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Segment Information
 12 Months Ended
Dec. 31, 2012
Segment Information
16. 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” primarily relates to corporate activities, including interest income on the investment portfolio. Corporate and Other intersegment revenue relates to receipts under the Mediation Agreement between Ambac Financial Group and Ambac Assurance. The following table is a summary of financial information by reportable segment as of and for the years ended December 31, 2012 and 2011:

 

     Financial
Guarantee		     Financial
Services		     Corporate
and Other		     Intersegment
Eliminations		     Total
Consolidated		  

2012:

           

Revenues:

           

Unaffiliated customers

    $ 758,331      ($ 72,977 )    $ 335      $ —        $ 685,689   

Intersegment

      5,189        (4,992 )      645        (842 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

    $ 763,520      ($ 77,969 )    $ 980      ($ 842 )    $ 685,689   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations:

           

Unaffiliated customers

    ($ 166,761 )    ($ 83,015 )    ($ 6,729 )    $ —        ($ 256,505 ) 

Intersegment

      580        (5,775 )      (5,195 )      —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations

    ($ 166,181 )    ($ 88,790 )    ($ 1,534 )    $ —        ($ 256,505 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 26,519,480      $ 455,427      $ 32,257      $ —        $ 27,007,164   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

2011:

           

Revenues:

           

Unaffiliated customers

    $ 546,525      ($ 251,044 )    $ 283      $ —        $ 295,764   

Intersegment

      26,481        (26,205 )      7,386        (7,662 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

    $ 573,006      ($ 277,249 )    $ 7,669      ($ 7,662 )    $ 295,764   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations:

           

Unaffiliated customers

    ($ 1,558,768 )    ($ 269,580 )    ($ 54,601 )    $ —        ($ 1,882,949 ) 

Intersegment

      13,041        (23,397 )      10,356        —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations

    ($ 1,545,727 )    ($ 292,977 )    ($ 44,245 )    $ —        ($ 1,882,949 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 25,935,817      $ 1,133,438      $ 44,440      $ —        $ 27,113,695   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Included in the table above are revenues from unaffiliated customers in 2012 relating to net investment income of $365,912 for Financial Guarantee, $16,769 for Financial Services and $221 for Corporate and Other, compared to 2011 with $326,157, $28,346 and $293 for Financial Guarantee, Financial Services and Corporate and Other, respectively. Included in the line item pre-tax loss from continuing operations—unaffiliated customers for 2012 is interest expense, of which $105,973 is for Financial Guarantee, $6,347 for Financial Services and $0 for Corporate and Other, compared to 2011 with $119,997, $8,095 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 years ended December 31, 2012 and 2011:

 

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

2012

        

United States

    ($ 260,517 )    $ 315,367       $ (8,496 ) 

United Kingdom

      10,785        73,955         (5,709 ) 

Other international

      (27,776 )      25,282         4,986   
  

 

 

    

 

 

     

 

 

  

Total

    ($ 277,508 )    $ 414,604       $ (9,219 ) 
  

 

 

    

 

 

     

 

 

  

2011

        

United States

    ($ 382,347 )    $ 320,149       $ 34,174   

United Kingdom

      198,047        52,770         1,120   

Other international

      5,347        33,051         12,738   
  

 

 

    

 

 

     

 

 

  

Total

    ($ 178,953 )    $ 405,970       $ 48,032