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Business and Basis of Presentation Background and Business Description (Notes) | 6 Months Ended | 9 Months Ended | 12 Months Ended
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Mar. 31, 2025 | Sep. 30, 2024 | Dec. 31, 2024
Accounting Policies [Abstract] |  |  |
Background and Business Description |  | 1. BUSINESS AND BASIS OF PRESENTATION Business The following description provides an update of Note 1. Background and Business Description and Note 2. Basis of Presentation and Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and should be read in conjunction with the complete descriptions provided in the Form 10-K. Capitalized terms used, but not defined herein, and in the other footnotes to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q shall have the meanings ascribed thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Ambac Financial Group, Inc. (“AFG”), headquartered in New York City, is an insurance holding company incorporated in the state of Delaware on April 29, 1991. References to “Ambac,” the “Company,” “we,” “our,” and “us” are to AFG and its subsidiaries, as the context requires. Ambac's principal businesses include: •Specialty Property & Casualty Insurance — Ambac's Specialty Property & Casualty Insurance program business currently includes five carriers (collectively, “Everspan”). Everspan carriers have an A.M. Best rating of 'A-' (Excellent) which was affirmed on June 13, 2024. Effective September 1, 2024, Consolidated National Insurance Company ("CNIC"), an admitted Everspan carrier, was sold and a gain on the sale of approximately $7 was recognized in other income on the Consolidated Statements of Total Comprehensive Income (Loss) for the three and nine months ended September 30, 2024. The sale of CNIC will not have any adverse impact on the group's operations or growth prospects. •Insurance Distribution — Ambac's specialty property and casualty ("P&C") insurance distribution business, includes Managing General Agents and Underwriters (collectively "MGAs"), an insurance broker, and other distribution and underwriting businesses. Insurance Distribution includes Beat Capital Partners Limited, which was acquired on July 31, 2024. At September 30, 2024, Ambac's insurance distribution platform operates in the following lines of business: property, niche specialty risk, accident & health, miscellaneous specialty, reinsurance, marine & energy, specialty auto, other professional and professional Directors & Officers ("D&O") . •Legacy Financial Guarantee Insurance — Ambac's legacy financial guarantee business includes the activities of Ambac Assurance Corporation ("AAC") and its wholly owned subsidiaries, including Ambac Assurance UK Limited (“Ambac UK”) and Ambac Financial Services LLC ("AFS"). Both AAC and Ambac UK (the "Legacy Financial Guarantee Companies") have financial guarantee insurance portfolios that have been in runoff since 2008. AFS provided interest rate derivatives to financial guarantee customers and used derivatives to hedge interest rate risk in AAC's insurance and investment portfolios. AFS's remaining derivative positions include a limited number of legacy customer swaps and their associated hedges. The Company reports these three business operations as segments; see Note 2. Segment Information for further information. |
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] | 1. BUSINESS AND BASIS OF PRESENTATION Business The following description provides an update of Note 1. Background and Business Description and Note 2. Basis of Presentation and Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and should be read in conjunction with the complete descriptions provided in the Form 10-K. Capitalized terms used, but not defined herein, and in the other footnotes to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q shall have the meanings ascribed thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Ambac Financial Group, Inc. (“AFG”), headquartered in New York City, is an insurance holding company incorporated in the state of Delaware on April 29, 1991. References to “Ambac,” the “Company,” “we,” “our,” and “us” are to AFG and its subsidiaries, as the context requires. Ambac's principal businesses include: •Specialty Property & Casualty Insurance — Ambac's Specialty Property & Casualty Insurance program business currently includes five carriers (collectively, “Everspan”). Everspan carriers have an A.M. Best rating of 'A-' (Excellent) which was affirmed on June 13, 2024. Effective September 1, 2024, Consolidated National Insurance Company ("CNIC"), an admitted Everspan carrier, was sold and a gain on the sale of approximately $7 was recognized in other income on the Consolidated Statements of Total Comprehensive Income (Loss) for the three and nine months ended September 30, 2024. The sale of CNIC will not have any adverse impact on the group's operations or growth prospects. •Insurance Distribution — Ambac's specialty property and casualty ("P&C") insurance distribution business, includes Managing General Agents and Underwriters (collectively "MGAs"), an insurance broker, and other distribution and underwriting businesses. Insurance Distribution includes Beat Capital Partners Limited, which was acquired on July 31, 2024. At September 30, 2024, Ambac's insurance distribution platform operates in the following lines of business: property, niche specialty risk, accident & health, miscellaneous specialty, reinsurance, marine & energy, specialty auto, other professional and professional Directors & Officers ("D&O") . •Legacy Financial Guarantee Insurance — Ambac's legacy financial guarantee business includes the activities of Ambac Assurance Corporation ("AAC") and its wholly owned subsidiaries, including Ambac Assurance UK Limited (“Ambac UK”) and Ambac Financial Services LLC ("AFS"). Both AAC and Ambac UK (the "Legacy Financial Guarantee Companies") have financial guarantee insurance portfolios that have been in runoff since 2008. AFS provided interest rate derivatives to financial guarantee customers and used derivatives to hedge interest rate risk in AAC's insurance and investment portfolios. AFS's remaining derivative positions include a limited number of legacy customer swaps and their associated hedges. The Company reports these three business operations as segments; see Note 2. Segment Information for further information. Sale of Ambac Assurance Corporation ("AAC") On June 4, 2024, AFG entered into a stock purchase agreement (the "Purchase Agreement") with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., pursuant to which and subject to the conditions set forth therein, AFG will sell all of the issued and outstanding shares of common stock of AAC, a wholly-owned subsidiary of AFG, to the Buyer for aggregate consideration of $420 in cash (the "Sale"). The terms of the Sale as contemplated by the Purchase Agreement provide that, at the closing of the Sale (the “Closing”), Buyer will acquire complete ownership of the common stock of AAC and all of its wholly owned subsidiaries, including Ambac UK. The Purchase Agreement required AFG to seek the affirmative vote in favor of the Sale by the holders of a majority of the issued and outstanding shares of AFG common stock entitled to vote thereon (the “Stockholder Approval”). On October 16, 2024, Stockholder Approval was obtained at a special meeting of stockholders duly convened for that purpose. The Purchase Agreement contains certain customary termination rights for each of AFG and Buyer, including (i) by mutual written agreement, (ii) if the Sale has not been consummated on or before April 4, 2025 (the “End Date”), subject to certain extensions for 90 days, (iii) if the other party is in breach of the Purchase Agreement in a manner that would result in a failure of an applicable closing condition and such breach cannot be cured or, if curable, has not been cured within 60 days after written notice to the other party of such breach, or (iv) if any applicable law makes the consummation of the Closing illegal or otherwise prohibited or any judgment, order or decree of any governmental authority enjoins Buyer and AFG from consummating the Closing. AFG would pay the Buyer an amount equal to $22 (the “Termination Fee”) if all of the following occur: (i) the Purchase Agreement is terminated as a result of (a) not closing the Sale and other transactions contemplated by the Purchase Agreement by the End Date, subject to certain conditional extension for 90 days, or (b) an AFG breach of representations or covenants that would cause certain closing conditions not to be satisfied, (ii) AFG has received an alternative acquisition proposal prior to a valid termination of the Purchase Agreement, and (iii) within 12 months after termination of the Purchase Agreement, AFG enters into a definitive agreement for an alternative acquisition. AFG would also pay Buyer the Termination Fee if the Purchase Agreement is terminated for (x) AFG breach of certain covenants that would cause closing conditions not to be satisfied, or (y) AFG changing its recommendation to the Company’s stockholders regarding the sale. In addition to the Termination Fee, AFG would pay Buyer up to $6 as a reimbursement of Buyer’s reasonably documented out-of-pocket fees and expenses incurred in connection with the Sale and other transactions contemplated by the Purchase Agreement if (i) the Purchase Agreement is terminated as a result of not closing the Sale and other transactions by the End Date and the Termination Fee is also payable, (ii) the Purchase Agreement is terminated as a result of AFG changing its recommendation to the AFG stockholders regarding the Sale, or (iii) there is an AFG breach of representations or covenants that would cause certain closing conditions not to be satisfied. The Closing is subject to customary closing conditions, including the receipt of specified regulatory approvals. In connection with and pursuant to the Purchase Agreement, AFG has agreed to issue to the Buyer a warrant exercisable for a number of shares of common stock, par value $0.01, of AFG representing 9.9% of the fully diluted shares of AFG’s common stock as of March 31, 2024, pro forma for the issuance of the Warrant. The Warrant will have an exercise price per share of $18.50 with a 6.5 year term from the date of issuance and will be immediately exercisable. Payment of the exercise price may be settled, at AFG’s option, by way of a cash exercise or by net share settlement. While management, the Board and AFG's stockholders have approved the Sale, the final commitment to sell AAC is subject to approval by our regulators in both the US and UK. Buyer received approval from the U.K. Prudential Regulation Authority ("PRA") for the change in control of Ambac UK on October 24, 2024 (which remains effective only if the Sale is completed by January 30, 2025, which deadline may be extended by the PRA on upon Buyer's request). Approval from the Wisconsin Office of the Commissioner of Insurance remains outstanding. The Sale will have a major effect on AFG's operations and financial results and therefore at the date we meet the held-for-sale reporting requirements, which we anticipate will occur in the fourth quarter of 2024, we will report the pending sale as a discontinued operation. At September 30, 2024, the carrying value of AFG's investment in AAC is approximately $943. Once regulatory approval is deemed probable, a loss on the transaction will be reflected in the Statement of Comprehensive Income equal to the difference between the sales proceeds (net of the value of the Warrants to be issued) and AAC's carrying value. Additionally, net income will be adversely impacted by a reclassification from Accumulated Other Comprehensive Income of unrealized losses on available-for-sale investment securities, foreign currency translation losses and credit risk changes of fair value option liabilities, which at September 30, 2024, amounted to $90. The Sale is expected to close in the fourth quarter of 2024 or the first quarter of 2025. Acquisition of Beat Capital Partners Limited ("Beat") On June 4, 2024, the Company, entered into a share purchase agreement (the “Beat Purchase Agreement”), by and among the Company, Cirrata V LLC, a Delaware limited liability company and an indirect wholly-owned subsidiary of AFG (the “Purchaser”), certain sellers set forth therein (the “Sellers”) and Beat, pursuant to which, effective July 31, 2024, the Purchaser purchased from the Sellers approximately 60% of the entire issued share capital of Beat for total consideration, as of the closing date, of approximately $281, of which approximately $252 was paid in cash and the remainder of which was satisfied through the issuance of 2,216,023 shares of AFG common stock to certain Sellers (the "Beat Transaction"). Beat’s management team and Bain Capital Credit LP (together, the “Rollover Shareholders”) each retained approximately 20% of Beat’s issued share capital immediately after closing. Many of Beat's operating units are minority owned by their respective management teams and accordingly, Ambac's economic interests in those units is less than 60% despite our ownership of 60% of Beat. AFG issued the common stock free and clear of any liens or restrictions (other than those arising under state and federal securities laws of the United States) and bearing a restrictive legend. The common stock has not been registered under the Securities Act in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act. AFG funded the cash portion of the consideration with a combination of available cash, approximately $62 of funding from AAC, and $147 from new indebtedness (the "Credit Facility") that was issued in the third quarter of 2024. The debt incurred under the Credit Facility matures on July 31, 2025. Obligations under Credit Agreement are guaranteed by AFG and are secured on a first-priority basis by (i) a pledge by AFG of all of the capital stock of Everspan Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company and (ii) a pledge by the Purchaser of all of the capital stock of Beat held by Purchaser. Borrowing under the Credit Facility bears interest at three-month SOFR plus a margin initially equal to 4.50%, increasing to 5.50% on November 1, 2024, 6.50% on February 1, 2025, and 7.50% on May 1, 2025. A duration fee equal to 1% of the then outstanding Credit Facility shall be due on each of February 1, 2025 and May 1, 2025, to the extent the borrowing under the Credit Facility is not repaid earlier. Funding received from AAC and the Credit Facility are required to be repaid upon closing of the sale of AAC. To reduce its exposure to appreciation of the British Pound Sterling ("GBP") relative to the U.S. Dollar ("USD"), AFG entered into a foreign exchange futures contract under which it agreed to purchase an amount of GBP sufficient to cover the cash portion of the purchase price of Beat along with estimated GBP denominated expenses at an exchange rate of 1.2662 per USD. At the closing of the Beat Transaction, AFG entered into a Shareholders’ Agreement by and among AFG, the Purchaser, the Rollover Shareholders and Beat (the “Shareholders’ Agreement”). The Shareholders’ Agreement provides for, among other things, the granting of (i) put options to each Rollover Shareholder to require the Purchaser to purchase from such Rollover Shareholder, the Relevant Shares (as defined in the Shareholders’ Agreement), and (ii) call options to the Purchaser to purchase from each Rollover Shareholder, the Relevant Shares. Basis of Presentation The Company has disclosed its significant accounting policies in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The following significant accounting policies provide an update to those included in the Company’s Annual Report on Form 10-K. The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for annual periods. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2023. The accompanying consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (U.S.), but in the opinion of management such financial statements include all adjustments necessary for the fair presentation of the Company’s consolidated financial position and results of operations. The results of operations for the three and nine months ended September 30, 2024, may not be indicative of the results that may be expected for the year ending December 31, 2024. The December 31, 2023, consolidated balance sheet was derived from audited financial statements. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As additional information becomes available or actual amounts become determinable, the recorded estimates are revised and reflected in operating results. Consolidation The consolidated financial statements include the accounts of AFG and all other entities in which AFG (directly or through its subsidiaries) has a controlling financial interest, including variable interest entities (“VIEs”) for which AFG or an AFG subsidiary is deemed the primary beneficiary in accordance with the Consolidation Topic of the Accounting Standards Codification ("ASC"). All significant intercompany balances have been eliminated. See Note 9. Variable Interest Entities, for a detailed discussion of Ambac’s involvement in VIEs, Ambac’s methodology for determining whether Ambac is required to consolidate a VIE and the effects of VIEs being consolidated and deconsolidated. Foreign Currency The impact of non-functional currency transactions and the remeasurement of non-functional currency assets and liabilities into the respective subsidiaries' functional currency (collectively "foreign currency transactions gains/(losses)") are $(8) and $(2) for the nine months ended September 30, 2024 and 2023, respectively. Foreign currency transaction gains/(losses) are primarily the result of remeasuring Ambac UK's and Beat's assets and liabilities that are denominated in currencies (primarily the U.S. dollar) other than their functional currency (the British Pound Sterling). Additionally, Ambac uses foreign currency forward contracts to economically hedge certain currency exposures. See Note 7. Derivative Instruments, for further information about the Company's foreign currency forwards. Redeemable Noncontrolling Interest The Beat, Riverton, All Trans, Capacity Marine and Xchange acquisitions resulted in a majority ownership of the acquired entities by Ambac. Under the terms of all the acquisition agreements, Ambac has call options to purchase the remaining interests from the minority owners (i.e., noncontrolling interests) and the minority owners have put options to sell their interests to Ambac. Because the exercise of the put options are outside the control of Ambac, in accordance with the Distinguishing Liabilities from Equity Topic of the ASC, Ambac reports redeemable noncontrolling interests in the mezzanine section of its consolidated balance sheet. The redeemable noncontrolling interest is remeasured each period as the greater of: i.the carrying value under ASC 810, which attributes a portion of consolidated net income (loss) to the redeemable noncontrolling interest, and ii.the redemption value of the put option under ASC 480 as if it were exercisable at the end of the reporting period. Any increase (decrease) in the carrying amount of the redeemable noncontrolling interest as a result of adjusting to the redemption value of the put option is recorded as an offset to retained earnings. The impact of such differences on earnings per share are presented in Note 12. Net Income Per Share. Following is a rollforward of redeemable noncontrolling interest.
Nine Months Ended September 30, |  | 2024 |  | 2023
Beginning balance |  | $ | 17 |  |  | $ | 20 |
Fair value of acquired redeemable noncontrolling interest at acquisition date |  | 179 |  |  | 2 |
Net income (loss) attributable to redeemable noncontrolling interest (ASC 810) |  | (1) |  |  | 1 |
Distributions |  | (2) |  |  | (1) |
Adjustment to redemption value (ASC 480) |  | 3 |  |  | — |
Foreign exchange |  | 7 |  |  | — |
Ending balance |  | $ | 204 |  |  | $ | 22 |
Supplemental Disclosure of Cash Flow Information |  | Nine Months Ended September 30,
|  | 2024 |  | 2023
Cash paid during the period for: |  |  |  |
Income taxes |  | $ | 11 |  |  | $ | 9 |
Interest on long-term debt |  | — |  |  | 50 |
Non-cash investing and financing activities: |  |  |  |
Securities acquired (transferred) in transactions related to Puerto Rico restructurings |  | — |  |  | (1) |
Decrease in VIE loans as a result of de-consolidations |  | — |  |  | 133 |
Decrease in VIE long-term debt as a result of de-consolidations |  | — |  |  | 133 |
Securities acquired (transferred) in connection with financial guarantee commutations |  | (65) |  |  | — |
Ambac common stock issued as partial consideration to acquire Beat |  | 29 |  |  | — |
|  | September 30,
|  | 2024 |  | 2023
Reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows: |  |  |  |
Cash and cash equivalents |  | $ | 54 |  |  | $ | 32 |
Restricted cash |  | 16 |  |  | 13 |
Variable Interest Entity Restricted cash |  | 47 |  |  | 256 |
Total cash, cash equivalents, and restricted cash shown on the Consolidated Statements of Cash Flows |  | $ | 117 |  |  | $ | 302 |
Restricted cash is cash that we do not have the right to use for general purposes and includes fiduciary cash held by Ambac's insurance distribution subsidiaries, consolidated variable interest entity cash to support the obligations of the consolidated VIEs and cash received as collateral under their derivatives agreements. Reclassifications and Rounding Reclassifications may have been made to prior years' amounts to conform to the current year's presentation. Certain amounts and tables in the consolidated financial statements and associated notes may not add due to rounding. Adopted Accounting Standards There have been no new accounting standards adopted during 2024. Future Application of Accounting Standards and Required Disclosures Segment Reporting In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvement to Reportable Segment Disclosures. The ASU requires disclosure of the following: •Significant segment expenses regularly provided to the chief operating decision maker (CODM) and included within the reported measure(s) of a segment’s profit or loss. •The amount and composition of "other segment items." This amount reconciles segment revenue, less significant expenses, to the reported measure(s) of a segment’s profit or loss. •The CODM's title and position. •How the CODM uses the reported measure(s) of a segment’s profit or loss to assess segment performance and decide how to allocate resources. •All segment profit or loss and assets disclosures currently required annually by Topic 280, as well as those introduced by the ASU, to also be disclosed in interim periods. The ASU also permits a public entity to report multiple measures of a segment’s profit or loss as long as: i) all the reported measures of a segment’s profit or loss are used by the CODM for purposes of assessing performance and allocating resources and ii) the measure closest to GAAP is also provided. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Ambac will adopt this ASU for the annual reporting period ending December 31, 2024 and we are evaluating its impact on Ambac's financial statements. Income Taxes In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The enhancements in the ASU include the following: •Within the rate reconciliation table, disclosure of additional categories of information about federal, state and foreign income taxes and providing more details about the reconciling items in some categories if the items meet a quantitative threshold. •Annual disclosure of income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and disaggregation of the information by jurisdiction based on a quantitative threshold. •Other disclosures include: i) income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and ii) income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. The ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. Ambac will adopt this ASU on January 1, 2025 and we are evaluating its impact on Ambac's financial statements. |  |
Noncontrolling Interest Disclosure |  | Redeemable Noncontrolling Interest The Beat, Riverton, All Trans, Capacity Marine and Xchange acquisitions resulted in a majority ownership of the acquired entities by Ambac. Under the terms of all the acquisition agreements, Ambac has call options to purchase the remaining interests from the minority owners (i.e., noncontrolling interests) and the minority owners have put options to sell their interests to Ambac. Because the exercise of the put options are outside the control of Ambac, in accordance with the Distinguishing Liabilities from Equity Topic of the ASC, Ambac reports redeemable noncontrolling interests in the mezzanine section of its consolidated balance sheet. The redeemable noncontrolling interest is remeasured each period as the greater of: i.the carrying value under ASC 810, which attributes a portion of consolidated net income (loss) to the redeemable noncontrolling interest, and ii.the redemption value of the put option under ASC 480 as if it were exercisable at the end of the reporting period. Any increase (decrease) in the carrying amount of the redeemable noncontrolling interest as a result of adjusting to the redemption value of the put option is recorded as an offset to retained earnings. The impact of such differences on earnings per share are presented in Note 12. Net Income Per Share. Following is a rollforward of redeemable noncontrolling interest.
Nine Months Ended September 30, |  | 2024 |  | 2023
Beginning balance |  | $ | 17 |  |  | $ | 20 |
Fair value of acquired redeemable noncontrolling interest at acquisition date |  | 179 |  |  | 2 |
Net income (loss) attributable to redeemable noncontrolling interest (ASC 810) |  | (1) |  |  | 1 |
Distributions |  | (2) |  |  | (1) |
Adjustment to redemption value (ASC 480) |  | 3 |  |  | — |
Foreign exchange |  | 7 |  |  | — |
Ending balance |  | $ | 204 |  |  | $ | 22 |
Business Combination Disclosure |  | 3. BUSINESS COMBINATION On July 31, 2024, Ambac completed the acquisition of 60% of Beat Capital Partners ("Beat") for a purchase price of $281 of which approximately $252 was paid in cash and the remainder was satisfied through the issuance of 2,216,023 shares of Company Common Stock. The acquisition was accounted for as a business combination. The Company is in the process of finalizing the estimation of the fair value of acquired assets and assumed liabilities. Accordingly, the Company’s preliminary estimates and the allocation of the purchase price to the assets acquired and liabilities assumed may change as the Company completes the process, which would also likely impact the Company’s allocation of the purchase price to Goodwill. In accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, changes if any, to the preliminary estimates and allocation will be reported in the Company’s financial statements as an adjustment to the opening balance sheet. The following table summarizes the consideration transferred to acquire Beat and the estimated fair values of the identified assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the noncontrolling interest, at the acquisition date:
Fair value of consideration transferred: |  |
Cash |  | $ | 252 |
Common shares |  | 29 |
Total consideration |  | 281 |
Recognized amounts of assets acquired, liabilities assumed and noncontrolling interests: |  |
Cash and equivalents |  | 8 |
Short-term investments |  | 29 |
Commission receivables |  | 5 |
Contract assets |  | 43 |
Other assets |  | 11 |
Intangible assets |  | 312 |
Goodwill |  | 350 |
Advanced commissions |  | (49) |
Premium payable |  | (6) |
Deferred tax liability |  | (74) |
Other liabilities |  | (20) |
Redeemable noncontrolling interest |  | (179) |
Nonredeemable noncontrolling interests |  | (148) |
Total |  | 281 |
Goodwill was recorded to reflect the excess purchase consideration over net assets acquired and primarily consists of the future economic benefits that we expect to receive as a result of the acquisition, driven by the value of Beat's potential future distribution and carrier relationships, and synergies with other Ambac business operations. All of the $350 goodwill was assigned to the Insurance Distribution segment. The goodwill is not deductible for tax purposes. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed were based on management’s estimates and assumptions at the time of acquisition and are subject to updating as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available. The fair value of the redeemable non-controlling interest of $179 on the acquisition date was estimated based on the non-controlling interest’s respective share of Beat's enterprise value, adjusted for the value of Ambac's call option to purchase, and the minority owners' put option to sell to Ambac, respectively, the remaining 40% membership interest in Beat. Please refer to the Redeemable Noncontrolling Interest section of Note 1. Business and Basis of Presentation, for further information regarding the terms of the call and put option, as well as the redeemable noncontrolling interest balance sheet classification. The fair value of the nonredeemable noncontrolling interest of $148 represents the aggregate noncontrolling interest share in certain Beat operating units which are minority owned by the units' respective management teams. There are no put or call options associated with these minority interests and as such, the aggregate amount is classified as nonredeemable noncontrolling interest on the balance sheet. The following table sets forth the estimated fair values of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:
|  | Fair Value |  | Useful Life - Years
Customer relationships |  | $ | 303 |  |  | 10.0
Trademarks |  | 8 |  |  | 10.0
Total |  | $ | 312 |  |  |
The customer relationships intangible represents existing relationships Beat maintains with a variety of brokers and distributors across its product lines. It excludes the value of potential future distribution relationships that may be developed, which is included in goodwill. The trade name intangible represents the rights to the Beat Capital Partners brand name which is well known in the marketplace in which Beat competes. The overall weighted average useful life of the identified amortizable intangible assets acquired is 5.5 years. At September 30, 2024, future amortization of Beat's acquired finite-lived intangible assets for the year 2024 (three months) through 2028 and thereafter will be:
Year |  | Estimated Expense
2024 |  | $ | 8 |
2025 |  | 31
2026 |  | 31
2027 |  | 31
2028 |  | 31
Thereafter |  | 174
Total |  | $ | 306 |
The acquired business contributed revenues of $8 and net income of $(2) to Ambac for the period from August 1, 2024 to September 30, 2024. The following unaudited pro forma summary presents consolidated information of Ambac as if the business combination had occurred on January 1, 2023.
|  | Nine Months Ended September 30,
Pro forma |  | 2024 |  | 2023
Revenues |  | $ | 362 |  |  | $ | 238 |
Net income (loss) |  | $ | 18 |  |  | $ | 4 |
Ambac did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and net income. These pro forma amounts have been calculated after applying Ambac's accounting policies and adjusting the results of Beat to reflect amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2023, with the consequential tax effects. In 2024, Ambac incurred $26 of acquisition-related costs. These expenses are included in general and administrative expense on Ambac's consolidated statement of comprehensive income for the nine months ended September 30, 2024. In the table above, these expenses are reflected in the pro forma net income for the nine months ended September 30, 2023. | 3. BUSINESS COMBINATION On July 31, 2024, Ambac completed the acquisition of 60% of Beat Capital Partners ("Beat") for a purchase price of $281 of which approximately $252 was paid in cash and the remainder was satisfied through the issuance of 2,216,023 shares of Company Common Stock. The acquisition was accounted for as a business combination. The Company is in the process of finalizing the estimation of the fair value of acquired assets and assumed liabilities. Accordingly, the Company’s preliminary estimates and the allocation of the purchase price to the assets acquired and liabilities assumed may change as the Company completes the process, which would also likely impact the Company’s allocation of the purchase price to Goodwill. In accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, changes if any, to the preliminary estimates and allocation will be reported in the Company’s financial statements as an adjustment to the opening balance sheet. The following table summarizes the consideration transferred to acquire Beat and the estimated fair values of the identified assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the noncontrolling interest, at the acquisition date:
Fair value of consideration transferred: |  |
Cash |  | $ | 252 |
Common shares |  | 29 |
Total consideration |  | 281 |
Recognized amounts of assets acquired, liabilities assumed and noncontrolling interests: |  |
Cash and equivalents |  | 8 |
Short-term investments |  | 29 |
Commission receivables |  | 5 |
Contract assets |  | 43 |
Other assets |  | 11 |
Intangible assets |  | 312 |
Goodwill |  | 350 |
Advanced commissions |  | (49) |
Premium payable |  | (6) |
Deferred tax liability |  | (74) |
Other liabilities |  | (20) |
Redeemable noncontrolling interest |  | (179) |
Nonredeemable noncontrolling interests |  | (148) |
Total |  | 281 |
Goodwill was recorded to reflect the excess purchase consideration over net assets acquired and primarily consists of the future economic benefits that we expect to receive as a result of the acquisition, driven by the value of Beat's potential future distribution and carrier relationships, and synergies with other Ambac business operations. All of the $350 goodwill was assigned to the Insurance Distribution segment. The goodwill is not deductible for tax purposes. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed were based on management’s estimates and assumptions at the time of acquisition and are subject to updating as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available. The fair value of the redeemable non-controlling interest of $179 on the acquisition date was estimated based on the non-controlling interest’s respective share of Beat's enterprise value, adjusted for the value of Ambac's call option to purchase, and the minority owners' put option to sell to Ambac, respectively, the remaining 40% membership interest in Beat. Please refer to the Redeemable Noncontrolling Interest section of Note 1. Business and Basis of Presentation, for further information regarding the terms of the call and put option, as well as the redeemable noncontrolling interest balance sheet classification. The fair value of the nonredeemable noncontrolling interest of $148 represents the aggregate noncontrolling interest share in certain Beat operating units which are minority owned by the units' respective management teams. There are no put or call options associated with these minority interests and as such, the aggregate amount is classified as nonredeemable noncontrolling interest on the balance sheet. The following table sets forth the estimated fair values of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:
|  | Fair Value |  | Useful Life - Years
Customer relationships |  | $ | 303 |  |  | 10.0
Trademarks |  | 8 |  |  | 10.0
Total |  | $ | 312 |  |  |
The customer relationships intangible represents existing relationships Beat maintains with a variety of brokers and distributors across its product lines. It excludes the value of potential future distribution relationships that may be developed, which is included in goodwill. The trade name intangible represents the rights to the Beat Capital Partners brand name which is well known in the marketplace in which Beat competes. The overall weighted average useful life of the identified amortizable intangible assets acquired is 5.5 years. At September 30, 2024, future amortization of Beat's acquired finite-lived intangible assets for the year 2024 (three months) through 2028 and thereafter will be:
Year |  | Estimated Expense
2024 |  | $ | 8 |
2025 |  | 31
2026 |  | 31
2027 |  | 31
2028 |  | 31
Thereafter |  | 174
Total |  | $ | 306 |
The acquired business contributed revenues of $8 and net income of $(2) to Ambac for the period from August 1, 2024 to September 30, 2024. The following unaudited pro forma summary presents consolidated information of Ambac as if the business combination had occurred on January 1, 2023.
|  | Nine Months Ended September 30,
Pro forma |  | 2024 |  | 2023
Revenues |  | $ | 362 |  |  | $ | 238 |
Net income (loss) |  | $ | 18 |  |  | $ | 4 |
Ambac did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and net income. These pro forma amounts have been calculated after applying Ambac's accounting policies and adjusting the results of Beat to reflect amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2023, with the consequential tax effects. In 2024, Ambac incurred $26 of acquisition-related costs. These expenses are included in general and administrative expense on Ambac's consolidated statement of comprehensive income for the nine months ended September 30, 2024. In the table above, these expenses are reflected in the pro forma net income for the nine months ended September 30, 2023.
Mergers, Acquisitions and Dispositions Disclosures |  | Acquisition of Beat Capital Partners Limited ("Beat") On June 4, 2024, the Company, entered into a share purchase agreement (the “Beat Purchase Agreement”), by and among the Company, Cirrata V LLC, a Delaware limited liability company and an indirect wholly-owned subsidiary of AFG (the “Purchaser”), certain sellers set forth therein (the “Sellers”) and Beat, pursuant to which, effective July 31, 2024, the Purchaser purchased from the Sellers approximately 60% of the entire issued share capital of Beat for total consideration, as of the closing date, of approximately $281, of which approximately $252 was paid in cash and the remainder of which was satisfied through the issuance of 2,216,023 shares of AFG common stock to certain Sellers (the "Beat Transaction"). Beat’s management team and Bain Capital Credit LP (together, the “Rollover Shareholders”) each retained approximately 20% of Beat’s issued share capital immediately after closing. Many of Beat's operating units are minority owned by their respective management teams and accordingly, Ambac's economic interests in those units is less than 60% despite our ownership of 60% of Beat. AFG issued the common stock free and clear of any liens or restrictions (other than those arising under state and federal securities laws of the United States) and bearing a restrictive legend. The common stock has not been registered under the Securities Act in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act. AFG funded the cash portion of the consideration with a combination of available cash, approximately $62 of funding from AAC, and $147 from new indebtedness (the "Credit Facility") that was issued in the third quarter of 2024. The debt incurred under the Credit Facility matures on July 31, 2025. Obligations under Credit Agreement are guaranteed by AFG and are secured on a first-priority basis by (i) a pledge by AFG of all of the capital stock of Everspan Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company and (ii) a pledge by the Purchaser of all of the capital stock of Beat held by Purchaser. Borrowing under the Credit Facility bears interest at three-month SOFR plus a margin initially equal to 4.50%, increasing to 5.50% on November 1, 2024, 6.50% on February 1, 2025, and 7.50% on May 1, 2025. A duration fee equal to 1% of the then outstanding Credit Facility shall be due on each of February 1, 2025 and May 1, 2025, to the extent the borrowing under the Credit Facility is not repaid earlier. Funding received from AAC and the Credit Facility are required to be repaid upon closing of the sale of AAC. To reduce its exposure to appreciation of the British Pound Sterling ("GBP") relative to the U.S. Dollar ("USD"), AFG entered into a foreign exchange futures contract under which it agreed to purchase an amount of GBP sufficient to cover the cash portion of the purchase price of Beat along with estimated GBP denominated expenses at an exchange rate of 1.2662 per USD. At the closing of the Beat Transaction, AFG entered into a Shareholders’ Agreement by and among AFG, the Purchaser, the Rollover Shareholders and Beat (the “Shareholders’ Agreement”). The Shareholders’ Agreement provides for, among other things, the granting of (i) put options to each Rollover Shareholder to require the Purchaser to purchase from such Rollover Shareholder, the Relevant Shares (as defined in the Shareholders’ Agreement), and (ii) call options to the Purchaser to purchase from each Rollover Shareholder, the Relevant Shares. |

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