NEW YORK - Ambac Financial Group, Inc. (NYSE: NYSE:AMBC), a financial services holding company, reported its third-quarter results, highlighting significant growth in total property and casualty (P&C) premium production despite a net loss for the period.
The company experienced an 86% increase in total P&C premium production compared to the third quarter of 2023, amounting to $260 million. However, Ambac reported a net loss of $28 million, or $0.63 per diluted share, and an adjusted net loss of $19 million, or $0.46 per diluted share. The losses were attributed to approximately $20 million in transaction costs and short-term interest expenses related to acquisitions.
Ambac's Insurance Distribution segment, Cirrata, generated $24 million in total revenue, marking a 64% increase over the previous year. Additionally, the Specialty P&C Insurance segment, Everspan, improved its combined ratio by 600 basis points to 100.5% and saw its total revenue grow by 158% to $40 million, partly due to a $7.5 million gain on the sale of CNIC.
Claude LeBlanc, President and CEO, expressed satisfaction with the underwriting trend at Everspan and the company's acquisition of Beat Capital Partners (WA:CPAP). He anticipates that the distribution business will exceed $1 billion of premium placed in 2025. LeBlanc also noted the shareholder support for the sale of Ambac's Legacy Financial Guarantee business, with the Wisconsin OCI's approval pending for later this year or early next year.
The sale of the Legacy Financial Guarantee business is part of Ambac's strategy to emerge as a pure-play P&C franchise. The Board has approved an acceleration of a previously announced $50 million share buy-back program, which will commence immediately.
Ambac's financial position includes net assets of $147 million at the holding company level, with cash and liquid securities of $97 million. The company's stockholders' equity stood at $1.47 billion as of September 30, 2024, or $30.89 per share, an increase from $1.37 billion or $30.25 per share as of June 30, 2024.
The company plans to discuss its third-quarter results during a conference call on November 13, 2024. This article is based on a press release statement from Ambac Financial Group, Inc.
"In other recent news, Ambac Financial Group announced its Q2 2024 results, reporting a net loss of under $1 million, adjusted net income of $8 million, and consolidated EBITDA of $27 million. The company is also set to sell its financial guarantee business, a move expected to boost cash earnings within the next one to two years. This development, along with the initiation of a share repurchase program of up to $50 million, influenced Roth/MKM to upgrade Ambac's stock from Neutral to Buy.
Additionally, the company's strategic changes include the sale of its underwriting operation considered non-essential to its core strategy. These changes are expected to stimulate investor interest. Furthermore, Ambac has completed the acquisition of Beat Capital, positioning it as a significant player in the insurance distribution sector with a projected premium of $1.4 billion for 2024.
These recent developments mark Ambac's transition to a specialty P&C company, aiming for growth in its insurance distribution business and additional shareholder value. The legacy financial guarantee segment generated a net income of $11 million, a notable improvement from the previous year. This, along with the company's current share price level, indicates its potential for future success in a competitive market."
InvestingPro Insights
To complement Ambac Financial Group's third-quarter results, recent data from InvestingPro offers additional context for investors. Despite the reported net loss, Ambac's financial metrics reveal some positive aspects. The company's P/E ratio stands at a low 7.05, suggesting that the stock might be undervalued relative to its earnings. This is further supported by its price-to-book ratio of 0.41, indicating that the stock is trading below its book value.
An InvestingPro Tip highlights that Ambac is expected to be profitable this year, which aligns with the company's strategic moves, including the sale of its Legacy Financial Guarantee business and the focus on its P&C franchise. This expectation of profitability could be a positive sign for investors looking beyond the current quarter's results.
The company's revenue growth is noteworthy, with a 51.67% increase in quarterly revenue as of Q2 2024. This robust growth is consistent with the reported 86% increase in total P&C premium production mentioned in the article. Additionally, Ambac boasts a strong gross profit margin of 97.34% for the last twelve months, reflecting efficient operations in its core business.
It's worth noting that while Ambac has faced challenges, including a significant stock price decline over the past six months (another InvestingPro Tip), the company's strategic initiatives and improving operational metrics may position it for future growth. Investors seeking more comprehensive analysis can find 7 additional InvestingPro Tips for Ambac Financial Group, providing a deeper understanding of the company's financial health and market position.
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