Investments

6 Months Ended

Jun. 30, 2025

Investments, Debt and Equity Securities [Abstract]

4. INVESTMENTS

Ambac’s invested assets are primarily comprised of of (i) fixed maturity securities classified as either available-for-sale, (ii) interests in pooled investment funds which are reported within Other investments on the Consolidated Balance Sheets and (iii)

preferred equity investments which are reported within Other investments on the Consolidated Balance Sheets. Interests in pooled investment funds are limited partner interests and are reported using the equity method.

Fixed Maturity Securities:

The amortized cost and estimated fair value of available-for-sale investments, at June 30, 2025, and December 31, 2024, were as follows:


	June 30, 2025:										December 31, 2024:
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized				Estimated Fair Value		Amortized Cost		Allowance for Credit Losses	Gross Unrealized				Estimated Fair Value
					Gains		Losses							Gains		Losses
Fixed maturity securities:
Municipal obligations	$	14,540	$	—	$	109	$	341	$	14,308	$	14,646	—	$	7	$	570	$	14,083
Corporate obligations	93,926		—		773		2,599		92,100		92,990		—	107		3,905		89,192

U.S. government obligations	44,244		—		496		308		44,432		41,706		—	98		809		40,995

Residential mortgage-backed securities	3,352		—		28		18		3,362		2,475		—	—		29		2,446
Commercial mortgage-backed securities	1,935		—		2		17		1,920		2,127		—	8		34		2,101
Collateralized debt obligations	2,642		—		11		1		2,652		3,131		—	13		2		3,142
Other asset-backed securities	2,544		—		19		2		2,561		5,049		—	14		2		5,061
	163,183		—		1,438		3,286		161,335		162,124		—	247		5,351		157,020
Short-term	102,719		—		1		—		102,720		127,588		—	13		—		127,601





Total available-for-sale investments	$	265,902	$	—	$	1,439	$	3,286	$	264,055	$	289,712	—	$	260	$	5,351	$	284,621

The amortized cost and estimated fair value of available-for-sale investments, at June 30, 2025, by contractual maturity, were as follows:


	Amortized Cost		Estimated Fair Value
Due in one year or less	$	138,597	$	138,260
Due after one year through five years	53,212		52,386
Due after five years through ten years	62,642		61,934
Due after ten years	978		980
	255,429		253,560
Residential mortgage-backed securities	3,352		3,362
Commercial mortgage-backed securities	1,935		1,920
Collateralized debt obligations	2,642		2,652
Other asset-backed securities	2,544		2,561
Total	$	265,902	$	264,055

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

Unrealized Losses on Fixed Maturity Securities:

The following table shows gross unrealized losses and fair values of Ambac’s available-for-sale investments, which at June 30, 2025, and December 31, 2024, did not have an allowance for credit losses. This information is aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at June 30, 2025, and December 31, 2024:


	June 30, 2025												December 31, 2024
	Less Than 12 Months				12 Months or More				Total				Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Fixed maturity securities:
Municipal obligations	$	1,329	$	31	$	6,042	$	310	$	7,371	$	341	$	6,042	$	112	$	6,582	$	458	$	12,624	$	570
Corporate obligations	9,555		59		35,650		2,540		45,205		2,599		23,784		269		46,612		3,636		70,396		3,905

U.S. government obligations	4,714		43		11,932		265		16,646		308		15,919		344		14,818		465		30,737		809

Residential mortgage-backed securities	1,805		18		—		—		1,805		18		2,446		29		—		—		2,446		29
Commercial mortgage-backed securities	754		17		—		—		754		17		738		34		—		—		738		34
Collateralized debt obligations	566		1		—		—		566		1		655		2		—		—		655		2
Other asset-backed securities	848		2		—		—		848		2		1,428		2		—		—		1,428		2
	19,571		171		53,624		3,115		73,195		3,286		51,012		792		68,012		4,559		119,024		5,351
Short-term	749		—		—		—		749		—		—		—		—		—		—		—
	20,320		171		53,624		3,115		73,944		3,286		51,012		792		68,012		4,559		119,024		5,351




Total temporarily impaired securities	$	20,320	$	171	$	53,624	$	3,115	$	73,944	$	3,286	$	51,012	$	792	$	68,012	$	4,559	$	119,024	$	5,351

Management has determined that the securities in the above table do not have credit impairment as of June 30, 2025, and December 31, 2024, based upon (i) no actual or expected principal and interest payment defaults on these securities and (ii) analysis of the creditworthiness of the issuer.

Ambac’s assessment about whether a security is credit impaired reflects management’s current judgment regarding facts and circumstances specific to the security and other factors. If that

judgment changes, Ambac may record a charge for credit impairment in future periods.

The declines in fair value and resultant unrealized losses across asset classes as of June 30, 2025, included in the above table resulted from the impact of increasing interest rates since the securities were purchased. Management has determined that the securities with unrealized losses are not credit impaired. Further

discussion of management's assessment with respect to security categories with larger unrealized loss balances is below.

Corporate obligations

The gross unrealized losses on corporate obligations as of June 30, 2025, resulted primarily from an increase in interest rates since the securities were purchased. Unrealized losses of $2,599 related to 120 investment grade securities with an average unrealized loss equal to 5% of amortized cost at June 30, 2025. Management believes that the full and timely receipt of all principal and interest payment on corporate obligations with unrealized losses as of June 30, 2025, is probable.

Investment Income (Loss)

Net investment income (loss) was comprised of the following for the affected periods:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Fixed maturity securities	$	1,470	$	1,263	$	2,870	$	2,434
Short-term investments	1,191		2,988		2,648		5,577
Loans	35		—		69		—
Investment expense	(87)		(102)		(84)		(193)
Securities available-for-sale and short-term	2,609		4,149		5,503		7,818
Fixed maturity securities - trading	—		(386)		(79)		(415)

Total net investment income (loss)	$	2,609	$	3,763	$	5,424	$	7,403

Net investment income (loss) from Other investments primarily represents income from investment limited partnerships and other equity interests accounted for under the equity method.

Net Investments Gains (Losses), including Impairments:

The following table details investment gains (losses) and impairments included in earnings within Other revenues for the affected periods:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Gross realized gains on securities	$	2	$	6,058	$	2	$	6,062
Gross realized losses on securities	—		(43)		(3)		(46)
Foreign exchange gains (losses)	—		—		—		—
Credit impairments	—		(1,480)		—		(1,480)
Intent / requirement to sell impairments	—		—		—		—
Net investment gains (losses), including impairments	$	2	$	4,535	$	(1)	$	4,536

Ambac had an allowance for credit losses of $0 and $0 at June 30, 2025, and 2024, respectively.

Ambac did not purchase any financial assets with credit deterioration for the three and six months ended June 30, 2025 and 2024.

Deposits with Regulators and Other Restrictions:

Securities carried at $32,325 and $22,861 at June 30, 2025, and December 31, 2024, respectively, were deposited by Ambac's insurance subsidiaries with governmental authorities or designated custodian banks as required by laws affecting insurance companies. Invested assets carried at $765 and $800 at June 30, 2025, and December 31, 2024, were deposited as security in connection with a letter of credit issued for an office lease. Invested assets include certain fiduciary funds held by Ambac's insurance distribution subsidiaries, carried at $1,994 and $2,845 at June 30, 2025, and December 31, 2024, respectively.

Other Investments:

Ambac's investment portfolio includes a limited partnership interest in a private equity fund which seeks to generate long-term capital appreciation through venture investments in insurtech companies. The fair value of Ambac's investment in the fund was $7,486 and $7,499 as of June 30, 2025, and December 31, 2024, determined using net asset value ("NAV") as a practical expedient. Redemptions may be made quarterly with 90 days notice subject to withdrawal limitations and/or redemption fees which vary with the timing and notification of withdrawal provided by the investor. Ambac's unfunded commitments total $1,658 on this private equity fund at June 30, 2025.

Other investments also include preferred equity investments with a carrying value of $20,618 and $20,618 as of June 30, 2025, and December 31, 2024, respectively, that do not have readily determinable fair values and are carried at cost, less any impairments as permitted under the Investments — Equity Securities Topic of the ASC. There were no impairments recorded on these investments in the three and six months ended June 30, 2025, and $1,480 and $1,480 in the three and six months ended June 30, 2024, respectively.