Ambac Financial Group (OSG) Investor Update summary

Strategic transformation and transactions

• Announced sale of 100% interest in legacy financial guarantee business (Ambac Assurance Corporation and Ambac UK) to Oaktree for $420 million in cash, plus equity warrants, with closing expected in Q4 2024 or Q1 2025, subject to regulatory and shareholder approvals.

• Oaktree will receive warrants to acquire up to 9.9% of Ambac common stock at a strike price of $18.50.

• Signed agreement to acquire a majority (60%) stake in Beat Capital Partners, a London-based MGA platform, for $282 million, with Bain Capital and Beat Management retaining 20% each; closing expected in Q3 2024.

• These transactions advance the shift to a pure-play specialty P&C insurance and MGA platform, enhancing scale, diversification, and international reach.

• Sale of legacy business eliminates nearly $1 billion in debt, reduces insured net par by $19 billion, and provides $1.3 billion in NOLs for future value creation.

Financial impact and growth outlook

• Combined Cirrata and Beat platforms expected to deliver $155 million in revenue and $40 million in EBITDA in 2024, with over $1 billion in gross written premiums.

• Projected 2025 combined revenue of nearly $200 million and EBITDA of $80 million, with Ambac’s interest at $58 million after non-controlling interest.

• Three-year target to exceed $100 million in annual EBITDA and reach $1.5 billion in premiums across more than 50 MGA programs.

• Beat’s 2024E GWP is $733 million, with $90 million revenue and high-20s EBITDA margin; Cirrata adds $300 million GWP and $68 million revenue.

• Majority of EBITDA growth expected to come from organic expansion, with additional M&A opportunities supported by strong liquidity.

Strategic rationale and operational synergies

• Acquisition of Beat brings immediate scale, diversification, and operational synergies, with no anticipated headcount reductions.

• Beat's partnership model and international presence complement Cirrata's specialty distribution focus, creating a global MGA platform.

• Combined entity will have no single product line exceeding 16% of the portfolio, with a strong presence in the U.S. E&S market.

• Ownership structure aligns interests between shareholders and management, supporting long-term value creation.

• Strategic and cultural alignment expected to drive operational and business synergies, supporting long-term growth.