• Premiums: Nearly $900 million, up 74% from 2023.
• Revenue: $236 million, an increase of 89% from the prior year.
• Net Loss: $548 million or $10.23 per diluted share for Q4 2024.
• Net Loss from Continuing Operations: $22 million or $0.70 per share.
• Adjusted Net Loss: $6 million or $0.12 per diluted share for Q4 2024.
• Adjusted EBITDA Margin: 20% for 2024, with 500 basis points of margin headwinds.
• Organic Growth: 5.4% for the year.
• Everspan Gross Premium: Over $380 million, up 40% from the prior year.
• Everspan Combined Ratio: 101.6% for the year, a 500 basis points improvement over 2023.
• Adjusted EBITDA to Ambac Common Shareholders: $5.3 million for Q4 and $13.2 million for the year.
• Discontinued Operations Loss: $570 million loss on sale of the legacy financial guarantee business.
• Cash and Investments: Approximately $119 million or $2.56 per share as of the end of Q4 2024.

• Warning! GuruFocus has detected 4 Warning Signs with AMBC.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ambac Financial Group Inc (NYSE:AMBC) achieved significant growth in its P&C business, generating nearly $900 million in premiums, up 74% from 2023.
• The acquisition of Beat has been transformative, providing immediate scale and enhancing the distribution platform.
• Successfully sold the legacy financial guarantee business to Oaktree for $420 million, allowing focus on scaling the specialty P&C business.
• Everspan's gross premium grew by 40% to over $380 million, with a combined ratio improvement of nearly 500 basis points over 2023.
• Cirrata generated nearly $100 million in revenue for 2024, up 93%, with a strong adjusted EBITDA margin of 20%.

Negative Points

• Ambac Financial Group Inc (NYSE:AMBC) reported a net loss of $548 million for the fourth quarter of 2024, primarily due to a $570 million loss on the sale of the legacy business.
• The insurance distribution segment faced challenges with de novo startup expenses impacting adjusted EBITDA by approximately $3.8 million.
• The employer stop loss and short-term medical lines experienced market deterioration, affecting the distribution business.
• Everspan's net premiums written were negative $3 million in the quarter due to non-renewal of a reinsurance program.
• The expense ratio increased to 44.6% in the fourth quarter of 2024, driven by changes to sliding scale commissions.

Q & A Highlights

Q: On the distribution side, you mentioned specific lines like short-term medical and employer stop loss were weaker. Do you expect this trend to persist, and how should we think about the prospects for these lines? A: Claude LeBlanc, President and CEO, explained that the employer stop loss sector has seen widespread deterioration, which is considered a macro trend. However, there could be stabilization in the near future. For short-term medical, challenges were noted under the past administration, but there is optimism for a return to steady state with the new administration. Overall, growth is significant across various areas in A&H, with ESL being the biggest challenge.

Q: Regarding the specialty P&C side, the combined ratio showed continued progress. Is this sustainable, or are there temporary factors at play? A: David Trick, CFO, stated that the focus is on profitability rather than just growth. The effective loss ratios are in the mid-60s, aligning with long-term goals for Everspan. While there will be variability due to market developments, the quarter's performance is consistent with long-term objectives.

Q: Can you provide more details on the impact of the Beat acquisition on your financials? A: David Trick, CFO, noted that the acquisition of Beat Capital significantly contributed to revenue growth, with premiums placed growing 309% and total revenue increasing by 257% compared to the previous year. The acquisition also led to increased intangible amortization and interest expenses, impacting adjusted EBITDA.

Q: How is the sale of the legacy financial guarantee business progressing, and what are the expected benefits? A: Claude LeBlanc, President and CEO, mentioned that the sale to Oaktree for $420 million is nearing completion, pending regulatory approval. This sale allows Ambac to accelerate the scaling of its specialty P&C business and focus on future growth, with expectations of strong organic growth and significant adjusted EBITDA by 2028.

Q: What are the key factors driving the growth in your specialty commercial auto business? A: Claude LeBlanc, President and CEO, highlighted that the specialty commercial auto business performed particularly well, offsetting headwinds in other areas. The growth is supported by rate increases in US casualty lines and a favorable market environment for E&S commercial insurance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.