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Segment Information
 3 Months Ended
Mar. 31, 2012
Segment Information [Abstract]  
Segment Information

12. 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 months ended March 31, 2012 and 2011:

 

Three months ended March 31,

    Financial
Guarantee		     Financial
Services		     Corporate
and Other		     Intersegment
Eliminations		     Total
Consolidated		  

2012:

           

Revenues:

           

Unaffiliated customers

    $ 269,827      $ 54,252      $ 57      $        $ 324,136   

Intersegment

      1,499        (1,443 )      645        (701 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

    $ 271,326      $ 52,809      $ 702      $ (701 )    $ 324,136   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations:

           

Unaffiliated customers

    $ 206,287      $ 51,670      $ (4,335 )    $ —        $ 253,622   

Intersegment

      1,027        (1,355 )      328        —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations

    $ 207,314      $ 50,315      $ (4,007 )    $ —        $ 253,622   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 26,183,305      $ 1,146,877      $ 42,702      $ —        $ 27,372,884   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

2011:

           

Revenues:

           

Unaffiliated customers

    $ 175,011      $ 28,195      $ 77      $ —        $ 203,283   

Intersegment

      22,679        (22,605 )      —          (74 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

    $ 197,690      $ 5,590      $ 77      $ (74 )    $ 203,283   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations:

           

Unaffiliated customers

    $ (815,081 )    $ 23,390      $ (25,205 )    $ —        $ (816,896 ) 

Intersegment

      21,290        (21,826 )      536        —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations

    $ (793,791 )    $ 1,564      $ (24,669 )    $ —        $ (816,896 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Included in the table above are revenues from unaffiliated customers for the three months ended March 31, 2012 relating to net investment income of $105,261 for Financial Guarantee, $6,799 for Financial Services and $57 for Corporate and Other, compared with $71,665, 4,726 and $77 for Financial Guarantee, Financial Services and Corporate and Other, respectively, for the three months ended March 31, 2011. Included in the line item pre-tax loss from continuing operations—unaffiliated customers for the first quarter of 2012 is interest expense, of which $32,049 is for Financial Guarantee, $1,790 for Financial Services and $0 for Corporate and Other, compared to the first quarter of 2011 with $28,069, $2,191 and $0 for Financial Guarantee, Financial Services and 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 months ended March 31, 2012 and 2011:

 

Three months ended March 31,

    Gross
Premiums
Written		     Net
Premiums
Earned		      Net change in
fair value of
credit
derivatives		  

2012

        

United States

    $ (92,724 )    $ 72,985       $ (3,451 ) 

United Kingdom

      6,414        15,041         (3,624 ) 

Other international

      (6,284 )      6,924         (147 ) 
  

 

 

    

 

 

     

 

 

  

Total

    $ (92,594 )    $ 94,950       $ (7,222 ) 
  

 

 

    

 

 

     

 

 

  

2011

        

United States

    $ (144,266 )    $ 71,481       $ (7,199 ) 

United Kingdom

      (7,269 )      10,933         (682 ) 

Other international

      (8,676 )      9,385         (1,022 ) 
  

 

 

    

 

 

     

 

 

  

Total

    $ (160,211 )    $ 91,799       $ (8,903 )