Annual Report 2023 Annual Report

SHAREHOLDER

EQUITY

(in billions)

$1.25 $1.36

$1.0

2021 2022 2023

+9%

FINANCIAL GUARANTEE NET PAR OUTSTANDING

(in billions)

$28

$23

$20

2021 2022 2023

-14%

BOOK VALUE

PER SHARE

(in dollars)

$28 $30

$22

2021 2022 2023

+8%

P&C PREMIUM

PRODUCTION

(in millions)

$504

$282

$131

2021 2022 2023

+79%

ADJUSTED

BOOK VALUE

(in billions)

$1.27 $1.30

$.87

2021 2022 2023

+2%

MGA

PARTNERS

27

17

8

2021 2022 2023

+59%

Net Income

$4 MILLION

Adjusted Net Income

$93 MILLION

EBITDA

$107 MILLION

Adversely Classified Credits

26% REDUCTION

Everspan had a very strong year, generating gross premium written of $273 million, an 87% increase over 2022 and a 9% increase over its 2023 target of $250 million. While we are pleased with those numbers, we are equally, if not more, focused on combined ratio, which factors both underwriting results and expense management, and is a more accurate gauge of an insurer's performance and profitability. Everspan's 100% combined ratio, reported in the fourth quarter, demonstrates a positive trend that we aim to improve in the coming quarters. Everspan's fourth quarter results marked the fifth consecutive quarterly improvement for the business, which we believe has achieved the necessary scale to generate underwriting profitability. Everspan is now on a pathway to generating mid-teen ROEs at scale, over the insurance cycle.

Portfolio diversification was also a key area of focus for Everspan in 2023, as the business sought to expand and diversify its MGA program partners. At year end, Everspan had 23 program partners, up from 14 a year ago. Equally important, its programs spanned a wide range of business classes, including commercial auto, excess liability, workers compensation and

general liability, among others. Everspan's book is now more balanced across risk classes, which should have the long-term benefit of more stable and predictable underwriting results.

It is important to note that Everspan's growth was achieved without sacrificing robust underwriting standards. Everspan accepted less than 5% of the program submissions it received, which is a testament to its careful selection methods. Its rigorous review process is underpinned by robust diligence and a "gross line" underwriting approach, meaning it applies the same evaluation criteria regardless of whether it retains 30% or very little risk. Uniform application of underwriting criteria helps keep Everspan's interests aligned with the interests of its reinsurance partners.

Everspan also aligns interests through its high-touch engagement model. With two full years of operation under its belt, it has established a comprehensive approach to program management, employing proactive risk management and oversight to achieve profitability for itself and its partners. We believe this approach is a strategic differentiator in the marketplace and a cornerstone to our achievements.

$273 MILLION

of GPW in 2023 Up 87%

61% E&S vs 39% Admitted

Shareholders' Equity

$123 MILLION

GROSS PREMIUM WRITTEN (GPW) & NUMBER OF PROGRAMS

(in millions)

Cirrata, like Everspan, exceeded its 2023 targets. It placed $231 million of premium in 2023, an increase of 70% over the prior year and a 15% increase over its 2023 target of $200 million. It also produced over $11 million of EBITDA. Cirrata's revenue has doubled to $52 million in the last two years, while its EBITDA margin remains attractive at 22%.

Cirrata's growth has been fueled by both organic initiatives and the financial performance of recent acquisitions. It has acquired and onboarded three companies over the last 18 months and now operates four programs across various classes of business, including specialty commercial auto, professional liability, inland marine, employer stop loss, and affinity programs. After purchasing majority stakes in All Trans Risk Solutions and Capacity Marine Corporation at the end of 2022, we acquired a majority stake in Riverton Insurance Agency in August 2023. Xchange Benefits, our first MGU, rounds out the Cirrata portfolio.

In 2023, Cirrata reached the size and scale to necessitate its own dedicated leadership team, and in May we appointed industry veteran Naveen Anand as President of Cirrata Group. Naveen has extensive

executive management and specialty lines experience, making him the ideal candidate to expand the Cirrata platform and build its profile in the specialty property and casualty insurance market.

We continue to see significant opportunities for growth at Cirrata, whether across our current businesses,

via organic initiatives, or through additional M&A transactions and de novo incubations.

$231 MILLION

of Premium Placed Up 71% Over 2022

EBITDA Margin(1) of 22% Generating $11 MILLION(2)of EBITDA in 2023

REVENUE UP 68%

in 2023

RIVERTON INSURANCE AGENCY CORP.

Acquired August 1

1. EBITDA/Net Insurance Distribution Revenues
2. Represents 100% inclusive of non-controlling interests

REVENUE & EBITDA

(in millions)

Since I joined Ambac seven years ago, we have de- risked and de-levered the insured portfolio by over $42 billion, materially improving our business risk profile and quality of our book value. During 2023 we continued our active de-risking efforts, which we expect will further enhance value for Ambac and its shareholders.

Net insured par exposure for our legacy portfolio was $20 billion at December 31, 2023, down approximately 14% from $23 billion at year-end 2022. Our adversely classified credit exposure at year end was $3.5 billion, a reduction of 26% from the prior year end.

Following a thorough process over the last year, the Wisconsin Office of the Commissioner of Insurance (OCI) has finalized its capital model and Stipulation and Order, providing a new regulatory framework for the legacy business. This new framework provides Ambac with clarity on capital requirements and pathways toward realization of value from the Legacy Financial Guarantee companies.

Finally, in the fourth quarter we engaged Moelis & Company, along with other external advisors, to assess strategic options for our legacy business.

EVERSPAN

• Target GPW +$400 million in 2024 growing to +$500 million in 2025(1,2)
• Target mid-teens ROE at scale and over the cycle
• Target combined ratio under 100%

CIRRATA

• Target premiums placed +$300 million in 2024(1,2)
• Target +$60 million revenue in 2024(1,2)
• Target +20% EBITDA margins(1)

1. Forward looking targets and projections subject to change. Targets and projections may not be realized and are not meant to provide guarantees of performance. Please refer to Ambac's annual report on form 10-K for the year ended December 31, 2023, for more information about Ambac's business and related risk factors.
2. Subject to market conditions.

In conclusion, I am pleased with our continued progress on our strategic priorities and am very excited about Ambac's prospects in 2024 and beyond.

I would like to thank you, our shareholders, for your ongoing support and the Board, our Executive Management team and dedicated employees for their tireless commitment to the execution of our strategic priorities for the benefit of all our stakeholders.

Sincerely,

Claude LeBlanc

President and Chief Executive Officer

STRATEGIC PRIORITIES

SPECIALTY PROPERTY

AND CASUALTY

INSURANCE PLATFORM:

• Growing our Specialty Property and Casualty Insurance business to generate underwriting profits from a diversified portfolio of commercial and personal liability risks accessed primarily through program administrators.
• Expanding our Insurance Distribution business based on deep domain knowledge in specialty and niche classes of risk that generate attractive margins at scale.
  This will be achieved through acquisitions, establishing new businesses "de-novo," and organic growth and diversification supported by a centralized technology-led shared services offering.
• Making opportunistic investments that are strategic to both the Specialty Property and Casualty Insurance and Insurance Distribution businesses.

LEGACY FINANCIAL

GUARANTEE:

• Actively managing, de-risking and mitigating insured portfolio risk, and pursuing recoveries of previously paid losses.
• Improving operating efficiency and optimizing our asset and liability profile.
• Exploring strategic options to further maximize value for Ambac.

JEFFREY S. STEIN (2), (3)

Chairman

Founder and Managing Partner

of Stein Advisors LLC

IAN D. HAFT (1)*, (4)

Chief Executive Officer

of Surgis Capital LLC

and Chief Financial Officer

of Electric Monster Media, Inc.

LISA G. IGLESIAS (1), (3)*

Executive Vice President

General Counsel of Unum Group

JOAN LAMM-TENNANT(2), (3), (4)*

Founder and Former

Chief Executive Officer of

Blue Marble Microinsurance

KRISTI A. MATUS (1), (2)*

Former Chief Financial Officer

and Chief Operating Officer

of Buckle Agency LLC

MICHAEL D. PRICE (1), (4)

Former President and

Chief Executive Officer of

Platinum Underwriters Holdings, Ltd.

CLAUDE LeBLANC

President and

Chief Executive Officer

1. Member of Audit Committee
2. Member of Compensation Committee
3. Member of Governance and Nominating Committee
4. Member of Strategy Committee

*Chair of Committee

CLAUDE LeBLANC

President and

Chief Executive Officer

DAVID TRICK

Executive Vice President,

Chief Financial Officer

and Treasurer

R. SHARON SMITH

Executive Vice President and Chief Strategy Officer

DAVID BARRANCO

Senior Managing Director, Head of Risk Management

ROBERT B. EISMAN

Senior Managing Director, Chief Accounting Officer

and Controller

STEPHEN M. KSENAK

Senior Managing Director and General Counsel

DAN McGINNIS

Senior Managing Director and Chief Operating Officer

• Business ..............................................................
  Introduction.........................................................
  Description of the Business ................................
  Enterprise Risk Management..............................
  Available Information.........................................
  Insurance Regulatory Matters and Other Restrictions .........................................................
  Investments and Investment Policy ....................

Employees...........................................................

1ARisk Factors ........................................................

1BUnresolved Staff Comments...............................

1CCybersecurity......................................................

2Properties ............................................................

3Legal Proceedings...............................................

4Mine Safety Disclosures .....................................

PART II

Market for Registrant's Common Equity,

5 Related Stockholder Matters and Issuer

Purchases of Equity Securities............................

6Reserved .............................................................

• Management's Discussion and Analysis of Financial Condition and Results of Operations
  Executive Summary............................................
  Critical Accounting Policies and Estimates .......
  Financial Guarantees in Force ............................
  Results of Operations..........................................
  Liquidity and Capital Resources...........................