Ambac Financial Group Inc (AMBC) Reports Mixed Third Quarter 2023 Results
Net income of $66 million or $1.41 per diluted share, with Adjusted net income of $94 million or $2.00 per diluted share.
Legacy Financial Guarantee segment generated $66 million in net income.
Specialty P&C Insurance ("Everspan") gross premium up 160% year-over-year, achieving first quarterly pre-tax profit.
Insurance Distribution ("Cirrata") premiums placed up 119% year-over-year.
Ambac Financial Group Inc (NYSE:AMBC) disclosed its third-quarter earnings for the period ending September 30, 2023, on November 7, 2023. The company reported a net income of $66 million, or $1.41 per diluted share, and an Adjusted net income of $94 million, or $2.00 per diluted share. The Legacy Financial Guarantee segment contributed significantly to the net income, while the Specialty P&C Insurance segment, Everspan, reported a gross premium of $77 million, marking a 160% increase from the third quarter of 2022 and achieving its first quarterly pre-tax profit. Insurance Distribution, Cirrata, also showed robust growth with premiums placed of $62 million, a 119% increase from the previous year.
Financial Highlights and Segment Performance
Ambac's Book Value per share increased to $28.00, up 1% from the previous quarter, while Adjusted Book Value per share rose to $27.90, a 3% increase. The company's President and CEO, Claude LeBlanc, commented on the completion of the capital model for Ambac Assurance Corporation and the appointment of Moelis & Company to discuss strategic options for the legacy financial guarantee business.
The Specialty P&C Insurance segment saw a 160% increase in gross premiums written, while net premiums written surged by 341%. The segment's pre-tax income turned positive, reflecting a 109% improvement from the prior year. The Insurance Distribution segment also experienced substantial growth, with premiums placed and gross commissions increasing by 119% and 107%, respectively.
Consolidated Financials and Capital Activity
Net premiums earned across Ambac increased by 69% year-over-year, driven by growth in the Specialty P&C businesses. Net investment income more than doubled to $30 million, attributed to improved performance on pooled fund investments and higher yields. Losses and loss expenses saw a benefit of $76 million, primarily due to RMBS recoveries and higher discount rates in the Legacy Financial Guarantee business.
General and administrative expenses rose to $49 million, mainly due to increased litigation expenses and growth in headcount associated with the P&C businesses. Ambac's stockholders' equity stood at $1,265 million, or $28.00 per share, as of September 30, 2023, reflecting a modest increase from the previous quarter.
During the quarter, Ambac repurchased 120,068 shares at an average price of $12.94 per share. The company also highlighted non-GAAP financial measures, including EBITDA and Adjusted Book Value, to provide additional insight into its performance.
Looking Forward
For 2024, Ambac targets over $700 million of premium production with attractive margins in its P&C businesses, subject to market conditions. The company will hold a conference call on November 8, 2023, to discuss the third-quarter results in detail.
Ambac's mixed third-quarter results reflect a company in transition, with significant growth in its Specialty P&C Insurance segment and ongoing strategic evaluations of its legacy financial guarantee business. Investors and analysts will likely focus on the company's ability to sustain growth in its profitable segments while managing the challenges of its legacy operations.
For more detailed information on Ambac Financial Group Inc (NYSE:AMBC)'s third-quarter earnings, please visit Ambac's Investor Relations.
Explore the complete 8-K earnings release (here) from Ambac Financial Group Inc for further details.
This article first appeared on GuruFocus.
