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Long-Term Debt (Notes) | 12 Months Ended
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Dec. 31, 2022
Debt Disclosure [Abstract] |
Long-term Debt | 13. LONG-TERM DEBT Long-term debt outstanding, excluding VIE long-term debt, was as follows:
December 31, |  |  |  | 2022 |  | 2021
|  |  |  | Par Value |  | Unamortized Discount |  | Carrying Value |  | Par Value |  | Unamortized Discount |  | Carrying Value
Ambac Assurance: |  |  |  |  |  |  |  |  |  |  |  |  |  |
5.1% Surplus Notes |  |  |  | $ | 519 |  |  | $ | (42) |  |  | $ | 477 |  |  | $ | 785 |  |  | $ | (56) |  |  | $ | 729 |
Sitka AAC Note |  |  |  | — |  |  | — |  |  | $ | — |  |  | 1,175 |  |  | (21) |  |  | 1,154 |
Tier 2 Notes |  |  |  | 146 |  |  | — |  |  | 146 |  |  | 333 |  |  | — |  |  | 333 |
Ambac UK Debt |  |  |  | 41 |  |  | (25) |  |  | 16 |  |  | 41 |  |  | (26) |  |  | 15 |
Long-term debt |  |  |  | $ | 706 |  |  | $ | (67) |  |  | $ | 639 |  |  | $ | 2,334 |  |  | $ | (104) |  |  | $ | 2,230 |
Aggregated annual maturities of non-VIE long-term debt obligations (based on scheduled maturity dates as further discussed below) are as follows:
2023 |  | $ | 665 |  | (1), (2)
2024 |  | — |  |
2025 |  | — |  |
2026 |  | — |  |
2027 |  | — |  |
Thereafter |  | 41 |  |
Total |  | $ | 706 |  |
(1) Surplus Notes had a scheduled maturity date of June 7, 2020. OCI declined the request of Ambac Assurance to pay the principal amount of the surplus notes, plus all accrued and unpaid interest thereon, on June 7, 2020, June 7, 2021 and June 7, 2022. As a result, the payment date for principal of the surplus notes was extended until OCI grants approval to make the payment. Interest will accrue, compounded on each anniversary of the original scheduled payment date or scheduled maturity date, on any unpaid principal or interest through the actual date of payment at 5.1% per annum. Included in the table above is the potential principal payment at the next scheduled payment date of June 7, 2023. (2) Includes $146 of Tier 2 Notes, as more fully described in Note 1. Background and Business Description, which were fully redeemed on January 15, 2023. Surplus Notes Ambac Assurance's surplus notes, with a par amount of $519 and $785 at December 31, 2022 and 2021, respectively, had a scheduled maturity of June 7, 2020, which has been extended until OCI grants approval to make the payment. During the year ended December 31, 2022, surplus notes with aggregate par amount of $266 were acquired and extinguished. The discount on surplus notes outstanding as of December 31, 2022, is being accreted into income at a weighted average effective interest rate of 7.0%. Ambac can provide no assurance as to when surplus note principal and interest payments will be made. If OCI does not approve payments on or the acquisition of surplus notes over time, the ongoing accretion of interest on the notes may impair AAC's ability to extinguish the notes in full. Surplus notes are subordinated in right of payment to policyholder and other claims. Sitka AAC Note The Sitka AAC Note, issued in connection with the Secured Note Refinancing on July 6, 2021, was wholly redeemed effective October 29, 2022, as a result of the BOA Settlement Payment as more fully described in Note 1. Background and Business Description. Interest on the Sitka AAC Note was payable quarterly (on the last day of each quarter beginning with September 30, 2021) at an annual rate of 3-month U.S. Dollar LIBOR + 4.50%, subject to a 0.75% LIBOR floor. The discount on Sitka AAC Note was being accreted into income at an effective interest rate of 5.7% Tier 2 Notes The Tier 2 Notes, issued on February 12, 2018, were partially redeemed on October 29, 2022, as a result of the BOA Settlement Payment as more fully described in Note 1. Background and Business Description. The Tier 2 Notes had a par value of $146 and $333 (including paid-in-kind interest of $49 and $93) at December 31, 2022 and 2021, respectively, and had a legal maturity of February 12, 2055. Interest on the Tier 2 Notes was at an annual rate of 8.50%. Other than upon payment of principal at redemption or maturity, interest payments were not due in cash on interest payment dates and were paid-in-kind and compounded on the last day of each calendar quarter. The Tier 2 Notes were recorded at a discount to par as any consideration paid that was directly related to the issuance of the Tier 2 Notes was capitalized and was part of the effective yield calculation. Ambac accreted the discount on the Tier 2 Notes into earnings at an effective interest rate of 9.9% based on the projected redemption at the date of issuance. The discount had been fully accreted as of December 31, 2020. The Tier 2 Notes were secured by recoveries from the RMBS Litigations in excess of $1,600 and subject to mandatory redemption upon: (i) receipt of recoveries from the RMBS Litigations in excess of $1,600 ("Tier 2 Net Proceeds") and (ii) payment of principal or interest on AAC surplus notes. Promptly, and in any event within five business days after the receipt (whether directly or indirectly) of Tier 2 Net Proceeds, AAC was required to deposit an amount equal to the Tier 2 Net Proceeds to a collateral account. As described in Note 1. Background and Business Description, the Tier 2 Notes were fully redeemed effective January 15, 2023 as a result of the Nomura Settlement Payment. Ambac UK Debt The Ambac UK debt, issued in connection with the commutation of its exposure with respect to Ballantyne Re plc on June 18, 2019, has a par value of $41 and $41 at December 31, 2022 and 2021, and a legal maturity of May 2, 2036. Interest on the Ambac UK debt is at an annual rate of 0.00%. The Ambac UK debt was recorded at its fair value at the date of issuance. The discount on the debt is currently being accreted into income at an effective interest rate of 7.4%. 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 VIEs 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 $3,388 and $3,739 as of December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the ranges of final maturity dates of the outstanding long-term debt associated with these VIEs were December 2025 to August 2054 and December 2025 to August 2054, respectively. As of December 31, 2022 and 2021, the interest rates on these VIEs’ long-term debt ranged from 0.00% to 7.93% in both years. Aggregated annual maturities of VIE long-term debt following December 31, 2022 are: 2023-$0; 2024-$0; 2025-$26; 2026-$0; 2027-$0; Thereafter-$3,362.

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