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Segment Information
 3 Months Ended
Mar. 31, 2013
Segment Reporting [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. 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 three months ended March 31, 2013 and 2012:

 

Three months ended March 31,    Financial
Guarantee		     Financial
Services		     Corporate
and Other		     Intersegment
Eliminations		     Total
Consolidated		  

2013:

           

Revenues:

           

Unaffiliated customers

    $ 250,793      $ 40,605      $ 29      $ —        $ 291,427   

Intersegment

      726        (684 )      —          (42 )      —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

    $ 251,519      $ 39,921      $ 29      ($ 42 )    $ 291,427   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations:

           

Unaffiliated customers

    $ 246,700      $ 38,847      ($ 2,638 )    $ —        $ 282,909   

Intersegment

      (72 )      (849 )      921        —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax loss from continuing operations

    $ 246,628      $ 37,998      ($ 1,717 )    $ —        $ 282,909   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 25,573,998      $ 558,593      $ 32,069      $ —        $ 26,164,660   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Included in the table above are revenues from unaffiliated customers for the three months ended March 31, 2013 relating to net investment income of $83,829 for Financial Guarantee, $1,211 for Financial Services and $29 for Corporate and Other, compared to 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, respectively. Included in the line item pre-tax loss from continuing operations—unaffiliated customers for the three months ended March 31, 2013 is interest expense, of which $22,176 is for Financial Guarantee, $989 for Financial Services and $0 for Corporate and Other, compared to the first quarter of 2012 with $32,049 for Financial Guarantee, $1,790 for Financial Services and $0 for 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, 2013 and 2012:

 

Three months ended March 31,    Gross
Premiums
Written		     Net
Premiums
Earned		      Net change in
fair value of
credit
derivatives		  

2013

        

United States

    $ (8,716 )    $ 81,057       $ 16,530   

United Kingdom

      8,507        13,754         (2,175 ) 

Other international

      (3,321 )      5,445         (1,568 ) 
  

 

 

    

 

 

     

 

 

  

Total

    ($ 3,530 )    $ 100,256       $ 12,787   
  

 

 

    

 

 

     

 

 

  

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 )