By Michael Loney

March 4 - (The Insurer) - Ambac’s share price has fallen more than 20% since it reported an adjusted net loss of $1.1 million for the fourth quarter on February 26, despite its CEO stating the overall E&S market is "performing well".

The quarterly result included a $570 million loss on disposal related to the sale of its legacy financial guarantee business to funds managed by Oaktree Capital Management, a move it described as “pivotal for positioning the company for long-term growth”.

New York-listed Ambac’s share price closed down 10.8% on February 27 at $10.40, with a further 6.7% drop the following day.

The share price fell again by 4.2% on Monday, closing at $9.30, meaning it was now down 20.2% from the close on Wednesday, February 26, before the results were announced.

As of 9.50 a.m. ET on Tuesday, the share price was down a further 2.5%.

Ambac also reported that its total P&C premium production, which includes gross premiums written by the Everspan specialty P&C insurance segment and premiums placed by the Cirrata insurance distribution segment, grew to $265 million during the fourth quarter.

This was an 88% increase over the $140.9 million in the fourth quarter of 2023.

For the full year, Ambac reported total P&C insurance production of $876.1 million, up 74% from $503.9 million in 2023.

The Everspan specialty P&C segment grew gross premiums written 40% to $382.8 million, while the Cirrata insurance distribution segment grew premiums placed 114% to $493.4 million.

FOCUS NOW ON GROWTH OF SPECIALTY P&C

On an investor call on February 27, Ambac president and CEO Claude LeBlanc commented that “our focus is squarely on the future growth of our specialty P&C business and delivering value for our shareholders”.

“Our efforts are supported within a market environment where broadly speaking we continue to see the overall E&S market performing well. The move towards risk specialization and E&S business continues across our industry, and that specialization supports the growth of the MGA market,” he said.

LeBlanc said that Ambac continues to see rate increases in the U.S. casualty lines it focuses on, with generally high single to double-digit rate increases.

“In the property market, we have seen some softening in the fourth quarter and through January 1 renewals, but terms and conditions have held. It remains too early to know the overall impact of the California wildfires on market conditions,” he said.

In addition, LeBlanc said professional and financial lines continue to see softness, especially in large account and public market D&O, while smaller account and management liability are “holding up much better”.

“Overall, specialty and E&S commercial insurance market conditions remain broadly supportive of our business goals,” he added.

In the Cirrata insurance distribution business, premiums placed and revenue grew to $204.9 million during the fourth quarter of 2024 compared to the $50.2 million in Q4 2023. The increase was driven primarily by the inclusion of Beat Capital's results.

Ambac noted the launch of four new MGAs since the acquisition of Beat Capital, which closed in the third quarter, in addition to two new launches that Beat started pre-acquisition.

Cirrata’s organic growth for the quarter of -3.2% was negatively affected primarily by A&H production, mostly due to weak market conditions in employer stop loss and short-term medical lines.

LeBlanc highlighted that for the full year organic growth was 5.4%, “with our specialty commercial auto business performing particularly well and more than offsetting some headwinds in our ESL and short-term medical business".

The executive noted that a key element for supporting the growth in MGA businesses is the availability of managed capacity.

“For 2025, the Cirrata platform has more than $1.5 billion of committed third-party capacity from a diversified panel of insurers, reinsurers, private capital and pension funds,” he said. “Over 60% of that support has been behind us for 4 or more years, which I think validates the quality of the underwriting of our MGAs.”

The Everspan specialty P&C insurance segment reported a 96.5% combined ratio for the fourth quarter, a 3.8 point improvement from 100.3% in Q4 2023.

The segment’s gross premiums written of $60.0 million was down 34% from $90.7 million in Q4 2023, while net premiums written of -$2.6 million compared with $36.8 million.

Both gross and net premiums written contracted due to Everspan's cancellation of a personal lines non-standard auto reinsurance program in Q4 2024.

For the full year, Everspan's gross premium written grew to over $380 million, up 40% from the prior year. Its full-year combined ratio of 101.6% was nearly a 500 basis points improvement over 2023.

“Everspan maintains a strong pipeline of internal and external program opportunities, which we believe will further our goals to diversify the portfolio, support growth, reduce our combined ratios and deliver strong future ROEs,” LeBlanc said.

Summing up, the executive said that Ambac is on track towards achieving its long-term goals of strong organic growth and generating $80 million to $90 million of adjusted Ebitda to common shareholders in 2028.