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Segment Information
 6 Months Ended
Jun. 30, 2011
Segment Information  
Segment Information

(10) 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, which includes municipalities and other public entities, health care organizations, investor-owned utilities and asset-backed issuers. 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. Additionally, Ambac Assurance provides loans to the Financial Services businesses. Inter-segment revenues include the premiums and investment income earned under those agreements. Such premiums are determined as if they were premiums paid by third parties, that is, at current market prices.

Information provided below for "Corporate and Other" relates to (i) investment advisory, consulting and research services to the structured credit markets from RangeMark in 2010, and (ii) corporate activities, including interest income on the investment portfolio (2011 and 2010) and activities related to debentures in 2010. Corporate and other revenue from unaffiliated customers consists primarily of income from investments. The following table is a summary of financial information by reportable segment as of and for the three and six months ended June 30, 2011 and 2010:

 

 

Three months ended June 30,

    Financial
Guarantee		     Financial
Services		     Corporate
and Other		     Inter-
segment
Eliminations		     Consolidated  

2011:

           

Revenues:

           

Unaffiliated customers

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

Inter-segment

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes:

           

Unaffiliated customers

    $ (34,791 )    $ (59,697 )    $ (918 )    $ —        $ (95,406 ) 

Inter-segment

      341        (328 )      157        (170 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total income before income taxes

    $ (34,450 )    $ (60,025 )    $ (761 )    $ (170 )    $ (95,406 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

2010:

           

Revenues:

           

Unaffiliated customers

    $ 380,219      $ (10,899 )    $ 11,850      $ —        $ 381,170 ) 

Inter-segment

      (217,728 )      217,815        2,808        (2,895 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

    $ 162,491      $ 206,916      $ 14,658      $ (2,895 )    $ 381,170   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes:

           

Unaffiliated customers

    $ (8,924 )    $ (18,380 )    $ (30,392 )    $ —        $ (57,696 ) 

Inter-segment

      (223,122 )      219,365        3,757        —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total income before income taxes

    $ (232,046 )    $ 200,985      $ (26,635 )    $ —        $ (57,696 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 28,198,706      $ 1,755,353      $ 101,726      $ —        $ 30,055,785   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Six months ended June 30,

    Financial
Guarantee		     Financial
Services		     Corporate
and Other		     Inter-
segment
Eliminations		     Consolidated  

2011:

           

Revenues:

           

Unaffiliated customers

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

Inter-segment

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes:

           

Unaffiliated customers

    $ (849,872 )    $ (36,307 )    $ (1,318 )    $ —        $ (887,497 ) 

Inter-segment

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total income before income taxes

    $ (828,241 )    $ (58,461 )    $ (625 )    $ (170 )    $ (887,497 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

2010:

           

Revenues:

           

Unaffiliated customers

    $ (68,936 )    $ (61,187 )    $ 12,154      $ —        $ (117,969 ) 

Inter-segment

      (186,096 )      186,287        2,808        (2,999 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

    $ (255,032 )    $ 125,100      $ 14,962      $ (2,999 )    $ (117,969 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes:

           

Unaffiliated customers

    $ (597,727 )    $ (77,729 )    $ (72,195 )    $ —        $ (747,651 ) 

Inter-segment

      (193,617 )      189,165        4,452        —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total income before income taxes

    $ (791,344 )    $ 111,436      $ (67,743 )    $ —        $ (747,651 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 28,198,706      $ 1,755,353      $ 101,726      $ —        $ 30,055,785   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The following table summarizes 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, 2011 and 2010:

 

     Three Months Ended June 30, 2011      Three Months Ended June 30, 2010  
     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

    $ (210,913 )    $ 78,648       $ 17,717       $ 1,167      $ 117,961       $ 145,145   

United Kingdom

      18,151        11,853         1,535         (20,301 )      20,864         9,895   

Other international

      (15,312 )      8,770         5,035         (22,601 )      28,180         47,141   
  

 

 

    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Total

    $ (208,074 )    $ 99,271       $ 24,287       $ (41,735 )    $ 167,005       $ 202,181   
  

 

 

    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  
     Six Months Ended June 30, 2011      Six Months Ended June 30, 2010  
     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

    $ (355,179 )    $ 150,129       $ 10,518       $ (113,544 )    $ 214,237       $ (79,895 ) 

United Kingdom

      10,883        22,786         853         (29,090 )      33,168         14,752   

Other international

      (23,989 )      18,155         4,013         (48,501 )      44,831         100,185   
  

 

 

    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Total

    $ (368,285 )    $ 191,070       $ 15,384       $ (191,135 )    $ 292,236       $ 35,042