Ambac Financial Group (OSG) Q2 2024 earnings summary

Executive summary

• Reported a Q2 2024 net loss of $1 million ($0.02 per diluted share), adjusted net income of $8 million, and consolidated EBITDA of $27 million, reflecting significant improvement over the prior year.

• Closed the acquisition of 60% of Beat Capital Partners for $278 million, expanding the MGA platform and fee-based income.

• Announced the sale of the legacy financial guarantee business (AAC) to Oaktree Capital for $420 million, expected to close in Q4 2024 or Q1 2025, significantly de-risking the balance sheet.

• Specialty P&C and Insurance Distribution segments are expected to generate $1.4 billion in premium on a pro forma basis for 2024, doubling the platform's size.

• Transformation into a pure-play specialty P&C company is underway, with a focus on insurance distribution and underwriting.

Financial highlights

• Q2 2024 net loss attributable to common stockholders was $(1) million ($0.02 per diluted share), improved from $(13) million in Q2 2023.

• Adjusted net income for Q2 2024 was $8 million ($0.18 per diluted share), up from $3 million in Q2 2023.

• Consolidated EBITDA for Q2 2024 was $27 million, up from $14 million in Q2 2023.

• Book value per share at June 30, 2024, was $30.25; adjusted book value per share was $29.23.

• Gross written premium rose 109% year-over-year to $111 million; net premiums earned up 113% to $33 million.

Outlook and guidance

• Sale of AAC to Oaktree expected to close in Q4 2024 or Q1 2025, with proceeds to repay Beat acquisition debt, initiate a $50 million share repurchase program, and support growth in retained businesses.

• Focus shifting to expansion of Specialty P&C and Insurance Distribution segments post-AAC sale, targeting double-digit organic growth and EBITDA margins of 20%+.

• Additional capital return activities will be evaluated post-repurchase, based on market conditions and capital needs.