Ambac's Q4 2024 Earnings Call: Key Contradictions on Profitability, Legacy Sales, and Financial Strategy

These are the key contradictions discussed in Ambac Financial Group's latest 2024Q4 earnings call, specifically including: Distribution and Specialty P&C profitability and expectations, legacy business sale updates, cash availability and share repurchase authorization, leverage strategy for growth opportunities, Everspan's financial performance, and legacy business sale process:



Premium and Revenue Growth in Specialty P&C:
- Ambac's P&C business generated nearly $900 million of premiums in 2024, up 74% from the previous year, and produced $236 million of revenue, which was up 89% from the prior year.
- This growth was driven by the acquisition of Beat, which brought immediate scale and breadth to the distribution platform, as well as successfully selling the legacy financial guarantee business.

Cirrata's Revenue and EBITDA Growth:
- Cirrata generated nearly $100 million in revenue for 2024, up 93%, and earned approximately $20 million of adjusted EBITDA, with an adjusted EBITDA margin of 20%.
- The growth was supported by strong performance in the specialty commercial auto business, offsetting some headwinds in the ESL and short-term medical business.

Everspan's Underwriting and Growth:
- Everspan's gross premium written grew to over $380 million, up 40% from the prior year, and achieved a full year combined ratio of 101.6.
- The improvement was due to concerted efforts to adjust to market conditions and rebalance capital allocation in support of future business growth, leading to the second consecutive quarterly underwriting profit.

Managed Capacity and Diversification:
- The Cirrata platform has more than $1.5 billion of committed third-party capacity for 2025 from a diversified panel of insurers, reinsurers, private capital, and pension funds, with over 60% of support having been in place for four or more years.
- Access to managed capacity supports the growth of MGA businesses by leveraging the depth and breadth of insurance, reinsurance, and ILS markets, which is a strategic differentiator for the company.