Investments

9 Months Ended

Sep. 30, 2025

Investments, Debt and Equity Securities [Abstract]

4. INVESTMENTS

Ambac’s invested assets are primarily comprised of (i) fixed maturity securities classified as 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 September 30, 2025, and December 31, 2024, were as follows:


	September 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	$	11,689	$	—	$	100	$	279	$	11,510	$	14,646	—	$	7	$	570	$	14,083
Corporate obligations	72,280		—		590		2,180		70,690		92,990		—	107		3,905		89,192

U.S. government obligations	38,978		—		398		205		39,171		41,706		—	98		809		40,995

Residential mortgage-backed securities	3,265		—		43		14		3,294		2,475		—	—		29		2,446
Commercial mortgage-backed securities	1,827		—		1		9		1,819		2,127		—	8		34		2,101
Collateralized debt obligations	2,304		—		15		—		2,319		3,131		—	13		2		3,142
Other asset-backed securities	2,274		—		24		—		2,298		5,049		—	14		2		5,061
	132,617		—		1,171		2,687		131,101		162,124		—	247		5,351		157,020
Short-term	295,815		—		10		—		295,825		127,588		—	13		—		127,601





Total available-for-sale investments	$	428,432	$	—	$	1,181	$	2,687	$	426,926	$	289,712	—	$	260	$	5,351	$	284,621

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


	Amortized Cost		Estimated Fair Value
Due in one year or less	$	331,403	$	331,164
Due after one year through five years	35,584		34,749
Due after five years through ten years	50,797		50,296
Due after ten years	978		987
	418,762		417,196
Residential mortgage-backed securities	3,265		3,294
Commercial mortgage-backed securities	1,827		1,819
Collateralized debt obligations	2,304		2,319
Other asset-backed securities	2,274		2,298
	$	428,432	$	426,926

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 September 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 September 30, 2025, and December 31, 2024:


	September 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	$	318	$	15	$	6,191	$	264	$	6,509	$	279	$	6,042	$	112	$	6,582	$	458	$	12,624	$	570
Corporate obligations	3,269		13		32,855		2,167		36,124		2,180		23,784		269		46,612		3,636		70,396		3,905

U.S. government obligations	3,012		34		13,064		171		16,076		205		15,919		344		14,818		465		30,737		809

Residential mortgage-backed securities	—		—		1,722		14		1,722		14		2,446		29		—		—		2,446		29
Commercial mortgage-backed securities	761		9		—		—		761		9		738		34		—		—		738		34
Collateralized debt obligations	390		—		—		—		390		—		655		2		—		—		655		2
Other asset-backed securities	—		—		—		—		—		—		1,428		2		—		—		1,428		2
	7,750		71		53,832		2,616		61,582		2,687		51,012		792		68,012		4,559		119,024		5,351
Short-term	—		—		—		—		—		—		—		—		—		—		—		—
	7,750		71		53,832		2,616		61,582		2,687		51,012		792		68,012		4,559		119,024		5,351




Total temporarily impaired securities	$	7,750	$	71	$	53,832	$	2,616	$	61,582	$	2,687	$	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 September 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 September 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 September 30, 2025, resulted primarily from an increase in interest rates since the securities were purchased. Unrealized losses of $2,180 related to 99 investment grade securities with an average unrealized loss equal to 6% of amortized cost at September 30, 2025. Management believes that the full and timely receipt of all principal and interest payment on corporate obligations with unrealized losses as of September 30, 2025, is probable.

Investment Income (Loss)

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Fixed maturity securities	$	1,192	$	1,133	$	4,063	$	3,567
Short-term investments	1,344		2,495		3,991		8,072
Loans	24		—		93		—
Investment expense	(93)		(84)		(177)		(276)
Securities available-for-sale and short-term	2,467		3,544		7,970		11,363

Other investments	199		(56)		120		(472)
Total net investment income (loss)	$	2,666	$	3,488	$	8,090	$	10,891

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 September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Gross realized gains on securities	$	512	$	4	$	514	$	6,066
Gross realized losses on securities	(5)		—		(7)		(46)

Credit impairments	—		(581)		—		(2,061)

Net investment gains (losses), including impairments	$	507	$	(577)	$	507	$	3,959

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

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

Deposits with Regulators and Other Restrictions:

Securities carried at $32,587 and $22,861 at September 30, 2025, and December 31, 2024, respectively, were deposited by Ambac's insurance company subsidiaries with governmental authorities or designated custodian banks as required by laws affecting insurance companies. Invested assets carried at $765 and $800 at September 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 $3,916 and $2,845 at September 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 $7,684 and $7,499 as of September 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 September 30, 2025.

Other investments also include preferred equity investments with a carrying value of $20,618 and $20,618 as of September 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 nine months ended September 30, 2025, and $581 and $2,061 in the three and nine months ended September 30, 2024, respectively.