noncontrolling interest to current redemption value
EBITDA — We define EBITDA as net
income (loss) before interest expense, income taxes, depreciation
and amortization of intangible assets.
The following table reconciles net income (loss) attributable to
common shareholders to the non-GAAP measure, EBITDA on a
consolidation and segment basis.
Legacy
Financial
Guarantee
Insurance
Specialty
Property &
Casualty
Insurance
Insurance
Distribution
Corporate
& Other
Consolidated
Three Months Ended June 30,
2023
Net income (loss)
$
(9.3
)
$
(0.1
)
$
0.6
$
(4.3
)
$
(13.0
)
Adjustments:
Interest expense
16.0
—
—
—
16.0
Income taxes
1.6
—
—
0.4
1.9
Depreciation
0.4
—
—
—
0.4
Amortization of intangible assets
5.5
—
1.0
—
6.5
EBITDA (2)
$
14.2
$
(0.1
)
$
1.6
$
(3.8
)
$
11.8
Three Months
Ended June 30, 2022
Net income (loss)
$
5.7
$
(1.5
)
$
0.3
$
0.7
$
5.3
Adjustments:
Interest expense
45.0
—
—
—
45.0
Income taxes
1.1
—
—
(0.1
)
1.1
Depreciation
0.5
—
—
—
0.5
Amortization of intangible assets
12.8
—
0.7
—
13.5
EBITDA (2)
$
65.2
$
(1.5
)
$
1.0
$
0.7
$
65.3
(1)
Net income (loss) is prior to the
impact of noncontrolling interests.
(2)
EBITDA is prior to the impact of
noncontrolling interests, relating to subsidiaries where Ambac does
not own 100%, of $0.3 and $0.2 for the three and six months ended
June 30, 2023 and 2022, respectively. These noncontrolling
interests are primarily in the Insurance Distribution segment.
EBITDA margin — We define EBITDA
margin as EBITDA divided by total revenues. We report EBITDA margin
for the Insurance Distribution segment only.
Adjusted Book Value.
Adjusted book value is defined as Total Ambac Financial Group, Inc.
stockholders’ equity as reported under GAAP, adjusted for after-tax
impact of the following:
- Insurance intangible asset: Elimination of the financial
guarantee insurance intangible asset that arose as a result of
Ambac’s emergence from bankruptcy and the implementation of Fresh
Start reporting. This adjustment ensures that all financial
guarantee contracts are accounted for within adjusted book value
consistent with the provisions of the Financial Services—Insurance
Topic of the ASC.
- Net unearned premiums and fees in excess of expected losses:
Addition of the value of the unearned premium revenue ("UPR") on
financial guarantee contracts, in excess of expected losses, net of
reinsurance. This non-GAAP adjustment presents the economics of UPR
and expected losses for financial guarantee contracts on a
consistent basis. In accordance with GAAP, stockholders’ equity
reflects a reduction for expected losses only to the extent they
exceed UPR. However, when expected losses are less than UPR for a
financial guarantee contract, neither expected losses nor UPR have
an impact on stockholders’ equity. This non-GAAP adjustment adds
UPR in excess of expected losses, net of reinsurance, to
stockholders’ equity for financial guarantee contracts where
expected losses are less than UPR. This adjustment is only made for
financial guarantee contracts since such premiums are
non-refundable.
- Net unrealized investment (gains) losses in Accumulated Other
Comprehensive Income: Elimination of the unrealized gains and
losses on the Company’s investments that are recorded as a
component of accumulated other comprehensive income (“AOCI”), net
of income taxes.
Ambac has a significant U.S. tax net operating loss (“NOL”) that
is offset by a full valuation allowance in the GAAP consolidated
financial statements. As a result of this, tax planning strategies
and other considerations, we utilized a 0% effective tax rate for
non-GAAP operating adjustments to Adjusted Book.
Adjusted book value was $1,222 million, or $26.97 per share, at
June 30, 2023, as compared to $1,254 million, or $27.89 per share,
at March 31, 2023. The decrease is primarily as a result of the
ceded reinsurance transaction noted above.
The following table reconciles Total Ambac Financial Group, Inc.
stockholders’ equity to the non-GAAP measure adjusted book value as
of each date presented:
June 30, 2023
March 31, 2023
($ in millions, other than per share
data)
$ Amount
Per Share
$ Amount
Per Share
Total AFG Stockholders' Equity
$
1,249.9
$
27.59
$
1,253.6
$
27.66
Adjustments:
Insurance intangible asset
(258.2
)
(5.70
)
(261.5
)
(5.77
)
Net unearned premiums and fees in excess
of expected losses
163.6
3.61
218.2
4.81
Net unrealized investment (gains) losses
in Accumulated Other Comprehensive Income
66.6
1.47
54.0
1.19
Adjusted book value
$
1,222.0
$
26.97
$
1,264.2
$
27.89
Shares outstanding (in millions)
45.3
45.3
Earnings Call and Webcast
On August 8, 2023 at 8:30am ET, Claude LeBlanc, President and
Chief Executive Officer, and David Trick, Executive Vice President
and Chief Financial Officer, will discuss Ambac's second quarter
2023 results during a conference call. A live audio webcast of the
call will be available through the Investor Relations section of
Ambac’s website,
https://ambac.com/investor-relations/events-and-presentations.
Participants may also listen via telephone by dialing (877)
407-9716 (Domestic) or (201) 493-6779 (International).
The webcast will be archived on Ambac's website. A replay of the
call will be available through August 22, 2023, and can be accessed
by dialing (Domestic) (844) 512-2921 or (International) (412)
317-6671; and using ID#13737443
Additional information is included in an operating supplement
and presentations at Ambac's website at www.ambac.com.
About Ambac
Ambac Financial Group, Inc. (“Ambac” or “AFG”) is a financial
services holding company headquartered in New York City. Ambac’s
core business is a growing specialty P&C distribution and
underwriting platform. Ambac also has a legacy financial guaranty
business in run off. Ambac’s common stock trades on the New York
Stock Exchange under the symbol “AMBC”. Ambac is committed to
providing timely and accurate information to the investing public,
consistent with our legal and regulatory obligations. To that end,
we use our website to convey information about our businesses,
including the anticipated release of quarterly financial results,
quarterly financial, statistical and business-related information.
For more information, please go to www.ambac.com.
The Amended and Restated Certificate of Incorporation of Ambac
contains substantial restrictions on the ability to transfer
Ambac’s common stock. Subject to limited exceptions, any attempted
transfer of common stock shall be prohibited and void to the extent
that, as a result of such transfer (or any series of transfers of
which such transfer is a part), any person or group of persons
shall become a holder of 5% or more of Ambac’s common stock or a
holder of 5% or more of Ambac’s common stock increases its
ownership interest.
Forward-Looking Statements
In this press release, 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 our most recent SEC
filed quarterly or annual report.
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) uncertainty concerning the
Company’s ability to achieve value for holders of its securities,
whether from Ambac Assurance Corporation (“AAC”) and its
subsidiaries or from the specialty property and casualty insurance
business, the insurance distribution business, or related
businesses; (3) 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; (4)
potential for rehabilitation proceedings or other regulatory
intervention or restrictions against AAC; (5) credit risk
throughout Ambac’s business, including but not limited to credit
risk related to insured residential mortgage-backed securities,
student loan and other asset securitizations, public finance
obligations (including risks associated with Chapter 9 and other
restructuring proceedings), issuers of securities in our investment
portfolios, and exposures to reinsurers; (6) our inability to
effectively reduce insured financial guarantee exposures or achieve
recoveries or investment objectives; (7) our inability to generate
the significant amount of cash needed to service our debt and
financial obligations, and our inability to refinance our
indebtedness; (8) Ambac’s substantial indebtedness could adversely
affect its financial condition and operating flexibility; (9) Ambac
may not be able to obtain financing or raise capital on acceptable
terms or at all due to its substantial indebtedness and financial
condition; (10) greater than expected underwriting losses in the
Company’s specialty property and casualty insurance business; (11)
failure of specialty insurance program partners to properly market,
underwrite or administer policies; (12) inability to obtain
reinsurance coverage on expected terms; (13) 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;
(14) the impact of catastrophic public health, environmental or
natural events, or global or regional conflicts, on significant
portions of our insured portfolio; (15) credit risks related to
large single risks, risk concentrations and correlated risks; (16)
risks associated with adverse selection as Ambac’s financial
guarantee insurance portfolio runs off; (17) the risk that Ambac’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) adverse effects
on operating results or the Company’s financial position resulting
from measures taken to reduce financial guarantee risks in its
insured portfolio; (20) disagreements or disputes with Ambac's
insurance regulators; (21) loss of control rights in transactions
for which we provide financial guarantee insurance; (22) inability
to realize expected recoveries of financial guarantee losses; (23)
risks attendant to the change in composition of securities in the
Ambac’s investment portfolio; (24) adverse impacts from changes in
prevailing interest rates; (25) events or circumstances that result
in the impairment of our intangible assets and/or goodwill that was
recorded in connection with Ambac’s acquisitions; (26) risks
associated with the discontinuance of the London Inter-Bank Offered
Rate; (27) factors that may negatively influence the amount of
installment premiums paid to Ambac; (28) the risk of litigation and
regulatory inquiries or investigations, and the risk of adverse
outcomes in connection therewith; (29) the Company’s ability to
adapt to the rapid pace of regulatory change; (30) actions of
stakeholders whose interests are not aligned with broader interests
of Ambac's stockholders; (31) system security risks, data
protection breaches and cyber attacks; (32) regulatory oversight of
Ambac Assurance UK Limited (“Ambac UK”) and applicable regulatory
restrictions may adversely affect our ability to realize value from
Ambac UK or the amount of value we ultimately realize; (33)
failures in services or products provided by third parties; (34)
political developments that disrupt the economies where the Company
has insured exposures; (35) our inability to attract and retain
qualified executives, senior managers and other employees, or the
loss of such personnel; (36) fluctuations in foreign currency
exchange rates; (37) failure to realize our business expansion
plans or failure of such plans to create value; (38) greater
competition for our specialty property and casualty insurance
business and/or our insurance distribution business; (39) loss or
lowering of the AM Best rating for our property and casualty
insurance company subsidiaries; (40) disintermediation within the
insurance industry or greater competition from technology-based
insurance solutions; (41) changes in law or in the functioning of
the healthcare market that impair the business model of our
accident and health managing general underwriter; and (42) other
risks and uncertainties that have not been identified at this
time.
AMBAC FINANCIAL GROUP, INC.
AND SUBSIDIARIES
Consolidated Statements of
Income (Loss) (Unaudited)
Three Months Ended
June 30,
($ in millions, except share
data)
2023
2022
Revenues:
Net premiums earned
$
15
$
14
Commission income
10
6
Program fees
2
1
Net investment income (loss)
35
(21
)
Net investment gains (losses), including
impairments
(3
)
7
Net gains (losses) on derivative
contracts
—
29
Income (loss) on variable interest
entities
—
(6
)
Other income
2
—
Total revenues and other income
62
86
Expenses:
Losses and loss adjustment expenses
7
(12
)
Amortization of deferred acquisition
costs, net
1
—
Commission expense
6
4
General and administrative expenses
36
30
Intangible amortization
7
13
Interest expense
16
45
Total expenses
73
80
Pretax income (loss)
(11
)
6
Provision for income taxes
2
1
Net income (loss)
(13
)
5
Less: net (gain) loss attributable to
noncontrolling interest
—
—
Net income (loss) attributable to
common stockholders
$
(13
)
$
5
Net income (loss) per basic
share
$
(0.29
)
$
0.11
Net income (loss) per diluted
share
$
(0.29
)
$
0.11
Weighted-average number of common
shares outstanding:
Basic
45,757,234
45,519,093
Diluted
45,757,234
45,685,349
AMBAC FINANCIAL GROUP, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
($ in millions, except share
data)
June 30,
2023
December 31,
2022
Assets:
Investments:
Fixed maturity securities, at fair value
(amortized cost: $1,631 and $1,469)
$
1,552
$
1,395
Fixed maturity securities - trading
28
59
Short-term investments, at fair value
(amortized cost: $365 and $507)
365
507
Short-term investments pledged as
collateral, at fair value (amortized cost: $36 and $64)
36
64
Other investments (includes $518 and $556
at fair value)
530
568
Total investments (net of allowance for
credit losses of $1 and $0)
2,510
2,593
Cash and cash equivalents (including $10
and $14 of restricted cash)
43
44
Premium receivables (net of allowance for
credit losses of $5 and $5)
276
269
Reinsurance recoverable on paid and unpaid
losses (net of allowance for credit losses of $0 and $0)
149
115
Deferred ceded premium
198
124
Deferred acquisition costs
4
3
Subrogation recoverable
139
271
Derivative assets
26
27
Intangible assets
317
326
Goodwill
61
61
Other assets
89
84
Variable interest entity assets:
Fixed maturity securities, at fair
value
2,056
1,967
Restricted cash
266
17
Loans, at fair value
1,772
1,829
Derivative and other assets
226
241
Total assets
$
8,132
$
7,973
Liabilities and Stockholders’
Equity:
Liabilities:
Unearned premiums
$
394
$
372
Loss and loss adjustment expense
reserves
863
805
Ceded premiums payable
96
39
Deferred program fees and reinsurance
commissions
6
5
Long-term debt
501
639
Accrued interest payable
450
427
Derivative liabilities
37
38
Other liabilities
136
163
Variable interest entity liabilities:
Long-term debt (includes $2,785 and $2,788
at fair value)
2,956
3,107
Derivative liabilities
1,106
1,048
Other liabilities
264
5
Total liabilities
6,809
6,647
Redeemable noncontrolling interest
20
20
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: 46,659,144 and
46,658,990
—
—
Additional paid-in capital
283
274
Accumulated other comprehensive income
(loss)
(209
)
(253
)
Retained earnings
1,191
1,245
Treasury stock, shares at cost: 1,355,146
and 1,685,233
(15
)
(15
)
Total Ambac Financial Group, Inc.
stockholders’ equity
1,250
1,252
Nonredeemable noncontrolling interest
53
53
Total stockholders’ equity
1,303
1,305
Total liabilities, redeemable
noncontrolling interest and stockholders’ equity
$
8,132
$
7,973
The following table presents segment
financial results and includes the non-GAAP measure, EBITDA on a
segment and consolidated basis.
($ in millions)
Legacy
Financial
Guarantee
Insurance
Specialty
Property &
Casualty
Insurance
Insurance
Distribution
Corporate &
Other
Consolidated
Three Months
Ended June 30, 2023
Gross premiums written
$
1.5
$
53.2
$
54.7
Net premiums written
(54.0
)
9.1
(44.9
)
Revenues:
Net premiums earned
7.5
7.8
15.3
Commission income
$
10.0
10.0
Program fees
2.1
2.1
Net investment income (loss)
32.2
0.8
$
2.2
35.2
Net investment gains (losses), including
impairments
(3.4
)
—
—
(3.4
)
Net gains (losses) on derivative
contracts
0.6
(0.1
)
0.5
Net realized gains on extinguishment of
debt
—
—
Other income
2.4
0.1
—
—
2.5
Total revenues and other income
39.4
10.7
10.1
2.1
62.2
Expenses:
Losses and loss adjustment expenses
1.6
5.7
7.4
Commission expense
6.0
6.0
Amortization of deferred acquisition
costs, net
0.1
1.4
1.4
General and administrative expenses
23.5
3.8
2.4
5.9
35.6
Total expenses
25.2
10.8
8.4
5.9
50.4
EBITDA
14.2
(0.1
)
1.6
(3.8
)
11.8
Add: Interest expense
16.0
—
16.0
Add: Depreciation expense
0.4
—
—
—
0.4
Add: Intangible amortization
5.5
1.0
6.5
Pretax income (loss)
(7.7
)
(0.1
)
0.7
(3.9
)
(11.1
)
Income tax expense (benefit)
1.6
—
—
0.4
1.9
Net income (loss)
$
(9.3
)
$
(0.1
)
$
0.6
$
(4.3
)
$
(13.0
)
Three Months
Ended June 30, 2022
Gross premiums written
$
(4.3
)
$
40.9
$
36.6
Net premiums written
1.1
8.1
9.2
Revenues:
Net premiums earned
11.0
2.8
13.8
Commission income
$
6.2
6.2
Program fees
0.6
0.6
Net investment income (loss)
(22.3
)
0.4
$
0.5
(21.4
)
Net investment gains (losses), including
impairments
6.8
—
—
6.8
Net gains (losses) on derivative
contracts
28.1
1.2
29.3
Other income
(5.8
)
(0.1
)
0.2
(0.1
)
(5.8
)
Total revenues and other income
74.8
3.7
6.4
1.6
86.5
Expenses:
Losses and loss adjustment expenses
(13.9
)
1.9
(12.0
)
Amortization of deferred acquisition
costs, net
0.1
0.2
0.2
Commission expense
3.9
3.9
General and administrative expenses
23.4
3.1
1.6
1.0
29.1
Total expenses
9.6
5.2
5.4
1.0
21.2
EBITDA
65.2
(1.5
)
1.0
0.7
65.3
Add: Interest expense
45.0
45.0
Add: Depreciation expense
0.5
—
—
—
0.5
Add: Intangible amortization
12.8
—
0.7
13.5
Pretax income (loss)
6.9
(1.5
)
0.3
0.6
6.3
Income tax expense (benefit)
1.1
—
—
(0.1
)
1.1
Net income (loss)
$
5.7
$
(1.5
)
$
0.3
$
0.7
$
5.3
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230807266405/en/
Charles J. Sebaski Managing Director, Investor Relations (212)
208-3222 csebaski@ambac.com
Ambac Financial (NYSE:AMBC)
過去 株価チャート
から 4 2024 まで 5 2024
Ambac Financial (NYSE:AMBC)
過去 株価チャート
から 5 2023 まで 5 2024