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Segment Information
 9 Months Ended
Sep. 30, 2016
Segment Reporting [Abstract]  
Segment Information
12. SEGMENT INFORMATION
Ambac has two reportable business segments, as follows: (i) Financial Guarantee, which provides financial guarantees (including credit derivatives) for public finance, structured finance and international obligations; and (ii) Financial Services, which provides investment agreements, funding conduits, interest rate swaps, principally to clients of the financial guarantee business. Ambac’s reportable business segments are 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 subsidiaries. Additionally, Ambac Assurance provides loans to the Financial Services businesses. Inter-segment revenues include the premiums and investment income earned under those agreements.
Information provided below for unaffiliated “Corporate and Other” primarily relates to investment income on Ambac's investment portfolio. Equity in net income of investees accounted for by the equity method relates to the Owner Trust Certificate received when Ambac deposited its Segregated Account junior surplus note into a Trust (see Note 1. Background and Business Description in the Notes to Consolidated Financial Statements included Part II, Item 8 in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2015 for further information relating to the sale by Ambac of a junior surplus note issued to it by the Segregated Account). Inter-segment for "Corporate and Other" relates to amounts received by Ambac under the Mediation Agreement dated September 21, 2011, as more fully described in Note 1. Background and Business Description in the Notes to Consolidated Financial Statements included Part II, Item 8 in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2015.
The following table is a summary of financial information by reportable business segment for the affected periods:
 
 
Financial
Guarantee
 
Financial
Services
 
Corporate
and Other
 
Inter-segment
Eliminations
 
Consolidated
Three Months Ended September 30, 2016:
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers (1)
 
$
156,236

 
$
(14,286
)
 
$
1,888

 
$
—

 
$
143,838

Equity in net income of investees accounted for by equity method
 
—

 
—

 
1,190

 
—

 
1,190

Inter-segment
 
375

 
(308
)
 
229

 
(296
)
 
—

Total revenues before expenses and reorganization items
 
156,611

 
(14,594
)
 
3,307

 
(296
)
 
145,028

Pre-tax income:
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers (1)(2)(3)
 
131,162

 
(14,912
)
 
(720
)
 
—

 
115,530

Equity in net income of investees accounted for by equity method
 
—

 
—

 
1,190

 
—

 
1,190

Inter-segment
 
(690
)
 
(435
)
 
1,125

 
—

 
—

Pre-tax income
 
130,472

 
(15,347
)
 
1,595

 
—

 
116,720

Total assets as of September 30, 2016
 
23,264,567

 
396,509

 
350,613

 
3,940

 
24,015,629

Net investment income
 
87,350

 
195

 
3,372

 
—

 
90,917

Insurance intangible amortization
 
44,553

 
—

 
—

 
—

 
44,553

Interest expense
 
31,352

 
141

 
—

 
—

 
31,493

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2015:
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers (1)
 
$
152,024

 
$
(66,997
)
 
$
1,538

 
$
—

 
$
86,565

Equity in net income of investees accounted for by equity method
 
—

 
—

 
1,125

 
—

 
1,125

Inter-segment
 
24

 
(204
)
 
252

 
(72
)
 
—

Total revenues before expenses and reorganization items
 
152,048

 
(67,201
)
 
2,915

 
(72
)
 
87,690

Pre-tax income (loss):
 
 
 
 
 
 
Unaffiliated customers (1) (2) (3)
 
(320,414
)
 
(67,655
)
 
(1,249
)
 
—

 
(389,318
)
Equity in net income of investees accounted for by equity method
 
—

 
—

 
1,125

 
—

 
1,125

Inter-segment
 
(763
)
 
425

 
1,302

 
(964
)
 
—

Pre-tax income (loss)
 
(321,177
)
 
(67,230
)
 
1,178

 
(964
)
 
(388,193
)
Total assets as of September 30, 2015
 
23,610,582

 
363,118

 
289,238

 
3,981

 
24,266,919

Net investment income
 
61,292

 
139

 
2,764

 
—

 
64,195

Insurance intangible amortization
 
39,680

 
—

 
—

 
—

 
39,680

Interest expense
 
29,738

 
161

 
—

 
—

 
29,899

Goodwill impairment
 
514,511

 
—

 
—

 
—

 
514,511

(1)
Included in both revenues from unaffiliated customers and in pre-tax income from unaffiliated customers is net investment income.
(2)
Included in pre-tax income from unaffiliated customers is interest expense.
(3)
Included in pre-tax income from unaffiliated customers is the amortization of insurance intangible asset and impairment of goodwill. Such assets were established upon the adoption of Fresh Start on April 30, 2013.
 
 
Financial
Guarantee
 
Financial
Services
 
Corporate
and Other
 
Inter-segment
Eliminations
 
Consolidated
Nine Months Ended September 30, 2016:
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers (1)
 
$
393,557

 
$
(133,613
)
 
$
5,247

 
$
—

 
$
265,191

Equity in net income of investees accounted for by equity method
 
—

 
—

 
3,471

 
—

 
3,471

Inter-segment
 
1,214

 
(1,039
)
 
615

 
(790
)
 
—

Total revenues before expenses and reorganization items
 
394,771

 
(134,652
)
 
9,333

 
(790
)
 
268,662

Pre-tax income:
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers (1)(2)(3)
 
328,906

 
(135,529
)
 
(5,763
)
 
—

 
187,614

Equity in net income of investees accounted for by equity method
 
—

 
—

 
3,471

 
—

 
3,471

Inter-segment
 
(1,896
)
 
(1,401
)
 
3,297

 
—

 
—

Pre-tax income
 
327,010

 
(136,930
)
 
1,005

 
—

 
191,085

Total assets as of September 30, 2016
 
23,264,567

 
396,509

 
350,613

 
3,940

 
24,015,629

Net investment income
 
212,595

 
596

 
9,305

 
—

 
222,496

Insurance intangible amortization
 
134,456

 
—

 
—

 
—

 
134,456

Interest expense
 
92,193

 
439

 
—

 
—

 
92,632

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2015:
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers (1)
 
$
521,340

 
$
(53,566
)
 
$
2,951

 
$
—

 
$
470,725

Equity in net income of investees accounted for by equity method
 
—

 
—

 
3,208

 
—

 
3,208

Inter-segment
 
286

 
(565
)
 
388

 
(109
)
 
—

Total revenues before expenses and reorganization items
 
521,626

 
(54,131
)
 
6,547

 
(109
)
 
473,933

Pre-tax income:
 
 
 
 
 
 
Unaffiliated customers (1) (2) (3)
 
172,271

 
(55,861
)
 
(5,136
)
 
—

 
111,274

Equity in net income of investees accounted for by equity method
 
—

 
—

 
3,208

 
—

 
3,208

Inter-segment
 
(2,087
)
 
(139
)
 
3,027

 
(801
)
 
—

Pre-tax income
 
170,184

 
(56,000
)
 
1,099

 
(801
)
 
114,482

Total assets as of September 30, 2015
 
23,610,582

 
363,118

 
289,238

 
3,981

 
24,266,919

Net investment income
 
195,270

 
401

 
6,260

 
—

 
201,931

Insurance intangible amortization
 
115,200

 
—

 
—

 
—

 
115,200

Interest expense
 
85,165

 
815

 
—

 
—

 
85,980

Goodwill impairment
 
514,511

 
—

 
—

 
—

 
514,511

(1)
Included in both revenues from unaffiliated customers and in pre-tax income from unaffiliated customers is net investment income.
(2)
Included in pre-tax income from unaffiliated customers is interest expense.
(3)
Included in pre-tax income from unaffiliated customers is the amortization of insurance intangible asset and impairment of goodwill. Such assets were established upon the adoption of Fresh Start on April 30, 2013.
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:
 
 
Three Months Ended September 30, 2016
 
Three Months Ended September 30, 2015
 
 
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
 
$
(7,555
)
 
$
45,257

 
$
520

 
$
(2,386
)
 
$
60,402

 
$
30,604

United Kingdom
 
(598
)
 
6,018

 
—

 
260

 
8,081

 
—

Other international
 
(2,390
)
 
1,943

 
1,213

 
(6,584
)
 
3,052

 
6,348

Total
 
$
(10,543
)
 
$
53,218

 
$
1,733

 
$
(8,710
)
 
$
71,535

 
$
36,952


 
 
Nine Months Ended September 30, 2016
 
Nine Months Ended September 30, 2015
 
 
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
 
$
(25,988
)
 
$
126,003

 
$
1,613

 
$
(5,172
)
 
$
163,094

 
$
39,286

United Kingdom
 
14,157

 
19,111

 
—

 
7,295

 
23,659

 
—

Other international
 
(27,533
)
 
2,306

 
16,941

 
(20,963
)
 
11,379

 
5,460

Total
 
$
(39,364
)
 
$
147,420

 
$
18,554

 
$
(18,840
)
 
$
198,132

 
$
44,746