Ambac Reports First Quarter 2021 Results

Rhea-AI Summary

Ambac Financial Group reported a net income of $17 million, or $0.08 per diluted share, for Q1 2021, a turnaround from a net loss of $14 million in Q4 2020. Adjusted earnings also surged to $41 million, or $0.59 per diluted share, compared to $4 million or $0.08 in the prior quarter. The positive results stemmed from $37 million in gains from junior surplus note exchanges and the inclusion of Xchange's results, despite losses related to Puerto Rico. However, book value per share decreased to $23.02, reflecting ongoing challenges.

Positive

• Net income rose to $17 million from a loss of $14 million in Q4 2020.
• Adjusted earnings improved significantly to $41 million from $4 million in Q4 2020.
• $37 million in gains achieved through junior surplus note exchanges.
• Successful inclusion of Xchange's results contributing positively.

Negative

• Book value per share decreased by $0.55 to $23.02.
• Adjusted book value per share decreased by $0.39 to $19.66.
• Incremental losses incurred related to Puerto Rico.

Ambac Financial Group, Inc. (NYSE: AMBC) ("Ambac"), a financial services holding company, today reported Net Income attributable to common stockholders of $17 million or $0.08⁽¹⁾ per diluted share and Adjusted Earnings⁽²⁾ of $41 million or $0.59 per diluted share for the quarter ended March 31, 2021. This compares to a Net Loss attributable to common stockholders of $14 million or $0.31 per diluted share and Adjusted Earnings of $4 million or $0.08 per diluted share in the fourth quarter of 2020. Book Value per Share decreased $0.55 to $23.02 and Adjusted Book Value per Share⁽²⁾ decreased $0.39 to $19.66 from December 31, 2020, to March 31, 2021.

The results for the first quarter of 2021 as compared to the fourth quarter of 2020 were primarily driven by $37 million of gains from junior surplus note exchanges, higher gains from interest rate derivatives and the inclusion of Xchange's results, partially offset by incremental Puerto Rico incurred losses.

Claude LeBlanc, President and Chief Executive Officer, stated, “Our results for the first quarter of 2021 were positively impacted by the advancement of our strategic priorities, particularly gains of $37 million recognized from the junior surplus note exchanges, which further simplified our capital structure, and the inclusion of results from Xchange." Mr. LeBlanc continued, "During the first quarter we also regained significant momentum towards de-risking the insured portfolio and materially progressed our specialty property and casualty insurance strategy, all in line with the goal of increasing long-term value for our shareholders."

Ambac's First Quarter 2021 Summary Results
											Better (Worse)
($ in millions, except per share data)		1Q2021				4Q2020					Amount					Percent
Net premiums earned		$	14			$	18				$	(4	)			(21	)	%
Net investment income		49				53					(4		)			(7	)	%
Net realized investment gains (losses)		2				2					1					32		%
Net gains (losses) on derivative contracts		25				12					14					116		%
Net realized gains (losses) on extinguishment of debt		33				—					33					—		%
Losses and loss expenses (benefit)		8				9					1					12		%
Operating expenses		33				26					(8		)			(30	)	%
Interest expense		50				50					—					1		%
Intangible amortization		19				16					(3		)

FAQ

What are Ambac Financial's Q1 2021 earnings results?

Ambac Financial reported a net income of $17 million or $0.08 per diluted share for Q1 2021.

How did Ambac's earnings change compared to Q4 2020?

Earnings improved from a net loss of $14 million in Q4 2020 to a net income of $17 million in Q1 2021.

What drove Ambac's positive results in Q1 2021?

The positive results were primarily driven by $37 million in gains from junior surplus note exchanges and higher gains from interest rate derivatives.

What happened to Ambac's book value per share in Q1 2021?

Ambac's book value per share decreased by $0.55 to $23.02 in Q1 2021.

What are the key concerns for Ambac Financial from the Q1 2021 results?

Key concerns include the decrease in book value per share and ongoing losses related to Puerto Rico.