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Segment Information
 12 Months Ended
Dec. 31, 2013
Segment Reporting [Abstract]  
Segment Information

19.        SEGMENT INFORMATION

Ambac has two reportable segments, as follows: (i) Financial Guarantee, which provides financial guarantees (including credit derivatives) for public finance, structured finance and other obligations; and (ii) Financial Services, which provides 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 (i) Fresh Start items, including the discharge of liabilities subject to compromise and fair value adjustments to assets and liabilities (ii) amounts received by Ambac under the Mediation Agreement and related documents (as more fully described in Note 1); and (iii) other corporate activities, including interest income on the investment portfolio and accrual of interest on the Junior Surplus Notes issued by the Segregated Account. Corporate and Other intersegment revenue relates to receipts under the Mediation Agreement and related documents. The following table is a summary of financial information by reportable segment for the affected periods:

 

     Financial
Guarantee (3)		     Financial
Services		     Corporate
and Other		     Inter-segment
Eliminations		     Consolidated  

Successor Ambac–Period from May 1 through December 31, 2013

       

Revenues:

       

Unaffiliated customers(1)

    $ 464,701      $ 116,177      $ 170      $ —       $ 581,048   

Inter-segment

      1,837        (1,210 )      22,126        (22,753 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

    $ 466,538      $ 114,967      $ 22,296      $ (22,753 )    $ 581,048   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax income (loss) from continuing operations:

       

Unaffiliated customers(1) (2) (3)

    $ 402,651      $ 113,019      $ (3,354 )    $ —       $ 512,316   

Inter-segment

      (23,163 )      (1,644 )      24,807        —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax income (loss) from continuing operations

    $ 379,488      $ 111,375      $ 21,453      $ —       $ 512,316   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets as of December 31, 2013

    $ 26,597,097      $ 472,886      $ 36,956      $ —       $ 27,106,939   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income

    $ 145,269      $ 1,115      $ 62      $ —       $ 146,446   

Insurance intangible amortization

    $ 99,658      $ —       $ —       $ —       $ 99,658   

Interest expense

    $ 83,595      $ 1,355      $ —       $ —       $ 84,950   

Reorganization items(4)

    $ —       $ —       $ 493      $ —       $ 493   

 

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

Predecessor Ambac–Period from January 1 through April 30, 2013

       

Revenues:

       

Unaffiliated customers(1)

    $ 633,010      $ 7,339      $ 39      $ —       $ 640,388   

Inter-segment

      940        (882 )      197,055        (197,113 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

    $ 633,950      $ 6,457      $ 197,094      $ (197,113 )    $ 640,388   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax income (loss) from continuing operations:

           

Unaffiliated customers(1) (2)

    $ 1,830,165      $ 3,233      $ 1,514,635      $ —       $ 3,348,033   

Inter-segment

      (197,187 )      (1,101 )      198,288        —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax income (loss) from continuing operations

    $ 1,632,978      $ 2,132      $ 1,712,923      $ —       $ 3,348,033   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets as of April 30, 2013

    $ 28,287,321      $ 536,711      $ 29,403      $ —       $ 28,853,435   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income

    $ 115,129      $ 1,572      $ 39      $ —       $ 116,740   

Interest expense

    $ 29,718      $ 1,307      $ —       $ —       $ 31,025   

Reorganization items(4)

    $ (1,231,550 )    $ 1,505      $ (1,515,135 )    $ —       $ (2,745,180 ) 

 

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

Predecessor Ambac – Year Ended December 31, 2012

       

Revenues:

       

Unaffiliated customers(1)

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

Inter-segment

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax income (loss) from continuing operations:

           

Unaffiliated customers(1) (2)

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

Inter-segment

      580        (5,775 )      5,195        —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax income (loss) from continuing operations

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets as of December 31, 2012

    $ 26,519,480      $ 533,528      $ 32,257      $ —        $ 27,085,265   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net investment income

    $ 365,912      $ 16,769      $ 221      $ —       $ 382,902   

Interest expense

    $ 105,973      $ 6,347      $ —       $ —       $ 112,320   

Reorganization items(4)

    $ —       $ —       $ 7,215      $ —       $ 7,215   

 

(1) Included in both revenues from unaffiliated customers and in pre-tax income (loss) from continuing operations from unaffiliated customers is net investment income.
(2) Included in pre-tax income (loss) from continuing operations from unaffiliated customers is interest expense.
(3) Included in pre-tax income from (loss) continuing operations from unaffiliated customers is amortization of intangible asset arising from financial guarantee contracts that were set to fair value upon adoption of Fresh Start. See “Note 8: Financial Guarantee Insurance Contracts,” for additional information.
(4) Refer to Note 3: Fresh Start Financial Statement Reporting, for a further discussion of Reorganization items.

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 affected periods:

 

    Successor Ambac–Period from May
through December 31, 2013		    

 

   Predecessor Ambac–Period from
January 1 through April 30, 2013		     Predecessor Ambac–Year
Ended December 31, 2012		  
    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		     Gross
Premiums
Written		     Net
Premiums
Earned		     Net Change in
Fair Value of
Credit
Derivatives		  

United States

   $ (61,255 )    $ 165,099      $ 122,696          $ (16,102 )    $ 104,594      $ (31,134 )    $ (260,517 )    $ 315,367      $ (8,496 ) 

United Kingdom

     (7,368 )      35,387        22,548            10,673        18,071        (5,861 )      10,785        73,955        (5,709 ) 

Other international

     (11,686 )      13,032        47,625            (8,696 )      7,335        (23,389 )      (27,776 )      25,282        4,986   
 

 

 

    

 

 

    

 

 

    

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ (80,309 )    $ 213,518      $ 192,869          $ (14,125 )    $ 130,000      $ (60,384 )    $ (277,508 )    $ 414,604      $ (9,219 )