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Long-Term Debt (Notes) | 12 Months Ended
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Dec. 31, 2017
Debt Disclosure [Abstract] |
Long-term Debt | 13. LONG-TERM DEBT The carrying value of long-term debt was as follows:
December 31, |  | 2017 |  | 2016
Ambac Assurance: |  |  |  |
5.1% surplus notes, general account, due 2020 |  | $ | 668,667 |  |  | $ | 730,648 |
5.1% surplus notes, segregated account, due 2020 |  | — |  |  | 33,107 |
5.1% junior surplus notes, segregated account, due 2020 |  | 249,036 |  |  | 248,247 |
Secured borrowing |  | 73,993 |  |  | 102,403 |
Ambac Assurance long-term debt |  | $ | 991,696 |  |  | $ | 1,114,405 |
Variable Interest Entities long-term debt |  | $ | 12,160,544 |  |  | $ | 11,155,936 |
Surplus Notes, General Account Ambac Assurance surplus notes, with a par amount of $754,811 and $862,945 at December 31, 2017 and 2016, respectively, are reported in long-term debt on the Consolidated Balance Sheet and have a scheduled maturity of June 7, 2020. In 2017 and 2016, Ambac purchased $108,134 and $11,804 par amount of these surplus notes, respectively. The gains on these repurchases were $3,603 and $1,677, and recognized in Net realized gains (losses) on extinguishment of debt of the Consolidated Statements of Total Comprehensive Income for the years ended December 31, 2017 and 2016, respectively. These surplus notes were issued in connection with the Settlement Agreement and were recorded at their fair value at the date of issuance. The discount on these notes is currently being accreted into income using the effective interest method at an imputed interest rate of of 10.5%. All payments of principal and interest on these surplus notes are subject to the prior approval of the OCI. If the OCI does not approve the payment of interest on these surplus notes, such interest will accrue and compound annually until paid. OCI disapproved the requests of Ambac Assurance to pay interest on the outstanding Ambac Assurance surplus notes on their respective scheduled interest payment dates since their issuance. Surplus Notes, Segregated Account The Segregated Account surplus notes, with a par amount of $0 and $39,102 at December 31, 2017 and 2016, respectively, are reported in long-term debt on the Consolidated Balance Sheets and have a scheduled maturity of June 7, 2020. In 2017, Ambac purchased $39,102 par amount of these surplus notes. The gains on these repurchases were $212 and recognized in Net realized gains (losses) on extinguishment of debt of the Consolidated Statements of Total Comprehensive Income. These surplus notes were recorded at their fair value at the date of issuance. The discount on these notes was being accreted into income using the effective interest method at an imputed interest rate of 10.5%. All payments of principal and interest on the these surplus notes are subject to the prior approval of the OCI. If the OCI does not approve the payment of interest on these surplus notes, such interest will accrue and compound annually until paid. OCI disapproved of the requests of the Rehabilitator of the Segregated Account, acting for and on behalf of the Segregated Account, to pay interest on the outstanding Segregated Account surplus notes on their respective scheduled interest payment dates since their issuance. Pursuant to the Second Amended Plan of Rehabilitation, Ambac Assurance became the obligor under the Segregated Account surplus notes as of February 12, 2018. Junior Surplus Notes, Segregated Account The Segregated Account junior surplus notes, with a par value of $370,237 and $374,036 at December 31, 2017 and 2016, respectively, are reported in long-term debt on the Consolidated Balance Sheets and have a scheduled maturity of June 7, 2020, subject to the following restrictions. Pursuant to the Second Amended Plan of Rehabilitation, Ambac Assurance became the obligor under the junior surplus notes as of February 12, 2018. Principal and interest payments on these junior surplus notes cannot be made until all Ambac Assurance surplus notes (other than junior surplus notes) are paid in full and after all of Ambac Assurance's future and existing senior indebtedness, policy and other priority claims have been paid in full. All payments of principal and interest on these junior surplus notes are subject to the prior approval of the OCI. If the OCI does not approve the payment of interest on the junior surplus notes, such interest will accrue and compound annually until paid. No such approval has been sought or obtained to pay interest on junior surplus notes since their issuance.
• | Par value at December 31, 2017 and 2016 includes $20,237 and $24,037, respectively, of junior surplus notes issued in connection with a settlement agreement (the “OSS Settlement Agreement”) entered into among Ambac, Ambac Assurance, the Segregated Account and One State Street, LLC (“OSS”) with respect to the termination of Ambac’s office lease with OSS. Part of these junior surplus notes ($13,056 par value) will be reduced periodically as rent payments are made by Ambac Assurance beginning in January 2016. Par value of these junior surplus notes have been reduced by $3,799 and $4,002 during 2017 and 2016, respectively, as rent payments were made by Ambac Assurance. These junior surplus notes were recorded at their fair value at the dates of issuance. The discount on these notes are currently being accreted into income using the effective interest method at an imputed interest rate of 19.5%.
• | Par value at December 31, 2017 and 2016 includes $350,000 face amount of a junior surplus note originally issued to Ambac pursuant to Ambac's Reorganization Plan in accordance with the Mediation Agreement dated September 21, 2011 among Ambac, Ambac Assurance, the Segregated Account, the Rehabilitator, the OCI and the Official Committee of Unsecured Creditors of Ambac, and that Ambac sold to a Trust on August 28, 2014. This junior surplus note was recorded at a discount to par based on its fair value on August 28, 2014. Ambac is accreting the discount on this junior surplus note into earnings using the effective interest method, based on an imputed interest rate of 8.4%.
Secured Borrowing The secured borrowing, with a par value of $73,993 and $102,986 at December 31, 2017 and 2016, respectively, is reported in long-term debt on the Consolidated Balance Sheets and has a legal maturity of July 25, 2047. Interest on the secured borrowing is payable monthly at an annual rate of one month LIBOR + 2.8%. Refer to Note 3. Special Purpose Entities, Including Variable Interest Entities for further discussion on the secured borrowing transaction. Variable Interest Entities, Long-term Debt The variable interest entity notes were issued by consolidated VIEs. Ambac is the primary beneficiary of the VIEs as a result of providing financial guarantees on certain of the the variable interest obligations. Consequently, Ambac has consolidated these variable interest entity notes and all other assets and liabilities of the VIEs. Ambac is not primarily liable for the debt obligations of these entities. Ambac would only be required to make payments on these debt obligations in the event that the issuer defaults on any principal or interest due and to the extent such obligations are guaranteed by Ambac. The total unpaid principal amount of outstanding long-term debt associated with VIEs consolidated as a result of the financial guarantee provided by Ambac was $9,387,884 and $8,854,530 as of December 31, 2017 and 2016, respectively. The range of final maturity dates of the outstanding long-term debt associated with these VIEs is November 2018 to December 2047 as of December 31, 2017 and 2016. As of December 31, 2017 and 2016, the interest rates on these VIEs’ long-term debt ranged from 0.96% to 8.35% and from 0.82% to 13.00%, respectively. Final maturities of VIE long-term debt for each of the five years following December 31, 2017 are as follows: 2018-$141,327; 2019-$307,915; 2020-$44,100; 2021-$94,024; 2022-$0.

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