Business and Basis of Presentation Financial Services, Insurance (Policies)

6 Months Ended

9 Months Ended

Mar. 31, 2025

Sep. 30, 2025

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. All significant intercompany balances have been eliminated. The usual condition for a controlling financial interest is ownership of a majority of the voting interests of an entity.

Discontinued Operations

On September 29, 2025, the Company completed the sale of its Legacy Financial Guarantee business, inclusive of Ambac Assurance Corporation ("AAC") and its wholly owned subsidiary Ambac Assurance UK Limited. The results of discontinued operations for all periods to the date of sale are reported separately as Net income (loss) from discontinued operations within the Consolidated Statements of Total Comprehensive Income for the current and prior periods. Assets and liabilities of AAC are presented on the Consolidated Balance Sheet as of December 31, 2024, under Assets of discontinued operations and Liabilities of discontinued operations. AAC's cash flows for all periods to the date of sale are reflected as Net cash provided by (used in) discontinued operations within the Consolidated Statements of Cash Flows. Given the exit from the legacy business, the Company will be changing its name and rebranding in the fourth quarter of 2025.

Refer to Sale of Ambac Assurance Corporation in Note 3. Discontinued Operation for further information.

Acquisition of ArmadaCare

On October 31, 2025, the Company closed on the acquisition of ArmadaCare for a purchase price of $250,000. The Company

purchased all of the issued and outstanding limited liability company interests in ArmadaCare from Sirius Re Holdings, Inc. and Sirius Acquisitions Holding Company.

Credit Facilities

Proceeds from the sale of AAC were used, in part, by the Company to repay the $150,000 credit facility that was used to partially finance the acquisition of Beat Capital Partners Limited ("Beat").

In connection with the acquisition of ArmadaCare on October 31, 2025, Cirrata Group LLC and certain of its subsidiaries (including ArmadaCare) entered into a credit facility providing for a $100,000 term loan and a $20,000 revolving credit facility. The term loan and revolving loans were fully drawn to pay part of the purchase price for ArmadaCare. The term loan will amortize in equal quarterly installments in an aggregate amount equal to 2.5% per annum of the original principal amount, with the remaining balance to be paid on the maturity date in five years. The revolver is payable on the maturity date in five years. Optional prepayments are permitted without premium or penalty. Mandatory prepayments will be due with net cash proceeds from certain asset sales, recovery events (such as insurance recoveries), issuances of indebtedness and indemnity payments. The credit agreement includes customary representations and warranties and covenants applicable to the Insurance Distribution businesses, including (without limitation) maintenance of certain financial ratios and limitations on indebtedness, liens, mergers, sales of assets, investments, restricted payments (such as dividends), and affiliate transactions. Pursuant to a separate guaranty and pledge agreement, AFG guarantees the payment and performance of all obligations under the credit agreement and other loan documents and pledges its ownership interest in Cirrata Group LLC as collateral. AFG makes customary representations and warranties and covenants and agrees to always maintain minimum cash liquidity of $10,000. Pursuant to a separate guaranty and security agreement, the borrowers and other wholly-owned subsidiaries of Cirrata Group LLC guarantee the payment and performance of all obligations under the credit agreement and other loan documents and grant security interests in substantially all of the assets of the borrowers and such other subsidiaries, including their respective ownership interests in their subsidiaries, as collateral.

Pivix Conversion

Effective September 1, 2025, AFG's wholly owned subsidiary, Cirrata Group, LLC ("Cirrata Group"), exercised its option to convert its $3,500 convertible note investment in Pivix Specialty Insurance Services ("Pivix"), an excess and surplus lines MGA/U, into common stock. As a result, Cirrata Group now has a 74% controlling stake in Pivix when combined with its previous 17% minority equity interest and includes Pivix in its consolidated financial statements.

New Accounting Pronouncements, Policy [Policy Text Block]

Adopted Accounting Standards

There have been no new accounting standards adopted during the nine months ended September 30, 2025.

Future Application of Accounting Standards and Required Disclosures

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 for the annual reporting period ending December 31, 2025. The standard is not expected to have a consequential impact on Ambac's financial statements.

Credit Losses for Accounts Receivable and Contract Assets:

In July 2025, the FASB issued ASU 2025-05, Financial Instruments— Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in the ASU provide all entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions under Topic 606. The practical expedient allows entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset.

The ASU is effective for interim and annual periods beginning after December 15, 2025. The standard is not expected to have a material impact on Ambac's financial statements.

Goodwill and Other— Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Intangibles— Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal Use Software. This standard is intended to increase the operability of the accounting guidance for internal-use software development costs considering the evolution of software development methods. Amendments remove references to prescriptive and sequential project stages, requiring entities to start capitalizing costs when: i) management has authorized and committed to funding the project and ii) it is probable that the project will be completed and the software will be used to perform the function intended.

The ASU is effective for interim and annual periods beginning after December 15, 2027 with early adoption permitted. Ambac has not determined if it will early adopt this ASU and is evaluating its impact on Ambac's financial statements.

Expense Disaggregation Disclosures:

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The enhanced disclosures requirements include the following:

•Disclose the amounts of certain expense categories included in each relevant expense caption. Those categories applicable to Ambac include employee compensation, depreciation, and intangible asset amortization. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed above.

•Include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements.

•Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

•Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

The ASU is effective for annual periods beginning after December 15, 2026 and for interim reporting periods after December 15, 2027 with early adoption permitted. Ambac has not determined if it will early adopt this ASU and is evaluating the impact on Ambac's financial statements.

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

1. BACKGROUND AND BUSINESS DESCRIPTION

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, 2024, 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, 2024.

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:

•Insurance Distribution — Ambac's specialty property and casualty ("P&C") insurance underwriting and distribution business, includes Managing General Agents and Underwriters (collectively "MGAs" or "MGA/Us"), an insurance broker, and other distribution and underwriting businesses. On October 31, 2025, the Company completed the acquisition of ArmadaCorp Capital, LLC and its subsidiaries (collectively, "ArmadaCare"), a leading specialty accident and health MGA. Ambac's insurance distribution platform operates in the following lines of business: property, niche specialty risk, accident & health, miscellaneous specialty, reinsurance, surety, marine & energy, specialty auto, other professional and professional Directors & Officers ("D&O") .

•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 last affirmed on July 17, 2025.

The Company reports these two business operations as segments; see Note 2. Segment Information for further information.

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, 2024. 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, 2024. 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, 2025, may not be indicative of the results that may be expected for the year ending December 31, 2025. The December 31, 2024, 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

Discontinued Operations

Refer to Sale of Ambac Assurance Corporation in Note 3. Discontinued Operation for further information.

Acquisition of ArmadaCare

On October 31, 2025, the Company closed on the acquisition of ArmadaCare for a purchase price of $250,000. The Company

purchased all of the issued and outstanding limited liability company interests in ArmadaCare from Sirius Re Holdings, Inc. and Sirius Acquisitions Holding Company.

Credit Facilities

Proceeds from the sale of AAC were used, in part, by the Company to repay the $150,000 credit facility that was used to partially finance the acquisition of Beat Capital Partners Limited ("Beat").

Pivix Conversion

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 $(3,791) and $(5,974) for the nine months ended September 30, 2025, and 2024, respectively. Foreign currency transaction gains/(losses)

are primarily the result of Beat transactions in currencies (primarily the U.S. dollar) other than its functional currency (the British Pound Sterling).

Noncontrolling Interests ("NCI")

Nonredeemable NCI

The total Nonredeemable NCI as of September 30, 2025, and December 31, 2024, were $115,790 and $197,755, respectively.

For Beat, the Nonredeemable NCI of $115,790 and $146,837 as of September 30, 2025, and December 31, 2024, includes the NCI share in certain operating units which are minority owned by the units' respective management teams that do not have associated put options. As of December 31, 2024, there were no put options associated with any of these minority interests and as such, the aggregate amount was classified as nonredeemable NCI on the balance sheet. During the nine months ended September 30, 2025, certain NCI shares were reclassified between nonredeemable and redeemable NCI as further described under "Redeemable NCI" below. The acquisition date valuation method to determine the fair value of nonredeemable NCI was the discounted cash flow approach. The significant fair value assumptions used in the model included estimated long term revenue and expense forecasts and the discount rate. When redeemable NCI shares are no longer redeemable, such as when put options expire unused, the NCI shares are reclassified to nonredeemable NCI with no change in carrying value.

During the nine months ended September 30, 2025, Ambac paid $2,967 to purchase certain nonredeemable shares from minority interest owners, resulting in a $14,362 decrease to Nonredeemable noncontrolling interest. During the three months ended September 30, 2205, there was no activity related the purchases of nonredeemable shares. The difference between the consideration paid and carrying value of the nonredeemable NCI is recorded as an adjustment to additional paid-in capital.

Redeemable Noncontrolling Interest

Ambac's acquisitions of MGA/Us has resulted in a majority ownership of the acquired entities by Ambac. Under the terms of applicable 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 NCI in the mezzanine section of its consolidated balance sheet. In addition, during the three months ended March 31, 2025, Ambac entered into put options with certain minority owners of the MGA/U operating entities that are majority owned by Beat. These put options are embedded in the associated NCI shares ("Option Shares"), resulting in remeasurement of the shares at fair value inclusive of the put options, and reclassification of the Option Shares from nonredeemable NCI to redeemable NCI. The change in carrying value resulting from revaluation of $10,276 is recorded as an offset to retained earnings, with a corresponding impact on earnings per share for the nine months ended September 30, 2025. During the nine months ended September 30, 2025, Ambac paid

$1,068 as a result of exercise of put options on the Option Shares, acquiring redeemable NCI with a carrying value of $1,815. The difference between the consideration paid and carrying value of the redeemable NCI is recorded as an adjustment to additional paid-in capital. During the three months ended September 30, 2025, there was no activity related the exercise of the put options on the Option Shares.

The redeemable noncontrolling interest is remeasured on an annual basis as the greater of:

•the carrying value under ASC 810, which attributes a portion of consolidated net income (loss) to the redeemable noncontrolling interest, and

•the redemption value of the put option under ASC 480 as if it were exercisable at the end of the reporting period.

Management made an accounting policy election to calculate the redemption value of the put options under ASC 480 on an annual basis. Quarterly, the redeemable noncontrolling interest increases or decreases due to activity related to net income and distributions. As the redemption is calculated at year end, management will record an adjustment to bring the redeemable noncontrolling interest to the redemption value calculated at year end.

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 11. Net Income Per Share.

Following is a rollforward of redeemable noncontrolling interest.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Beginning balance	$	190,347	$	17,079	$	140,860	$	17,079
Net income (loss) attributable to redeemable noncontrolling interest (ASC 810)	(271)		(1,776)		(1,012)		(857)
Gain (loss) on foreign currency translation attributable to redeemable NCI	(3,457)		7,189		10,313		7,189
Fair value of acquired redeemable noncontrolling interest at acquisition date	1,359		179,428		1,359		179,428
Reclassification from nonredeemable noncontrolling interest including remeasurement at fair value	—		—		42,180		—
Reclassification to nonredeemable noncontrolling interest	—		—		(5,136)		—
Put / call option exercise	—		—		(1,815)		—
Distributions	(300)		(626)		(1,219)		(1,676)
Adjustment to redemption value (ASC 480)	569		2,402		2,717		2,533
Ending balance	$	188,247	$	203,696	$	188,247	$	203,696


Supplemental Disclosure of Cash Flow Information

	Nine Months Ended September 30,
	2025		2024
Cash paid during the period for:
Income taxes	3,889		$	1,234
Interest and related fees on debt	19,775		—
Non-cash investing and financing activities:














Ambac common stock issued as partial consideration to acquire Beat	—		29,229

	September 30,
	2025		2024
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	$	27,520	$	40,803
Restricted cash	24,247		15,973

Total cash, cash equivalents, and restricted cash shown on the Consolidated Statements of Cash Flows	$	51,767	$	56,776

Restricted cash is cash that we do not have the right to use for general purposes and consists primarily of fiduciary cash held by Ambac's insurance distribution subsidiaries and Everspan state deposits.

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.