Ambac Reports Second Quarter 2022 Results

·5 min read

Growth in Specialty P&C Production and Material De-Risking of the Legacy Financial Guarantee Portfolio Advances Ambac's Strategic Priorities

Net income of $5 million and adjusted earnings of $13 million

Specialty P&C Insurance Platform production totaled $65 million, up 168% from second quarter of 2021

Legacy Financial Guarantee Watch List and Adversely Classified Credits insured net par reduced 11%

Repurchased $133 million of AAC debt and $14 million of AFG common stock

NEW YORK, August 08, 2022--(BUSINESS WIRE)--Ambac Financial Group, Inc. (NYSE: AMBC) ("Ambac" or "AFG"), a financial services holding company, today reported net income attributable to common stockholders of $5 million or $0.11(1) per diluted share and adjusted earnings(2) of $13 million or $0.28(1) per diluted share for the quarter ended June 30, 2022. This compares to a net loss attributable to common stockholders of $29 million or $0.63 per diluted share and an adjusted loss of $13 million or $0.30 per diluted share in the second quarter of 2021. Book value per share decreased $2.21 to $17.44 and adjusted book value per share(2) decreased $0.87 to $17.20 from March 31, 2022, to June 30, 2022.

Claude LeBlanc, President and Chief Executive Officer, stated, "Our second quarter results reflect the continued strong growth of our specialty property and casualty business strategy and the continued active de-risking of our legacy financial guarantee portfolios. Our Specialty P&C Insurance and Insurance Distribution businesses grew production by 168% to $65 million, compared to the second quarter of 2021.

LeBlanc continued, "In addition, our increased capital management activity this quarter demonstrates Ambac's belief in our core P&C business strategy as well as our prospects for recovery from our active litigations."

Ambac's Second Quarter 2022 Summary Results

Better (Worse)

($ in millions, except per share data)

2Q2022

2Q2021

Amount

Percent

Gross written premium

$

36.6

$

(3.4

)

$

40.0

1,176

%

Net premiums earned

13.8

11.1

2.7

24

%

Net investment income (loss)

(21.4

)

41.6

(63.0

)

(152

) %

Net realized investment gains (losses), including impairments

6.8

(1.5

)

8.3

540

%

Net gains (losses) on derivative contracts

29.3

(11.1

)

40.4

364

%

Net realized gains on extinguishment of debt

57.0

57.0

%

Commission income

6.2

6.0

0.2

4

%

Other income (expense)

1.0

0.7

0.3

48

%

Losses and loss expenses (benefit)

(12.0

)

(25.7

)

(13.6

)

(53

) %

Operating expenses

33.7

28.4

(5.3

)

(19

) %

Interest expense

45.0

50.1

5.1

10

%

Intangible amortization

13.5

13.5

%

Pretax income (loss)

6.3

(17.6

)

23.9

136

%

Provision for income taxes

1.1

10.9

9.8

90

%

Net income (loss) attributable to Common Stockholders

5.2

(28.5

)

33.8

118

%

Net income (loss) per diluted share1

0.11

(0.63

)

0.74

117

%

EBITDA

65.1

46.3

18.8

41

%

Adjusted earnings (loss) 2

12.7

(13.3

)

25.9

195

%

Adjusted earnings (loss) per diluted share 1, 2

0.28

(0.30

)

0.58

193

%

Weighted-average diluted shares outstanding (in millions)

45.7

46.6

0.9

2

%

June 30, 2022

March 31, 2022

Better (Worse)

Amount

Percent

Total Ambac Financial Group, Inc. stockholders' equity

$

783.8

$

914.4

$

(130.6

)

(14

) %

Total Ambac Financial Group, Inc. stockholders' equity per share

17.44

19.65

(2.21

)

(11

) %

Adjusted book value 2

773.0

841.2

(68.2

)

(8

) %

Adjusted book value per share 2

17.20

18.07

(0.87

)

(5

) %

(1)

Per Diluted share includes the impact of adjusting redeemable noncontrolling interests to current redemption value

(2)

See Non-GAAP Financial Data section of this press release for further information.

(3)

Some financial data in this press release may not add up due to rounding

Results of Operations by Segment

Ambac is reporting three reportable segments: Legacy Financial Guarantee Insurance, Specialty Property & Casualty Insurance, and Insurance Distribution.

The following table presents segment financial results and includes the non-GAAP measure, EBITDA on a segment and consolidated basis.

Three Months Ended June 30, 2022

Legacy
Financial
Guarantee
Insurance

Specialty
Property &
Casualty
Insurance

Insurance
Distribution

Corporate &
Other

Consolidated

($ in millions)

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

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

Net realized gains on extinguishment of debt

57.0

57.0

Commission income (1)

$

6.2

6.2

Other income

(5.8

)

0.5

0.2

(0.1

)

(5.2

)

Total revenues

74.8

3.7

6.4

1.6

86.5

Expenses:

Loss and loss expenses

(13.9

)

1.9

(12.0

)

Operating expenses (2)

23.5

3.3

1.6

1.0

29.3

Sub-producer commissions (2)

3.9

3.9

Total expenses

9.6

5.2

5.4

1.0

21.2

Net (gain) attributable to noncontrolling interest

(0.2

)

(0.2

)

Earnings before interest, taxes, depreciation and amortization

65.2

(1.5

)

0.8

0.7

65.1

Add back noncontrolling interest EBITDA adjustment

0.2

0.2

Interest expense

45.0

45.0

Depreciation expense

0.5

0.5

Intangible amortization

12.8

0.7

13.5

Pretax income (loss)

$

6.9

$

(1.5

)

$

0.3

$

0.6

$

6.3

(1)

Based on premiums placed. Refer to the Specialty P&C Insurance Platform Production section of this release for further details.

(2)

The Consolidated Statements of Comprehensive Income presents the sum of these items as Operating Expenses.

Three Months Ended June 30, 2021

Legacy
Financial
Guarantee
Insurance

Specialty
Property &
Casualty
Insurance

Insurance
Distribution

Corporate &
Other

Consolidated

($ in millions)

Gross premiums written

$

(5.4

)

$

2.0

$

(3.4

)

Net premiums written

(12.9

)

0.4

(12.5

)

Revenues:

Net premiums earned

11.1

11.1

Net investment income (loss)

41.2

0.3

$

0.1

41.6

Net investment gains (losses), including impairments

(1.5

)

(1.5

)

Net gains (losses) on derivative contracts

(11.1

)

(11.1

)

Net realized gains on extinguishment of debt

Commission income (1)

$

6.0

6.0

Other income

2.8

(0.1

)

2.7

Total revenues

42.5

0.3

6.0

48.8

Expenses:

Loss and loss expenses

(25.7

)

(25.7

)

Operating expenses (2)

20.8

1.9

1.3

0.3

24.3

Sub-producer commissions (2)

3.6

3.6

...