UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM						10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File Number:						1-10777


AMBAC FINANCIAL GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware

13-3621676

(State of incorporation)

(I.R.S. employer identification no.)

One World Trade Center

New York

10007

(Address of principal executive offices)

(Zip code)


	(212)	658-7470
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock par value $0.01 per share

AMBC

New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act): (Check one):

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of November 7, 2025, 43,812,035 shares of common stock, par value $0.01 per share, of the Registrant were outstanding.

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995					1

Item Number		Page	Item Number		Page
PART I. FINANCIAL INFORMATION			PART I (CONTINUED)
1	Unaudited Consolidated Financial Statements of Ambac Financial Group, Inc. and Subsidiaries			U.S. Insurance Statutory Basis Financial Results	42
	Consolidated Balance Sheets (Unaudited)	2		Non-GAAP Financial Measures	42
	Consolidated Statements of Total Comprehensive Income (Loss) (Unaudited)	3	3	Quantitative and Qualitative Disclosures About Market Risk	45
	Consolidated Statements of Stockholders' Equity (Unaudited)	5	4	Controls and Procedures	45
	Consolidated Statements of Cash Flows (Unaudited)	7
	Notes to Unaudited Consolidated Financial Statements	8	PART II. OTHER INFORMATION
2	Management's Discussion and Analysis of Financial Condition and Results of Operations	31	1	Legal Proceedings	45
	Overview	32	1A	Risk Factors	46
	Critical Accounting Policies and Estimates	33	2	Unregistered Sales of Equity Securities and Use of Proceeds	55
	Results of Operations	33	3	Defaults Upon Senior Securities	56
	Liquidity and Capital Resources	37	5	Other Information	56
	Balance Sheet	39	6	Exhibits	56
	Accounting Standards	42	SIGNATURES		56


Ambac Financial Group, Inc.			i			Third Quarter 2025 Form 10-Q

Table of Contents

CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Management has included in Parts I and II of this Quarterly Report on Form 10-Q, statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “project,” “plan,” “believe,” “anticipate,” “intend,” “planned,” “potential” and similar expressions, or future or conditional verbs such as “will,” “should,” “would,” “could,” and “may,” or the negative of those expressions or verbs, identify forward-looking statements. We caution readers that these statements are not guarantees of future performance. Forward-looking statements are not historical facts, but instead represent only our beliefs regarding future events, which may by their nature be inherently uncertain and some of which may be outside our control. These statements may relate to plans and objectives with respect to the future, among other things which may change. We are alerting you to the possibility that our actual results may differ, possibly materially, from the expected objectives or anticipated results that may be suggested, expressed or implied by these forward-looking statements. Important factors that could cause our results to differ, possibly materially, from those indicated in the forward-looking statements include, among others, those discussed under “Risk Factors” in Part I, Item 1A of the 2023 Annual Report on Form 10-K and in Part II, Item 1A of this quarterly Report on Form 10-Q.

Any or all of management’s forward-looking statements here or in other publications may turn out to be incorrect and are based on management’s current belief or opinions. Ambac Financial Group’s (“AFG”) and its subsidiaries’ (collectively, “Ambac” or the “Company”) actual results may vary materially, and there are no guarantees about the performance of Ambac’s securities. Among events, risks, uncertainties or factors that could cause actual results to differ materially are: (1) the high degree of volatility in the price of AFG’s common stock; (2) uncertainty concerning the Company’s ability to achieve value for holders of its securities from the specialty property and casualty insurance business, the insurance distribution business, or related businesses; (3) greater than expected underwriting losses in the Company’s specialty property and casualty insurance business resulting in inadequacy of loss and loss expense reserves and the possibility that changes in reserves may result in further volatility of earnings or financial results; (4) credit risk throughout Ambac’s business, including but not limited to issuers of securities in our investment portfolios, and exposures to reinsurers; (5) our inability to achieve investment objectives; (6) the Company’s inability to generate the significant amount of cash needed to service its debt and financial obligations, and its inability to refinance its indebtedness; (7) the Company’s indebtedness could adversely affect the Company’s financial condition and operating flexibility; (8) Ambac may not be able to obtain financing, refinance its outstanding indebtedness, or raise capital on acceptable terms or at all due to its outstanding indebtedness and financial condition; (9) failure of specialty insurance program partners to properly market, underwrite or administer policies; (10) inability to obtain reinsurance coverage on economic terms; (11) loss of key relationships for production of business in specialty property and casualty and insurance distribution businesses or the inability to secure such additional relationships to produce expected results; (12) the impact of catastrophic public health, environmental or natural events, or global or regional conflicts; (13) the risk that Ambac’s risk management policies and practices do not anticipate certain risks and/or the magnitude of potential for loss; (14) restrictive covenants in agreements and instruments that impair Ambac’s ability to pursue or achieve its business strategies; (15) disagreements or disputes with Ambac's insurance regulators; (16) risks attendant to the change in composition of securities in Ambac’s investment portfolio; (17) adverse impacts from changes in prevailing interest rates; (18) events or circumstances that result in the impairment of our intangible assets

and/or goodwill that was recorded in connection with Ambac’s acquisitions; (19) the risk of litigation, regulatory inquiries, investigations, claims or proceedings, and the risk of adverse outcomes in connection therewith; (20) the Company’s ability to adapt to the rapid pace of regulatory change; (21) actions of stakeholders whose interests are not aligned with broader interests of Ambac's stockholders; (22) system security risks, data protection breaches and cyber attacks; (23) failures in services or products provided by third parties; (24) political developments that disrupt the economies where the Company has insured exposures; (25) our inability to attract and retain qualified executives, senior managers and other employees, or the loss of such personnel; (26) fluctuations in foreign currency exchange rates; (27) failure to realize our business expansion plans or failure of such plans to create value; (28) greater competition for our specialty property and casualty insurance business and/or our insurance distribution business; (29) loss or lowering of the AM Best rating for our property and casualty insurance company subsidiaries; (30) disintermediation within the insurance industry or greater competition from technology-based insurance solutions or non-traditional insurance markets; (31) changes in law or in the functioning of the healthcare market that impair the business model of our accident and health managing general underwriter; (32) difficulties in integrating acquired businesses into our business; and (33) other risks and uncertainties that have not been identified at this time.


Ambac Financial Group, Inc.			1			Third Quarter 2025 Form 10-Q

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements of Ambac Financial Group, Inc. and Subsidiaries

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets


	September 30,		December 31,
(Dollars in thousands, except share data) (September 30, 2025 (Unaudited))	2025		2024
Assets:
Investments:
Fixed maturity securities - available-for-sale, at fair value (amortized cost of $132,617 and $162,124)	$	131,101	$	157,020


Short-term investments, at fair value (amortized cost of $295,815 and $127,588)	295,825		127,601

Other investments (includes $7,684 and $7,499 at fair value)	28,302		28,294
Total investments (net of allowance for credit losses of $0 and $0)	455,228		312,915
Cash and cash equivalents (including $24,247 and $17,669 of restricted cash)	51,767		47,275
Premium receivables (net of allowance for credit losses of $200 and $142)	74,760		57,222

Commission and fees receivable	75,480		55,377
Reinsurance recoverable on paid and unpaid losses (net of allowance for credit losses of $100 and $100)	440,462		306,191
Deferred ceded premium	160,906		148,300
Policy acquisition costs	9,284		8,572

Intangible assets, less accumulated amortization	339,197		344,775
Goodwill	445,382		418,234
Other assets (net of allowance for credit losses of $238 and $238)	95,424		92,317
Assets of discontinued operations	—		6,267,200
Total assets	2,147,890		8,058,378
Liabilities and Stockholders’ Equity:
Liabilities:
Unearned premiums	$	197,133	$	182,446
Loss and loss adjustment expense reserves	437,539		349,062
Ceded premiums payable	87,635		53,002
Deferred program fees and reinsurance commissions	7,754		7,500
Commissions payable	109,317		71,431
Deferred taxes	68,865		70,135

Short-term debt	—		150,000

Accrued interest payable	—		2,560

Other liabilities	92,226		89,036
Liabilities of discontinued operations	—		5,887,685
Total liabilities	1,000,469		6,862,857
Commitments and contingencies (See Note 13)
Redeemable noncontrolling interest	188,247		140,860
Stockholders’ equity:
Preferred stock, par value $0.01 per share; 20,000,000 shares authorized shares; issued and outstanding shares—none	—		—
Common stock, par value $0.01 per share; 130,000,000 shares authorized; issued shares: 48,876,882 and 48,875,167	489		489
Additional paid-in capital	367,077		331,007
Accumulated other comprehensive income (loss)	11,780		(188,436)
Retained earnings	491,733		742,185
Treasury stock, shares at cost: 2,175,418 and 2,368,194	(27,695)		(28,339)
Total Ambac Financial Group, Inc. stockholders’ equity	843,384		856,906
Nonredeemable noncontrolling interest	115,790		197,755
Total stockholders’ equity	959,174		1,054,661
Total liabilities, redeemable noncontrolling interest and stockholders’ equity	$	2,147,890	$	8,058,378

See accompanying Notes to Unaudited Consolidated Financial Statements


Ambac Financial Group, Inc.			2			Third Quarter 2025 Form 10-Q

Table of Contents

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Loss) (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands, except share data)	2025		2024		2025		2024
Revenues:
Commissions	$	36,059	$	23,064	$	103,152	$	54,014
Servicing and other fees	4,855		2,266		14,291		2,266
Net premiums earned	17,027		27,441		48,908		80,074
Program fees	3,590		3,622		10,739		9,517
Investment income	2,666		3,488		8,090		10,891
Other	2,408		10,124		(862)		13,831
Total revenues	66,606		70,005		184,319		170,593
Expenses:
Commissions	11,167		9,499		28,935		27,209
Losses and loss adjustment expenses	14,386		20,421		35,860		62,800
Policy acquisition costs	3,491		5,993		11,031		15,816
General and administrative	53,710		44,000		132,781		89,436
Intangible amortization and depreciation	9,746		7,104		28,663		10,332
Interest	6,185		3,745		17,209		3,745
Total expenses	98,685		90,762		254,479		209,338
Pretax income (loss) from continuing operations	(32,079)		(20,757)		(70,160)		(38,745)
Provision (benefit) for income taxes from continuing operations	(1,241)		(867)		(4,030)		(767)
Net income (loss) from continuing operations	(30,838)		(19,890)		(66,130)		(37,978)
Net income (loss) from discontinued operations, net of tax (including loss on disposal of $50,012 and $117,468 for the three and nine months ended September 30, 2025)	(80,890)		(9,386)		(163,288)		28,936
Net income (loss)	(111,728)		(29,276)		(229,418)		(9,042)
Net (gain) loss attributable to noncontrolling interest	(892)		1,773		(2,292)		859
Net income (loss) attributable to shareholders	$	(112,620)	$	(27,503)	$	(231,710)	$	(8,183)
Net income (loss) attributable to shareholders
Continuing operations	$	(31,730)	$	(18,117)	(68,422)		(37,119)
Discontinued operations	(80,890)		(9,386)		(163,288)		28,936
Total	$	(112,620)	$	(27,503)	(231,710)		(8,183)

Net income (loss) from continuing operations per share attributable to shareholders
Basic	$	(0.67)	$	(0.43)	$	(1.70)	$	(0.85)
Diluted	$	(0.67)	$	(0.43)	$	(1.70)	$	(0.85)
Net income (loss) from discontinued operations per share attributable to shareholders
Basic	$	(1.68)	$	(0.20)	$	(3.41)	$	0.62
Diluted	$	(1.68)	$	(0.20)	$	(3.41)	$	0.62
Net income (loss) per share attributable to shareholders
Basic	$	(2.35)	$	(0.63)	$	(5.11)	$	(0.23)
Diluted	$	(2.35)	$	(0.63)	$	(5.11)	$	(0.23)
Weighted average number of common shares outstanding:
Basic	48,106,069		47,688,986		47,862,071		46,580,518
Diluted	48,106,069		47,688,986		47,862,071		46,580,518

See accompanying Notes to Unaudited Consolidated Financial Statements


Ambac Financial Group, Inc.			3			Third Quarter 2025 Form 10-Q

Table of Contents

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands, except share data)	2025		2024		2025		2024
Net income (loss)	$	(111,728)	$	(29,276)	$	(229,418)	$	(9,042)
Unrealized gains (losses) on securities, net of income tax provision (benefit) of $36, $2,888, $1,184, and $3,302	5,289		36,779		19,248		33,632
Gains (losses) on foreign currency translation, net of income tax provision (benefit) of $0, $0, $0, and $0	66,139		57,315		199,843		50,813
Credit risk changes of fair value option liabilities, net of income tax provision (benefit) of $(15), $47, $180, and $(71)	522		142		1,108		(214)
Changes to postretirement benefit, net of income tax provision (benefit) of $0, $0, $0, and $0	—		—		—		(4,939)
Total other comprehensive income (loss), net of income tax	71,950		94,236		220,199		79,292
Total comprehensive income (loss), net of income tax	(39,778)		64,960		(9,219)		70,251
Less: net (gain) loss attributable to noncontrolling interest	(892)		1,773		(2,292)		859
Less: (gain) loss on foreign currency translation attributable to noncontrolling interest	5,843		(4,770)		(19,984)		(4,770)
Total comprehensive income (loss) attributable to shareholders	$	(34,827)	$	61,963	$	(31,495)	$	66,340

See accompanying Notes to Unaudited Consolidated Financial Statements


Ambac Financial Group, Inc.			4			Third Quarter 2025 Form 10-Q

Table of Contents

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (Unaudited)


Three months ended September 30, 2025 and 2024
	Stockholders' Equity																Mezzanine
			Ambac Financial Group, Inc.														Equity
(Dollars in thousands)	Total		Preferred Stock		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Common Stock Held in Treasury, at Cost		Non- redeemable NCI (1)		Redeemable NCI (1)
Balance at June 30, 2025	$	1,028,361	$	—	$	489	$	347,939	$	(66,013)	$	607,548	$	(30,124)	$	168,522	$	190,347
Net income (loss)	(111,457)		—		—		—		—		(112,620)		—		1,163		(271)
Total other comprehensive income (loss)	75,409		—		—		—		77,793		—		—		(2,384)		(3,457)





Stock-based compensation	2,138		—		—		2,138		—		—		—		—		—
Cost of shares repurchased	—		—		—		—		—		—		—		—		—
Cost of shares (acquired) issued under equity plan	(197)		—		—		—		—		(2,626)		2,429		—		—
Changes to noncontrolling interest	(1,162)		—		—		—		—		(569)		—		(593)		1,628








Issuance of warrants in connection with sale of AAC	17,000						17,000
Impact of sale of discontinued operation	(50,918)														(50,918)		—
Balance at September 30, 2025	$	959,174	$	—	$	489	$	367,077	$	11,780	$	491,733	$	(27,695)	$	115,790	$	188,247

Balance at June 30, 2024	$	1,418,991	$	—	$	467	$	294,624	$	(174,990)	$	1,264,633	$	(16,661)	$	50,918	$	17,079
Net income (loss)	(27,503)		—		—		—		—		(27,503)		—		—		(1,773)
Total other comprehensive income (loss)	94,236		—		—		—		94,236		—		—		—		7,189





Stock-based compensation	3,693		—		—		3,693		—		—		—		—		—

Cost of shares (acquired) issued under equity plan	2		—		—				—		2
Changes to noncontrolling interest	3,577		—		—		—		—		(2,403)		—		5,980		1,773
Fair value of nonredeemable noncontrolling interest in Beat Capital Partners at acquisition	147,809														147,809		179,428

Issuance of common stock	29,229		—		22		29,207		—		—






Balance at September 30, 2024	$	1,670,034	$	—	$	489	$	327,524	$	(80,754)	$	1,234,729	$	(16,661)	$	204,707	$	203,696
(1) NCI = Noncontrolling interest


Ambac Financial Group, Inc.			5			Third Quarter 2025 Form 10-Q

Table of Contents


Nine months ended September 30, 2025 and 2024
	Stockholders' Equity																Mezzanine
			Ambac Financial Group, Inc.														Equity
(Dollars in thousands)	Total		Preferred Stock		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Common Stock Held in Treasury, at Cost		Non- redeemable NCI (1)		Redeemable NCI (1)
Balance at January 1, 2025	$	1,054,661	$	—	$	489	$	331,007	$	(188,436)	$	742,185	$	(28,339)	$	197,755	$	140,860
Net income (loss)	(228,406)		—		—		—		—		(231,710)		—		3,304		(1,012)
Total other comprehensive income (loss)	209,888		—		—		—		200,216		—		—		9,672		10,313





Stock-based compensation	6,924		—		—		6,924		—		—		—		—		—
Cost of shares repurchased	(3,301)		—		—		—		—		—		(3,301)		—		—
Cost of shares (acquired) issued under equity plan	(1,805)		—		—		—		—		(5,750)		3,945		—		—
Changes to noncontrolling interest	(44,869)		—		—		12,146		—		(12,992)		—		(44,023)		38,086









Issuance of warrants in connection with sale of AAC	17,000						17,000
Impact of sale of discontinued operation	(50,918)						—				—				(50,918)		—
Balance at September 30, 2025	$	959,174	$	—	$	489	$	367,077	$	11,780	$	491,733	$	(27,695)	$	115,790	$	188,247

Balance at January 1, 2024	$	1,414,615	$	—	$	467	$	291,761	$	(160,046)	$	1,246,048	$	(16,573)	$	52,958	$	17,079
Net income (loss)	(8,185)		—		—		—		—		(8,183)		—		(2)		(857)
Total other comprehensive income (loss)	79,292		—		—		—		79,292		—		—		—		7,189





Stock-based compensation	5,512		—		—		5,512		—		—		—		—		—

Cost of shares (acquired) issued under equity plan	(682)		—		—		—		—		(594)		(88)		—		—
Changes to noncontrolling interest	3,438		—		—		—		—		(2,542)		—		5,980		857

Purchase of Beat Capital Partners	147,809														147,809		179,428
Issuance of common stock	29,229				22		29,207

Acquisition of noncontrolling interest in subsidiary	(994)		—		—		1,044		—		—		—		(2,038)		—



Balance at September 30, 2024	$	1,670,034	$	—	$	489	$	327,524	$	(80,754)	$	1,234,729	$	(16,661)	$	204,707	$	203,696

(1) NCI = Noncontrolling interest

See accompanying Notes to Unaudited Consolidated Financial Statements


Ambac Financial Group, Inc.			6			Third Quarter 2025 Form 10-Q

Table of Contents

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,
(Dollars in thousands)	2025		2024
Cash flows from operating activities:
Net income (loss)	$	(229,418)	$	(9,042)


Net income (loss) from discontinued operations	(163,288)		28,936
Net income (loss) from continuing operations	(66,130)		(37,978)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Intangible amortization and depreciation	28,663		10,332



Share-based compensation	6,924		5,512



Unearned premiums, net	2,081		11,215
Losses and loss expenses, net	(45,794)		7,115
Ceded premiums payable	34,633		78,175

Premium and commissions receivables	(37,961)		(68,442)
Commissions payable	37,886		67,287











Corporate costs reallocated to continuing operations	6,786		11,258
Other, net	(18,705)		(8,080)
Net cash provided by (used in) operating activities from continuing operations	(51,617)		76,394
Cash flows from investing activities:
Proceeds from sales of bonds	26,061		26,906
Proceeds from matured bonds	28,602		17,206
Purchases of bonds	(24,475)		(40,037)

Purchases of other investments	(66)		(16,607)
Change in short-term investments	(168,161)		40,147




Acquisitions, net of cash acquired	589		(276,857)
Proceeds from sale of subsidiary	407,300		14,119
Other, net	(4,479)		(10,550)
Net cash provided by (used in) investing activities from continuing operations	265,371		(245,673)
Cash flows from financing activities:






Proceeds from short-term debt	—		147,200
Issuance of equity interest in subsidiary	—		62,000

Payments for purchases of common stock held in treasury	(3,301)		—
Payments for extinguishment of short-term debt	(150,000)		—





Tax payments related to shares withheld for share-based compensation plans	(1,689)		(692)

Issuance of warrants	17,000		—

Distributions to noncontrolling interest holders	(1,391)		(1,676)
Acquisitions of noncontrolling interest shares	(71,345)		—

Net cash provided by (used in) financing activities from continuing operations	(210,726)		206,832

Effect of foreign exchange on cash and cash equivalents - continuing operations	1,464		—
Net cash provided by (used in) continuing operations	4,492		37,553
Cash, cash equivalents, and restricted cash at beginning of period - continuing operations	47,275		19,223
Cash, cash equivalents, and restricted cash at end of period - continuing operations	51,767		56,776
Net cash provided by (used in) operating activities from discontinued operations	71,728		13,842
Net cash provided by (used in) investing activities from discontinued operations	69,712		(78,757)
Net cash provided by (used in) financing activities from discontinued operations	(143,144)		(130,758)
Net cash provided by (used in) discontinued operations	(1,704)		(195,673)
Effect of foreign exchange on cash and cash equivalents - discontinued operations	—		425

Cash, cash equivalents, and restricted cash at beginning of period - discontinued operations	66,077		255,183
Cash disposed of related to sale of discontinued operations	$	(64,373)	$	—
Cash, cash equivalents, and restricted cash at end of period - discontinued operations	$	—	$	59,935

See accompanying Notes to Unaudited Consolidated Financial Statements


Ambac Financial Group, Inc.			7			Third Quarter 2025 Form 10-Q

Table of Contents

AMBAC FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Note 1. Background and Business Description	9	Note 8. Goodwill and Intangible Assets	24
Note 2. Segment Information	12	Note 9. Revenues From Contracts with Customers	24
Note 3. Discontinued Operation	14	Note 10. Comprehensive Income (Loss)	26
Note 4. Investments	16	Note 11. Net Income Per Share	27
Note 5. Fair Value Measurements	18	Note 12. Income Taxes	28
Note 6. Insurance Contracts	22	Note 13. Commitments and Contingencies	29
Note 7. Derivative Instruments	23


Ambac Financial Group, Inc.			8			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

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

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


Ambac Financial Group, Inc.			9			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

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.

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


Ambac Financial Group, Inc.			10			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

$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.

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


Ambac Financial Group, Inc.			11			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

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.

2. SEGMENT INFORMATION

The Company reports its results of continuing operations in two segments: Specialty Property and Casualty Insurance and Insurance Distribution. These reportable segments offer distinct products and services as further described in Note 1. Background and Business Description. The Company's segments have separate management teams with incentive compensation structures based on segment level performance. Financial reporting for each segment is regularly provided to the Company's Chief Executive Officer, who is the chief operating decision maker ("CODM") for purposes of monitoring the businesses, assessing performance and allocating resources.

The following tables summarize the components of the Company’s total revenues and expenses, and pretax income (loss) by reportable business segment. Information provided below for “Corporate and Other” primarily relates to the operations of AFG, which will include investment income on its investment portfolio and costs to maintain the operations of AFG, including public company reporting, capital management and business development costs for the acquisition and development of new business initiatives. As a result of the Company reporting the results of operations of AAC as discontinued operations, certain corporate costs charged to AAC totaling $1,521 and $3,678 for the three months ended September 30, 2025 and 2024 and $6,786 and $11,258 for the nine months ended September 30, 2025 and 2024, respectively, have been reported in Net income from continuing operations on the Consolidated Statements of Total Comprehensive Income and included in Corporate and Other in the tables below.


Ambac Financial Group, Inc.			12			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)


	Three Months Ended September 30, 2025						Three Months Ended September 30, 2024
	Reportable Segments								Reportable Segments
	Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Total		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Total
Revenues:
Net premiums earned	$	17,027					$	17,027	$	27,441					$	27,441
Commissions			$	36,059			36,059				$	23,064			23,064
Servicing and other fees			4,855				4,855				2,266				2,266
Program fees	3,590						3,590		3,622						3,622

Investment income	1,648		401		$	617	2,666		1,672		300		$	1,516	3,488


Other	509		1,906		(7)		2,408		7,397		(1,635)		4,362		10,124
Total revenues from continuing operations	22,774		43,222		610		66,606		40,132		23,995		5,878		70,005
Less:
Losses and loss adjustment expenses	14,386						14,386		20,421						20,421
Policy acquisition costs	3,491						3,491		5,993						5,993
Commissions			11,167				11,167				9,499				9,499


Intangible amortization and depreciation			9,417		329		9,746				6,635		469		7,104
Interest			6,185				6,185				3,745				3,745
Compensation expense	2,734		15,649		14,746		33,129		2,802		9,273		6,517		18,592
Non Compensation expense	2,208		6,551		11,822		20,581		1,982		2,792		20,634		25,408
Total expenses from continuing operations	22,819		48,969		26,897		98,685		31,198		31,944		27,620		90,762
Segment pretax income (loss)	(45)		(5,747)		(26,287)		(32,079)		8,934		(7,949)		(21,742)		(20,757)
Segment income tax expense (benefit)	8		(1,241)		(8)		(1,241)		944		(883)		(928)		(867)
Segment net income (loss)	(53)		(4,506)		(26,279)		(30,838)		7,990		(7,066)		(20,814)		(19,890)
Segment net (income) loss attributable to noncontrolling interest	—		(892)				(892)		—		1,773				1,773
Net income (loss) attributable to shareholders	$	(53)	$	(5,398)	$	(26,279)	(31,730)		$	7,990	$	(5,293)	$	(20,814)	(18,117)

Reconciliation to consolidated net income (loss) attributable to shareholders
Discontinued operations							(80,890)								(9,386)

Net income (loss) attributable to shareholders							$	(112,620)							$	(27,503)

Reconciliation of segment assets to consolidated total assets
Total assets	$	898,722	$	971,160	$	278,428	$	2,148,310	$	811,564	$	936,578	$	149,916	$	1,898,058
Discontinued operations															7,358,328
Total consolidated assets															$	9,256,386

EBITDA RECONCILIATION
Segment net income (loss)	$	(53)	$	(4,506)	$	(26,279)	$	(30,838)	$	7,990	$	(7,066)	$	(20,814)	$	(19,890)
Adjustments:
Interest expense	—		6,185		—		6,185		—		3,745		—		3,745
Income taxes	8		(1,241)		(8)		(1,241)		944		(883)		(928)		(867)
Depreciation expense	—		145		329		474		—		206		475		681
Amortization expense	—		9,272		—		9,272		—		6,423		—		6,423

EBITDA	(45)		9,855		(25,958)		(16,148)		8,934		2,425		(21,267)		(9,908)
Impact of noncontrolling interests	—		(3,927)				(3,927)		—		(557)				(557)
EBITDA to shareholders	$	(45)	$	5,928	$	(25,958)	$	(20,075)	$	8,934	$	1,868	$	(21,267)	$	(10,465)


Ambac Financial Group, Inc.			13			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)


	Nine Months Ended September 30, 2025						Nine Months Ended September 30, 2024
	Reportable Segments								Reportable Segments
	Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Total		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Total
Revenues:
Net premiums earned	$	48,908					$	48,908	$	80,074					$	80,074
Commissions			$	103,152			103,152				$	54,014			54,014
Servicing and other fees			14,291				14,291				2,266				2,266
Program fees	10,739						10,739		9,517						9,517

Investment income	5,238		1,117		$	1,735	8,090		4,536		427		$	5,928	10,891


Other	450		(1,300)		(12)		(862)		7,375		(1,541)		7,997		13,831
Total revenues from continuing operations	65,335		117,261		1,723		184,319		101,502		55,166		13,925		170,593
Less:
Losses and loss adjustment expenses	35,860						35,860		62,800						62,800
Policy acquisition costs	11,031						11,031		15,816						15,816
Commissions			28,935				28,935				27,209				27,209


Intangible amortization and depreciation			27,590		1,073		28,663				8,931		1,401		10,332
Interest			17,209				17,209				3,745				3,745
Compensation expense	8,850		43,636		26,312		78,798		7,653		13,467		18,704		39,824
Non Compensation expense	7,517		18,050		28,416		53,983		5,578		4,665		39,369		49,612
Total expenses from continuing operations	63,258		135,420		55,801		254,479		91,847		58,017		59,474		209,338
Segment pretax income (loss)	2,077		(18,159)		(54,078)		(70,160)		9,655		(2,851)		(45,549)		(38,745)
Segment income tax expense (benefit)	278		(3,922)		(386)		(4,030)		1,023		(756)		(1,034)		(767)
Segment net income (loss)	1,799		(14,237)		(53,692)		(66,130)		8,632		(2,095)		(44,515)		(37,978)
Segment net (income) loss attributable to noncontrolling interest	—		(2,292)				(2,292)		2		857				859
Net income (loss) attributable to shareholders	$	1,799	$	(16,529)	$	(53,692)	(68,422)		$	8,634	$	(1,238)	$	(44,515)	(37,119)

Reconciliation to consolidated net income (loss) attributable to shareholders
Discontinued operations							(163,288)								28,936

Net income (loss) attributable to shareholders							$	(231,710)							$	(8,183)






EBITDA RECONCILIATION
Segment net income (loss)	$	1,799	$	(14,237)	$	(53,692)	$	(66,130)	$	8,632	$	(2,095)	$	(44,515)	$	(37,978)
Adjustments:
Interest expense	—		17,209		—		17,209		—		3,745		—		3,745
Income taxes	278		(3,922)		(386)		(4,030)		1,023		(756)		(1,034)		(767)
Depreciation expense	—		343		1,073		1,416		—		230		1,401		1,631
Amortization expense	—		27,247		—		27,247		—		8,701		—		8,701
EBITDA	2,077		26,640		(53,005)		(24,288)		9,655		9,825		(44,148)		(24,668)
Impact of noncontrolling interests	—		(11,132)		—		(11,132)				(1,907)		—		(1,907)
EBITDA to shareholders	$	2,077	$	15,508	$	(53,005)	$	(35,420)	$	9,655	$	7,918	$	(44,148)	$	(26,575)

(1)Inter-segment revenues and inter-segment pre-tax income (loss) amounts are insignificant and are not presented separately.

3. DISCONTINUED OPERATION

Sale of Ambac Assurance Corporation ("AAC")

On September 29, 2025, pursuant to the stock purchase agreement dated as of June 4, 2024, as amended by the First Amendment thereto dated as of July 3, 2025 (the "Purchase Agreement") and the Letter Agreements dated July 3, 2025 and September 22, 2025, with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., AFG sold all of the issued and outstanding shares of common stock of AAC, a wholly-owned subsidiary of AFG, to the Buyer for $420,000 in cash (the "Sale"). The Buyer acquired complete ownership of the common stock of AAC and all of its wholly owned subsidiaries, including

Ambac Assurance UK Limited. In connection with and pursuant to the Purchase Agreement, AFG issued to Buyer a warrant exercisable for 5,092,707 shares of common stock, par value $0.01, of AFG representing 9.9% of the fully diluted shares of AFG’s common stock as of March 31, 2024, pro forma for the issuance of the warrant. The warrant has an exercise price per share of $18.50 and expires March 29, 2032. Under terms of the Letter Agreement dated July 3, 2025, between the parties to the Purchase Agreement, the Buyer may convert the warrant at a value equal to its Black-Scholes value, over specified time periods, with the conversion value delivered in shares of AFG common stock or cash at AFG's election. In addition, the Buyer made an incremental payment to AFG totalling $4,300 to resolve other agreed upon matters. See Note 5. Discontinued Operation in the Notes to Consolidated Financial Statements included in the


Ambac Financial Group, Inc.			14			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for further information regarding the Sale.

AFG recorded an expected loss on sale in the Statement of Comprehensive Income (Loss) for the year ended December 31, 2024 of $(570,145), equal to the difference between the sale proceeds (net of the value of the warrants to be issued) and the carrying value of AAC's net assets held-for-sale, less expected closing costs. AFG recorded adjustments to the loss on sale of AAC equal to $(50,012) and $(117,468) in the three and nine months ended September 30, 2025, reflecting remeasurement of net assets held-for-sale, changes in fair value of the warrant issued to Buyer, other agreed upon payments, and reestimation of closing costs during the periods up the final Sale closing. The loss on sale for the three and nine months ended September 30, 2025 also included the reclassification of net unrealized gains (losses) on available-for-sale investment securities, cumulative foreign currency translation adjustments and cumulative credit risk changes of fair value option liabilities attributable to AAC and subsidiaries, totaling $(85,096), from Accumulated Other Comprehensive Income (Loss) ("AOCI") to Net income (loss) from discontinued operation at Sale closing.

The components of the loss on sale, reflected in the valuation allowance on net assets of discontinued operations as of December 31, 2024, and at Sale closing on September 29, 2025, are summarized below:


	Sale Closing on September 29, 2025		December 31, 2024
Fair value of net consideration	$	407,300	$	399,727
Less: estimated closing costs	7,098		7,235
	400,202		392,492
Carrying amount of net assets of discontinued operations	1,002,719		962,637
Reclassification of AOCI	(85,096)
Loss on disposal	$	(687,613)	$	(570,145)

The following table summarizes the major classes of assets and liabilities of discontinued operations on the Consolidated Balance

Sheet at December 31, 2024 after elimination of intercompany balances:


	December 31, 2024
ASSETS:
Total investments	2,226,505
Cash and equivalents	8,322
Premiums receivable	217,096
Reinsurance recoverable on paid and unpaid losses	25,274
Deferred ceded premiums	79,074
Subrogation recoverable	113,962
Intangible assets	213,457
Other assets, net	49,396
VIE assets (including restricted cash of $57,755)	3,904,259

Valuation allowance on assets held-for-sale	(570,145)
Total assets held-for-sale	$	6,267,200
LIABILITIES:
Unearned premiums	$	228,177
Loss and loss adjustment reserves	577,167
Ceded premiums payable	56,404
Long-term debt and accrued interest	1,046,658
Other liabilities, net	105,772
VIE liabilities	3,873,507
Total liabilities held-for-sale	$	5,887,685

The following table summarizes the major line items constituting net income (loss) from discontinued operations reconciled to net income (loss) from discontinued operations presented in the Consolidated Statement of Comprehensive Income (Loss):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
REVENUES:
Net premiums earned	$	5,183	$	5,660	$	15,145	$	18,715
Net investment income	43,396		34,497		100,203		104,947
Net investment gains (losses), including impairments	5,852		(920)		(12,616)		(1,308)
Net gains (losses) on derivative contracts	9,669		(1,349)		302		1,127


Other revenues	1,355		6,253		18,016		27,206
Total revenues	65,455		44,141		121,050		150,687
EXPENSES:
Loss and loss adjustment expenses (benefit)	2,366		17,210		10,444		(8,768)
Intangible amortization	5,909		6,194		17,097		24,535
General & administrative and other expenses	64,427		10,756		81,034		47,488
Interest expense	15,723		15,766		47,617		47,732
Other expenses	—		(20)		—		(1)
Total expenses	88,425		49,906		156,192		110,986
Pretax income (loss)	(22,970)		(5,765)		(35,142)		39,701
Provision (benefit) for income taxes	7,908		3,621		10,678		10,765
Loss on disposal	(50,012)		—		(117,468)		—


Net income (loss) from discontinued operations	$	(80,890)	$	(9,386)	$	(163,288)	$	28,936


Ambac Financial Group, Inc.			15			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

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


Ambac Financial Group, Inc.			16			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

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.


Ambac Financial Group, Inc.			17			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

5. FAIR VALUE MEASUREMENTS

The Fair Value Measurement Topic of the ASC establishes a framework for measuring fair value and disclosures about fair value measurements.

Fair Value Hierarchy:

The Fair Value Measurement Topic of the ASC specifies a fair value hierarchy based on whether the inputs to valuation techniques used to measure fair value are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Company-based assumptions. The fair value hierarchy has three broad levels as follows:


l	Level 1	Quoted prices for identical instruments in active markets. Assets and liabilities classified as Level 1 include US Treasury traded in highly liquid and transparent markets, and money market funds.

l	Level 2	Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Assets and liabilities classified as Level 2 generally include investments in fixed maturity securities and certain derivatives valued using only market observable data.

l	Level 3	Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. This hierarchy requires the use of observable market data when available. Financial instruments classified as Level 3 may include certain loans, investment securities, or derivatives.

The Fair Value Measurement Topic of the ASC permits, as a practical expedient, the estimation of fair value of certain investments in funds using the net asset value per share of the investment or its equivalent (“NAV”). Investments in funds valued using NAV are not categorized as Level 1, 2 or 3 under the fair value hierarchy. The Investments — Equity Securities Topic of the ASC permits the measurement of certain equity securities without a readily determinable fair value at cost, less impairment, and adjusted to fair value when observable price changes in identical or similar investments from the same issuer occur (the "measurement alternative"). The fair values of investments measured under this measurement alternative are not included in the below disclosures of fair value of financial instruments.

The following table sets forth the carrying amount and fair value of Ambac’s financial assets and liabilities as of September 30, 2025, and December 31, 2024, including the level within the fair value hierarchy at which fair value measurements are categorized. As required by the Fair Value Measurement Topic of the ASC, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.


	September 30, 2025										December 31, 2024
	Carrying Amount		Total Fair Value		Fair Value Measurements Categorized as:						Carrying Amount		Total Fair Value		Fair Value Measurements Categorized as:
					Level 1		Level 2		Level 3						Level 1		Level 2		Level 3
Financial assets:
Fixed maturity securities:
Municipal obligations	$	11,510	$	11,510	$	—	$	11,510	$	—	$	14,083	$	14,083	$	—	$	14,083	$	—
Corporate obligations	70,690		70,690		—		70,690		—		89,192		89,192		—		89,192		—

U.S. government obligations	39,171		39,171		39,171		—		—		40,995		40,995		40,995		—		—

Residential mortgage-backed securities	3,294		3,294		—		3,294		—		2,446		2,446		—		2,446		—
Commercial mortgage-backed securities	1,819		1,819		—		1,819		—		2,101		2,101		—		2,101		—
Collateralized debt obligations	2,319		2,319		—		2,319		—		3,142		3,142		—		3,142		—
Other asset-backed securities	2,298		2,298		—		2,298		—		5,061		5,061		—		5,061		—



Short term investments	295,825		295,825		295,825		—		—		127,601		127,601		127,601		—		—
Other investments (1)	28,302		7,685		—		—		—		28,294		7,499		—		—		—
Cash, cash equivalents and restricted cash	51,767		51,767		51,767		—		—		47,275		47,275		47,275		—		—
Other assets-loans	—		—		—		—		—		3,434		3,434		—		—		3,434
Other assets - Derivatives:





FX forward contracts	378		378		—		378		—		—		—		—		—		—

Total financial assets	$	507,373	$	486,756	$	386,763	$	92,308	$	—	$	363,624	$	342,829	$	215,871	$	116,025	$	3,434
Financial liabilities:

Short-term debt, including accrued interest	$	—	$	—	$	—	$	—	$	—	$	152,560	$	152,560	$	—	$	—	$	152,560

Other liabilities - Derivatives:




FX forward contracts	—		—		—		—		—		317		317		—		317		—


Total financial liabilities	$	—	$	—	$	—	$	—	$	—	$	152,877	$	152,877	$	—	$	317	$	152,560

(1)Excluded from the fair value measurement categories in the table above are investment funds of $7,684 and $7,499 as of September 30, 2025, and December 31, 2024, respectively, which are measured using NAV as a practical expedient. Also excluded from the fair value amounts in the table above are equity securities 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 have carrying amounts determined using the measurement alternative, and an equity method investment of $— and $177 as of September 30, 2025, and December 31, 2024.


Ambac Financial Group, Inc.			18			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

Determination of Fair Value:

When available, Ambac uses quoted active market prices specific to the financial instrument to determine fair value, and classifies such items within Level 1. The determination of fair value for financial instruments categorized in Level 2 or 3 involves judgment due to the complexity of factors contributing to the valuation. Third-party sources from which we obtain independent market quotes also use assumptions, judgments and estimates in determining financial instrument values and different third parties may use different methodologies or provide different values for financial instruments. In addition, the use of internal valuation models may require assumptions about hypothetical or inactive markets. As a result of these factors, the actual trade value of a financial instrument in the market, or exit value of a financial instrument position by Ambac, may be significantly different from its recorded fair value.

Ambac’s financial instruments carried at fair value are mainly comprised of investments in fixed maturity securities, short-term investments, and equity interests in pooled investment funds. Valuation of financial instruments is performed by Ambac’s finance group using methods approved by senior financial management with consultation from third-party portfolio managers as appropriate. Preliminary valuation results are discussed with senior financial management and third-party portfolio managers as necessary to assess consistency with market transactions and trends as applicable. Market transactions such as trades or negotiated settlements of similar positions, if any, are reviewed to validate fair value model results. However, financial instruments valued using significant unobservable inputs have very little or no observable market activity. Methods and significant inputs and assumptions used to determine fair values across portfolios are reviewed quarterly by senior financial management. Other valuation control procedures specific to particular portfolios are described further below.

Fixed Maturity Securities:

The fair values of fixed maturity investment securities are based primarily on market prices received from independent pricing sources. Because many fixed maturity securities do not trade on a daily basis, pricing sources apply available market information through processes such as matrix pricing to calculate fair value. Such prices generally consider a variety of factors, including recent trades of the same and similar securities. In those cases, the items are classified within Level 2. For those fixed maturity investments where quotes were not available or cannot be reasonably corroborated, fair values are based on internal valuation models. Key inputs to the internal valuation models generally include maturity date, coupon and yield curves for asset-type and credit rating characteristics that closely match those characteristics of the specific investment securities being valued. Items valued using valuation models are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be significant inputs that are readily observable. Longer (shorter) expected maturities or

higher (lower) yields used in the valuation model will, in isolation, result in decreases (increases) in fair value. Generally, lower credit ratings or longer expected maturities will be accompanied by higher yields used to value a security.

Ambac performs various review and validation procedures to quoted and modeled prices for fixed maturity securities, including price variance analyses, missing and static price reviews, overall valuation analysis by portfolio managers and finance managers and reviews associated with our ongoing impairment analysis. Unusual prices identified through these procedures will be evaluated further against alternative third-party quotes (if available), internally modeled prices and/or other relevant data, and the pricing source values will be challenged as necessary. Price challenges generally result in the use of the pricing source’s quote as originally provided or as revised by the source following their internal diligence process. A price challenge may result in a determination by either the pricing source or Ambac management that the pricing source cannot provide a reasonable value for a security or cannot adequately support a quote, in which case Ambac would resort to using either other quotes or internal models. Results of price challenges are reviewed by portfolio managers and finance managers.

Other Investments:

Other investments primarily relate to investments in pooled investment funds. The fair value of pooled investment funds is determined using dealer quotes or alternative pricing sources when such investments have readily determinable fair values. When fair value is not readily determinable, pooled investment funds are valued using NAV as a practical expedient as permitted under the Fair Value Measurement Topic of the ASC. Refer to Note 4. Investments for additional information about such investments in pooled funds that are reported at fair value using NAV as a practical expedient.

Derivative Instruments:

At September 30, 2025, and December 31, 2024 Ambac has foreign currency forward contracts and holds warrants to purchase preferred stock of a development stage company. The fair value of foreign currency forwards are determined using valuation models with observable market inputs. Fair value of the warrants are determined using a standard warrant valuation model with internally developed input assumptions.

Short-term Debt:

Short-term debt at December 31, 2024, consisted of SOFR indexed borrowing used for partial funding of the Beat acquisition and is classified as Level 3. Such debt was fully repaid in September 2025.

Other Financial Assets:

Included in Other assets at December 31, 2024 are loans carried at amortized cost, the fair values of which are estimated based upon internal valuation models and are classified as Level 3.


Ambac Financial Group, Inc.			19			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

Additional Fair Value Information for Financial Assets and Liabilities Accounted for at Fair Value:

The following tables present the changes in the Level 3 fair value category for the periods presented in 2025 and 2024. Ambac classifies financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to these unobservable inputs, the valuation models for Level 3 financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly. Thus, the gains and losses presented below include changes in the fair value related to both observable and unobservable inputs.


Level 3 - Financial Assets and Liabilities Accounted for at Fair Value

	Investments		Derivatives		Total
Three Months Ended September 30, 2025:
Balance, beginning of period	$	—	$	—	$	—

Total gains/(losses) realized and unrealized:
Included in earnings	—		—		—
Included in other comprehensive income	—		—		—
Purchases	—		—		—


Settlements	—		—		—



Balance, end of period	$	—	$	—	$	—
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—

Three Months Ended September 30, 2024:
Balance, beginning of period	$	—	$	548	$	548

Total gains/(losses) realized and unrealized:
Included in earnings	—		—		—
Included in other comprehensive income	—		—		—
Purchases	—		—		—


Settlements	—		—		—



Balance, end of period	$	—	$	548	$	548
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—


Ambac Financial Group, Inc.			20			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)



Level 3 - Financial Assets and Liabilities Accounted for at Fair Value

	Investments		Derivatives		Total
Nine Months Ended September 30, 2025:
Balance, beginning of period	$	—	$	—	$	—

Total gains/(losses) realized and unrealized:
Included in earnings	—		—		—
Included in other comprehensive income	—		—		—



Settlements	—		—		—



Balance, end of period	$	—	$	—	$	—
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—

Nine Months Ended September 30, 2024:
Balance, beginning of period	$	13,920	$	656	$	14,576

Total gains/(losses) realized and unrealized:
Included in earnings	6,016		(108)		5,908
Included in other comprehensive income	125		—		125



Settlements	(20,061)		—		(20,061)



Balance, end of period	$	—	$	548	$	548
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	6,016	$	(108)	$	5,908
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—

Invested assets are transferred into Level 3 when internal valuation models that include significant unobservable inputs are used to estimate fair value. All such securities that have internally modeled fair values have been classified as Level 3. Derivative instruments are transferred into Level 3 when the use of unobservable inputs becomes significant to the overall valuation. There were no transfers of financial instruments into or out of Level 3 in the periods disclosed.

Gains and losses (realized and unrealized) relating to Level 3 assets and liabilities included in earnings for the affected periods are reported as follows:


	Three Months Ended September 30, 2025						Three Months Ended September 30, 2024
	Net Investment Income		Net Gains (Losses) on Derivative Contracts		Other Income or (Expense)		Net Investment Income		Net Gains (Losses) on Derivative Contracts		Other Income or (Expense)
Total gains (losses) included in earnings for the period	$	—	$	—	$	—	$	—	$	—	$	—
Changes in unrealized gains (losses) relating to financial instruments still held at the reporting date	—		—		—		—		—		—

	Nine Months Ended September 30, 2025						Nine Months Ended September 30, 2024
	Net Investment Income		Net Gains (Losses) on Derivative Contracts		Other Income or (Expense)		Net Investment Income		Net Gains (Losses) on Derivative Contracts		Other Income or (Expense)
Total gains or losses included in earnings for the period	$	—	$	—	$	—	$	—	$	(108)	$	6,016
Changes in unrealized gains or losses included in earnings relating to the assets and liabilities still held at the reporting date	—		—		—		—		(108)		—


Ambac Financial Group, Inc.			21			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

6. INSURANCE CONTRACTS

Amounts presented in this Note relate only to Ambac’s continuing operations.

Premiums:

The effect of reinsurance on premiums written and earned was as follows:


	Three Months Ended September 30,
	2025				2024
	Written		Earned		Written		Earned
Direct	$	89,780	$	83,058	$	92,776	$	79,847
Assumed	7,405		8,053		22,378		16,999
Ceded	79,408		74,084		82,400		69,405
Net premiums	$	17,777	$	17,027	$	32,754	$	27,441

	Nine Months Ended September 30,
	2025				2024
	Written		Earned		Written		Earned
Direct	$	256,820	$	243,104	$	262,726	$	211,820
Assumed	23,527		22,556		60,057		49,804
Ceded	229,360		216,752		231,493		181,550
Net premiums	$	50,987	$	48,908	$	91,290	$	80,074

Premium Receivables, including credit impairments:

Premium receivables at September 30, 2025, and December 31, 2024, were $74,760 and $57,222, respectively. Management evaluates premium receivables for expected credit losses ("credit impairment") in accordance with the CECL standard, which is further described in Note 2. Basis of Presentation and Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Below is a rollforward of the premium receivable allowance for credit losses for the periods presented.



Nine Months Ended September 30,	2025		2024
Beginning balance	$	142	$	—
Current period provision	58		142
Write-offs of the allowance	—		—
Recoveries of previously written-off amounts	—		—
Ending balance	$	200	$	142

At September 30, 2025, and December 31, 2024, $9,445 and $5,690 of premiums were past due.

Loss and Loss Adjustment Expense Reserves

Below is the loss and loss reserve expense roll-forward, net of subrogation recoverable and reinsurance, for the affected periods:


Nine Months Ended September 30,	2025		2024
Beginning gross loss and loss expense reserves	$	349,062	$	197,089
Reinsurance recoverable	270,081		156,301
Beginning balance of net loss and loss expense reserves	78,981		40,788
Losses and loss expenses:
Current year	31,577		59,742
Prior years	4,283		3,058
Total (1)	35,860		62,800
Loss and loss expenses paid (recovered):
Current year	4,263		9,572
Prior years	27,814		13,585
Total	32,077		23,157

Ending net loss and loss expense reserves	82,764		80,431
Reinsurance recoverable (2)	354,775		242,800
Ending gross loss and loss expense reserves	$	437,539	$	323,231

(1)Total losses and loss adjustment expense (benefit) is net of $(166,959) and $(72,160) for the nine months ended September 30, 2025 and 2024, respectively, related to ceded reinsurance.

(2)Represents reinsurance recoverable on future loss and loss expenses. Additionally, the Balance Sheet line "Reinsurance recoverable on paid and unpaid losses" includes reinsurance recoverables (payables) of $85,687 and $41,225 as of September 30, 2025, and 2024, respectively, related to previously paid loss and loss expenses

Prior accident years losses incurred development for the nine months ended September 30, 2025, was primarily driven by increased commercial auto loss experience for programs in run-off and excess liability claims, whereas prior accident years losses incurred development for the nine months ended September 30, 2024, was primarily driven by increased commercial auto loss experience for programs in run-off.

Specialty Property & Casualty Loss Reserves

Claims Development

The following is a summary of loss and loss adjustment expense reserves, including certain components, for the Company’s major product lines by reporting segment at September 30, 2025.


September 30, 2025	Net Loss and Loss Adjustment Expense Reserves		Reinsurance Recoverables on Unpaid Losses (1)		Loss and Loss Adjustment Reserves (1)
Commercial auto	$	24,961	$	134,859	$	159,820
Excess liability	14,025		83,086		97,111
General liability	10,961		44,175		55,136
Workers compensation	18,086		—		18,086
Non-standard personal auto	5,195		195		5,390
Professional Liability	2,892		35,473		38,365
Surety	(6)		15,216		15,210
Unallocated loss adjustment expense reserves	5,672		9,966		15,638
Other	$	978	$	31,805	$	32,783
Total	$	82,764	$	354,775	$	437,539


Ambac Financial Group, Inc.			22			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

(1)Other includes $28,999 related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company, and Consolidated Specialty Insurance Company. All legacy liabilities remain obligations of affiliates of the sellers through reinsurance and contractual indemnities.

Reinsurance Recoverables, Including Credit Impairments:

Everspan’s reinsurance assets, including deferred ceded premiums and reinsurance recoverables on losses amounted to $601,368 at September 30, 2025. Credit exposure existed at September 30, 2025, with respect to reinsurance recoverables to the extent that any reinsurer may not be able to reimburse Everspan under the terms of these reinsurance arrangements. At September 30, 2025, there were ceded reinsurance balances payable of $87,635 offsetting this credit exposure. Contractually ceded reinsurance payables can only be offset against amounts owed from the same reinsurer in the event that such reinsurer is unable to meet its obligations to reimburse Everspan.

To minimize its credit exposure to losses from reinsurer insolvencies, Everspan (i) is entitled to receive collateral from its reinsurance counterparties in certain reinsurance contracts and (ii) has certain cancellation rights that can be exercised by Everspan in the event of rating agency downgrades of a reinsurer (among other events and circumstances). Everspan held letters of credit and collateral amounting to $72,454 from its reinsurers at September 30, 2025. We believe that Everspan's reinsurance counterparties that do not currently post collateral are well capitalized, highly rated, authorized capacity providers. Additionally, while legacy liabilities from the Providence Washington Insurance Company acquisition and the admitted carriers previously acquired by Everspan (Greenwood Insurance Company and Consolidated Specialty Insurance Company), were fully ceded to certain reinsurers, Everspan also benefits from an unlimited, uncapped indemnity from Enstar Holdings (US) and 21st Century Premier Insurance Company, respectively, to mitigate any residual risk to these reinsurers.

At September 30, 2025, our top five reinsurers represented 60.2% of our total reinsurance recoverables on paid and unpaid losses. These reinsurance recoverables were primarily from reinsurers with applicable ratings of A or better. The following table sets forth our five most significant reinsurers by amount of reinsurance recoverable as of September 30, 2025.


Reinsurers	Rating (1)			Reinsurance Recoverable (2)				Unsecured Recoverable (3)
General Reinsurance Company	A++			$	148,776			$	130,515
Munich Reinsurance Company	A+			49,677				32,540
QBE Insurance Corporation	A			27,255				27,255
Guaranty Captive Insurance Company	NR			21,937				—
Swiss Reinsurance America Corporation	A+			17,486				15,890
All other reinsurers				175,331				98,083
Total recoverables		$	440,462			$	304,283

(1)Represents financial strength ratings from AM Best for P&C reinsurers.

(2)Represents reinsurance recoverables on paid and unpaid losses. Unsecured amounts from QBE Insurance Corporation are also supported by an unlimited, uncapped indemnity from Enstar Holdings (US).

(3)Reinsurance recoverables reduced by ceded premiums payables due to reinsurers, letters of credit, and collateral posted for the benefit of Ambac.

Everspan has uncollateralized credit exposure of $304,283 and $232,310 and has recorded an allowance for credit losses of less than a million at September 30, 2025, and December 31, 2024. The uncollateralized credit exposure includes legacy liabilities obtained from the acquisitions of PWIC and the 21st Century Companies of $28,999 and $35,146 at September 30, 2025, and December 31, 2024, respectively. All legacy liabilities, which are fully ceded to reinsurers, also benefit from an unlimited, uncapped indemnity from the respective sellers to mitigate the Company from any residual risk from these reinsurers.

7. DERIVATIVE INSTRUMENTS

The following tables summarize the gross fair values of individual derivative instruments and the impact of legal rights of offset as reported in the Consolidated Balance Sheets as of September 30, 2025, and December 31, 2024:


	September 30, 2025										December 31, 2024
	Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet		Gross Amount of Collateral Received / Pledged Not Offset in the Consolidated Balance Sheet		Net Amount		Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet		Gross Amount of Collateral Received / Pledged Not Offset in the Consolidated Balance Sheet		Net Amount
Other assets:



FX forwards	378		—		378		—		378		—		—		—		—		—


Total derivative assets	$	378	$	—	$	378	$	—	$	378	$	—	$	—	$	—	$	—	$	—
Other liabilities:


FX forwards	—		—		—		—		—		317		—		317		—		317


Total derivative liabilities	$	—	$	—	$	—	$	—	$	—	$	317	$	—	$	317	$	—	$	317


Ambac Financial Group, Inc.			23			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

The following tables summarize the location and amount of gains and losses of derivative contracts in the Unaudited Consolidated Statements of Total Comprehensive Income (Loss) for the three and nine months ended September 30, 2025, and 2024:


	Location of Gain (Loss) Recognized in Consolidated Statements of Total Comprehensive Income (Loss)	Amount of Gain (Loss) Recognized in Consolidated Statement of Total Comprehensive Income (Loss)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2025		2024		2025	2024
Derivatives:






Warrants	Net gains (losses) on derivative contracts	—		(2)		—	(110)


FX forwards	Net gains (losses) on derivative contracts	21		6,547		1,128	6,143

Total derivatives		$	21	$	6,545	1,128	6,033

Beat utilizes foreign exchange forward contracts to partially hedge its foreign currency exposure. Beat’s functional currency is the British Pound, but a significant portion of its revenues are generated in currencies other then the British Pound, particularly the US Dollar. Beat, therefore, typically enters into forward contracts to partially hedge its exposure to fluctuations in exchange rates relative to the British Pound. AFG used FX forward contracts to mitigate British Pound to US Dollar exchange risk leading up to its purchase of Beat in August 2024.

Ambac also holds warrants to purchase equity shares of a development stage company and was party to foreign exchange (FX) forward contracts in 2024.

Information about FX forward contracts as of September 30, 2025, and December 31, 2024, is summarized below:


Derivative Type	Weighted Average Remaining Term (years)	Face Amount (Buy)	Face Amount (Sell)	Fair Value Asset (Liability)
September 30, 2025
FX Forwards-Buy GBP/Sell USD	0.22	3,925	5,000	378


December 31, 2024
FX Forwards-Buy GBP/Sell USD	0.61	15,720	20,000	(317)

8. GOODWILL AND INTANGIBLE ASSETS

The following table presents the Company's goodwill asset.


	September 30, 2025		December 31, 2024
Beginning balance	$	418,234	$	69,694
Business acquisitions	1,313		357,316
Foreign exchange	25,835		(8,776)
Impairments	—		—
Ending balance	$	445,382	$	418,234

Intangible assets and accumulated amortization are included in the Consolidated Balance Sheets, as shown below.


	Gross Carrying Amount		Accumulated Amortization		Net
September 30, 2025
Finite-lived Intangible Assets:
Customer relationships	$	370,366	$	51,798	$	318,568
Non-compete agreements	1,350		1,283		67
Trade name	11,414		2,065		9,349
Total finite lived intangible assets	383,130		55,146		327,984
Indefinite lived intangible assets:
Licenses	11,213		—		11,213
Total intangible assets	394,343		55,146		339,197

December 31, 2024
Finite-lived Intangible Assets:
Customer relationships	$	348,350	$	24,630	$	323,720
Non-compete agreements	1,350		1,080		270
Trade name	10,767		1,195		9,572
Total finite lived intangible assets	360,467		26,905		333,562
Indefinite lived intangible assets:
Licenses	11,213		—		11,213
Total intangible assets	371,680		26,905		344,775

9. REVENUES FROM CONTRACTS WITH CUSTOMERS

As further described in the Revenue Recognition section of Note 2. Basis of Presentation and Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, the Insurance Distribution businesses have contracts that are subject to the Revenue from Contracts with Customers Topic of the ASC ("ASC 606").


Ambac Financial Group, Inc.			24			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

The following table presents Insurance Distribution commission income recognized disaggregated by policy type for the periods presented.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Accident & Health	$	6,753	$	6,755	$	20,226	$	24,260
Specialty Auto	6,485		7,180		14,245		14,151
Other Professional	3,086		2,437		10,064		6,703
Marine & Energy	904		500		4,246		2,298
Niche Specialty Risks	3,300		2,414		10,273		2,414
Property	3,666		1,578		17,558		1,578
Reinsurance	3,868		1,074		11,803		1,317
Environmental	620		667		3,417		667
Professional D&O	1,840		303		4,841		303
Surety	5,327		31		6,599		31
Misc. Specialty	210		125		(120)		292
Total	$	36,059	$	23,064	$	103,152	$	54,014

For the three and nine months ended September 30, 2025 and 2024, revenue of $4,855 and $2,266, $14,291 and $2,266 respectively, was recognized in accordance with ASC 606 and reported in Servicing and other fees on the Consolidated Statement of Comprehensive Income (Loss).

During the nine months ended September 30, 2025 and 2024, the amount of revenue recognized related to performance obligations satisfied in a previous period, inclusive of changes due to estimates was approximately $314 and $413, respectively.

Contract Assets and Liabilities

The balances of contract assets and contract liabilities with customers were as follows:


	September 30, 2025		December 31, 2024

Contract assets	$	31,111	$	15,967
Contract liabilities	3,167		2,705

Contract assets and Contract liabilities is reported in Other Assets and Other Liabilities on the Balance Sheet

Insurance Distribution

Contract assets represent estimated future consideration related to base commissions and profit-sharing commissions that were recognized as revenue upon the placement of the policy, but are not yet due. The Company does not have the right to bill or collect payment on i) base commissions until the related premiums from policyholders has been collected nor ii) profit-sharing commissions until after the contract year is completed.

Contract liabilities represent advance consideration received from customers related to employer stop loss base commissions that will be recognized over time as claims servicing is performed, which typically occurs between 17 and 20 months from contract inception. During the nine months ended September 30, 2025 and 2024, the Company recognized revenue that was included in the contract liability balance as of the beginning of the period of $606 and $479, respectively.


Ambac Financial Group, Inc.			25			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

10. COMPREHENSIVE INCOME (LOSS)

The following tables detail the changes in the balances of each component of accumulated other comprehensive income for the affected periods:


	Three Months Ended September 30, 2025:										Three Months Ended September 30, 2024:
	Unrealized Gains (Losses) on Available for Sale Securities (1)		Amortization of Postretirement Benefit (1)		Gain (Loss) on Foreign Currency Translation (1)		Credit Risk Changes of Fair Value Option Liabilities (1) (2)		Total		Unrealized Gains (Losses) on Available for Sale Securities (1)		Amortization of Postretirement Benefit (1)		Gain (Loss) on Foreign Currency Translation (1)		Credit Risk Changes of Fair Value Option Liabilities (1) (2)		Total
Beginning Balance	$	(7,176)	$	—	$	(58,314)	$	(523)	$	(66,013)	$	(23,344)	$	—	$	(150,537)	$	(1,109)	$	(174,990)


Other comprehensive income (loss) before reclassifications	25,646		—		(27,373)		—		(1,727)		36,788		—		57,315		—		94,103
Amounts reclassified from accumulated other comprehensive income (loss)	(20,357)		—		99,354		523		79,520		(9)		—		—		142		133


Net current period other comprehensive income (loss)	5,289		—		71,981		523		77,793		36,779		—		57,315		142		94,236
Ending Balance	$	(1,887)	$	—	$	13,667	$	—	$	11,780	$	13,435	$	—	$	(93,222)	$	(967)	$	(80,754)

	Nine Months Ended September 30, 2025										Nine Months Ended September 30, 2024
	Unrealized Gains (Losses) on Available for Sale Securities (1)		Amortization of Postretirement Benefit (1)		Gain (Loss) on Foreign Currency Translation (1)		Credit Risk Changes of Fair Value Option Liabilities (1) (2)		Total		Unrealized Gains (Losses) on Available for Sale Securities (1)		Amortization of Postretirement Benefit (1)		Gain (Loss) on Foreign Currency Translation (1)		Credit Risk Changes of Fair Value Option Liabilities (1) (2)		Total
Beginning Balance	$	(21,136)	$	—	$	(166,191)	$	(1,109)	$	(188,436)	$	(20,197)	$	4,939	$	(144,035)	$	(753)	$	(160,046)


Other comprehensive income before reclassifications	25,949		—		80,504		—		106,453		38,148		—		50,813		—		88,961
Amounts reclassified from accumulated other comprehensive income	(6,700)		—		99,354		1,109		93,763		(4,516)		(4,939)		—		(214)		(9,669)


Net current period other comprehensive income	19,249		—		179,858		1,109		200,216		33,632		(4,939)		50,813		(214)		79,292
Ending Balance	$	(1,887)	$	—	$	13,667	$	—	$	11,780	$	13,435	$	—	$	(93,222)	$	(967)	$	(80,754)

(1)All amounts are net of tax and NCI. Amounts in parentheses indicate reductions to Accumulated Other Comprehensive Income.

(2)Represents the changes in fair value attributable to instrument-specific credit risk of liabilities for which the fair value option is elected.


Ambac Financial Group, Inc.			26			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

The following table details the significant amounts reclassified from each component of accumulated other comprehensive income, shown in the above rollforward tables, for the affected periods:


Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income								Affected Line Item in the Consolidated Statement of Total Comprehensive Income (Loss)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Unrealized Gains (Losses) on Available-for-Sale Securities (1)
	$	(6,362)	$	1,497	$	12,108	$	(2,651)	Net realized investment gains (losses)
	962		(1,506)		(3,851)		(1,865)		Provision for income taxes
	$	(14,957)	$	—	$	(14,957)	$	—	Net loss on discontinued operations
	$	(20,357)	$	(9)	$	(6,700)	$	(4,516)	Net of tax and noncontrolling interest
Amortization of Postretirement Benefit
Prior service cost	$	—	$	—	$	—	$	—	Other income
Actuarial (losses)	—		—		—		—		Other income
Curtailment gain	—		—		—		(4,939)		Other income
	—		—		—		(4,939)		Total before tax
	—		—		—		—		Provision for income taxes
	$	—	$	—	$	—	$	(4,939)	Net of tax and noncontrolling interest
Gain (loss) on foreign currency translation
	$	99,354	$	—	$	99,354	$	—	Net loss on discontinued operations
	$	99,354	$	—	$	99,354	$	—	Net of tax and noncontrolling interest
Credit Risk Changes of Fair Value Option Liabilities
	$	(191)	$	189	$	590	$	(285)	Credit risk changes of fair value option liabilities
	16		(47)		(179)		71		Provision for income taxes
	698		—		$	698	—		Net loss on discontinued operations
	$	523	$	142	$	1,109	$	(214)	Net of tax and noncontrolling interest
Total reclassifications for the period	$	79,520	$	133	$	94,461	$	(9,669)	Net of tax and noncontrolling interest

(1) Net unrealized investment gains (losses) on available for sale securities are included in Ambac's Consolidated Statements of Comprehensive Income (Loss) as a component of Accumulated Other Comprehensive Income (Loss). Changes in these amounts include reclassification adjustments to exclude from "Other Comprehensive Income (Loss)" those items that are included are part or ":Net income for a period that has been par of "Other comprehensive income *loss) in earlier periods.

11. NET INCOME PER SHARE

As of September 30, 2025, 46,701,464 shares of AFG's common stock (par value $0.01) and a warrant entitling the holder to acquire up to 5,092,707 shares of common stock at an exercise price of $18.50 per share were issued and outstanding. The warrant was issued September 29, 2025 and allows the holder to convert the warrant at its Black-Scholes value, settleable in shares of AFG common stock or cash at AFG's election. Common shares outstanding increased by 194,491 during the nine months ended September 30, 2025, primarily due to shares issued in connection with employee stock compensation partially offset by share repurchases.

Share Repurchases

On November 12, 2024, Ambac’s Board of Directors authorized a share repurchase program, under which Ambac may opportunistically repurchase up to $50,000 of the Company’s common shares at management’s discretion over the period ending on December 31, 2026.

The following table shows shares repurchased by year.


($ in thousands, except per share)	Year Ended December 31,						YTD 2025
	2022		2023		2024
Shares repurchased	1,605,316		325,068		937,141		292,191
Total cost	$	14,217	$	4,510	$	11,678	$	3,301
Average purchase price per share	$	8.86	$	13.88	$	12.46	$	11.30
Unused authorization amount							$	8,449

Subsequent to September 30, 2025, Ambac repurchased 3,142,554 common shares in the open market at an average price of $8.46 (including brokerage commissions) under a 10b5-1 program. As of the date of this filing $8,449 of unused capacity remains under Ambac's current share repurchase authorization.

Earnings Per Share Calculation

The numerator of the basic and diluted earnings per share computation represents net income (loss) attributable to common stockholders adjusted by the retained earnings impacts of the noncontrolling adjustment to redemption value under ASC 480, or amendments resulting in revaluation to fair value and reclassification of NCI shares to redeemable NCI. Adjustments to the carrying value of redeemable noncontrolling interest are further described in the Redeemable NCI section of Note 1. Background and Business Description.


Ambac Financial Group, Inc.			27			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

The following table provides a reconciliation of net income attributable to common stockholders to the numerator in the basic and diluted earnings per share calculation, together with the resulting earnings per share amounts:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net income (loss) attributable to common stockholders	$	(112,620)	$	(27,503)	$	(231,710)	(8,183)
Adjustment of NCI to fair value	—		—		(10,276)		—
Adjustment to redemption value (ASC 480)	(569)		(2,402)		(2,717)		(2,533)
Numerator of basic and diluted EPS	$	(113,189)	$	(29,905)	$	(244,703)	(10,716)
Per Share:
Basic	$	(2.35)	$	(0.63)	$	(5.11)	$	(0.23)
Diluted	$	(2.35)	$	(0.63)	$	(5.11)	$	(0.23)

The denominator of the basic earnings per share computation represents the weighted average common shares ("WASO") outstanding plus vested performance and restricted stock units (together, "Basic Weighted Average Shares Outstanding"). The denominator of diluted earnings per share adjusts the Basic Weighted Average Shares Outstanding for all potential dilutive common shares outstanding during the period. All potential dilutive common shares outstanding consider common stock deliverable pursuant to warrants, unvested restricted stock units and performance stock units granted under existing compensation plans. Additionally, as further described in the Redeemable NCI section of Note 1, the acquisition agreements and other agreements related to certain majority-owned subsidiaries include call and put options that, if exercised, would result in Ambac purchasing all or a portion of the remaining interests from the minority owners. Under the terms of certain of those agreements, Ambac may elect to settle a portion of its purchase with Ambac shares, which have also been considered in potential dilutive common shares outstanding.

The following table provides a reconciliation of the weighted average shares denominator used for basic net income per share to the denominator used for diluted net income per share:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2025	2024	2025	2024
Basic WASO denominator	48,106,069	47,688,986	47,862,071	46,580,518
Effect of potential dilutive shares :


Restricted stock units	—	—	—	—
Performance stock units (1)	—	—	—	—
Diluted WASO denominator	48,106,069	47,688,986	47,862,071	46,580,518
Anti-dilutive shares excluded from the above reconciliation:

Warrants	—	—	—	—
Restricted stock units	170,982	470,482	183,058	480,944
Performance stock units (1)	—	515,035	—	515,238

(1) Performance stock units are reflected based on the performance metrics through the balance sheet date. Vesting of these units is contingent upon meeting certain performance metrics. Although a portion of these performance metrics have been achieved as of the respective period end, it is possible that awards may no longer meet the metric at the end of the performance period.

12. INCOME TAXES

AFG files a consolidated U.S. Federal income tax return with its 80% or more owned domestic subsidiaries ("Consolidated Tax Subsidiaries"). Beat's U.S. subsidiaries are not included in AFG's Federal consolidated income tax return since AFG does not own 80% or more of these entities. AFG and its Consolidated Tax Subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions.

In accordance with the Income Tax Topic of the ASC, a valuation allowance is recognized if, based on the weight of available evidence, it is more-likely-than-not that some, or all, of the deferred tax asset will not be realized. As a result of the risks and uncertainties associated with future operating results, management believes it is more likely than not that the Company will not generate sufficient U.S. federal, state and/or local taxable income to recover its deferred tax operating assets and therefore maintains a full valuation allowance.

Consolidated Pretax Income (Loss)

U.S. and foreign components of pre-tax income (loss) were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
U.S.	$	(26,385)	$	(19,459)	$	(51,962)	$	(37,447)
Foreign	(5,694)		(1,298)		(18,198)		(1,298)
Total	$	(32,079)	$	(20,757)	$	(70,160)	$	(38,745)


Ambac Financial Group, Inc.			28			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

Provision (Benefit) for Income Taxes

The components of the provision for income taxes were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Current taxes

U.S. state and local	$	—	$	—	—		100
Foreign	1,824		292		4,600		292
Total Current taxes	1,824		292		4,600		392
Deferred taxes
U.S.federal	(483)		(232)		(2,636)		(232)
Foreign	(2,582)		(927)		(5,994)		(927)
Total Deferred taxes	(3,065)		(1,159)		(8,630)		(1,159)
Provision (benefit) for income taxes	$	(1,241)	$	(867)	$	(4,030)	$	(767)

On July 4, 2025, President Trump signed into law a reconciliation bill, known informally as the One Big Beautiful Bill Act ("OBBBA" or "the Act"), which contains a number of business tax provisions, including favorable treatment for capital investment and research expenditures, expansion of the limitations on deductibility of executive compensation and modifications to U.S. taxation of foreign derived income.

This legislation will not have a significant impact on the Company's current operations or financial condition.

13. COMMITMENTS AND CONTINGENCIES

The Company periodically receives various regulatory inquiries and requests for information with respect to investigations and inquiries that such regulators are conducting. The Company has complied with all such inquiries and requests for information.

The Company is involved from time to time in various routine legal proceedings, including proceedings related to litigation with present or former employees. Although such litigation is routine and incidental to the conduct of its business, such litigation can potentially result in large monetary awards when a civil jury is allowed to determine compensatory and/or punitive damages.

Everspan may be subject to disputes with policyholders or other third parties regarding the scope and extent of coverage offered under Everspan's policies, including disputes relating to Everspan’s course of conduct in the handling of claims and settling or failing to settle claims (which can lead to bad faith and other forms of extra-contractual liability); be required to defend claimants in suits against its policyholders for covered liability claims; or enter into commercial disputes with its reinsurers, MGA/Us or third party claims administrators regarding their respective contractual obligations and rights. Under some circumstances, the results of such disputes or suits may lead to liabilities beyond those which are anticipated or reserved, including liabilities in excess of applicable policy limits.

Everspan has been, and may from time to time in the future be, threatened with allegations of acting in bad faith in connection with the handling of claims through third-party administrators. Adjudication of any such claims against Everspan could require extensive litigation unless settled or dismissed based on available

legal defenses. Damages claimed against Everspan could be material and the outcome of such cases could have an adverse impact on our results of operations and financial condition.

In the ordinary course of their businesses, certain of Ambac’s subsidiaries assert claims in legal proceedings against third parties to recover losses already paid and/or mitigate future losses. The amounts recovered and/or losses avoided which may result from these proceedings is uncertain, although recoveries and/or losses avoided in any one or more of these proceedings during any quarter or fiscal year could be material to Ambac’s results of operations in that quarter or fiscal year.

From time to time, Ambac is subject to allegations concerning its corporate governance, including the manner in which it exercises control and oversight of its subsidiaries, that may lead to litigation, including derivative litigation. While the monetary impacts of addressing such allegations outside of litigation may not be material, these charges may distract management and the Board of Directors from their principal focus on Ambac's business, strategy and objectives.

It is not reasonably possible to predict whether suits in addition to those described below will be filed or whether additional inquiries or requests for information will be made, and it is also not possible to predict the outcome of litigation, inquiries or requests for information. It is possible that there could be unfavorable outcomes in these or other proceedings. Legal accruals for litigation against the Company with losses that are probable and reasonably estimable are either not applicable or not material to the operating results or financial position of the Company. For the litigation matters the Company is defending that do not meet the “probable and reasonably estimable” accrual threshold and where no loss estimates have been provided below, management is unable to make a meaningful estimate of the amount or range of loss that could result from unfavorable outcomes. Under some circumstances, adverse results in any such proceedings could be material to our business, operations, financial position, profitability or cash flows. The Company believes that it has substantial defenses to the claims described below and, to the extent that these actions proceed, the Company intends to defend itself vigorously; however, the Company is not able to predict the outcomes of these actions.

Current Litigation

Dwight Jereczek and Stanley Elliott, individually and on behalf of all others similarly situated v. MBIA Inc., Ambac Financial Group, Inc., Ambac Assurance Corporation, MBIA Insurance Corporation, and National Public Finance Guarantee Corporation (United States District Court for the District of Connecticut, filed on February 12, 2025) (the "COFINA Case"). This putative class action complaint is brought by alleged former holders of bonds issued by the Puerto Rico Sales Tax Financing Corporation (“COFINA”) allegedly insured by defendants under financial guaranty insurance policies. On behalf of themselves and all persons and entities that owned such bonds between October 19, 2018, and February 12, 2019, plaintiffs allege that, in connection with the restructuring of COFINA under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act, defendants orchestrated a scheme to improperly use their role in the Title III process to alter contracts with insured COFINA


Ambac Financial Group, Inc.			29			Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

bondholders, resulting in such bondholders receiving less than what they contracted for under the financial guaranty insurance policies. Plaintiffs assert claims for breach of contract, unjust enrichment, and bad faith refusal to pay first-party benefits under an insurance contract. Plaintiffs seek an unspecified amount of damages with interest thereon, disgorgement of profits, a declaratory judgment of plaintiffs’ rights and defendants’ responsibilities, and a permanent injunction against violations of law. Plaintiffs filed an amended complaint on May 6, 2025. The amended complaint includes an additional claim against Ambac for breach of the implied covenant of good faith and fair dealing, and seeks punitive damages from all defendants. On May 8, 2025, the summons and amended complaint were served on Ambac. On May 29, 2025, Ambac filed a motion to dismiss the amended complaint or, in the alternative, to transfer venue to the Title III court. MBIA Inc., MBIA Insurance Corporation, and National Public Finance Guarantee Corporation (together, "National") filed a joinder to Ambac’s request for transfer on the same day, and subsequently filed their own motion to dismiss on June 18, 2025. Plaintiffs filed their opposition to Ambac’s motion to dismiss or transfer on July 5, 2025; Ambac filed a reply in support of its motion on August 8, 2025. Plaintiffs filed their opposition to National’s motion to dismiss on July 25, 2025; National filed a reply in support of its motion on August 14, 2025. On August 28, 2025, Plaintiffs sought leave to file further briefing in opposition to National’s motion to dismiss; National filed a response to Plaintiffs’ request on August 29, 2025. The Court granted Plaintiffs’ request on October 4, 2025, and Plaintiffs filed their surreply in opposition to National’s motion on October 14, 2025. On August 21, 2025, the Court found good cause to delay issuing a scheduling order in this matter. The Court entered an order directing Plaintiffs to file a notice stating their position with respect to a stay of discovery. Plaintiffs filed their notice on September 8, 2025. On September 19, 2025, Defendants filed a motion seeking leave to respond to Plaintiffs’ notice, along with their proposed response; the Court granted Defendants’ request to file their response on October 4, 2025.

Impact of the AAC Sale on Litigation

AAC is involved in litigation as described in Note 19. Commitments and Contingencies to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and Note 13. Commitments and Contingencies to the Unaudited Consolidated Financial Statements in the Company's Annual Report on Form 10-Q for the quarterly period ended June 30, 2025. Following completion of the AAC sale, AFG no longer has any exposure to such matters other than the COFINA Case, in which AFG is a named defendant.


Ambac Financial Group, Inc.			30			Third Quarter 2025 Form 10-Q

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ($ in thousands)

The objectives of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are to provide users of our consolidated financial statements with the following:

•A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results;

•Context to the unaudited consolidated financial statements; and

•Information that allows assessment of the likelihood that past performance is indicative of future performance.

The following discussion should be read in conjunction with our consolidated financial statements in Part I, Item 1 and the matters described under Part II, Item 1A. Risk Factors in this Quarterly Report and under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024. Refer to Item 1. Business and Note 1. Background and Business Description in our Annual Report on Form 10-K for the year ended December 31, 2024, for a description of our business and our key strategies to achieve our primary goal to maximize shareholder value.

Unless otherwise noted, this Management's Discussion and Analysis of Financial Condition and Results of Operations relates solely to our continuing operations and does not include the operations of the Legacy Financial Guarantee business. See "Sale of AAC" below and "Sale of Ambac Assurance Corporation" in Note 5. Discontinued Operation of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2024 for additional information about the divestiture of the Legacy Financial Guarantee business.

Organization of Information

MD&A includes the following sections:


			Page
Strategies to Enhance Shareholder Value			31
Overview			32
Critical Accounting Estimates			33
Results of Operations			33
Liquidity and Capital Resources			37
Balance Sheet			39
Accounting Standards			42
U.S. Insurance Statutory Basis Financial Results			42
Non-GAAP Financial Measures			42

Strategies to Enhance Shareholder Value

The Company's primary goal is to maximize long-term shareholder value through the execution of targeted strategies for its Insurance Distribution and Specialty Property and Casualty Insurance businesses.

Insurance Distribution and Specialty Property and Casualty Insurance strategic priorities include:

•Expanding our Insurance Distribution business based on deep domain knowledge in specialty and niche classes of risk which generate attractive margins at scale. This will be achieved through acquisitions, strategic investments, establishing new businesses “de-novo,” and organic growth and diversification supported by a centralized technology led shared services offering

•Growing our Specialty Property and Casualty Insurance business to generate underwriting profits from a diversified portfolio of commercial and personal liability risks accessed primarily through program administrators.

Ambac continuously evaluates opportunities to acquire businesses and assets for its Insurance Distribution business. These acquisitions may be material to our business, financial condition and operations and may involve raising capital to finance the acquisition(s). There can be no assurance that we will agree to acquire any business or assets, or that we can obtain the necessary financing or complete any acquisition in a timely manner or at all.


Ambac Financial Group, Inc.			31			Third Quarter 2025 Form 10-Q

Table of Contents

OVERVIEW

AFG's subsidiaries/businesses are divided into two reportable segments with results for the three and nine months ended September 30, 2025, and 2024, as follows:


	Three Months Ended September 30, 2025						Three Months Ended September 30, 2024
	Reportable Segments								Reportable Segments
($ in thousands)	Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Consoli-dated		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Consoli-dated
Gross premiums written	$	97,185					$	97,185	$	115,154					$	115,154
Net premiums written	17,777						17,777		32,754						32,754
Premiums placed			$	245,394			245,394				$	144,949			144,949

Total revenues	22,774		43,222		$	610	66,606		40,132		23,995		$	5,878	70,005
Total expenses	22,819		48,969		26,897		98,685		31,198		31,944		27,620		90,762
Pretax income (loss)	(45)		(5,747)		(26,287)		(32,079)		8,934		(7,949)		(21,742)		(20,757)
EBITDA(2)	(45)		9,855		(25,958)		(16,148)		8,934		2,425		(21,267)		(9,908)
Adjusted EBITDA	49		9,955		(8,893)		1,111		1,591		2,673		(1,802)		2,462
Net income (loss) attributable to Ambac shareholders	(53)		$	(5,398)	$	(26,279)	(31,730)		7,990		$	(5,293)	$	(20,814)	(18,117)
EBITDA attributable to Ambac shareholders	(45)		5,928		(20,075)		(20,075)		8,934		1,868		(21,267)		(10,465)
Adjusted EBITDA attributable to Ambac common stockholders	$	49	5,988		$	(8,893)	(2,856)		$	1,591	2,116		$	(1,802)	1,905

	Nine Months Ended September 30, 2025						Nine Months Ended September 30, 2024
	Reportable Segments								Reportable Segments
	Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Consoli-dated		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Consoli-dated
Premiums placed			$	728,493			$	728,493			$	288,463			$	288,463
Gross premiums written	$	280,347					280,347		$	322,782					322,782
Net premiums written	50,988						50,988		91,290						91,290

Total revenues	65,335		117,261		$	1,723	184,319		101,502		55,166		$	13,925	170,593
Total expenses	63,258		135,420		55,801		254,479		91,847		58,017		59,474		209,338
Pretax income (loss)	2,077		(18,159)		(54,078)		(70,160)		9,655		(2,851)		(45,549)		(38,745)
EBITDA (2)	2,077		26,640		(53,004)		(24,286)		9,655		9,825		(44,146)		(24,666)
Adjusted EBITDA	2,319		26,647		(26,652)		2,314		2,439		10,067		(8,921)		3,585
Net income (loss) attributable to Ambac shareholders	1,799		(16,529)		(53,692)		(68,422)		8,634		(1,238)		(44,515)		(37,119)
EBITDA attributable to Ambac shareholders	2,077		15,508		(53,004)		(35,418)		9,655		7,918		(44,146)		(26,573)
Adjusted EBITDA attributable to Ambac common stockholders	$	2,319	$	15,599	$	(26,652)	$	(8,734)	$	2,439	$	8,160	$	(8,921)	$	1,678

Sale of AAC

On September 29, 2025 the Company completed the sale of AAC pursuant to the June 4, 2024, stock purchase agreement (the "Purchase Agreement") with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., pursuant to which AFG sold all of the issued and outstanding shares of common stock of AAC, a wholly-owned subsidiary of AFG, to Buyer for $420,000 in cash (the "Sale"). The Buyer also made an additional payment to AFG in an amount of $4,300. In the Sale, Buyer acquired complete common equity ownership of AAC and all of its wholly owned subsidiaries, including Ambac Assurance UK Limited. In connection with and pursuant to the Purchase Agreement, AFG issued to Buyer a warrant exercisable for 5,092,707 shares of common stock, par value $0.01, of AFG. Refer to Note 3. Discontinued Operation of the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q and Note 5. Discontinued Operation of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2024, for further details on the sale of AAC.

For all periods leading up to the Sale, AAC's results of operations and AFG's loss on sale are reported within Net income (loss) from discontinued operations before tax on the Consolidated

Statement of Comprehensive Income (Loss). See Note 3. Discontinued Operation in this report on Form 10-Q 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, funded in part by $120,000 of loans obtained under new credit facilities. See Note 1. Business and Basis of Presentation to the Consolidated Financial Statements included in this Quarterly Report for further detail about the credit facility.

ArmadaCare includes an MGA/U that focuses on supplemental health and benefit products for C-suite executives and other key talent. ArmadaCare creates and distributes supplemental benefit solutions and insurance products. ArmadaCare's differentiated product offering in the A&H market will provide both line of business and product diversification to the Company, while also increasing exposure to non-correlated A&H business lines. ArmadaCare also provides clients with tools to navigate the healthcare system and finds physicians to match personal needs,


Ambac Financial Group, Inc.			32			Third Quarter 2025 Form 10-Q

Table of Contents

and include a provider of third-party administration services for insurance carriers that distribute the benefit products and handle claims.

Pivix

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 an approximately 74% controlling stake in Pivix when combined with its previous 17% minority equity interest and includes Pivix in its consolidated financial statements.

SEC Final Rules on Climate Related Information

On March 6, 2024, the U.S. Securities and Exchange Commission (“SEC”) adopted The Enhancement and Standardization of Climate-Related Disclosures for Investors ("Final Rule"), which will require registrants to disclose extensive climate-related information in their Form 10-K annual reports and registration statements. The Final Rule was scheduled to become effective May 28, 2024; however, the SEC has voluntarily stayed the rule’s effective date pending judicial review of legal challenges. In March 2025, the SEC ended its defense of the Final Rule, though judicial review of legal challenges continues.

The compliance dates for accelerated filers for annual reports or registration statements that include financial statements for the year ending December 31 are phased in from 2026 through 2031. Depending on when the legal challenges are resolved, the compliance dates may be retained or delayed.

Ambac is reviewing the Final Rule and is currently assessing our related compliance obligations and other effects on our operations.

CRITICAL ACCOUNTING ESTIMATES

Ambac’s Unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which require the use of material estimates and assumptions. For a discussion of Ambac’s critical accounting policies and estimates, see “Critical Accounting Policies and Estimates” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Ambac’s Annual Report on Form 10-K for the year ended December 31, 2024.

Results of Operations

Consolidated Results

A summary of our financial results is shown below:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Gross premiums written	$	97,185	$	115,154	$	280,347	$	322,782
Net premiums written	17,777		32,754		50,988		91,290
Revenues:
Net premiums earned	$	17,027	$	27,441	$	48,908	$	80,074
Commissions	36,059		23,064		103,152		54,014
Servicing and other fees	4,855		2,266		14,291		2,266
Program fees	3,590		3,622		10,739		9,517
Investment income	2,666		3,488		8,090		10,891






Other	2,408		10,124		(862)		13,831


Expenses:
Losses and loss adjustment expenses	14,386		20,421		35,860		62,800
Policy acquisition costs	3,491		5,993		11,031		15,816
Commissions	11,167		9,499		28,935		27,209
General and administrative	53,710		44,000		132,781		89,436


Intangible amortization and depreciation	9,746		7,104		28,663		10,332
Interest	6,185		3,745		17,209		3,745


Total expenses	98,685		90,762		254,479		209,338
Provision (benefit) for income taxes from continuing operations	(1,241)		(867)		(4,030)		(767)
Net income (loss) from continuing operations	(30,838)		(19,890)		(66,130)		(37,978)
Net income (loss) from discontinued operations, net of income taxes	(80,890)		(9,386)		(163,288)		28,936
Net income (loss)	(111,728)		(29,276)		(229,418)		(9,042)
Net (gain) loss attributable to noncontrolling interest	(892)		1,773		(2,292)		859

Net income (loss) attributable to shareholders	$	(112,620)	$	(27,503)	$	(231,710)	$	(8,183)

Ambac's results for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, were impacted by the following:

•Ambac's acquisition of its interests in Beat Capital Partners Limited ("Beat") on August 1, 2024. Ambac's results for the three months ended September 30, 2024 included two months of Beat's results whereas our results for the three months ended September 30, 2025, include a full quarter of Beat results.

•On September 29, 2025, Ambac completed the sale of AAC. AAC's results, including Ambac's loss on the sale of AAC are reported within discontinued operations. Refer to Note 1. Background and Business Description and Note 5. Discontinued Operation of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2024, and Note 3. Discontinued Operations to the Unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further details on the Sale and results for the three and nine months ended September 30, 2025, and 2024. As a


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result of the Sale, Ambac repaid all of the outstanding debt used to acquire Beat, amounting to $150,000, and purchased AAC's co-investment in Beat of $62 million. Concurrent with the Sale, AFG entered into a number of transactions as discussed herein, including transactions intended to lower the long term run-rate of corporate operating expenses.

The following paragraphs describe the consolidated results of continuing operations of Ambac and its subsidiaries for the three and nine months ended September 30, 2025, and 2024, respectively.

Gross Premiums Written Gross premiums written decreased $17,969 and $42,435 for the three and nine months ended September 30, 2025, compared to the same period in the prior year.

The reduction is primarily driven by the non-renewal of certain programs, including the non-renewal of an assumed non-standard personal auto program, partially offset by growth in existing programs and the addition of new programs.

Net Premiums Written Net premiums written decreased $14,977 and $40,302 for the three and nine months ended September 30, 2025, compared to the same period in the prior year.

The reduction is primarily driven by the non-renewal of certain programs, including an assumed non-standard personal auto program, partially offset by growth in existing programs and the addition of new programs.

Net Premiums Earned Net premiums earned decreased $10,414 and $31,166 for the three and nine months ended September 30, 2025, compared to the same period in the prior year.

The decrease was primarily driven by the non-renewal of certain programs, including an assumed non-standard personal auto program, partially offset by growth in existing programs and the addition of new programs.

Commission Income and Commission Expense Commission income for the three and nine months ended September 30, 2025, was $36,059 and $103,152 compared to $23,064 and $54,014 for the three and nine months ended September 30, 2024. The increase was primarily driven by the inclusion of an additional month (July) of Beat's results and organic growth, including from the launch of new de-novo MGAs. Commission income included profit commissions (based on underwriting performance) of $1,940 and $8,896 for the three and nine months ended September 30, 2025, and $1,319 and $3,641 and for the three and nine months ended September 30, 2024, respectively. The increase for the three months ended September 30, 2025, was driven by higher A&H profit commissions earned and for the nine months ended September 30, 2025, was driven by the acquisition of Beat in August 2024.

For the three and nine months ended September 30, 2025, commission expense of $11,167 and $28,935 compared to $9,499 and $27,209 in three and nine months ended September 30, 2024, representing approximately 50% and 72% of commission income

in each respective period. The decrease in commission expense relative to commission income in 2025 relative to 2024 is primarily a result of the acquisition of Beat. When third parties are paid commissions to obtain business, the majority of Beat's commission income is reported net of any distribution and commission expenses, due to the nature of its program agreements. The majority of the Insurance Distribution Segment's other MGA/Us report their commission income gross of distribution and commission expenses.

Program Fees Program fee revenues were $3,590 and $3,622 for the three months ended September 30, 2025 and 2024, respectively, and $10,739 and $9,517 for the nine months ended September 30, 2025 and 2024, respectively. Program fee revenues represent the recognition of ceding commissions in excess of direct acquisition costs received from reinsurers and minimum fees received from MGA/Us until related programs reach certain levels of premium ceded. Program fees are charged as a percentage of premiums ceded to reinsurers as a component of total ceding commissions. The growth for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 is driven by a shift in mix of premium written and related premium ceded to reinsurers.

Net Investment Income Net investment income consists of interest income, including the net effect of discount accretion and premium amortization, from fixed maturity securities classified as available-for-sale and net gains (losses) on pooled investment funds which are reported under the equity method. These funds and certain other investments are reported in Other investments on the Consolidated Balance Sheets. For further information about investment funds held, refer to Note 4. Investments to the Unaudited Consolidated Financial Statements, included in Part I, Item 1 in this Form 10-Q.

Net investment income decreased $822 and $2,801 for the three and nine months ended September 30, 2025, compared to the prior year periods due to lower Corporate short-term investment balances resulting primarily from the acquisition of Beat, partially offset by higher investment income on short-term investments at the Cirrata companies with the addition of Beat and, for the nine months ended September 30, 2025, growth of the Everspan investment portfolio.

Servicing and Other Fees Servicing and Other Fees increased $2,589 and $12,025 for the three and nine months ended September 30, 2025. Servicing and Other Fees includes revenues earned for providing operational and administrative services to the Lloyd's syndicates managed by Beat as well as certain policy and brokerage fees.

Other Revenues Other revenues includes (i) net investment gains (losses) on securities sold or called, net of investment impairment charges; (ii) foreign exchange gains (losses) from the Insurance Distribution segment; and (iii) net gains on derivative contracts including FX forward contracts used to manage currency risk within the Insurance Distribution segment. Other revenues for the three and nine months ended September 30, 2025, of $2,408 and $(862) was driven primarily by foreign exchange gains (losses) including on the FX forward contracts. The decreases in Other revenue compared to the three and nine months ended September 30, 2024, resulted primarily from


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certain items impacting the 2024 periods, including: gains on FX forward contracts used by Ambac to mitigate currency risk leading up to the acquisition of Beat, and a gain on Everspan's sale of one of its shell insurance companies and its licenses. The nine months ended September 30, 2024, also benefited from Corporate gains related to the conversion and early settlement of certain convertible notes, including make-whole payments, partially offset by a write-down in carrying value on an investment in preferred securities that are carried at cost less impairments.

Losses and Loss Adjustment Expenses (Benefit) Loss and loss adjustment expenses incurred decreased $6,035 and $26,940 for the three and nine months ended September 30, 2025, compared to the same period in the prior year.

The lower loss and loss adjustment expenses is primarily due to lower net retained premiums and the shift in mix of business retained driven by the non-renewal of certain programs, including an assumed non-standard personal auto program in which Everspan was a reinsurer and certain commercial auto programs, partially offset by the growth in existing and addition of new programs and reserve strengthening primarily related to commercial auto liability loss experience and increased loss costs related to excess liability exposures.

General and Administrative Expenses (G&A) The following table provides a summary of G&A expenses for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Compensation	$	33,129	$	18,195	$	78,798	$	39,824
Non-compensation	20,581		23,923		53,982		47,855
Total G&A expenses	$	53,710	$	42,118	$	132,780	$	87,679

The increase in Compensation G&A expenses during the three and nine months ended September 30, 2025, was largely driven by higher compensation costs due to inclusion of Beat expenses for only two months in the 2024 periods. In addition, for the three months and nine months ended September 2025, compensation expense was increased due to the impact of severance, special one-time cash and equity awards and accelerated equity compensation totaling $6,764 all of which were incurred in connection with the sale of AAC.

Non-Compensation G&A expenses for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, were driven by integration expenses related to the acquisition of Beat, lease termination costs related to our former corporate headquarters, and the write off of certain capitalized legacy software costs; offset by lower Corporate segment expenses related to M&A transactions. Ambac has also provided notice of early termination of its current corporate headquarters, the associated expenses for which will be recognized in the fourth quarter of 2025. Restructuring costs related to the sale of AAC for the three and nine months ended September 30, 2025, were $778 and $5,162, respectively, and for the three and nine months ended September 30, 2024, were $1,653 and $13,980, respectively.

Intangible Amortization and Depreciation. Intangible amortization and depreciation for the three and nine months ended September 30, 2025, was $9,746 and $28,663 compared to $7,104 and $10,332 in the comparable prior year periods. The increases are due to intangible amortization for the three and nine months ended September 30, 2025 related to the Beat acquisition.

Interest Expense Interest expense for the three and nine months ended September 30, 2025 was $6,185 and $17,209, compared to $3,745 and $3,745 for the three and nine months ended September 30, 2024, which was primarily related to the short-term debt used in funding the Beat acquisition, entered into during the third quarter of 2024. This debt was repaid on September 29, 2025.

Provision for Income Taxes The provision (benefit) for income taxes primarily relates to international operations and was $(1,241) and $(4,030) for the three and nine months ended September 30, 2025, compared to $(867) and $(767) for the three and nine months ended September 30, 2024. The tax benefit recognized in the current year includes current tax expense associated with Beat UK operations offset by deferred tax benefit related to the recognition of deferred tax assets generated by Beat US and amortization of finite lived intangible assets associated with Beat UK and US operations.

Results of Operations by Segment



Insurance Distribution
	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Premiums placed	$	245,394	$	144,949	$	728,493	$	288,463

Commission income	$	36,059	$	23,064	$	103,152	$	54,014
Commission expense	11,167		9,499		28,935		8,701
Net commissions	24,892		13,565		74,217		45,313
Servicing and other fees	4,855		2,266		14,291		2,266
Investment income	401		300		1,117		427

Other revenue	1,906		(1,635)				-1541
Expenses:
General and administrative expenses	22,197		12,065		61,686		18,132
EBITDA	9,858		2,431		26,640		9,825
Interest expense	6,185		—		17,209		—
Depreciation	145		212		8		—
Intangible amortization	9,272		6,423		27,247		4,665
Pretax income (loss)	$	(5,747)	$	(7,949)	$	(18,159)	$	7,283

Ambac's stockholders equity (1)	$	447,327	$	410,997

(1) Represents the share of Ambac stockholders equity for each subsidiary within the Insurance Distribution segment, including intercompany eliminations.

Ambac's Insurance Distribution businesses are compensated for their services primarily by commissions paid by insurance carriers for underwriting, structuring and/or administering polices. Commission revenues are usually based on a percentage of the premiums placed. In addition, we are eligible to receive profit sharing contingent commissions on certain programs based on the underwriting results of the policies placed with carriers and


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other capacity providers, which may cause some variability in revenue and earnings.

Insurance Distribution pre-tax loss for the three and nine months ended September 30, 2025, was $(5,747) and $(18,159) compared to $(7,949) and $(2,851) for the three and nine months ended September 30, 2024. The lower pre-tax loss for the three months ended September 30, 2025, compared to 2024 mostly related to the acquisition of and organic growth at Beat. The higher pre-tax loss for the nine months ended September 30, 2025, compared to September 30, 2024, higher general and administrative expenses, intangible amortization and interest expense related to Beat acquisition. In connection with the AAC sale, on September 29, 2025, the short-term debt used to partially finance the Beat acquisition was repaid, therefore the associated interest expense will no longer be incurred.

The Insurance Distribution segment placed premiums for its carriers are shown below:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2025			2024		2025			2024
Premiums Placed	$	245,394		$	144,949	$	728,493		$	288,463
Increase over prior period	100,445					440,030
As a percent	69.3		%			152.5		%

Higher premiums placed were mostly driven by the acquisition of Beat, effective August 1, 2024, the inclusion of an additional month of Beat's production and growth of Beat's business.

For the three months ended September 30, 2025, the increase in premiums placed and changes to the mix of business written led to the growth in commission income and commission expense of 56% and (18)%, respectively.

Business underwritten within our Insurance Distribution business can be seasonal which may result in revenue and earnings concentrations from period to period. As the Insurance Distribution business grows, we make additional acquisitions and launch additional de novo underwriting units, revenue and earnings concentrations may increase or may shift, perhaps meaningfully.

G&A expenses for the three and nine months ended September 30, 2025, were $22,197 and $61,686 an increase over three and nine months ended September 30, 2024 of $10,132 and $43,554, respectively, as a result of the Beat acquisition in the third quarter of 2024 as well as increase in staffing for the build out of new business.



Specialty Property and Casualty Insurance
	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Gross premiums written	$	97,185	$	115,154	$	280,347	$	322,782
Net premiums written	17,777		32,754		50,988		91,290
Revenues:
Net premiums earned	$	17,027	$	27,441	$	48,908	$	80,074
Program fees	3,590		3,622		10,739		9,517
Investment income	1,648		1,672		5,238		4,536

Other income	509		7,397		450		7,375
Total	22,774		40,132		65,335		101,502
Expenses:
Losses and loss expenses incurred	14,386		20,421		35,860		62,800
Amortization of deferred acquisition costs, net	3,491		5,993		11,031		15,816
General and administrative expenses	4,942		4,784		16,367		13,231

Total	22,819		31,198		63,258		91,847
EBITDA	$	(45)	$	8,934	$	2,077	$	9,655
Pretax income (loss)	$	(45)	$	8,934	$	2,077	$	9,655

Retention Ratio (1)	18.3%		28.4%		18.2%		28.3%

Loss and LAE Ratio (2)	84.5%		74.4%		73.3%		78.4%
Expense Ratio (3)	28.4%		26.1%		34.1%		24.4%
Combined Ratio (4)	112.9%		100.5%		107.4%		102.8%

Ambac's stockholders equity (5)	$	139,575	$	133,882

(1)Retention ratio is defined as net premiums written divided by gross premiums written

(2)Loss and LAE ratio is defined as losses and loss expenses incurred divided by net premiums earned

(3)Expense Ratio is defined as acquisition costs and general and administrative expenses, reduced by program fees divided by net premiums earned

(4)Combined ratio is defined as Loss and LAE ratio plus Expense Ratio

(5)Represents Ambac stockholders equity in the Specialty Property and Casualty Insurance segment, including intercompany eliminations.

The Specialty Property and Casualty Insurance segment has grown significantly since underwriting its first program in May 2021. Twenty-five programs were authorized to issue policies as of September 30, 2025, including Everspan participating on certain programs as a reinsurer. As part of Everspan's focus on improving profitability and capital utilization, Everspan non-renewed certain programs, including a commercial auto program and an assumed non-standard personal auto program in the latter half of 2024, and a commercial auto and a general liability program in 1Q2025. The non-renewals resulted in a reduction in gross and net written premiums, net premiums earned, nominal losses and loss expenses incurred, and a shift in Everspan's retention ratio in the three and nine months ended September 30, 2025, compared to three and nine months ended September 30, 2024. Partially offsetting these non-renewals was the continued growth in existing programs and addition of new programs. EBITDA and pre-tax income decreased in the three and nine months ended September 30, 2025 compared to September 30, 2024, primarily due to the gain related to the sale of Consolidated


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National Insurance Company recognized in 3Q2024, a reduction in earned premium related to program non-renewals and adverse prior period reserve development in 2025 versus 2024, partially offset by lower losses incurred due the program non-renewals.

Consistent with its strategy to generate sustainable and profitable, long-term specialty property and casualty program insurance business with a focus on diverse classes of risks, Everspan may source select programs as a reinsurer. Accessing programs as a reinsurer provides Everspan the ability to diversify its risk profile (temporarily or long-term), efficiently manage its exposure limits and underwrite programs in a cost efficient manner, amongst other benefits. Everspan may participate as a reinsurer on up to 30% of a program, which is in line with its strategy to retain up to 30% per program. Participation as a reinsurer will affect the retention ratio as Everspan's portion of assumed premiums is reflected fully in both Gross and Net Premiums Written.

The change in the loss ratio was driven by the shift in mix of business in addition to reserve strengthening. The three and nine months ended September 30, 2025, contained prior years loss strengthening equating to 23.2% and 8.8%, respectively, driven primarily by commercial auto liability loss experience on programs which are in runoff, and excess liability loss experience, whereas the three and nine months ended September 30, 2024, contained prior years loss strengthening equating to 0.2% and 3.8%, respectively, which was primarily driven by commercial auto loss experience on programs which have since been non-renewed.

Loss and loss expenses incurred, and Everspan's associated Loss and LAE ratio, may be adversely impacted by economic and social inflation. The impact of inflation on ultimate loss reserves is difficult to estimate, particularly in light of recent disruptions to the judicial system, supply chains and labor markets. Going forward, we may not be able to offset the impact of inflation on our loss costs with sufficient price increases. The estimation of loss reserves may also be more difficult during extreme events, such as a pandemic, or during the persistence of volatile or uncertain economic conditions, due to, amongst other reasons, unexpected changes in behavior of judiciaries, claimants and policyholders, including fraudulent reporting of exposures and/or losses. Due to the inherent uncertainty underlying loss reserve estimates, the final resolution of the estimated liability for loss and loss adjustment expenses will likely be higher or lower than the related loss reserves at the reporting date. In addition, our estimate of losses and loss expenses may change. These additional liabilities or increases in estimates, or a range of either, could vary significantly from period to period.

In addition to the increase in the Loss and LAE ratio for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, there was a benefit to acquisition costs resulting from sliding scale commission arrangements with program partners. Such benefit reduced the Specialty Property and Casualty Insurance segments expense ratio by 6.9% and 1.9% for the three months ended September 30, 2025 and 2024, respectively and 3.3% and 4.5% for the nine months ended September 30, 2025 and 2024, respectively. Certain Everspan programs were structured to include sliding scale commission arrangements within a loss ratio

range. These sliding scale arrangements help mitigate losses, protect underwriting results and limit earnings volatility.

General and administrative costs were higher for the three and nine months ended September 30, 2025, relative to the three and nine months ended September 30, 2024, due to a net increase in headcount and in legal expenses, partially offset by reduced performance on long term incentive compensation.

Corporate

Corporate consists of our holding company and shared services operations ("Corporate"). Corporate provides financial, legal, technological and human resources to Ambac's two segments and is responsible for the function of AFG as a publicly traded company.

Corporate revenues totaled $610 and $5,878 for the three months ended September 30, 2025 and 2024, respectively and $1,723 and $13,925 for the nine months ended September 30, 2025 and 2024, respectively. Corporate revenue is mostly generated from investment of AFG's liquid resources and investment results from its previously made strategic investments, including certain minority investments in MGA/Us and an insurtech fund. Investment revenues comprised of net investment income and net investment gains (losses), including impairments were $617 and $938 for the three months ended September 30, 2025 and 2024, respectively and $1,735 and $5,928 for the nine months ended September 30, 2025 and 2024, respectively. The declines from 2024 to 2025 are attributable to the use of liquid resources for the acquisition of Beat and third quarter 2024 gains on FX forward contracts used to mitigate currency risk leading up to the acquisition of Beat. The decline for the nine month period also reflected net investment gains of $3,958 in the nine months ended September 30, 2024 primarily related to the conversion and early settlement of certain convertible notes, including make-whole payments, partially offset by a write-down in carrying value on an investment in preferred securities that are carried at cost less impairment.

As a result of the Company reporting the results of operations of AAC as discontinued operations, certain corporate costs charged to AAC have been reported in Net income from continuing operations and included in Corporate expenses for all years presented. Corporate expenses were $26,571 and $27,151 for the three months ended September 30, 2025 and 2024, respectively and $55,801 and $59,474 for the nine months ended September 30, 2025 and 2024. Corporate expenses were lower for the three and nine months ended September 30, 2025 compared to three and nine months ended September 30, 2024 mainly due to lower expenses related to corporate development and the sale of AAC.

LIQUIDITY AND CAPITAL RESOURCES

Holding Company Liquidity

AFG is organized as a legal entity separate and distinct from its operating subsidiaries. AFG's liquidity is primarily dependent on its net assets, excluding the operating subsidiaries that it owns, totaling $255,951 as of September 30, 2025, and secondarily on investment income, distributions, tax and expense sharing payments from its operating subsidiaries and third party capital (e.g. from credit facilities and equity issuance).


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	September 30, 2025		December 31, 2024
Cash and short-term investments	$	226,931	$	53,726
Other investments (1)	29,759		29,487
Other net (liabilities) assets	(740)		21,218
Total	$	255,951	$	104,431

(1)Includes strategic minority investments in insurance services businesses of $20,618 at September 30, 2025, and December 31, 2024..

The increase in AFG net assets, excluding its equity investments in subsidiaries, during the first nine months of 2025 was driven primarily by net cash received at the closing of the sale of AAC on September 29, 2025 and related transactions. Additionally, AFG's change in assets reflects net cash outflows from operating and interest expenses in addition to treasury stock purchases, partially offset by interest income and net distributions received from subsidiaries.

•AFG received $420,000 of proceeds from the sale of AAC, plus an additional $4,300, less applicable legal, advisory and other expenses incurred in connection with the Sale.

•In connection with the Beat acquisition, Cirrata incurred $150,000 of debt funded by a global bank. Upon the closing of the sale of AAC, AFG repaid the $150,000 loan.

•AFG's acquisition of Beat was partially funded by AAC's co-investment in the amount of $62,000. Upon the close of the AAC sale, AFG purchased AAC's co-investment at a price resulting in a 7.5% rate of return per annum to AAC.

Everspan's ability to make future dividend payments will mostly depend on its future profitability relative to its capital needs to support growth. Everspan is not expected to pay dividends in 2025. Everspan makes tax payments to AFG in accordance with a Tax Sharing Agreement. For the nine months ended September 30, 2025, Everspan paid $2,014 in tax payments to AFG.

Cirrata does not have any regulatory restrictions on its ability to make distributions. AFG received distributions from Cirrata of $5,536 and $7,354 during the nine months ended September 30, 2025 and 2024, respectively.

AFG's principal uses of liquidity are: (i) the payment of G&A expenses, including costs to explore opportunities to grow and diversify Ambac, (ii) making capital investments to acquire, grow and/or capitalize new and/or existing businesses, including through the acquisition of noncontrolling interests as a result of the exercise of outstanding puts and/or calls, and (iii) making investments in technology and other operational infrastructure to improve the operational effectiveness and efficiency of our business and to support its growth. Funding puts, calls and other capital commitments would require payments from AFG, the magnitude of which will ultimately depend on the performance of the underlying businesses, whether or not the puts or calls are exercised, FX rates and other considerations. AFG would expect the funding requirements for such obligations not to exceed approximately $50,000 in 2026, but such amount could be higher based on those considerations outlined above. AFG seeks to fund these potential puts and calls from internal resources, but may seek to raise additional short-term or long-term funding or capital sources depending on a number of considerations, including distribution levels from subsidiaries, the potential for additional

acquisitions, other capital investment demands, stock repurchases and other considerations. AFG may also provide short-term financial support, primarily in the form of loans, to its operating subsidiaries to support their operating requirements.

In the opinion of the Company’s management the net assets and expected funding sources of AFG are currently sufficient to meet AFG’s current liquidity requirements. However, events, opportunities, acquisitions, the exercise of puts and calls, the need to refinance outstanding debt, share repurchases or other circumstances could require AFG to seek additional capital (e.g. through the issuance of debt, equity or hybrid securities).

In connection with the ArmadaCare acquisition on October 31, 2025, the Company borrowed $120,000 in the form of a five-year $100,000 term loan and a five-year $20,000 revolving credit facility (together, the "Credit Facilities"). The Credit Facilities include covenants that restrict our ability to manage capital resources by requiring maintenance of certain financial ratios and restricting indebtedness, liens, mergers, sales of assets, investments, restricted payments (such as dividends), and affiliate transactions, among other restrictions. The Credit Facility also requires the prepayment of the borrowings thereunder with proceeds of certain asset sales, recovery events, issuances of indebtedness and indemnity payments. These requirements will impact our financial and operational flexibility while the Credit Facility remains in place. See Note 1. Business and Basis of Presentation to the Consolidated Financial Statements included in this Quarterly Report for further detail about the Credit Facilities.

Operating Companies' Liquidity

Insurance

Sources of liquidity for Everspan are primarily funds generated from premiums, reinsurance recoveries, fees, investment income and maturities and sales of investments.

Cash provided from these sources is used primarily for claim payments, loss expenses, acquisition costs, operating expenses, reinsurance payments and purchases of securities and other investments.

Everspan manages its liquidity risk by projecting cash flows and maintaining specified levels of cash and short-term investments at all times. It is the opinion of the Company’s management that the insurance subsidiaries’ near term liquidity needs will be adequately met from the sources described above.

Insurance Distribution

The liquidity requirements of our Insurance Distribution subsidiaries are met primarily by funds generated from commission (both base and profit commissions) and fees. Base commissions and fees are generally received monthly, whereas profit commissions are received only if the business underwritten is profitable. Cash provided from these sources is used primarily for commissions paid to sub-producers, operating expenses and distributions to AFG and other members.

Cash Held at Banks

Ambac maintains cash and investment accounts, including premium trust accounts, at depository institutions in amounts in excess of the limits insured by the FDIC and in countries other


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than the U.S. Ambac's cash balances held at banks were $51,767 as of September 30, 2025, including cash of Ambac's insurance distribution subsidiaries held in regional banks of $17,002 as of September 30, 2025.

Consolidated Cash Flow Statement Discussion

The following table summarizes the net cash flows for the periods presented.


Nine Months Ended September 30,	2025		2024
Cash provided by (used in):
Operating activities	$	(51,617)	$	76,394
Investing activities	265,371		(245,673)
Financing activities	(210,726)		206,832
Foreign exchange impact on cash and cash equivalents	—		425
Net cash flow	$	3,028	$	37,978

Operating Activities for Continuing Operations

Operating cash flows during the nine months ended September 30, 2025 and 2024, was $(51,617) and $76,394, respectively. Operating cash flows for the nine months ended September 30, 2025, were adversely impacted by G&A expenses paid relating to acquisition and restructuring costs of $9,283 and interest on short-term borrowing, an increase in reinsurance recoverable, partially offset by cash collections from both the specialty P&C and insurance distribution businesses.

Future operating flows will primarily be impacted by net premium collections, commission and fee income and investment income receipts, offset by G&A expenses, commission expenses, net claim and loss expense payments and interest payments on debt.

Investing Activities for Continuing Operations

Investing activities for the nine months ended September 30, 2025 were primarily driven by the proceeds from the sale of AAC and changes in short-term investments.

Future investing cash flows will be primarily dependent on acquisition activity and the purchase and sale of securities.

Financing Activities for Continuing Operations

Financing activities for the nine months ended September 30, 2025, included purchases of common stock of $3,301 and repayment of the Company's short-term borrowing of $150,000.

Future financing cash flows will be primarily impacted by financing for the ArmadaCare acquisition, which closed in October 2025; new debt or other capital raising activity; paydowns and maturities of debt; share repurchases, including those executed in October 2025; acquisitions of noncontrolling interest shares; other capital management activity and distributions to noncontrolling interests.

Cash Flows from Discontinued Operations

Cash flows pertaining to discontinued operations are reported separately on the Consolidated Statements of Cash Flows. The primary driver of the cash flows from discontinued operations was the continued run-off of the financial guarantee business, including the collection of premiums, interest income and subrogation, and the payment of claims, expenses and foreign taxes. Since the agreement to sell AAC, the operations were substantially separated and with the Sale having been completed in September 2025 future reporting period will exclude any discontinued operations activity after September 30, 2025.

BALANCE SHEET

Total assets decreased by $5,910,488 from December 31, 2024, to $2,147,890 at September 30, 2025, primarily due to the closing of the sale of AAC on September 29, 2025, including net cash consideration received and repayment of the Company's short-term debt. Additionally, reinsurance recoverables increased due to growth and loss reserve strengthening in the specialty P&C business.

Total liabilities decreased by approximately $5,862,388 from December 31, 2024, to $1,000,469 as of September 30, 2025, primarily due to the closing of the sale of AAC, repayment the Company's short-term debt, partially offset by an increase in loss and loss adjustment expense reserve and ceded premium payables from the specialty P&C businesses.

As of September 30, 2025, total Ambac Financial Group stockholders’ equity was $843,384, compared with total stockholders’ equity of $856,906 at December 31, 2024. The decrease was primarily driven by a total comprehensive loss of $31,495 partially offset by the impact of the issuance of warrants in connection with the sale of AAC.

Discontinued Operation:

Assets and Liabilities Held-for-Sale. Assets held-for-sale decreased to $— at September 30, 2025, from $6,267,200 as December 31, 2024 as a result of the closing of the Sale. Liabilities held-for-sale increased to $— at September 30, 2025, from $5,887,685 as December 31, 2024 also as a result of the closing of the Sale.

Continuing Operations:

The following discusses changes in assets, liabilities and stockholders' equity, excluding assets and liabilities held-for-sale related to the pending sale of AAC, as of September 30, 2025, compared to December 31, 2024.


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Investment Portfolio

Ambac's investment portfolio is managed under established guidelines designed to meet the investment objectives of the Everspan Group and AFG. The Insurance Distribution businesses investments are limited to money market funds and U.S. Government Treasury bonds. Refer to "Description of the Business – Investments and Investment Policy" located in Part I. Item 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for further description of Ambac's investment policies and applicable regulations.

The following table summarizes the composition of Ambac’s investment portfolio, at carrying value at September 30, 2025, and December 31, 2024:


	September 30, 2025								December 31, 2024
	Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Consolidated		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Consolidated

Fixed maturity securities	$	129,644	$	—	$	1,457	$	131,101	$	157,020	$	—	$	—	$	157,020

Short-term	42,848		37,055		215,922		295,825		35,727		27,435		64,439		127,601
Other investments	—		—		28,302		28,302		—		177		28,117		28,294

Total investments	$	172,492	$	37,055	$	245,681	$	455,228	$	192,247	$	27,612	$	92,556	$	312,915

Ambac invests in various asset classes in its fixed maturity securities portfolio. Refer to Note 4. Investments to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Form 10-Q for information about fixed maturity securities and other investments by asset class.

The following charts provide the ratings distribution of the fixed maturity investment portfolio based on fair value at September 30, 2025, and December 31, 2024. Ratings represent the lower of ratings provided by S&P and Moody's when ratings are available from both agencies.


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Premium Receivables

Ambac's premium receivables increased to $74,760 at September 30, 2025, from $57,222 at December 31, 2024. The increase is primarily due to growth in the Specialty P&C Insurance Segment, including receivables related to the programs where Everspan participates as a reinsurer.

Commission and fees receivable

Ambac's commission and fee receivables increased to $75,480 at September 30, 2025, from $55,377 at December 31, 2024. The increase is primarily due to growth in the Insurance Distribution Segment and the Beat acquisition.

Reinsurance Recoverable on Paid and Unpaid Losses

Ambac has reinsurance in place pursuant to surplus share treaty and facultative agreements. As of September 30, 2025, and December 31, 2024, reinsurance recoverable on paid and unpaid losses were $440,462 and $306,191, respectively, increasing primarily due to growth in the Specialty P&C Insurance Segment. To minimize its exposure to losses from reinsurers, Ambac (i) monitors the financial condition of its reinsurers; (ii) is entitled to receive collateral from its reinsurance counterparties under certain reinsurance contracts; and (iii) has certain cancellation rights that can be exercised in the event of rating agency downgrades of a reinsurer (among other events and circumstances). Those reinsurance counterparties that do not currently post collateral are well capitalized, highly rated, authorized capacity providers. Ambac benefited from letters of credit and collateral amounting to approximately $72,454 from its reinsurers at September 30, 2025. Additionally, while legacy liabilities from Specialty P&C acquisitions were fully ceded to certain reinsurers, Everspan also benefits from an unlimited, uncapped indemnity from the respective sellers to mitigate any residual risk to these reinsurers.

Intangible Assets, net of Accumulated Depreciation

Intangible assets primarily include (i) intangible assets established as part of acquisitions in the Insurance Distribution business of $327,986 at September 30, 2025 and (iii) indefinite-lived intangible assets in the Specialty P&C business as part of its acquisitions of $11,213 at September 30, 2025.

As of September 30, 2025, and December 31, 2024, intangible assets were $339,197 and $344,775, respectively. The increase is driven by foreign exchange rates (appreciation of the British pound), partially offset by amortization of $27,247.

Goodwill

As of September 30, 2025, and December 31, 2024, goodwill totaled $445,382 and $418,234 respectively. The increase is primarily driven by foreign exchange rates (appreciation of the British pound). All of the goodwill was assigned to the Insurance Distribution segment.

Liabilities

Loss and Loss Adjustment Expense Reserves

Loss and loss adjustment expense reserves are estimates of the ultimate liability for unpaid losses and loss expenses for claims that have been reported and claims that have been incurred, but not yet reported as of the balance sheet date.

Loss and loss adjustment expense reserves by line of business were as follows as of September 30, 2025, and December 31, 2024


	September 30, 2025				December 31, 2024
Line	Gross		Net		Gross		Net
Commercial auto	$	159,820	$	24,961	$	158,472	$	28,720
Excess liability	97,111		14,025		50,248		6,571
General liability	55,136		10,961		35,211		8,286
Workers compensation	18,086		18,086		14,465		14,465
Non-standard personal auto	5,390		5,195		12,689		12,185
Professional Liability	38,365		2,892		17,698		1,807
Surety	15,210		(6)		11,217		6
Unallocated loss adjustment expense reserves	15,638		5,672		12,238		6,578
Other (1)	32,783		978		36,826		363
Loss and Loss Expense Reserves	$	437,539	$	82,764	$	349,064	$	78,980

(1)Includes $28,999 and $0 loss and loss expense reserves on a gross and net of reinsurance basis at September 30, 2025 and $35,146 and $0 loss and loss expense reserves on a gross and net of reinsurance basis at December 31, 2024 related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company and Consolidated Specialty Insurance Company. All legacy liabilities remain obligations of affiliates of the sellers through reinsurance.

The process for determining the level of loss and loss adjustment reserves is subject to certain estimates and judgments. Refer to the "Critical Accounting Policies and Estimates" and “Results of Operations” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations, in addition to Basis of Presentation and Significant Accounting Policies and Loss Reserves sections included in Note 2. Basis of Presentation and Significant Accounting Policies and Note 8. Insurance Contracts, respectively, of 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, for further information on loss and loss expenses.

Short and Long-term Debt

Ambac borrowed under a short-term credit facility to provide partial funding of the acquisition of Beat in 2024. This short-term debt was repaid from the proceeds of the sale of AAC in the amount of $150,000.

In connection with the acquisition of ArmadaCare on October 31, 2025, Cirrata Group LLC and certain of its subsidiaries (including ArmadaCare) entered into the Credit Facilities, which were fully drawn to pay part of the purchase price for ArmadaCare. See Note 1. Background and Business Description to the Consolidated Financial Statements included in this Quarterly Report for further detail about the Credit Facilities.

Commission Payable

Commission payables are commissions due to sub producers for placing insurance contracts on behalf of the MGAs and amounts due to UK Syndicates that provide advanced commissions to fund short term liquidity needs for MGAs. Commission payable at September 30, 2025, and December 31, 2024 was $109,317 and $71,431, respectively. The increase is primarily due to higher advance commissions due to Syndicates.


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Redeemable Noncontrolling Interest (NCI)

The minority equity interests of Beat's majority owned MGA/Us were classified within nonredeemable NCI at December 31, 2024. During the three months ended March 31, 2025, Ambac entered into put options on certain of these minority interests that are embedded in the underlying equity instruments. As a result, the minority interests were reclassified from nonredeemable to redeemable and remeasured at fair value including the put options, increasing redeemable NCI by $42,180. Other changes to redeemable NCI during the three and nine months ended September 30, 2025, relate primarily to the allocation of financial results to the minority interests, revaluation to redemption value where applicable, reclassification of certain interests to nonredeemable due to the expiration of related put options, the exercise of certain put options and the impact of foreign currency translation.

ACCOUNTING STANDARDS

Please refer to Note 1. Business and Basis of Presentation to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Form 10-Q for a discussion of new accounting pronouncements and the potential impact on Ambac’s financial condition and results of operations.

U.S. STATUTORY BASIS FINANCIAL RESULTS

AFG's U.S. insurance subsidiaries prepare financial statements under accounting practices prescribed or permitted by its domiciliary state regulator (“SAP”) for determining and reporting the financial condition and results of operations of an insurance company. The National Association of Insurance Commissioners (“NAIC”) Accounting Practices and Procedures manual (“NAIC SAP”) is adopted as a component of prescribed practices by each domiciliary state. For further information, see "Everspan Indemnity Insurance Company," in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Note 9. Insurance Regulatory Restrictions 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.

Everspan Indemnity Insurance Company

Everspan Indemnity Insurance Company’s (EIIC) statutory policyholder surplus was $126,460 at September 30, 2025, as compared to $125,202 at December 31, 2024. The increase in surplus was driven by net income at Everspan Indemnity Insurance Company, including its subsidiaries, of $1,163 during the nine months ended September 30, 2025. Each of Everspan's insurance carriers are a direct or indirect wholly-owned subsidiary of EIIC and therefore are included in EIIC's statutory policyholder surplus.

NON-GAAP FINANCIAL MEASURES

In addition to reporting the Company’s quarterly financial results in accordance with GAAP, the Company is reporting non-GAAP

financial measures: EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, Organic Revenue Growth Rate (Insurance Distribution segment only), Adjusted Net Income and Adjusted Net Income Margin. These amounts are derived from our consolidated financial information, but are not presented in our consolidated financial results.

We present non-GAAP supplemental financial information because we believe such information is of interest to the investment community, and that it provides greater transparency and enhanced visibility into the underlying drivers and performance of our businesses on a basis that may not be otherwise apparent on a GAAP basis. We view these non-GAAP financial measures as important indicators when assessing and evaluating our performance on a segmented and consolidated basis and they are presented to improve the comparability of our results between periods by eliminating the impact of the items that may not be representative of our core operating performance. These non-GAAP financial measures are not substitutes for the Company’s GAAP reporting, should not be viewed in isolation and may differ from similar reporting provided by other companies, which may define non-GAAP measures differently.

Beginning December 31, 2024, Ambac replaced the non-GAAP measure Adjusted Net Income with new non-GAAP measures Adjusted Net Income and Adjusted Net Income Margin and added Adjusted EBITDA and Adjusted EBITDA Margin to better align with other participants in the Property & Casualty insurance industry, including insurance carriers and other peers in the insurance distribution business.

The following paragraphs define each non-GAAP financial measure. A tabular reconciliation of the non-GAAP financial measure and the most comparable GAAP financial measure is also presented below.

EBITDA — EBITDA is net income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization of intangible assets.

EBITDA Margin — EBITDA divided by total revenues.

Adjusted EBITDA and Adjusted EBITDA Margin — We define Adjusted EBITDA as net income (loss) from continuing operations before interest expense, income taxes, depreciation, amortization of intangible assets, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, acquisition and integration related expenses, severance, and other exceptional or non-recurring items, including those related to raising capital. We believe that adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of income and expenses that may obfuscate business performance, and that the presentation of this measure enhances an investor's understanding of our financial performance.


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	Three Months Ended September 30, 2025											Three Months Ended September 30, 2024
	Specialty Property & Casualty Insurance			Insurance Distribution			Corporate & Other		Consoli-dated			Specialty Property & Casualty Insurance			Insurance Distribution			Corporate & Other		Consoli-dated
Net income (loss) (Continuing Operations)	$	(53)		$	(4,506)		$	(26,279)	$	(30,838)		$	7,990		$	(7,066)		$	(20,814)	$	(19,890)
Adjustments:
Add: Interest expense	—			6,185			—		6,185			—			3,745			—		3,745
Add: Income tax expense	8			(1,241)			(8)		(1,241)			944			(883)			(928)		(867)
Add: Depreciation	—			145			329		474			—			206			475		681
Add: Intangible amortization	—			9,272			—		9,272			—			6,423			—		6,423

EBITDA	(45)			9,855			(25,958)		(16,148)			8,934			2,425			(21,267)		(9,908)
Add: Impact of noncontrolling interests	—			(3,927)			—		(3,927)			—			(557)			—		(557)
EBITDA attributable to shareholders	(45)			5,928			(25,958)		(20,075)			8,934			1,868			(21,267)		(10,465)
Net income margin	(0.2)		%	(10.4)		%	NM		(46.3)		%	19.9		%	(29.4)		%	NM		(28.4)		%
Net income margin attributable to shareholders	(0.2)		%	(12.5)		%	NM		(47.6)		%	19.9		%	(22.1)		%	NM		(25.9)		%
EBITDA margin	(0.2)		%	22.8		%	NM		(24.2)		%	22.3		%	10.1		%	NM		(14.2)		%
EBITDA margin attributable to shareholders	(0.2)		%	13.7		%	NM		(30.1)		%	22.3		%	7.8		%	NM		(14.9)		%
Add: Acquisition and integration related expenses	—			—			229		229			—			—			14,854		14,854
Add: Equity-based compensation expense	94			100			5,953		6,147			157			—			2,376		2,533


Add: Severance and restructuring expense	—			—			8,875		8,875			—			248			1,653		1,901
Add: Other non-operating (income) losses	—			—			2,008		2,008			(7,500)			—			582		(6,918)





Adjusted EBITDA	$	49		$	9,955		$	(8,893)	$	1,111		$	1,591		$	2,673		$	(1,802)	$	2,462

Adjusted EBITDA attributable to shareholders	$	49		$	5,988		$	(8,893)	$	(2,856)		$	1,591		$	2,116		$	(1,802)	$	1,905


Adjusted EBITDA Margin	0.2		%	23.0		%	NM		1.7		%	4.0		%	11.1		%	NM		3.5		%
Adjusted EBITDA Margin attributable to shareholders	0.2		%	13.9		%	NM		(4.3)		%	4.0		%	8.8		%	NM		2.7		%


	Nine Months Ended September 30, 2025											Nine Months Ended September 30, 2024
	Specialty Property & Casualty Insurance			Insurance Distribution			Corporate & Other		Consoli-dated			Specialty Property & Casualty Insurance			Insurance Distribution			Corporate & Other		Consoli-dated
Net income (loss) (Continuing Operations)	$	1,799		$	(14,237)		$	(53,692)	$	(66,129)		$	8,632		$	(2,095)		$	(44,513)	$	(37,976)
Adjustments:
Add: Interest expense	—			17,209			—		17,209			—			3,745			—		3,745
Add: Income tax expense	278			(3,922)			(386)		(4,030)			1,023			(756)			(1,034)		(767)
Add: Depreciation	—			343			1,074		1,417			—			230			1,401		1,631
Add: Intangible amortization	—			27,247			—		27,247			—			8,701			—		8,701

EBITDA	2,077			26,640			(53,004)		(24,286)			9,655			9,825			(44,146)		(24,666)
Add: Impact of noncontrolling interests	—			(11,132)			—		(11,132)			—			(1,907)			—		(1,907)
EBITDA attributable to shareholders	2,077			15,508			(53,004)		(35,418)			9,655			7,918			(44,146)		(26,573)
Net income margin	2.8		%	(12.1)		%	NM		(35.9)		%	8.5		%	(3.8)		%	NM		(22.3)		%
Net income margin attributable to shareholders	—		%	—		%	NM		—		%	8.5		%	(2.2)		%	NM		(21.8)		%
EBITDA margin	3.2		%	22.7		%	NM		(13.2)		%	9.5		%	17.8		%	NM		(14.5)		%
EBITDA margin attributable to shareholders	3.2		%	13.2		%	NM		(19.2)		%	9.5		%	14.4		%	NM		(15.6)		%
Add: Acquisition and integration related expenses	—			375			1,310		1,685			—			—			25,827		25,827
Add: Equity-based compensation expense	241			167			9,422		9,830			282			—			6,252		6,534


Add: Severance and restructuring expense	—			60			13,612		13,672			—			248			6,990		7,238
Add: Other non-operating (income) losses	—			(591)			2,008		1,417			(7,500)			—			(3,845)		(11,345)





Adjusted EBITDA	$	2,319		$	26,647		$	(26,652)	$	2,314		$	2,439		$	10,067		$	(8,921)	$	3,585

Adjusted EBITDA attributable to shareholders	$	2,319		$	15,599		$	(26,652)	$	(8,734)		$	2,439		$	8,160		$	(8,921)	$	1,678
Adjusted EBITDA Margin	3.5		%	22.7		%	NM		1.3		%	2.4		%	18.2		%	NM		2.1		%
Adjusted EBITDA Margin attributable to shareholders	3.5		%	13.3		%	NM		(4.7)		%	2.4		%	14.8		%	NM		1.0		%

Organic Revenue Growth & Rate (Insurance Distribution Only.) — Organic revenue is based on commissions and fees for the relevant period by excluding (i) the first twelve months of commissions and fees generated from acquisitions and (ii) commissions and fees from divestitures (iii) and other items such

as contingent commissions and the impact of changes in foreign exchange rates.

Organic revenue growth is the change in organic revenue period-to-period, with prior period results adjusted to (i) include


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commissions and fees that were excluded from organic revenue in the prior period and reached the twelve-month owned mark in the current period, and (ii) exclude commissions and fees related to divestitures from organic revenue.

Organic revenue growth rate to Total revenue growth rate, the most directly comparable GAAP measure, for each of the periods indicated is as follows (in percentages):



Three Months Ended September 30,	2025		2024		% Growth
Total Insurance Distribution revenue & growth percentage (1)	$	43,222	$	23,995	80.1	%
Less: Acquired revenues	(6,206)		—
Less: Profit commission and contingent commission income	(1,940)		(1,319)
Less: impact of F.X. rates	(1,041)		1,636
Total Organic Revenue & Growth Percentage	$	34,035	$	24,312	40.0	%



Nine Months Ended September 30,	2025		2024		% Growth
Total Insurance Distribution revenue & growth percentage (1)	$	117,261	$	55,166	112.6
Less: Acquired revenues	(43,955)		—
Less: Profit commission and contingent commission income	(8,897)		(3,642)
Less: impact of F.X. rates	2,643		1,636
Total Organic Revenue & Growth Percentage	$	67,052	53,160		26.1	%

(1)Total Insurance Distribution revenue includes investment income.

Adjusted Net Income and Adjusted Net Income Margin — We define Adjusted net income as net income (loss) from continuing operations attributable to Ambac adjusted for amortization of intangible assets, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, acquisition and integration related expenses, severance and non-recurring income and loss items that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments. Per share amounts exclude any impact of revaluing non-controlling interests as otherwise reported under GAAP earnings per share. We believe that adjusted net income is an appropriate measure of operating performance because it eliminates the impact of income and expenses that may obfuscate business performance.


	Three Months Ended September 30,
	2025								2024
	Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Consoli-dated		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Consoli-dated
Net income (loss) (Continuing Operations)	$	(53)	$	(4,506)	$	(26,279)	$	(30,838)	$	7,990	$	(7,066)	$	(20,814)	$	(19,890)
Adjustments:
Add: Acquisition and integration related expenses	—		—		229		229		—		—		14,854		14,854
Add: Intangible amortization	—		9,272		—		9,272		—		6,423		—		6,423
Add: Equity-based compensation expense	94		100		5,953		6,147		157		—		2,376		2,533


Add: Severance and restructuring expense	—		—		8,875		8,875		—		248		1,653		1,901
Add: Other non-operating (income) losses	—		—		2,008		2,008		(7,500)		—		582		(6,918)





Adjusted net income (loss) before tax and NCI	41		4,866		(9,214)		(4,307)		647		(395)		(1,349)		(1,097)
Income tax effects	—		(2,067)		—		(2,067)		—		—		—		—
Adjusted net income (loss) before NCI	41		2,799		(9,214)		(6,374)		647		(395)		(1,349)		(1,097)
Net (income) loss attributable to noncontrolling interest	—		(3,583)		—		(3,583)		—		(557)		—		(557)
Adjusted net income (loss) attributable to shareholders	$	41	$	(784)	$	(9,214)	$	(9,957)	$	647	$	(952)	$	(1,349)	$	(1,654)


	Three Months Ended September 30,
	2025							2024
	Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other	Consoli-dated		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other	Consoli-dated
Net income (loss) margin	(0.2)	%	(10.4)	%	NM	(46.3)	%	19.9	%	(29.4)	%	NM	(28.4)	%
Adjusted Net income (loss) attributable to Ambac stockholders margin	0.2	%	(1.8)	%	NM	(14.9)	%	1.6	%	(4.0)	%	NM	(2.4)	%


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	Nine Months Ended September 30,
	2025								2024
	Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Consoli-dated		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Consoli-dated
Net income (loss) (Continuing Operations)	$	1,800	$	(14,241)	$	(53,691)	$	(66,132)	$	8,634	$	(2,095)	$	(44,516)	$	(37,977)
Adjustments:
Add: Acquisition and integration related expenses	—		375		1,310		1,685		—		—		25,827		25,827
Add: Intangible amortization	—		27,336		—		27,336		—		8,701		—		8,701
Add: Equity-based compensation expense	241		167		9,422		9,830		282		—		6,252		6,534


Add: Severance and restructuring expense	—		60		13,612		13,672		—		248		6,990		7,238
Add: Other non-operating (income) losses	—		(591)		2,008		1,417		(7,500)		—		(3,845)		(11,345)





Adjusted net income (loss) before tax and NCI	2,041		13,106		(27,339)		(12,192)		1,416		6,854		(9,292)		(1,022)
Income tax effects	(15)		(3,959)		15		(3,959)		—		—		—		—
Adjusted net income (loss) before NCI	2,026		9,147		(27,324)		(16,151)		1,416		6,854		(9,292)		(1,022)
Net (income) loss attributable to noncontrolling interest	—		(10,395)		—		(10,395)		—		(1,907)		—		(1,907)
Adjusted net income (loss) attributable to common shareholders	$	2,026	$	(1,248)	$	(27,324)	$	(26,546)	$	1,416	$	4,947	$	(9,292)	$	(2,929)


	Nine Months Ended September 30,
	2025							2024
	Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other	Consoli-dated		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other	Consoli-dated
Net income (loss) margin	7.9	%	(32.9)	%	NM	(99.3)	%	8.5	%	(3.8)	%	NM	(22.3)	%
Adjusted Net income (loss) attributable to Ambac stockholders margin	8.9	%	(2.9)	%	NM	(39.9)	%	1.4	%	9.0	%	NM	(1.7)	%

Item 3. Quantitative and Qualitative Disclosure About Market Risk

As of September 30, 2025, there are no material changes in the market risks that the Company is exposed to compared to December 31, 2024.

Item 4. Controls and Procedures

In connection with the preparation of this third quarter Form 10-Q, an evaluation was carried out by Ambac’s management, with the participation of Ambac’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of Ambac’s disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form 10-Q. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Based on its evaluation, Ambac’s Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2025, Ambac’s disclosure controls and procedures were effective.

Management has formally incorporated Beat Capital Partners Limited into Ambac's program for internal control over financial reporting effective August 1, 2025. Accordingly, Beat is included in the scope of management's control assessments beginning with the third quarter of 2025.

The Company completed the sale of AAC on September 29, 2025 (refer to Sale of AAC in the Overview section of Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations). Subsequent to the Sale, AAC continued to perform certain services for the Company under a transition support agreement between the parties. These services included certain accounting and information technology activities

that supported the preparation of the Company's Unaudited Consolidated Financial Statements included in Part 1 of this Form 10-Q.

Effective January 1, 2025, Ambac Financial Group, Inc. changed the general ledger and consolidation system and certain related processes used for a substantial portion of its continuing operations. Additional entities comprising AFG's continuing operations will be converting onto the new general ledger system in 2025 and 2026. As part of its implementation, the Company evaluated the impact of this new system on its internal control over financial reporting and made changes to controls and procedures where necessary.

There were no other changes in our internal control over financial reporting during the first nine months of 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Please refer to Note 13. Commitments and Contingencies of the Unaudited Consolidated Financial Statements located in Part I, Item 1 in this Form 10-Q and Note 19: Commitments and Contingencies in Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion on legal proceedings against Ambac and its subsidiaries.


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Item 1A. Risk Factors

Subsequent to the sale of Ambac's Legacy Financial Guarantee Insurance business on September 29, 2025, the Company revised the Risk Factors presented in Item 1A to Part I in our Annual Report on Form 10-K for the year ended December 31, 2024, to represent the Risk Factors applicable to the Company as of September 30, 2025. Please also see the section entitled “Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995” in this quarterly report on Form 10-Q.

Our risk factors are organized in the following sections:


			Page
Risks Related to AFG Common Shares			46
Risk Related to the Company's Business			46
Risks Related to Capital, Liquidity and Markets			54

Risks Related to AFG Common Shares

The price per share of AFG's common stock may be subject to a high degree of volatility, including significant price declines.

Although AFG's common stock is listed on the New York Stock Exchange ("NYSE"), there can be no assurance as to the liquidity of the trading market or the price at which such shares can be sold. The price of the shares may decline substantially in response to a number of events or circumstances, including but not limited to:

•adverse developments in our financial condition or results of operations;

•changes to regulatory status;

•changes in investors’ or analysts’ valuation measures for our stock;

•adverse changes in analysts’ recommendations regarding our stock;

•market perceptions of our success, or lack thereof, in building and managing our Specialty Property and Casualty Insurance and Insurance Distribution businesses and our business strategy and tactics more generally;

•the impact or perceived impact of any acquisition, disposition or other strategic transaction, including entry into a new line of business or the value or long-term prospects of the Company;

•adverse developments in the industries and markets in which we operate, including the property and casualty insurance, underwriting and brokerage industries, or the fixed income and equity capital markets;

•adverse market and/or economic conditions, such as those caused by a recession or inflation, which increase our risk of loss on insurance policies and depress the value and/or liquidity of our investments and other assets;

•adverse developments in current or future litigations; and

•results and actions of other participants in our industries.

The price of AFG's shares may also be affected by the risks described below. Investments in AFG's common stock may be subject to a high degree of volatility.

Ambac is planning to further develop and expand its Specialty Property and Casualty Insurance and Insurance Distribution businesses; however, such plans may not be realized, or if realized, may not create value and may negatively impact our financial results.

Ambac is planning to further develop and expand its Specialty Property and Casualty Insurance and Insurance Distribution businesses. Such plans may involve additional acquisitions of assets or existing businesses and the development of businesses through new or existing subsidiaries. Currently, it is not possible to fully predict the future prospects or other characteristics of such businesses. We may not be able to successfully identify opportunities, attract specialized underwriting and other talent, and operationalize new businesses in a timely or cost-efficient manner. While we expect to conduct business, financial and legal due diligence in connection with the evaluation of any future business or acquisition opportunities, there can be no assurance our due diligence will identify every matter that could have a material adverse effect on us. Efforts to pursue or develop certain business opportunities may be unsuccessful or require significant financial or other resources, which could have a negative impact on our growth plans, operating results and financial condition. To implement our growth strategy, we must be able to meet our capital needs, expand and refine our systems and our internal controls effectively, allocate our human resources optimally, identify and hire qualified employees and effectively integrate any acquisitions we make in our effort to achieve growth. No assurance can be given that Ambac will successfully execute its plans for new business, generate any earnings or value from new businesses or be able to successfully integrate any such business into our current operating structure. The failure to manage our growth effectively could have a material adverse effect on our business, financial condition and results of operations.

Our inability to successfully manage ongoing organizational changes could adversely impact our business results. We may experience higher levels of costs or disruption in managing these changes, which may cause the benefits derived from our business development strategy to be less than we originally expect.

Should changes in Ambac’s circumstances or financial condition or in the political, economic and/or legal environment occur, there can be no assurance that all or any part of our strategy and/or initiatives will not be abandoned or adjusted to take account of such changes. Any such adjustment or abandonment may have a material adverse effect on our securities.

Risks Related to the Company's Business

We are subject to reputational harm if companies with which we do business engage in negligent or fraudulent behaviors and damage to our reputation could materially adversely impact our business.

Our business depends on contractual and working relationships with insurance distribution partners, insurance carriers, reinsurers, policyholders and beneficiaries, third party administrators, and other agents and counterparties. We could suffer material financial loss, reputational harm and/or a loss of business


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prospects if a business partner, agent or counterparty engages in negligent or fraudulent conduct, whether directly in our relationship with them or indirectly as a result of their conduct in other business relationships.

Ambac may be adversely impacted by P&C industry market cycles.

Ambac’s P&C businesses are subject to market cycles. Premium pricing in the commercial property and casualty insurance markets has been historically based on underwriting capacity of insurance carriers, general economic conditions, inflation, and other factors. In recent years, we have been in a “hard” market whereby carriers have been raising rates. However, we have observed that in certain lines of business the rate of pricing increase has slowed or begun to decrease. If carriers lower premium rates more broadly this would be referred to as a “softening” or “soft” market. Given that Ambac generates revenue from both insurance premiums and commissions that are based on insurance premiums, our revenues are affected by the cyclicality of the markets in which we operate. If we enter a soft market, absent mitigating factors, we may experience a reduction in revenues and profits.

Catastrophic events may cause volatility of net income and comprehensive income primarily through changes to loss reserves, which may not be adequate to cover potential losses, and declines in revenues. Revenue may be adversely impacted by reduced business activity and lower sliding scale and profit commissions.

Catastrophic events, whether natural or man-made, including natural disasters and environmental and public health events that result in material disruption of economic activity, loss of human life or significant property damage, can have a materially negative impact on our financial and operational performance. Such stresses could result in liquidity strains or permanent losses.

Everspan may be exposed to losses arising out of unpredictable catastrophic events. These include natural catastrophes and other disasters, such as hurricanes, earthquakes, windstorms, floods, wildfires, and severe winter weather. Catastrophes can also include man-made disasters, such as terrorist attacks and other destructive acts, war, political unrest, explosions, cyber-attacks, nuclear, biological, chemical or radiological events and infrastructure failures. A severe catastrophe or a series of catastrophes could result in losses exceeding Everspan’s reinsurance protection and may have a material adverse impact on our results of operations or financial condition.

Changing weather patterns and climate change have added to the unpredictability, frequency and severity of weather-related catastrophes incurred by the property and casualty insurance industry in recent years. These changing weather patterns make it more difficult to predict and model catastrophic events, reducing our ability to accurately price exposure to such events and mitigate its risks.

Catastrophic events may cause significant volatility in the markets in which we operate. Disruptions to these markets could result in a decline in business activity, increased claims, reduced underwriting capacity from insurance companies, reinsurers and other capital providers upon which our P&C businesses are reliant. Catastrophic events may also interrupt the operations of

our agents and business partners that distribute our P&C insurance products. Profit commissions and contingent commissions related to certain of our P&C business lines may also be adversely impacted by catastrophic losses. Individually and/or collectively, these results may have a material adverse impact on our results of operations and financial condition.

Further, we use internally developed and third-party vendor tools and models to assess exposure to losses, including catastrophic losses. The models assume various conditions and probability scenarios and may not accurately predict future losses or measure losses currently incurred. Limitations in these tools and models may adversely affect our results of operations and financial condition.

The ultimate impact of a catastrophic event on insurers and their obligations, and the economy in general, is by its very nature uncertain, and will be determined by a number of factors including, but not limited to, the depth and duration of a particular crisis; the extent to which affected consumers, businesses, municipal entities and other debtors or sources of revenues recover from depressed economic circumstances, and the timelines for such recoveries; the level and efficacy of government intervention or support for affected persons or entities and the financial markets via emergency relief measures; the availability of insurance; the availability of cost-effective financing; management of public health crisis remediation efforts; the effectiveness of other public or private crisis management efforts, mitigation measures or support; and certain socio-economic variables, such as unemployment levels. Consequently, if following such catastrophic events we do not have sufficient resources or financial flexibility, receive adequate measures of support or realize the appropriate level of economic recovery, our ultimate ability to operate could be materially impaired and we could suffer material permanent losses and therefore may have an adverse effect on our results of operations and financial condition. Counterparties that service aspects of our business may be similarly impacted and, if their operations are impaired due to a catastrophe, it may be difficult or costly to us to find alternatives to such servicing capabilities.

We could realize losses from our cash and investment accounts if one of the financial institutions we use fail or is taken over by regulators.

We maintain cash and investment accounts, including premium trust accounts, at depository institutions in amounts in excess of the limits insured by the FDIC. If one or more of these institutions were to fail or be taken over by federal regulators, our access to these funds could be limited and we could experience liquidity problems and potential financial losses.

Our risk management policies and practices may not adequately identify significant risks.

As described in Part I, Item 1, “Risk Management” in our Annual Report on Form 10-K for the year ended December 31, 2024, we have established risk management policies and practices which seek to mitigate our exposure to a variety of risks. These policies and practices in the past have not insulated us from risks that were unforeseen and which had unanticipated loss severity, and such policies and practices may not do so in the future. There can be no assurance that these policies and practices will be adequate to avoid future losses. If we are not able to identify significant


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risks, we may not be able to timely mitigate such risks, thereby increasing the amount of losses to which we are exposed. An inability to identify significant risks could also result in the failure to timely establish loss reserves that are sufficient in relation to such risks.

We operate within an enterprise risk management (“ERM”) framework designed to assess and monitor risks. However, no assurance can be given that we will effectively identify, review, monitor or manage all relevant risks. Nor can we provide assurance that our ERM framework will result in us accurately identifying all risks and adequately limiting our exposures based on our assessments. Any ineffectiveness in our controls or procedures or failure to manage these risks may have an adverse effect on our results of operations and financial condition.

We are subject to the risk of litigation and the outcome of proceedings we are or may become involved in could have a material adverse effect on our business, operations, financial position, profitability or cash flows.

It is not possible to predict the extent to which litigation against AFG or one or more subsidiaries will be filed, and it is also not possible to predict the outcome of litigation. It is possible that there could be unfavorable outcomes in existing or future proceedings. Management may be unable to make meaningful or reasonable estimates of the amount or range of losses that could result from unfavorable outcomes or of the expenses that will be incurred in connection with such lawsuits. Under some circumstances, adverse results in any such proceedings and/or the incurring of significant litigation or other expenses could be material to our business, operations, financial position, profitability or cash flows.

Everspan may be subject to disputes with policyholders regarding the scope and extent of coverage offered under Everspan's policies; be required to defend claimants in suits against its policyholders for covered liability claims; face allegations of improper claims handling; or enter into commercial disputes with its reinsurers, MGA/Us or TPAs regarding their respective contractual obligations and rights. Under some circumstances, the results of such disputes or suits may lead to liabilities beyond those which are anticipated or reserved, including liabilities in excess of policy limits.

Political developments may materially adversely affect our business.

Our Specialty Property and Casualty Insurance subsidiaries are highly regulated as insurance carriers in the States of their domicile and the jurisdictions in which they are licensed. Our owned MGA/Us and insurance brokerage subsidiaries are also required to maintain certain entity-level licenses in those jurisdictions and/or the international countries in which they operate, as well as licenses of individual officers or representatives that are essential to their ability to conduct

business. Each of the foregoing must also comply with laws generally applicable to insurance entities, including those relating to governance, capital, and operational requirements.

Government laws and regulations applicable to our businesses develop and change rapidly in response to consumer demands and public policies. State legislatures and insurance departments place increasing burdens on insurance carriers and producers with respect to matters such as cybersecurity, data privacy, management of technology, corporate governance, environmental and social issues, and enterprise risk management. Such laws and regulations require substantial resources to ensure that the Company has appropriate and effective compliance programs in place. If we are unable to keep pace with changes in applicable law and regulations, or if we otherwise fail in our compliance efforts, the Company may be subject to fines, sanctions, governmental orders or modifications to business practices that individually or collectively impair our business or increase our costs, possibly materially.

In addition, the Company from time to time receives various regulatory inquiries and requests for information, and its insurance carrier subsidiaries are subject to examination by regulatory authorities. It is not possible to predict the extent to which additional regulatory inquiries or requests for information will be made, nor the outcome of inquiries, requests for information or examination, which exposes the Company to potential fines, sanctions, governmental orders or modifications to business practices that individually or collectively impair our business or increase our costs, possibly materially.

Everspan may not be successful in executing its business plans or may experience greater than expected insurance underwriting losses and/or reinsurance counterparty losses, which could result in losses material to Everspan's capital position, a downgrade of its AM Best rating and a loss of its franchise value. Such events could have a material adverse impact on the value of AFG's shares.

Everspan is in the early stage of developing a portfolio of specialty insurance program business. Its business plan entails establishing programs with program administrators, MGA/Us, with claims handled by TPAs. The success of these programs is dependent upon the quality of insurance risk underwritten by the MGA/Us, the quality of underwriting and operational performance, as well as oversight, of the MGA/Us and TPAs by Everspan, the quality and creditworthiness of reinsurance obtained with respect to the underlying risks, loss experience over time, premium levels, competition and other factors, some of which are outside Everspan's control. Should Everspan fail in executing its business plans or experience greater than expected losses due to operational issues, poor risk selection, default or failure to perform by reinsurers, failure to timely realize ultimate loss exposure, a departure of qualified MGA/Us from the industry, enhanced scrutiny from regulators or ratings agencies specific to the program business model, failure to collect amounts due to it or other factors, Everspan may suffer losses that are material to its capital position, a downgrade in its AM Best rating and/or a loss of its franchise value. Any such outcomes could have a material adverse impact on the value of AFG's shares.


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A downgrade in the AM Best financial strength rating of Everspan may negatively affect our business.

The financial strength of Everspan is evaluated by AM Best, which issues an "FSR," an important factor in establishing the competitive position of Everspan. The FSR reflects AM Best’s opinion of Everspan's financial strength, operating performance, strategic position and ability to meet obligations to policyholders, and are not evaluations directed to investors. Everspan's FSR is subject to periodic review, and the criteria used in the rating methodologies are subject to change. All of the insurance companies that comprise Everspan are rated "A-" (Excellent). A downgrade in Everspan's FSR could make it more difficult to sell insurance policies and Everspan's distribution channels may cease to transact with them, which would adversely affect our business, financial condition and results of operations.

Failure of Everspan's Program Partners to properly market, underwrite or administer policies could adversely affect us.

The marketing, underwriting, administration and servicing of policies in our Specialty Property and Casualty Insurance business have been contracted to the MGA/Us with which Everspan transacts. Any failure by the MGA/Us or TPAs to properly handle these functions could result in liability to us. Even though the MGA/Us and TPAs with which Everspan transacts may be required to indemnify Everspan for any such liability or monetary losses, there are risks for which indemnity may be insufficient or entirely unavailable if, for example, the relevant program partner becomes insolvent or is otherwise unable to pay us. Furthermore, any failure to properly handle the marketing, underwriting, administration and servicing of policies in our Specialty Property and Casualty Insurance business could also create regulatory issues or harm our reputation, which could materially and adversely affect our business, financial condition and results of operations.

If in our Specialty Property and Casualty Insurance business we are unable to accurately underwrite risks and charge competitive yet profitable rates to our clients and policyholders, our business, financial condition and results of operations may be adversely affected.

In general, the premiums for our Specialty Property and Casualty Insurance policies are established at the time a policy is issued and, therefore, before all of our underlying costs are known. Like other property and casualty insurance companies, Everspan relies on estimates and assumptions in setting its premium rates. Establishing adequate premium rates is necessary, together with investment income, to generate sufficient revenue to offset losses, loss adjustment expenses, acquisition costs and general and administrative expenses in order to earn a profit. The rate environment is also subject to market cycles, which can be difficult to predict and make it difficult to adequately price risk. If Everspan does not accurately assess the risks that it assumes, it may not charge adequate premiums to cover its losses and expenses, which would adversely affect our results of operations and our profitability. Alternatively, Everspan could set its premiums too high, which could reduce its competitiveness and lead to lower policyholder retention, resulting in lower revenues. Pricing is a highly complex exercise involving the acquisition and analysis of historical loss data and the projection of future trends, loss costs, expenses, and inflation trends, among other factors, for each of Everspan's products in multiple risk tiers and many

different markets. Everspan seeks to implement its pricing accurately in accordance with its assumptions. Everspan's ability to undertake these efforts successfully and, as a result, to accurately price its policies, is subject to a number of risks and uncertainties, including insufficient or unreliable data; incorrect or incomplete analysis of available data; uncertainties generally inherent in estimates and assumptions; failure to implement appropriate actuarial projections and ratings formulas or other pricing methodologies; regulatory constraints on rate increases; failure to accurately estimate investment yields and the duration of liabilities for losses and loss adjustment expenses; disagreements with reinsurers or the MGA/Us with whom Everspan transacts as to the adequacy of pricing assumptions; and unanticipated court decisions, legislation or regulatory action.

If Everspan is unable to obtain reinsurance coverage at reasonable prices or on terms that adequately protect it, we may be required to bear increased risks or reduce the level of our underwriting commitments.

Everspan purchases reinsurance as part of its overall risk management strategy. While reinsurance does not discharge our insurance subsidiaries from their obligations to pay claims for losses insured under their insurance policies, it does make the reinsurer liable to them for the reinsured portion of the risk. At the inception of a new program, Everspan generally acts as an issuing carrier and reinsures a majority of such risk to third parties in contracts that are generally subject to term limitations or termination rights. Everspan may be unable to maintain its current reinsurance arrangements or to obtain other reinsurance in adequate amounts and at favorable rates, particularly if reinsurers become unwilling or unable to support our specialty property and casualty business in the future. Additionally, market conditions beyond our control may impact the availability and cost of reinsurance and could have an adverse effect on our business, financial condition and results of operations. A decline in the availability of reinsurance may increase the cost of reinsurance and materially and adversely affect our business prospects. Everspan may, at certain times, be forced to incur additional costs for reinsurance or may be unable to obtain sufficient reinsurance on acceptable terms or from reinsurers which satisfy Everspan's criteria as acceptable security. In the latter case, Everspan would have to accept an increase in exposure to risk, reduce the amount of business written by it or seek alternatives in line with Everspan's risk limits, all of which could adversely affect our business, financial condition and results of operations.

Our insurance carriers are subject to reinsurance counterparty credit risk. Their reinsurers may not pay on losses in a timely fashion, or at all.

Our insurance carrier subsidiaries purchase reinsurance to transfer part of the risk they have underwritten to reinsurance companies in exchange for part of the premium they receive in connection with the risk. Although reinsurance makes reinsurers liable to our carriers for the risk transferred or ceded to the reinsurers, it does not relieve our insurance carrier subsidiaries of their liabilities to policyholders. Accordingly, our insurance carrier subsidiaries are exposed to credit risk with respect to their reinsurers, especially to the extent reinsurance receivables are not sufficiently secured by collateral or do not benefit from other credit enhancements. Our insurance carrier subsidiaries also bear the risk that they are unable to receive, or there is a substantial delay in receiving, the


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reinsurance recoverable for any reason, including that the terms of the reinsurance contract do not reflect the intent of the parties to the contract; there is a disagreement between the parties as to their intent; the terms of the contract cannot be legally enforced; the terms of the contract are interpreted by a court or arbitration panel differently than intended by our insurance carrier subsidiaries; the reinsurance transaction performs differently than our insurance carrier subsidiaries anticipated due to a flawed design of the reinsurance structure, terms or conditions; or changes in law and regulation, or in the interpretation of laws and regulations, affects a reinsurance transaction. These risks may be exacerbated to the extent that our insurance carrier subsidiaries' reinsurance recoverables are overly concentrated with one or a small subset of reinsurers.

The insolvency of one or more of our insurance carrier subsidiaries' reinsurers, or their inability or unwillingness to make timely payments if and when required under the terms of reinsurance contracts, could adversely affect our business, financial condition and results of operations.

Everspan’s insurance carriers may be subject to counterparty credit risk associated with its MGA/U distribution partners.

Everspan may be subject to the risk that its MGA/U program partners fail to meet their financial obligations to Everspan or policyholders as it relates to premiums payable, return premiums, sliding scale commissions and return commissions. This risk may be exacerbated to the extent that Everspan has financial obligations to its reinsurers under reinsurance agreements that do not absolve Everspan of for credit risk or non-payment by the MGA/U program partner.

The insolvency of one or more of our MGA/U program partners, or their inability or unwillingness to make timely payments if and when required under the terms of program agreements, could adversely affect our business, financial condition and results of operations.

If actual claims exceed loss and loss adjustment expense reserves for Everspan, or if changes in the estimated level of loss and loss adjustment expense reserves are necessary, including as a result of, among other things, changes in the legal/tort, regulatory and economic environments in which Everspan operates, our financial results could be materially and adversely affected.

The objective of establishing loss reserve estimates is not to, and our loss reserves do not, reflect worst possible outcomes. While our reserving is estimated based on experience and using various actuarial methods and assumptions, our loss reserves may change materially based on future developments. As a result of inherent uncertainties in the estimates and judgments made to determine loss reserves, there can be no assurance that actual losses will not exceed such reserves or that our reserves will not materially change over time as circumstances, events, our assumptions, or our models change.

Loss and loss adjustment expense reserves represent management estimates of what the ultimate settlement and administration of claims will cost. These estimates are developed using common and industry accepted actuarial techniques. Nevertheless, the process of estimating loss and loss adjustment expense reserves involves a high degree of judgment and is subject to a number of

variables, which can be affected by internal and external events, such as changes in claims handling, changes in loss cost trends, catastrophic events and social inflation.

Elevated social inflation trends are likely to continue. Social inflation, which includes increased litigation, partially supported by access to litigation financing; changes in social norms; an erosion of the public sentiment towards insurers’ interpretation of coverage levels and limits; and increased damage awards by juries, may make it difficult for Everspan to estimate loss reserves, establish adequate product pricing, and maintain a strong competitive position with consumers.

Moreover, the impact of catastrophic events may not be adequately reflected in claims reserves and, accordingly, could adversely impact results. Catastrophic losses are caused by wind and hail, wildfires, tornadoes, hurricanes, tropical storms, earthquakes, severe freeze events, volcanic eruptions, terrorism, cyber attacks, civil unrest, and industrial accidents and other such natural and man made events.

We also face potential exposure to various types of new and emerging tort claims which were not known or anticipated when our insurance products were originally priced.

The impact of many of these items on ultimate costs for claims and claim adjustment expense reserves could be material and is difficult to estimate.

Our ability to grow Everspan will depend in part on the addition of new Program Partners, and our ability to effectively onboard such new Program Partners could have an adverse effect on our business, financial condition and results of operations.

Our ability to grow Everspan will depend in part on the addition of new MGA/U partners. If Everspan does not effectively and timely source, evaluate and onboard new MGA/Us, including assisting such MGA/Us to quickly resolve any post-onboarding matters and provide effective ongoing support, Everspan's ability to add new MGA/Us and its relationships with its existing Program Partners could be adversely affected. Additionally, Everspan's reputation with potential new MGA/Us could be damaged if it fails to effectively onboard MGA/Us with whom it has signed definitive legal agreements. Such reputational damage could make it more difficult for Everspan to attract new and retain existing program partners, which could have an adverse effect on our business, financial condition and results of operations.

We compete with a large number of companies in the property and casualty insurance industry for underwriting premium.

We compete with a large number of companies in the property and casualty insurance industry for underwriting premium. During periods of intense competition for premium, in particular, our Specialty Property and Casualty Insurance and Insurance Distribution businesses may be challenged to maintain competitiveness with other companies that may seek to write policies without the same regard for risk and profitability targeted by our Specialty Property and Casualty Insurance and Insurance Distribution businesses. During these times, it may be difficult for Everspan or our MGA/Us to grow or maintain premium volume without the unattractive options of lowering underwriting standards, sacrificing income, or both.


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In addition, our Specialty Property and Casualty Insurance and Insurance Distribution businesses face competition from a wide range of specialty insurance companies, underwriting agencies and intermediaries, as well as diversified financial services companies that are significantly larger than our Specialty Property and Casualty Insurance and Insurance Distribution businesses are and that have significantly larger financial, marketing, management and other resources. Some of these competitors also have longer standing and better established market recognition than Ambac's group companies. The greater resources or market presence that these competitors possess may enable them to avoid or defray particular costs, employ greater pricing flexibility, have a higher tolerance for risk or loss, or exploit other advantages that may make it more difficult for us to compete. We may incur increased costs in competing for underwriting revenues in this environment. If we are unable to compete effectively in the markets in which our Specialty Property and Casualty Insurance and Insurance Distribution businesses operate or expand into, our underwriting revenues may decline, as well as overall business results.

Other competitive concerns include the entrance of technology companies into the insurance distribution business and the direct-to-consumer insurance carriers that do not utilize third party agents and brokers as production sources. Additionally, the insurance industry may experience consolidation, and therefore we may experience increased competition from insurance companies and the financial services industry, as a growing number of larger financial institutions increasingly, and aggressively, offer a wider variety of financial services, including insurance distribution services. While we collaborate and compete in these segments on a fee-for-service basis, we cannot be certain that such alternative markets will provide the same level of insurance coverage or profitability as traditional insurance markets.

Technological changes to the way insurance is distributed, underwritten, and administered also present competitive risks. For example, our competitive position could be impacted if we are unable to cost-effectively deploy technology, such as machine learning and artificial intelligence, which collects and analyzes large sets of data to make underwriting or other decisions, or if our competitors collect and use data which we do not have the ability to access or use. In addition, usage-based methods of determining premiums (e.g., telematics) can impact product pricing and design and are becoming an increasingly important competitive factor. The landscape of law and regulation governing these areas presents additional risk to the extent we are unable to timely adapt to ensure compliance.

We may be adversely affected by failures in services or products provided by third parties.

We outsource and may further outsource certain technology and business process functions, and rely upon third-party vendors, agents and contractual counterparties for other essential services and information. Outsourcing functions to third parties exposes us to increased risk related to service disruptions. If we do not effectively develop, implement and monitor our vendor, agency and contractual counterparty relationships and the financial condition of such third parties, if third party providers do not perform as anticipated, if we experience technological or other problems, or if vendor, agency or other contractual relationships

relevant to our business process functions are terminated, we may not realize expected productivity improvements or cost efficiencies and may experience operational difficulties, increased costs and a loss of business. Further, we may suffer financial losses if a counterparty defaults on a financial obligation to us, including with respect to insurance agency commissions which adjust over time. Moreover, policyholders and claimants may suffer delays or lapses in service levels which may create extra-contractual exposures. The increased risks identified above could expose us to disruption of service, monetary and reputational damages, competitive disadvantage and significant increases in compliance costs. A material failure by an external service provider, information provider, agent or counterparty, or a material defect or default in the products, services or information provided thereby, could adversely affect our financial condition and results of operations.

Our outsourcing of certain technology and business process functions to third parties may expose us to increased risk related to data security, service disruptions or the effectiveness of our control system. These risks could increase as vendors increasingly offer cloud-based software services rather than software services which can be run within our data centers or as we choose to move additional functions to the cloud.

Impairment of intangible assets and goodwill, resulting from acquisitions, could adversely affect our results of operations.

In connection with Ambac’s acquisition of insurance distribution businesses (MGA/Us and brokers), Ambac recorded the fair value of identifiable intangible assets (primarily related to distribution relationships) and goodwill. The intangible assets will be amortized over their remaining useful lives. The Company will test intangible assets for impairment if certain events occur or circumstances change indicating that the carrying amount of the intangible asset may not be recoverable. Goodwill will be tested for impairment annually or whenever events occur or circumstances change that may indicate impairment. Intangible asset and goodwill impairments are driven by a variety of factors, which could include, among other things, declining future cash flows of the acquired business as addressed in other risk factors related to the Insurance Distribution Business. Any intangible asset or goodwill impairment could adversely affect the Company's operating results and financial condition.

Our Insurance Distribution businesses derive a significant portion of their commission revenues from a limited number of insurance companies and Lloyd's syndicates, the loss of any of which could result in lower commissions or loss of business production.

The commissions of our MGA/Us and insurance broker are derived from insurance policies underwritten on behalf of a limited number of capacity providers, including insurance and reinsurance companies, Lloyd’s syndicates and other capital providers. Should one or more of these capacity providers terminate its arrangements with our Insurance Distribution businesses or otherwise decrease the amount of capacity provided, we may lose significant commission revenues or lose significant business production while seeking other sources of capacity.

A number of our MGA/Us have material relationships with Lloyd’s Syndicates 4242, and to a lesser extent Cadenza Re


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Limited, which are risk carriers that are serviced by Ambac group entities. A reduction in scale and/or appetite of these carriers whether in response to underwriting performance, regulatory considerations, availability of underwriting capital support, or otherwise may result in a loss of significant commission revenues. Furthermore, these carriers form the cornerstone capacity for some of our MGA/Us new launches and hence a deterioration in their activities will further inhibit new MGA/U launches.

Our Insurance Distribution businesses, results of operations, financial condition and liquidity may be materially adversely affected by certain potential claims or proceedings.

Our owned MGA/Us and insurance brokerage operating subsidiaries are subject to various potential claims and other proceedings, including those relating to alleged errors and omissions in connection with the placement or servicing of insurance and/or the provision of services in the ordinary course of business, of which we cannot, and likely will not be able to, predict the outcome with certainty. Because our MGA/Us and insurance brokerage operating subsidiaries often assist customers with matters involving substantial amounts of money, including the placement of insurance and the handling of related claims that customers may assert, errors and omissions, claims against it may arise alleging potential liability for all or part of the amounts in question. Also, the failure of an insurer with whom our MGA/Us and insurance brokerage operating subsidiaries place business could result in errors and omissions claims against it by its customers, which could adversely affect Ambac’s results of operations and financial condition. Claimants may seek large damage awards, and these claims may involve potentially significant legal costs and damages. In addition, regardless of monetary costs, these matters could have a material adverse effect on our reputation and cause harm to carrier, customer or employee relationships, or divert personnel and management resources.

Acquiring new MGA/Us is core to our Insurance Distribution business strategy. Risks associated with such endeavors could adversely affect our growth and results of operations.

Acquisitions have been an important contributor of growth in the Insurance Distribution business and we believe that additional acquisitions will be important to future growth, building further operational scale and diversifying our sources of revenue. Failure to successfully identify and complete acquisitions likely would result in us achieving slower growth and less operating scale. Moreover, the failure of acquisition targets to achieve anticipated revenue and earnings levels could result in slower than anticipated growth and result in intangible asset or goodwill impairment charges.

Future growth of our Insurance Distribution business is highly dependent upon, amongst other items, our ability to launch de novo MGA/MGUs, which is highly dependent on our ability to attract insurance talent, operationalize new MGA/MGUs and compete for business.

The market for insurance underwriting talent and MGA/MGU leadership talent has become increasingly competitive. If we are not able to attract and/or retain such talent to launch and maintain de novo MGA/MGUs, our ability to grow may be materially constrained and the intangible and goodwill assets we recorded in

connection with the acquisition of Beat may become impaired. Any such impairment could be materially adverse to our results of operations and financial condition. Even if we are able to attract underwriting and leadership talent to launch de novo MGA/MGUs, there can be no guarantees that each de novo MGA/MGU will be successful or that we will be able to operationalize each business. Product and technological complexity have increased the challenges of starting de novo MGA/MGUs and could in the future increase the launch time and investment needed to improve the chances of success. Competition for premium has also increased, particularly as market conditions have begun to soften in certain segments. If markets continue to soften or such conditions spread to a broader set of risk classes, competition for premiums may increase further, making the launch of de novo MGA/MGU more challenging. While Ambac has access to managed capacity, de novo MGA/MGUs rely on access to insurance capacity for the risks they write. If Ambac were not able to source the capital needed to support the insurance risk underwritten by de novo MGA/MGUs, we would not be able to generate revenues to offset the expenses incurred to establish such de novo MGA/MGUs and we may experience losses.

Ambac may not be able to realize expected synergies from acquisitions.

Ambac’s assessment of acquisitions often includes an estimate of the value of revenue, expense and operating synergies that may be created from the acquisition. If due to market, economic, technological, cultural, regulatory or other reasons Ambac is not able to fully realize expected synergies or its valuation of such synergies otherwise proves incorrect, we may not realize the full expected value of an acquisition, which in turn may lead to lower than expected profits, material adverse results from operations and/or a weakened financial condition.

Changes in law or in the functioning of the healthcare market could significantly impair our Accident & Health insurance business and therefore negatively impact Ambac’s financial condition and results of operations.

Adoption of a single payer healthcare system or a public health insurance option would likely adversely impact the entire healthcare industry. While our Accident & Health insurance business has historically demonstrated an ability to adjust its products to major changes in the healthcare industry, such business would likely be adversely impacted by such a material change in the U.S. healthcare system particularly if private health insurance is eliminated, materially limited, or is rendered noncompetitive. Material adverse developments to our Accident & Health insurance business would have a negative impact on Ambac's financial condition and results of operations which could be material.

Our Insurance Distribution businesses and their results of operations and financial condition may be adversely affected by conditions that result in reduced insurance capacity.

Our Insurance Distribution business results of operations depend on the capacity of insurance carriers (including Lloyd’s of London), reinsurers and other capital providers to assume risk and provide coverage. Capacity among insurance carriers, reinsurers and other capital providers may diminish because of our performance or due to factors outside our control. For example, capacity could be reduced by insurance companies


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failing or withdrawing from writing certain coverages that our Insurance Distribution businesses offer to their customers. To the extent that reinsurance becomes less widely available or significantly more expensive, we may not be able to procure the amount or types of coverage that our customers desire and the coverage we are able to procure for our customers may be more expensive or limited.

Variations in commission income that results from the timing of policy renewals and the net effect of new and lost business production may have unexpected effects on our results of operations.

Commission income can vary quarterly or annually due to the timing of policy renewals and the net effect of new and lost business production. We do not solely control the factors that cause these variations. Specifically, customers’ demand for insurance products can influence the timing of renewals, new business and lost business (which includes policies that are not renewed), and cancellations. Quarterly and annual fluctuations in revenues based upon increases and decreases associated with the timing of new business, policy renewals and payments from insurance companies may adversely affect our financial condition, results of operations and cash flows.

Variations in contingent commissions that results from the effects of insurance loss activity on portfolios may result in significant variations in revenues.

Profit-sharing contingent commissions are paid by insurance companies based upon the profitability of the business placed with such companies. In the past these commissions have accounted for a significant amount of total commissions and fees. Due to, among other things, the inherent uncertainty of loss and changes in underwriting criteria by insurance companies, there will be a level of uncertainty related to the payment of profit-sharing contingent commissions.

System security risks, data protection breaches and cyber-attacks could adversely affect our business and results of operations.

We and our vendors and contractual counterparties rely on our information technology systems for many enterprise-critical functions and a prolonged failure or interruption of these systems for any reason could cause significant disruption to our operations and have a material adverse effect on our business, financial condition and operating results. Our information technology and application systems, as well as those of our vendors and contractual counterparties, may be vulnerable to threats from computer viruses, natural disasters, unauthorized access, cyber-attack and other similar disruptions. Computer hackers may be able to penetrate our network’s system security, or the network's security system of a vendor or contractual counterparty, and misappropriate or compromise confidential information, create system disruptions or cause shutdowns. The ability of hackers to infiltrate and compromise our and our vendors' and contractual counterparties' information systems or the contents thereof may be enhanced by generative artificial intelligence, which may be more difficult to detect and defend. In addition to our own confidential information, we and our vendors and contractual counterparties sometimes receive and are required to protect confidential information obtained from third parties (including us in the case of a vendor or contractual counterparty) and

personally identifiable information of individuals. To the extent any disruption or security breach results in a loss or damage to our data (or the data of a vendor or contractual counterparty on which we rely), or inappropriate disclosure of our confidential information or that of others, or personally identifiable information of individuals, it could cause significant financial losses that are either not, or not fully, insured against, cause damage to our reputation, affect our relationships with third parties, lead to claims against us, result in regulatory action, or otherwise have a material adverse effect on our business or results of operations. In addition, we may be required to incur significant costs to mitigate the damage caused by any security breach, or to protect against future damage. Moreover, although we have incident response, disaster recovery and business continuity plans in place, we may not be able to adequately execute these plans in a timely fashion in the event of a disruption to our information technology and application systems. Additionally, we are an acquisitive organization and the process of integrating the information systems of the businesses we acquire is complex and exposes us to additional risk as we might not adequately identify weaknesses in the targets’ information systems, which could expose us to unexpected liabilities or make our own systems more vulnerable to attack.

The application of innovative and solution-based technology is required to facilitate effective operations and to realize internal efficiencies; however, the investment required in technology may not yield sufficient returns and the implementation of new or modified technology may be a material distraction to management.

Our business performance and growth plans could be negatively affected if we are not able to, among other things, gain internal efficiencies through the application of effective technology across our businesses, integrate operations, and/or innovate product and operational solutions. Conversely, investments in internal systems or innovative product offerings may fail to yield sufficient return to cover their investment. To the extent our investments in technology fail to provide sufficient returns or achieve their stated business objectives, we may experience lower productivity and/or operational effectiveness, which could adversely impact our financial results and prevent us from meeting our strategic objectives.

Our ability to attract and retain qualified executives, senior managers and other employees or the loss of any of these personnel could negatively impact our business.

Our ability to execute on our business strategies depends on the retention and recruitment of qualified executives and other professionals. We rely substantially upon the services of our current executive and senior management teams. In addition to these officers, we rely on key staff with insurance, underwriting, business development, credit, risk management, investment, accounting, finance, legal, technology and other technical and specialized skills. The market for qualified executives, senior managers and other employees has become very competitive. As a result of competition for talent we may experience higher employee turnover and finding qualified replacements may be more difficult. The loss of the services of members of our executive and/or senior management teams, our inability to hire and retain other talented personnel and/or the absence of effective management succession plans could delay or prevent us


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from succeeding in executing our strategies, which could negatively impact our business.

Our business could be negatively affected by actions of stakeholders whose interests may not be aligned with the broader interests of our stockholders.

Ambac could be negatively affected as a result of actions by stakeholders whose interests may not be aligned with the broader interests of our stockholders, and responding to any such actions could be costly and time-consuming, disrupt operations and divert the attention of management and employees. Such activities could interfere with our ability to execute on our strategic plans.

We are exposed to foreign exchange risk, which may adversely affect our financial condition and results of operation.

A significant portion of our Insurance Distribution business is operated out of the U.K where our functional currency is the British pound (“GBP”). However, the majority of our revenues are generated in U.S. dollars (“USD”). As a result, movements in the rate of exchange between GBP and USD may materially distort our financial results and cause losses that are not attributable to the underlying business. We frequently hedge this foreign exchange risk through forward contracts; however, these hedges may not completely negate the adverse impact of foreign exchange movements.

Our P&C businesses rely on a limited number of retail and wholesale brokers to generate revenue and the loss of one or more of these key partners could adversely impact our results of operations and growth objectives.

Our relationship with retail and wholesale brokers and other trading partners (collectively, “Brokers”) are nonexclusive and may be discontinued at any time by either party. In addition, any of these parties may change the terms of our relationship which would cause our commission expense to increase.

The loss of a Broker could reduce the number of submissions we receive which could result in reduced commission revenue. Our business could also be harmed if we fail to develop relationships with new Brokers or other sources of business.

A reduction in the number of Brokers, whether as a result of the termination of relationships, consolidation or otherwise, may leave us more vulnerable to adverse changes in our relationships with other Brokers, particularly in geographies or lines of business where we offer insurance products through a relatively small number of Brokers.

Risks Related to Capital, Liquidity and Credit Markets

AFG and the Insurance Distribution business have substantial indebtedness, resulting from the acquisition of ArmadaCare on October 31, 2025, which could adversely affect our financial condition, operational flexibility and our ability to obtain financing in the future.

The Company funded a significant portion of the purchase price of ArmadaCorp Capital, LLC and its subsidiaries through new term loan and revolving credit facilities (the "Credit Facilities"). The Credit Facilities are secured by substantially all of the assets of, and the Company's ownership interests in, our Insurance Distribution businesses, and guaranteed by AFG.

The Credit Facilities include covenants that restrict our ability to manage capital resources by requiring maintenance of certain financial ratios and restricting indebtedness, liens, mergers, sales of assets, investments, restricted payments (such as dividends), and affiliate transactions, among other restrictions. The Credit Facilities also require the prepayment of the borrowings thereunder with proceeds of certain asset sales, recovery events, issuances of indebtedness and indemnity payments. These requirements will impact our financial and operational flexibility while the Credit Facilities remains in place.

The Company’s substantial indebtedness could have other significant consequences for our financial condition and operational flexibility. For example, it could:

•increase our vulnerability to general adverse economic, competitive and industry conditions;

•limit our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes on satisfactory terms or at all;

•require the Company to dedicate a substantial portion of its cash flow from operations to the payment of interest on its indebtedness, thereby reducing the funds available for operations and to fund the execution of key strategies;

•limit or restrict the Company from making strategic acquisitions or cause us to make non-strategic divestitures;

•limit the Company's ability, or increase the costs, to refinance its indebtedness or repay indebtedness due to ongoing interest payment obligations; and

•limit our ability to attract and retain key employees.

While restrictive covenants in the Credit Facilities may limit the amount of additional indebtedness the Company may incur, we may obtain waivers of those restrictions and incur additional indebtedness in the future. In addition, our ability to make scheduled payments on, or refinance, any such indebtedness may depend on the ability of our subsidiaries to make distributions or pay dividends, which in turn will depend on their future operating performance and applicable contractual, legal and regulatory restrictions on the payment of distributions or dividends. There can be no assurance that any such dividends or distributions would be made. This could further exacerbate the risks associated with the Company’s substantial leverage.

The Company intends to service indebtedness under the Credit Facilities from earnings and cash flow generated by the Insurance Distribution businesses. In the event the Insurance Distribution businesses fail to produce sufficient earnings and cash flow to pay the Company's indebtedness when due, the Company would need to seek to modify the terms of the Credit Facilities, refinance or restructure its indebtedness, or raise additional capital. There can be no assurance that the Company will be able to adequately address a shortfall in its debt-servicing capacity through such measures on commercially reasonable terms or at all. Moreover, if the Company were able to address a shortfall in its debt servicing capacity through one or more of these measures, it may incur substantial additional costs or burdens, including additional collateral or restrictions on its business, which could cause a


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material adverse impact on the Company's results of operations and financial condition.

Furthermore, raising additional capital to pay down debt through the issuance of equity or other debt would depend on market and economic conditions, may dilute the ownership of existing stockholders and potentially diminish the ability of the Company to access the capital markets in the future. Moreover, raising additional capital through the sale of assets would depend on market and economic conditions; the availability of buyers; the requirements and conditions of local law, including regulatory restrictions; and other factors that may result in the Company or a party enforcing rights against the Company to be unable to receive proceeds sufficient to discharge the Company’s obligations. Because of these and other factors beyond our control, the Company may be unable to pay or discharge the principal or interest on its indebtedness on economic terms or at all, which would materially impair the value of the Company.

We may have future capital needs and may not be able to obtain third-party financing or raise additional third-party capital on acceptable terms, or at all.

An inability to obtain third-party debt financing or raise additional third-party capital, when required by us or when business conditions warrant, could have a material adverse effect on our business, financial condition and results of operations, and could adversely impact our ability to achieve our strategic objectives. Our financial condition, the Risk Factors described elsewhere herein, as well as other factors, may constrain our financing abilities. Our ability to secure third-party financing will depend upon our future operating performance, regulatory conditions, the availability of credit generally, economic conditions and financial, business and other factors, many of which are beyond our control. The market conditions and the macroeconomic conditions that affect our business could have a material adverse effect on our ability to secure third-party financing on favorable terms, if at all.

If third-party financing is not available when needed, or is available on unfavorable terms, we may be unable to take advantage of business opportunities, respond to competitive pressures or effectively and efficiently manage our balance sheet, any of which could have a material adverse effect on our business, financial condition and results of operations.

Ambac has significant obligations as the counterparty to several put contracts related to redeemable minority interests in our Insurance Distribution business. Obligations under these put contracts may be material and may require Ambac to raise third party capital to fund.

If a counterparty exercises a put right, we would be required to make a cash payment, which could be substantial, at a time when we may not have sufficient cash resources to fund all or a portion of such obligation. As a result, we may be required to raise additional capital or liquidity to fund these obligations. Raising additional capital or liquidity may be dilutive to shareholders or may be otherwise very expensive. As a result, raising the capital or liquidity to fund these obligations may have a material adverse effect on our results of operations and financial condition. Alternatively, to fund the put payment, we may be forced to liquidate other assets, which may be less liquid exposing us to the risk of loss. Our ability raise capital or liquidity would depend on

market conditions at the time and there can be no assurance that we will be able to raise the capital necessary to fund these put obligations. .

Changes in prevailing interest rate levels and market conditions could adversely impact our business results and prospects.

Increases in prevailing interest rate levels can adversely affect the value of our investment portfolio and, therefore, our financial strength. In the event that investments must be sold in order to pay claims, to pay debt obligations, to meet collateral posting requirements or to meet other liquidity needs, such investments would likely be sold at discounted prices.

Our risk to changes in interest rates and market conditions could be magnified in the event that the US or UK were to enter into an economic recession. While interest rates may decline during a recession, credit and liquidity risks would be expected to increase which may cause us to experience losses in our investment portfolios. These losses may have a material adverse affect on our results of operations and financial condition, particularly if any economic rescission were prolonged.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities — No matters require disclosure.

(b) Purchases of Equity Securities By the Issuer and Affiliated Purchasers

On November 12, 2024, Ambac’s Board of Directors authorized a share repurchase program, under which Ambac was authorized to opportunistically repurchase up to $50,000 of the Company’s common shares at management’s discretion over the period ending on December 31, 2026. Additionally, when restricted stock unit awards issued under Ambac's Long Term Incentive Plan vest or settle, they become taxable compensation to employees. Shares withheld to cover the employee's portion of withholding taxes and are included in shares purchased.

The following table includes information about the Company's purchases of its common shares during the third quarter of 2025.


	Jul-2025		Aug-2025		Sep-2025		Third Quarter 2025
Total Shares Purchased	—		—		—		—
Average Price Paid Per Share	$	—	$	—	$	—	$	—
Total Number of Shares Purchased as Part of Publicly Announced Plan	—		—		—		—
Maximum Dollar Value That may Yet be Purchased Under the Plan							$	38,322

The following table shows shares repurchased by year under Ambac's November 12, 2024 share repurchase program.


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($ in thousands, except per share)	Year Ended December 31,						YTD 2025
	2022		2023		2024
Shares repurchased	1,605,316		325,068		937,141		292,191
Total cost	$	14,217	$	4,510	$	11,678	$	3,295
Average purchase price per share	$	8.86	$	13.88	$	12.46	$	11.28
Unused authorization amount							$	38,322

Subsequent to September 30, 2025, Ambac repurchased 3,142,554 number of shares in the open market at an average price of $8.46 under a 10B5-1 program. As of the date of this filing $8,449 of unused capacity remains under Ambac's share repurchase program.

Item 3. Defaults Upon Senior Securities — No matters require disclosure.

Item 5. Other Information — In the last fiscal quarter, none of our directors or executive officers adopted, terminated, or modified any Rule 10b5-1 trading arrangement, or any non-Rule 10b5-1 trading arrangement.

At the 2025 Annual Meeting of Stockholders held on May 28, 2025, the Company's stockholders recommended, by a non-binding advisory vote, that a stockholder vote to approve the compensation of our named executive officers should occur every year. In accordance with the stockholders' recommendation, the Company has determined that an advisory vote on the compensation of our named executive officers will be conducted every year, until the next required vote on the frequency of stockholder votes on the compensation of our named executive officers.

No other matters require disclosure.

Item 6. Exhibits


Exhibit Number						Description
Other exhibits, filed or furnished, as indicated:
31.1+						Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended.
31.2+						Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended.
32.1++						Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document - the instance document does not appear in the interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.
104						Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags or embedded within the Inline XBRL document

						+ Filed herewith. ++ Furnished herewith.


		AMBAC FINANCIAL GROUP, INC.

Dated:	November 10, 2025	By:	/s/ DAVID TRICK
		Name:	David Trick
		Title:	Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial Officer)