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Ambac to see 25% book value increase after end of account rehab

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Ambac to see 25% book value increase after end of account rehab

The conclusion of the regulator-overseen rehabilitation for the Ambac Assurance Corp. Segregated Account gives Ambac Financial Group Inc. a 25% increase in its book value on a pro forma basis.

Company executives said Ambac expects to record a $7.56-per-share boost to that metric, bringing book value to $38.08 per share and adjusted book value to $31.90 per share. The increase will be reflected in first-quarter financial results, President and CEO Claude LeBlance said in his prepared remarks. The company posted adjusted book value per share of $24.34 as of Dec. 31, 2017.

The exit of the segregated account's rehabilitation contributed to Ambac Financial having the "going concern" risk removed from its audit opinion and annual financial report for the first time since 2008, LeBlanc said during a conference call to discuss fourth-quarter 2017 earnings. Following the merger of the account into the general account of Ambac Assurance Corp., claims are being paid 100% in cash, he said. The conclusion of the rehabilitation program means reduced regulatory oversight, lower expenses and improved strategic and financial flexibility, he added.

The company in the fourth quarter of 2017 reorganized its risk management group and implemented a system to monitor the possibility of adverse development, LeBlanc said.

"We believe that these steps will enhance our overall focus on actively de-risking the insured portfolio, reducing its long-term volatility and improving the quality of adjusted book value," he said.

The end of the rehabilitation program also means Ambac Financial may be able to make additional investments in Ambac Assurance, take on new business opportunities and make share repurchases, the CEO said.