DEF 14A of Octave Specialty Group Inc, Apr 11, 2025

DEF 14A of Octave Specialty Group Inc

Filed Apr 11, 2025 · FY20240000874501-25-000078

Open on EDGAR

  1. How may I vote in the election of directors, and how many votes must the nominees receive to be elected?

    How may I vote in the election of directors, and how many votes must the nominees receive to be elected? With respect to the election of directors, you may: •vote “FOR" each of the seven nominees for director; •vote “AGAINST” each of the seven nominees for director; or •“ABSTAIN” from voting on each of the seven nominees for director. Our directors are elected by a majority of votes cast unless the election is contested, in which case directors are elected by a plurality of votes cast. A majority of votes cast means that the number of shares voted “FOR” a director exceeds the number of votes cast “AGAINST” a director; abstentions are not counted as votes cast either “FOR” or “AGAINST." If an incumbent director in an uncontested election does not receive a majority of votes cast FOR such incumbent’s election, the director is required to submit a letter of resignation to the Board of Directors for consideration by the Governance and Nominating Committee. The Governance and Nominating Committee is required to promptly assess the appropriateness of such nominee continuing to serve as a director and recommend to the Board the action to be taken with respect to the tendered resignation. The Board is required to determine whether to accept or reject the resignation, or what other action should be taken, within 90 days of the date of the certification of election results. Each holder of our common stock is entitled to one vote for each share held as of the Record Date. There are no cumulative voting rights associated with any of Ambac's common stock.

  2. Board of Directors

    Board of Directors The Board oversees the business of Ambac and monitors the performance of management. Addressing the issues and the challenges associated with our legacy financial guarantee insurance business, as well as overseeing Ambac's new businesses in specialty property and casualty insurance and insurance distribution, requires a high level of focus, time commitment and engagement from our directors. The Board meets approximately five times per year in regularly scheduled meetings, but will meet more often, if necessary. The Board met eighteen times in 2024. Outside of formal meetings, directors frequently engage with management concerning Ambac’s business and strategies. In 2024, each director attended at least 97% of the total number of meetings of the Board and any committees on which he or she served. All of our current directors also serve as directors of AAC, which involves different work streams and considerations than their directorships at AFG.

  3. Directors

    Directors The names of our continuing directors, and their ages, positions, and biographies as of the date of this proxy statement are set forth below. There are no family relationships among any of our directors or executive officers.

  4. Directors

    | | | | | Committee Membership | | | | | Name | Director Since | Age | Independent | Audit | Compensation | Governance and Nominating | Strategy | | Ian D. Haft | 2016 | 54 | ● | • • | | | ● | | Director | | | | | | | | | Lisa G. Iglesias | 2021 | 59 | ● | ● • | | • | | | Director | | | | | | | | | Joan Lamm-Tennant | 2018 | 72 | ● | | ● | ● | • | | Director | | | | | | | | | Claude LeBlanc | 2017 | 59 | | | | | | | President and Chief Executive Officer and Director | | | | | | | | | Kristi A. Matus | 2023 | 57 | ● | ● • | • | | | | Director | | | | | | | | | Michael D. Price | 2023 | 58 | ● | ● • | ● | | ● | | Director | | | | | | | | | Jeffrey S. Stein | 2013 | 55 | ● | | | ● | | | Chairman of the Board | | | | | | | | | • Chairman ● Member • Audit Committee Financial Expert | | | | | | | |

  5. Directors

    Our current slate of continuing directors and director nominees is currently comprised of individuals with diverse skill sets, which are necessary in light of the unique nature of Ambac’s business. Three of our director nominees self-identify as women; four of our director nominees self-identify as men; and one of our director nominees self-identifies as Hispanic.

  6. Directors

    | | CEO Experience | CFO Experience | Insurance Expertise | Risk Management | Investment Experience | Restructuring Expertise | | Ian D. Haft | | ✓ | | ✓ | ✓ | | | Lisa G. Iglesias | | | ✓ | ✓ | ✓ | | | Joan Lamm-Tennant | ✓ | | ✓ | ✓ | | | | Claude LeBlanc | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Kristi A. Matus | | ✓ | ✓ | ✓ | ✓ | | | Michael D. Price | ✓ | | ✓ | ✓ | | | | Jeffrey S. Stein | ✓ | | | ✓ | ✓ | ✓ |

  7. Consideration of Director Nominees

    Consideration of Director Nominees

  8. Director Compensation Program Components

    Director Compensation Program Components The annual compensation for non-employee directors generally consists of both a cash and equity component. The compensation components are designed to compensate members for their service on the Board of Directors and its committees, to create an incentive for continued service on the Board, and to align the interests of directors and stockholders. In furtherance of such alignment, a significant portion of each non-employee director’s annual compensation is at-risk and granted in the form of restricted stock units on the first business day of each calendar quarter. These quarterly grants vest on the one year anniversary of the grant date, subject to accelerated vesting under certain circumstances. Restricted stock units granted that have vested will not settle and convert into shares of common stock until the director resigns from, or otherwise ceases to be a member of, the Board of Directors of Ambac or certain other circumstances occur, such as a change in control. Upon a non-employee director’s first appointment or election to our Board of Directors, such non-employee director will receive a one-time off-cycle pro-rata grant of restricted stock units, based on his or her expected time of service on the Board of Directors prior to the next quarterly restricted stock unit grant.

  9. Compensation for Non-Employee Directors

    | Name | Year | Fees Earned or Paid in Cash(1) ($) | Stock Awards (2) ($) | All Other Compensation ($) | Total ($) | | Ian D. Haft | 2024 | $135,000 | $199,648 | — | $334,648 | | Lisa G. Iglesias | 2024 | $115,000 | $199,648 | — | $314,648 | | Joan Lamm-Tennant | 2024 | $115,000 | $199,648 | — | $314,648 | | Jeffrey S. Stein | 2024 | $229,167 | $199,648 | — | $428,815 | | Kristi A. Matus | 2024 | $120,834 | $199,648 | — | $320,482 | | Michael D. Price | 2024 | $100,000 | $199,648 | — | $299,648 |

  10. Executive Summary

    Executive Summary Our compensation program is designed to reward execution and value creation relating to the implementation of our strategic priorities. To ensure that our compensation program aligns with the expectations of our stockholders, in the Fall of each year, Ambac proactively seeks out opportunities to engage in a dialogue with our stockholders. As a result of these stockholder engagements, over the years our Compensation Committee has made important enhancements to our compensation program and processes. These enhancements include changes to the design of our annual and long-term incentive plans, and the implementation of important compensation-related policies, e.g., a Stock Ownership Policy and a Recoupment Policy, and the inclusion of a relative Total Shareholder Return ("rTSR") modifier as an additional metric with respect to our LTIP award payouts. The rTSR modifier is intended to further align compensation to Ambac's stock performance. Key features of our compensation program include: •Market competitive compensation levels and practices; •Performance-based incentive plans (annual STIP awards and three year LTIP PSU awards) that are based on quantitative and strategic performance goals and objectives, and aligned with our key business strategies; •Significant weighting on equity-based compensation as a component of total compensation, including the existence of a Stock Ownership Policy applicable to our executives; •A rTSR modifier that aligns compensation results with actual stock performance as compared to peers; and •Policies to manage compensation-related risk and support good governance, including a Recoupment Policy.

  11. 2024 Pay Decisions

    2024 Pay Decisions There were no changes to salaries and target total compensation levels in 2024 compared to 2023. Our 2024 compensation decisions reflect our compensation principles: •Link short-term incentives to the Company's operational, strategic, and financial performance; •Use long-term incentives to further align the interests of our executives with stockholders by providing that all LTIP awards are denominated in stock units, with payouts based on performance metrics that we believe drive long-term value for stockholders; and •Support the retention and attraction of key executive talent. Base salaries in 2024 for each of our NEOs were reviewed and approved by the Compensation Committee, based on a review of relevant market data and each executive’s performance for the prior year, as well as each executive’s experience, expertise and position. In 2024, following a review of the overall compensation program, the Compensation Committee determined that STIP awards for 2024 would be determined based on a structured approach in which 70% of an executive officer's annual STIP award was based on the Company’s achievement of pre-established financial performance targets and the remaining 30% of an executive officer's STIP award for 2024 was based on strategic performance goals. Long-term incentive awards were granted in early 2024 based on a review of relevant market data and each executive’s performance for the prior year. The 2024 long term incentive awards include restricted stock units (30% of total long term incentive award) which vest annually over a three year period and performance stock units (70% of total long term incentive award), tied to quantitative metrics that reflect the long term goals that the Compensation Committee believes will drive stockholder value. Vesting of performance stock units is subject to the satisfaction of certain performance goals, which will be determined at the end of a three year performance period, and application of the rTSR modifier at the end of three years (described below).

  12. Our Compensation Philosophy and Objectives

    Determining Executive Compensation The Compensation Committee bases current pay levels on numerous factors, including competitive pay practices in the financial services industry, the scope and complexity of the functions of each NEO’s role, the contribution of those functions to our overall performance, individual experience and capabilities, and individual performance. The Compensation Committee monitors the effectiveness of our compensation program throughout the year and performs an annual reassessment of the programs at the beginning of the year in connection with year-end compensation decisions and future goal settings. Role of Compensation Consultants The Compensation Committee has authority to retain compensation consulting firms to assist it in the evaluation of executive officer and employee compensation and benefit programs. The Compensation Committee retained Meridian Compensation Partners, LLC as its independent compensation consultant to advise on the 2024 compensation cycle, which included year-end compensation decisions made in the first quarter of 2025. Meridian provides an objective perspective as to the reasonableness of our executive compensation program and practices and their effectiveness in supporting our business and compensation objectives. Specifically, Meridian advised the Compensation Committee with respect to compensation trends and best practices, incentive plan design, competitive pay levels, and individual pay decisions with respect to our NEOs. The Compensation Committee has assessed the independence of Meridian pursuant to applicable SEC rules and NYSE listing standards. The Role of Management in Determining Pay Generally, our Chief Executive Officer reviews the competitive compensation data for each of the other NEOs, considers individual, departmental and Company performance, measured against financial performance metrics and strategic performance goals established at the beginning of the year, and makes a recommendation to the Compensation Committee for base salary and annual short- and long-term incentive awards. The Chief Executive Officer typically participates in Compensation Committee meetings at the Compensation Committee’s request to provide background information regarding performance against the Company’s strategic objectives and to evaluate the performance of, and compensation recommendations for, each of the other NEOs. The Committee utilizes the information provided along with input from the compensation consultant and the knowledge and experience of the Committee’s members in making compensation decisions. Our NEOs do not propose or seek approval for their own compensation. The Chairman of the Compensation Committee, with input from the Chairman of the Board of Directors, recommends the Chief Executive Officer’s compensation to the Compensation Committee. See "Directors, Executive Officers, and Corporate Governance." Competitive Compensation Considerations Because the competition to attract and retain high performing executives and professionals in the financial services industry is intense, the amount and composition of total compensation paid to our executives must be considered in light of competitive compensation levels. To help inform the Compensation Committee's compensation decisions for the NEOs for 2024, Meridian prepared a benchmarking analysis that compared the compensation levels for our NEOs to that of officers in comparable positions across a selected peer group of companies. However, the Compensation Committee does not rely on this information to target any specific pay percentile for our NEOs. Instead, they use this information to provide a general review of market pay levels and practices and to ensure that informed decisions are made regarding our executive pay programs. For the 2024 compensation cycle, Ambac had no directly comparable business peers given the Company’s transition from a financial guarantee insurance company to a specialty property and casualty insurance company, and thus peer selection has been a challenge. Ambac believes that the most relevant criteria in the selection of its peer group is the consideration of asset value and enterprise value as these variables are indicators of the complexity of an organization and are useful when considering competitive compensation packages for our NEOs. Each year the Compensation Committee reviews the Company's peer group and considers adjustments if appropriate. Key criteria used to assess current and potential peer companies include financial services industry sector focus (i.e., specialty insurance, specialty finance, and property and casualty insurance), and organizations of similar size and scope (market capitalization, assets and enterprise value). Based on a review conducted in 2024, we revised the list of peer companies to: (i) be more reflective of Ambac's size, given the acquisition of Beat Capital and the pending sale of the Legacy Financial Guarantee business, (ii) add more property and casualty insurance companies, (iii) capture the markets and businesses in which we operate and (iv) reflect the market for executive talent. The table below provides summary financial information regarding Ambac and the comparator group following the 2024 review.

  13. Our Compensation Philosophy and Objectives

    | Comparator Group used for 2024 Compensation Cycle | Primary Industry | Market Capitalization ($ in millions) | Assets ($ in millions) | Enterprise Value ($ in millions) | | Bowhead Specialty Holdings Inc. | Property & Casualty Insurance | 1,160 | 1,654 | 1,067 | | Goosehead Insurance, Inc. | Insurance Brokers | 2,615 | 398 | 2,710 | | Hagerty, Inc. | Insurance Brokers | 869 | 1,709 | 1,370 | | Heritage Insurance Holdings, Inc. | Property & Casualty Insurance | 353 | 2,374 | 353 | | HCI Group, Inc. | Property & Casualty Insurance | 1,228 | 2,230 | 942 | | Horace Mann Educators Corporation | Multi-line Insurance | 1,599 | 14,488 | 3,114 | | James River Group Holdings, Ltd. | Property & Casualty Insurance | 184 | 5,007 | 265 | | Palomar Holdings, Inc. | Property & Casualty Insurance | 2,795 | 2,262 | 2,724 | | ProAssurance Corporation | Property & Casualty Insurance | 814 | 5,574 | 1,201 | | SiriusPoint Ltd. | Reinsurance | 2,654 | 12,525 | 2,837 | | Skyward Specialty Insurance Group, Inc. | Property & Casualty Insurance | 2,027 | 3,729 | 2028 | | The Baldwin Insurance Group, Inc. | Insurance Brokers | 2,619 | 3,535 | 4,394 | | Tiptree Inc. | Property & Casualty Insurance | 773 | 5,695 | 1,172 | | White Mountains Insurance Group, Ltd. | Property & Casualty Insurance | 4,926 | 9,926 | 5,979 | | Universal Insurance Holdings, Inc. | Property & Casualty Insurance | 596 | 2,842 | 438 | | Ambac Financial Group, Inc. (1) | Property & Casualty Insurance | 600 | $9,256 | $5,520 | | Percentile Rank vs. Peer Group | | 14% | 85% | 98% | | Note: Financial data reflects information available as of December 31, 2024 | | | | | | Source: S&P Capital IQ | | | | |

  14. Elements of Pay

    | Compensation Element | Purpose | | | Base Salary | ● | Provides a minimum, fixed level of cash compensation to compensate executive officers for services rendered during the fiscal year that is competitive with organizations operating within the same marketplace for executive talent. | | Bonuses | ● | While bonus payments are not regular part of Ambac's compensation mix, from time to time, the Compensation Committee may approve a special bonus in recognition of an extraordinary outcome or promotion. | | Short Term Incentive Awards | ● | Drive achievement of annual corporate goals, including key financial and operating results by setting pre-established financial performance targets and strategic performance goals at the Company. Annual STIP awards are paid in cash. | | Long-Term Incentives | ● | Further align executive officers’ interests with the interests of stockholders by rewarding increases in the value of our share price, and tying long-term incentive compensation to performance metrics that we believe to be important value-drivers for our stockholders. LTIP awards are strictly equity-based and denominated in PSUs and RSUs. | | Post-Employment Benefits | ● | Provide certain severance benefits to our executive officers. See “--Post-Employment Benefits” and for a description of post-employment benefits payable to Messrs. LeBlanc, Trick, and Ksenak, and Ms. Smith, see “Agreement with Claude LeBlanc,” and “Agreements with Other Executive Officers." | | Perquisites | ● | Provide a limited number of perquisites to our executive officers. |

  15. Pay Mix

    Base Salary. Base salaries are intended to reflect the experience, skill and knowledge of our executive officers in their particular roles and responsibilities, while retaining the flexibility to appropriately compensate for fluctuations in performance, both of the Company and the individual. Base salaries for our executive officers and any subsequent adjustments thereto are reviewed and approved by the Compensation Committee annually, based on a review of relevant market data and each executive’s performance for the prior year, as well as each executive’s experience, expertise and position. The base salaries paid in 2024 to each of our NEOs was unchanged from prior years. Incentive Compensation. Incentive compensation is a key component of our executive compensation strategy. Our incentive compensation awards generally have two components: Short Term Incentive Plan awards (consisting of annual cash incentive awards) and Long Term Incentive Plan awards (which are equity-based). Annual decisions with regard to incentive compensation are generally made in February of each year. Incentive compensation payouts can be highly variable from year to year, at risk, subject to performance criteria and impacted by the value of Ambac's common stock. Short Term Incentive Compensation. Annual incentives for our NEOs are meant to reward performance. Seventy percent (70%) of NEO 2024 short term incentive compensation awards were measured against pre-established financial performance targets at the Company related to: •earned premium and program fees, and number of underwritten programs, at Everspan; •the number of new MGAs and non-program business added, and EBITDA margin, at Cirrata; •reductions in Net Par Outstanding in the legacy financial guarantee insured portfolio; and •reductions in Gross Operating Run Rate Expense. These metrics were chosen because the Compensation Committee believed that they would be key drivers of stockholder value in 2024. The remaining thirty percent (30%) of the short term incentive compensation award is based on strategic performance goals, as follows: •Active de-risking and ongoing rationalization of Ambac's capital and liability structures; •Progress AAC strategic plan; and •Progress 22° Business Services infrastructure development and implementation. The Compensation Committee believes that it is important to establish strategic performance goals, which are evaluated using objective performance criteria to the extent possible because of the uncertainties associated with our legacy operating subsidiaries, AAC and Ambac UK, which are not writing new business and are in runoff, and Ambac’s strategic shift towards growing our specialty P&C insurance platform. In 2024, the Compensation Committee decided to increase the weighting of the STIP strategic performance goals with respect to the successful execution of the Board approved strategic plan for Ambac Assurance Corporation. The Compensation Committee assigns to each NEO an annual target incentive opportunity, which is based on the executive’s position and the scope of responsibilities. Target annual incentives (as a percent of base salary) for the NEOs for 2024 were set as follows: 125% for the Chief Executive Officer; and between 55% and 85% for each of the other NEOs. Actual incentive payouts can range from 0% to 200% of target for each of the NEOs based on the Compensation Committee’s review of overall performance relative to the financial performance targets and strategic performance goals noted above.

  16. Pay Mix

    | Key Changes in 2025 to Short Term Incentive Program: For the 2025 performance year, given the Company’s transition from a financial guarantee insurance company to a specialty property and casualty insurance company, the Compensation Committee revised the financial performance metrics of the STIP to include Adjusted EBITDA Margin weighted at 40%; Everspan Combined Ratio weighted at 20%; and Revenue Growth weighted at 40%; and eliminated the use of strategic performance goals which left an element of discretion to the Committee's interpretation. |

  17. Pay Mix

    Long Term Incentive Compensation. Our LTIP awards focus on the attainment of long term performance goals and objectives, which the Compensation Committee believes are instrumental in creating long term value for stockholders and long term retention incentives for our executives. The Compensation Committee reviews the LTIP targets each year for competitive alignment. The Compensation Committee also reviews market trends related to the award mix and determines the appropriate mix of equity instruments considering market benchmark data. LTIP awards in 2024 were denominated 70% in performance stock units ("PSUs") and 30% in restricted stock units ("RSUs"). In 2024, the Compensation Committee retained the same LTIP performance metrics from the prior year while adjusting the target, minimum, and maximum goals to continue to align management's goals with certain key drivers of stockholder value: risk reduction at AAC and new business growth at Everspan and Cirrata Group. PSU awards granted in 2024 will be measured over a three year period based on (i) reductions in Watch List and Adversely Classified Credits at AAC weighted at approximately 22% and (ii) the achievement of certain cumulative EBITDA goals and gross written premium goals at Everspan and Cirrata, each weighted at approximately 39%. In addition, the 2024 LTIP awards are subject to our relative Total Shareholder Return ("rTSR") modifier which serves as an additional metric with respect to final PSU award payouts. The rTSR modifier for 2024 LTIP awards can cause any final PSU award payout at the end of a three year settlement period to be increased or decreased by 20% if the Company's total shareholder return performance compared to a peer group is at or above the 75th percentile or at or below the 25th percentile, respectively. PSUs represent a promise to deliver, within 75 days after the end of a three-year performance period, a number of shares of Ambac’s common stock ranging from 0% to 200% (not including any adjustment that may be applied pursuant to the rTSR modifier) of the amount of the initial grant, depending on the achievement of financial performance objectives determined by the Compensation Committee at the time of the grant. The RSUs are time-based awards and were granted in order to encourage the retention of our most valued employees. The RSUs granted as part of the 2024 LTIP awards represent the right to receive an equivalent number of shares of Ambac’s common stock and will vest and settle in three equal annual installments in March of 2025, 2026 and 2027. The Compensation Committee determined the target value of the 2024 LTIP awards granted to each of our NEOs based on the Company’s overall results, the individual executive’s contribution to overall performance, external market benchmark data and the proportion of total compensation comprised of LTIP awards. LTIP Metrics. The metrics used to judge performance for PSU awards granted in March 2024 are (i) reductions in Watch List and Adversely Classified Credits2 at AAC weighted at approximately 22% and (ii) the achievement of certain cumulative EBITDA goals and gross written premium goals at Everspan3 and Cirrata4 each weighted at approximately 39%. The following table sets forth the percentage of the 2024 PSU target award that each of our named executive officers could earn under the 2024 PSU award agreement as of the last day of the three year performance period.

  18. Pay Mix

    | | Cirrata Group | | Everspan Group | | | | Percentage of LTIP PSU Target Award Earned | Cumulative Gross Written Premium ($ millions) * | Cumulative EBITDA ($ millions)* | Cumulative Gross Written Premium ($ millions)* | Cumulative EBITDA ($ millions)* | WLACC Outstanding ($ billions)* | | 200% | $1,256.0 | $56.0 | $1,723.0 | $46.5 | $3.0 | | 100% | $1,092.0 | $49.0 | $1,566.0 | $40.0 | $3.4 | | 0 | $983.0 | $44.0 | $1,374.0 | $31.5 | $3.8 |

  19. Pay Mix

    (*) Linear interpolation between payout multiples will result in a proportionate amount of the PSU target Award becoming earned and vested. Following the end of the Performance Period, the Compensation Committee will determine the extent to which each participant’s PSU award has been earned and the amount payable. The Compensation Committee may, in the exercise of its discretion, reduce the amount of any PSU award that otherwise would have been earned based on the satisfaction of the performance metrics, but may not increase the size of any PSU award. The ultimate value of the PSUs and RSUs directly depends on the value of our common stock at the time of vesting. Each individual who receives a PSU or RSU becomes, economically, a long-term stockholder of the Company, with the same interests as our other stockholders. As a result, we believe our NEOs have a demonstrable and significant interest in increasing stockholder value over the long term. ________________________ 2 WLACC Outstanding represents the remaining net par outstanding at December 31, 2026, inclusive of the impact of any ART Transactions executed by the Company during the Performance Period, for watch list and adversely classified credits as identified at the beginning of the Performance Period (“WLACC”) by AFG and its subsidiaries, including AAC and AUK. "ART Transactions" are Alternative Risk Transfer transactions executed by the Company that reduce/eliminate portfolio risk, including by way of proportional reinsurance (e.g. quota share) or other alternative hedging or risk transfer strategies (e.g. excess of loss reinsurance) the impact of which has been approved by the Committee for purposes of reducing WLACC Outstanding. 3 Cumulative EBITDA at Everspan is calculated by taking 100% of Everspan Group’s earnings before interest, taxes, depreciation and amortization (calculated in accordance with US GAAP as in effect at beginning of the Performance Period) through the end of the performance period. Cumulative Everspan EBITDA shall be adjusted to exclude the impact of any other costs as determined in the sole discretion of the Board of Directors. 4 Cumulative EBITDA at Cirrata is calculated by taking 100% of Cirrata’s earnings before interest, taxes, depreciation and amortization (calculated in accordance with US GAAP as in effect at beginning of the performance period) through the end of the performance period. Cumulative Cirrata EBITDA only includes entities that were a part of the Cirrata group as of January 1, 2024, and excludes any subsequently acquired or start-up entities. Cumulative Cirrata EBITDA shall be adjusted to exclude the impact of any other costs as determined in the sole discretion of the Board of Directors.

  20. Our Chief Executive Officer

    (1)Reductions in Net Par Outstanding as of December 31, 2024 under the STIP were measured against Net Par Outstanding as of January 1, 2024; however, the Board exercised its discretion by taking into consideration that the agreement related to sale of AAC limited management's ability to reduce net par outstanding pending the close. (2)Gross Operating Run Rate Expenses is measured by comparing actual gross operating run rate expenses for the fourth quarter of a fiscal year to performance goals established against budgeted amounts. Under Mr. LeBlanc's leadership in 2024, the number of new programs underwritten by Everspan achieved the target performance goal at eight programs in total, however, Everspan did not achieve threshold performance with respect fourth quarter of 2024 earned premiums and program fees as a result of the non-renewal of an assumed reinsurance personal auto program on October 1, 2024. The number of new MGAs and non-program business added at Cirrata exceeded the maximum performance goal set for this metric with a combined 13 new MGAs and new program businesses added in 2024, including the acquisition of Beat Capital and the addition of a new charter bus program at All Trans. With respect to EBITDA margin at Cirrata, Ambac exceeded the maximum performance goal set for this metric with an EBITDA margin of 51.5%. With respect to reductions in Net Par Outstanding, the Board took into consideration that the agreement related to the sale of AAC limited management's ability to reduce net par outstanding, and the regulatory approvals that were outside of management's control prevented the closing of the sale prior to year end. Therefore the Board exercised its discretion, noting that the pending sale of AAC would cause Net Par Outstanding to be reduced to zero on closing, and credited management with meeting the maximum performance goal for this metric. With respect to reductions in Gross Operating Run Rate Expenses, Ambac achieved the maximum performance goal set for that metric, as Gross Operating Run Rate Expenses for the fourth quarter of 2024 was $13.9 million due to active expense management and a third quarter 2024 reduction in force. Applying the appropriate weighting to each performance metric as set forth above, the Committee assigned a 1.357x multiplier to the financial performance portion of Mr. LeBlanc's target STIP award for 2024. Strategic Performance Goals. In determining the other thirty percent of Mr. LeBlanc's 2024 STIP award, the Compensation Committee gave consideration to the Company’s results against the strategic performance goals described below, which were communicated to Mr. LeBlanc in the first quarter of 2024. For each of these performance goals the Compensation Committee assigned a relative weighting based on the current importance of such performance goals to the Company, with an aggregate total weighting of 100%. To assess results against these performance goals, the Committee utilized a definitive score card methodology to achieve a consistent, formula driven ratings process. Score results were determined by the Committee for each category and could range from 0-5, with 0 to 1 indicating results that were below the anticipated outcomes; a score between 2 and 3 indicating results were slightly below to slightly above the anticipated outcomes; and a score between 4 and 5 indicating results that exceeded or far exceeded the anticipated outcomes. The strategic performance goals for each category can be further bifurcated between (i) objective, quantifiable or financial performance goals to which the defined scorecard methodology is applied and (ii) well defined strategic goals relating to key components of the Company’s reported strategic priorities, to which the defined scorecard methodology is also applied. After reviewing the actual results against the strategic goals outlined herein, some of which are set forth below, the Committee utilized the pre-defined scorecard methodology to arrive at a performance rating for each category. The performance ratings were then applied against the pre-determined weightings outlined herein to arrive at a formulaic outcome for the Chief Executive Officer that was not subject to any override or adjustments.

  21. Other Named Executive Officers

    | Payout Goals | Cumulative Xchange EBITDA (1) ($ in millions) | Percentage of Cumulative Xchange EBITDA Award Earned | Watch List & Adversely Classified Credits Outstanding (1) ($ in billions) | Percentage of Watch List & Adversely Classified Credits Award Earned | | Maximum | $17.1 | 200% | $9.135 | 200% | | Target | $13.7 | 100% | $9.735 | 100% | | Minimum | $10.3 | —% | $10.635 | —% | | Actual Results | $12.9 | 76.5% | $8.337 | 200% |

  22. Other Named Executive Officers

    | Named Executive Officer | Grant Date value of PSU Award at Target $ | Performance Percentage | 10% Reduction to Payout Percentage After Applying rTSR modifier | Value of PSU Award on Vesting and Settlement $ | | Claude LeBlanc | 2,295,000 | 169.1% | 152.2% | 3,505,954 | | David Trick | 555,000 | 169.1% | 152.2% | 847,860 | | David Barranco | 510,000 | 169.1% | 152.2% | 779,123 | | Stephen M. Ksenak | 450,000 | 169.1% | 152.2% | 687,424 | | R. Sharon Smith | 480,000 | 169.1% | 152.2% | 733,281 |

  23. Employment Agreements

    Employment Agreements Certain of our active NEOs have entered into employment agreements with the Company which provide for certain compensation and benefits, including severance benefits in certain circumstances. In December 2016, we entered into an employment agreement with our CEO, Claude LeBlanc, in connection with his appointment, which took effect on January 1, 2017. This agreement was subsequently amended on February 27, 2020, and again on August 3, 2020. We also entered into an employment agreement with Mr. Trick in November of 2016; with Mr. Ksenak in January 2017; and with Ms. Smith on October 5, 2023. (See “Agreement with Claude LeBlanc”, and “Agreements with Other Executive Officers” below.)

  24. Post-Employment Benefits

    Post-Employment Benefits Pursuant to Ambac's Severance Pay Plan, to provide protection in the event of an involuntary termination, Mr. Barranco is entitled to receive a severance payment equal to 52 weeks of such executive officer's weekly base salary at the time of termination of his or her employment by Ambac as the result of (i) a job elimination, job discontinuation, office closing, reduction in force, business restructuring, redundancy, or such other circumstances as the Company deems appropriate for the payment of severance or (ii) a “termination by mutual agreement” (as defined in the Severance Pay Plan). In addition to this severance payment, Mr. Barranco would be entitled to receive reimbursement for a portion of the premiums paid for COBRA continuation coverage under the Company's group health plan for the first twelve months following his or her termination of employment. The portion of the premiums to be paid by the Company will be the same as the amount paid by the Company for the same group health insurance coverage for active employees. For a description of post-employment benefits payable to Messrs. LeBlanc, Trick and Ksenak, and Ms. Smith, see “Agreement with Claude LeBlanc,” and “Agreements with Other Executive Officers."

  25. Compensation Risk Management

    Compensation Risk Management Risks Related to Compensation Policies. In keeping with our risk management framework, we consider risks not only in the abstract, but also risks that might hinder the achievement of a particular objective. We have identified two primary risks relating to compensation: the risk that compensation will be insufficient to retain talent and the risk that compensation strategies might result in unintended incentives. To combat the first risk, as noted above, the compensation of employees throughout the Company is benchmarked against comparative compensation data, permitting us to set compensation levels that we believe contribute to low rates of employee attrition. Further, LTIP awards granted to our NEOs and other senior professionals are subject to vesting over a three-year period. We believe both the levels of compensation and the structure of the LTIP awards have had the effect of retaining key personnel. Our Company-wide year-end compensation program is designed to reflect the performance of the Company, the performance of the business unit in which the employee works and the performance of the individual employee, and is designed to not encourage excessive risk taking. For example, two of the performance metrics used in our 2024 Short Term Incentive Plan (reductions in Net Par Outstanding in the Legacy Financial Guarantee insured portfolio and reductions in Gross Operating Run Rate Expense), are designed to encourage the reduction of risk and prudent management of the business. In addition, we pay a significant portion of our incentive compensation in the form of LTIP awards that vest over a three-year period, which makes each of our NEOs and other senior professionals sensitive to long-term risk outcomes, as the value of their awards increase or decrease with the price of our common stock. Further, performance criteria for the PSUs granted as part of the LTIP awards include a relative Total Shareholder Return modifier, which we believe provide our employees additional incentives to prudently manage the wide range of risks inherent in the Company’s business.

  26. Risk Mitigating Policies and Practices

    Risk Mitigating Policies and Practices Equity Grant Process. The Compensation Committee does not grant equity awards in anticipation of the release of material nonpublic information (“MNPI”), and the Company does not time the release of MNPI based upon grant dates of equity awards. In the event MNPI becomes known to the Compensation Committee before granting an equity award, the Compensation Committee will consider such information and use its business judgment to determine whether to delay the grant of equity to avoid any appearance of impropriety. Stock Ownership Policy. Under our executive officers became subject to our Executive Stock Ownership and Retention Policy. The Chief Executive Officer is required to own Ambac common stock equal in value to at least six times his annual base salary, the Chief Financial Officer is required to own Ambac common stock equal in value to at least three times his annual base salary and each other executive officer is required to own Ambac common stock equal in value to at least two times their annual base salary.

  27. 2024 Summary Compensation Table

    2024 Summary Compensation Table The table below provides information concerning the compensation of our President and Chief Executive Officer, Chief Financial Officer, and our three most highly compensated executive officers who were executive officers as of December 31, 2024.

  28. 2024 Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | All Other Compensation ($) (3) | Total ($) | | Claude LeBlanc | 2024 | 900,000 | — | 3,788,006 | 1,619,900 | 32,814 | 6,340,720 | | President and Chief Executive Officer | 2023 | 900,000 | — | 4,125,142 | 1,851,500 | 41,077 | 6,917,719 | | | 2022 | 900,000 | — | 3,420,095 | 1,827,000 | 38,667 | 6,185,762 | | David Trick | 2024 | 750,000 | — | 916,060 | 619,200 | 17,084 | 2,302,344 | | Executive Vice President, Chief Financial Officer and Treasurer | 2023 | 750,000 | — | 997,591 | 695,000 | 16,173 | 2,458,764 | | | 2022 | 750,000 | — | 827,086 | 663,100 | 14,573 | 2,254,759 | | David Barranco | 2024 | 500,000 | — | 841,790 | 600,000 | 21,884 | 1,963,674 | | Senior Managing Director | 2023 | 500,000 | — | 916,709 | 698,000 | 21,223 | 2,135,932 | | | 2022 | 500,000 | — | 760,033 | 707,500 | 21,273 | 1,988,806 | | Stephen M. Ksenak | 2024 | 600,000 | — | 742,754 | 577,500 | 14,984 | 1,935,238 | | Senior Managing Director and General Counsel | 2023 | 600,000 | — | 808,864 | 665,000 | 14,323 | 2,088,187 | | | 2022 | 600,000 | 74,000 | 670,619 | 646,600 | 13,323 | 2,004,542 | | R. Sharon Smith | 2024 | 500,000 | — | 817,022 | 619,200 | 27,608 | 1,963,830 | | Executive Vice President and Chief Strategy Officer | 2023 | 500,000 | — | 889,744 | 693,000 | 34,385 | 2,117,129 | | | 2022 | 500,000 | 20,000 | 737,673 | 685,400 | 42,464 | 1,985,537 |

  29. 2024 Summary Compensation Table

    (1)In 2022, 2023 and 2024, each of our NEOs received performance stock units (“PSUs”) and restricted stock units ("RSUs") pursuant to Ambac’s Long Term Incentive Plan (the "LTIP"). The LTIP are sub-plans of the 2020 Incentive Compensation Plan and the 2024 Incentive Compensation Plan. As required by Item 402(c)(2) of Regulation S-K, the value of the PSUs and RSUs reported in the Summary Compensation Table is based on the grant date fair value of awards in the fiscal year actually granted and computed in accordance with FASB ASC Topic 718 based on the probable outcome of performance conditions being achieved, including the value of the rTSR multiplier, if any, without regard to estimated forfeitures. For a discussion of the assumptions made in the valuation, see Note 2, Basis of Presentation and Significant Accounting Policies, to Ambac’s consolidated financial statements for the year-ended December 31, 2024. The value of PSUs awarded in 2024 to each of our NEOs, assuming the maximum payout level of 240% and a share price of $15.87 would have been as follows: for Mr. LeBlanc, $6,426,019; for Mr. Trick, $1,554,034; for Mr. Barranco, $1,428,051; for Mr. Ksenak, $1,260,022; and for Ms. Smith, $1,386,006. The value of PSUs awarded in 2023 to each of our NEOs, assuming the maximum payout level of 240% and a share price of $16.30, would have been as follows: for Mr. LeBlanc, $6,426,047; for Mr. Trick, $1,554,042; for Mr. Barranco, $1,428,036; for Mr. Ksenak, $1,260,055 and for Ms. Smith, $1,386,022. The value of PSUs awarded in 2022 to each of our NEOs, assuming the maximum payout level of 240% and a share price of $14.85, would have been as follows: for Mr. LeBlanc, $6,426,035; for Mr. Trick, $1,554,011; for Mr. Barranco, $1,428,024; for Mr. Ksenak, $1,260,052; and for Ms. Smith, $1,386,040. Each of our NEOs received RSUs on March 13, 2024 as part of their 2024 LTIP award grant. These RSUs vest in three equal annual installments on March 13th, 2025, and March 3, 2026, and March 3, 2027. Each of our NEOs received RSUs on March 3, 2023 as part of their 2023 LTIP award grant. These RSUs vest in three equal annual installments on March 3rd, 2024, 2025, and 2026. Each of our NEOs received RSUs on February 28, 2022 as part of their 2022 LTIP award grant. These RSUs vested in three equal annual installments on February 28th, 2023, 2024, and 2025. (2)The amount included in the "Non-Equity Incentive Plan Compensation " column above includes cash incentive award payments pursuant to the Company's year-end 2024, 2023 and 2022 STIP program, as approved by the Compensation Committee. (3)"All Other Compensation” for each of our named executive officers in 2024 includes, among other things, contributions by Ambac to the Ambac Savings Incentive Plan, as well as a portion of the life insurance premiums paid. In addition for Mr. LeBlanc and Ms. Smith, the amount reported also includes reimbursement from Ambac for certain commuting expenses, and for Messrs. LeBlanc, Barranco and Ms. Smith, the amount reported includes reimbursement from Ambac for the cost of an executive physical. For Mr. Trick the amount reported includes reimbursement from Ambac for payments for tax preparation services received as a result of services rendered to Ambac UK.

  30. Grants of Plan-Based Awards in 2024

    Grants of Plan-Based Awards in 2024 The following table contains information on the grants of plan-based awards made to each of our named executive officers in 2024 with respect to our STIP and LTIP programs which are administered pursuant to Ambac’s 2020 Incentive Compensation Plan. In 2024, Ambac's LTIP awards granted to our NEOs were denominated 70% in PSUs and 30% in RSUs and STIP awards were denominated 100% as cash incentive awards. The terms and conditions of these awards are described in the footnotes and narrative following this table.

  31. Grants of Plan-Based Awards in 2024

    | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | | Grant Date Fair Value of Stock Unit Awards ($) (4) | | | | | | | PSU Awards (2) | | | RSU Awards (2) | | | Name and Principal Position | Grant Date | Threshold(3) ($) | Target ($) | Maximum ($) | Threshold(3) (#) | Target (#) | Maximum (#) | # | | | Claude LeBlanc | | $562,500 | $1,125,000 | $2,250,000 | — | — | — | — | — | | | March 13, 2024 | — | — | — | 84,366 | 168,731 | 337,462 | — | $2,689,572 | | | March 13, 2024 | — | — | — | — | — | — | 72,313 | 1,098,434 | | David Trick | | $212,500 | $425,000 | $850,000 | — | — | — | — | — | | | March 13, 2024 | — | — | — | 20,403 | 40,805 | 81,610 | — | $650,432 | | | March 13, 2024 | — | — | — | — | — | — | 17,487 | 265,628 | | David Barranco | | $212,500 | $425,000 | $850,000 | — | — | — | — | — | | | March 13, 2024 | — | — | — | 18,749 | 37,497 | 74,994 | — | $597,702 | | | March 13, 2024 | — | — | — | — | — | — | 16,069 | 244,088 | | Stephen M. Ksenak | | $200,000 | $400,000 | $800,000 | — | — | — | — | — | | | March 13, 2024 | — | — | — | 16,543 | 33,085 | 66,170 | — | $527,375 | | | March 13, 2024 | — | — | — | — | — | — | 14,179 | 215,379 | | R. Sharon Smith | | $212,500 | $425,000 | $850,000 | — | — | — | — | — | | | March 13, 2024 | — | — | — | 18,197 | 36,393 | 72,786 | — | $580,104 | | | March 13, 2024 | — | — | — | — | — | — | 15,597 | 236,918 |

  32. Grants of Plan-Based Awards in 2024

    (1) STIP target annual incentives are set as a percentage of base salary for each of our NEOs as follows: 125% for the Chief Executive Officer; and between 55% and 85% for each of the other NEOs. Actual incentive payouts can range from 0% to 200% of target for each of the NEOs based on the Compensation Committee’s review of overall corporate performance and individual and business unit achievement relative to the pre-established goals and objectives. (2) Each of our NEOs received PSUs and RSUs on March 13, 2024, pursuant to Ambac’s LTIP. The RSUs granted as part of the 2024 LTIP award will vest in three equal annual installments on each of March 13, 2025, March 3, 2026, and March 3, 2027. For the PSUs the number of shares of Ambac’s common stock that may be acquired can range from 0% to 200% of the target award (not including any adjustment that may be applied pursuant to the rTSR modifier). (3) Threshold amounts represent a proportionate payout assuming actual performance measures equal the mid-point between minimum performance and target level performance. (4) As required under SEC rules for compensation disclosure, the value of the PSUs and RSUs reported in the table above is based on the grant date fair value of awards and computed in accordance with FASB ASC Topic 718.

  33. Outstanding Equity Awards at 2024 Fiscal Year-End

    Outstanding Equity Awards at 2024 Fiscal Year-End The following table provides information about the number and value of RSUs and PSUs granted under Ambac’s Incentive Compensation Plans (which includes the LTIP) that have not settled or converted into shares of Ambac common stock (“vested”) and are held by our named executive officers as of December 31, 2024. The market value of the RSUs and PSUs was calculated based on the closing price of Ambac’s common stock on the NYSE on December 31, 2024 ($12.65).

  34. Outstanding Equity Awards at 2024 Fiscal Year-End

    | Named Executive Officer | Number of Restricted Stock Units That Have Not Vested (#) (1) | Market Value of Restricted Stock Units That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Performance Stock Units That Have Not Vested (#) (2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Performance Stock Units that Have not Vested ($) | | Claude LeBlanc | 145,009 | 1,834,364 | 513,300 | $6,493,245 | | David Trick | 35,067 | 443,598 | 124,133 | $1,570,282 | | David Barranco | 32,223 | 407,621 | 114,069 | $1,442,973 | | Stephen M. Ksenak | 28,432 | 359,665 | 100,650 | $1,273,223 | | R. Sharon Smith | 31,276 | 395,641 | 110,713 | $1,400,519 |

  35. Outstanding Equity Awards at 2024 Fiscal Year-End

    (1) RSUs granted on March 13, 2024,vest in three equal annual installments on each of March 13, 2025, March 3, 2026, and March 3, 2027. .RSUs granted on March 3, 2023 will vest in three equal annual installments on each of March 3, 2024, March 3, 2025, and March 3, 2026. RSUs granted on February 28, 2022,vest in three equal annual installments on each of February 28, 2023, 2024, and 2025. (2) PSUs granted to our NEOs under Ambac's LTIP Plan on March 13, 2024, March 3, 2023 and February 28, 2022 have a three year performance period and are subject to the rTSR modifier. PSUs granted in February 2022, March 2023, and March 2024 will vest within 75 days after December 31 of 2024, 2025, and 2026, respectively. The number of PSUs reported assumes that a target level of performance will be achieved over the relevant period.

  36. Stock Vested in 2024

    Stock Vested in 2024 The following table sets forth certain information concerning RSUs and PSUs held by the named executive officers listed below that vested (settled or converted into shares of Ambac common stock) in 2024. The value realized on vesting and settlement for each of our named executive officers was calculated based on the closing prices of our common stock on the NYSE on each of the following dates as set forth below: February 21, 2024 closed at $16.25; February 28, 2024 closed at $16.94; March 3, 2024 closed at $16.19; and March 8, 2024 closed at $15.38.

  37. Stock Vested in 2024

    | | Stock Awards | | | Named Executive Officer | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Claude LeBlanc | 296,476 | $4,806,688 | | David Trick | 71,696 | $1,162,388 | | David Barranco | 65,885 | $1,068,176 | | Stephen M. Ksenak | 58,131 | $942,463 | | R. Sharon Smith | 62,330 | $1,010,659 |

  38. Potential Payments Upon Termination or Change-in-Control

    Potential Payments Upon Termination or Change-in-Control The following table shows the potential payments that would be made by the Company to each of the NEOs assuming that such officer's employment with the Company was terminated on December 31, 2024 under the circumstances outlined in the table. For purposes of this table, the per share price of the Company's common stock is assumed to be $12.65, which was the closing price on December 31, 2024.

  39. Potential Payments Upon Termination or Change-in-Control

    | | Prior to a Change of Control | | | In Connection with a Change of Control | | Named Executive Officer | Death or Disability | Involuntary Termination without "Cause" or by Executive for "Good Reason" | Voluntary Resignation | Involuntary Termination without "Cause" or by Executive for "Good Reason" | | Claude LeBlanc | | | | | | Severance payment(1) | $— | $5,175,000 | $— | $6,187,500 | | RSU settlement(2) | 6,129,760 | 6,129,760 | — | 6,129,760 | | PSU settlement(3) | 6,493,232 | — | — | — | | Pro-rata Annual STIP Award(4) | 1,125,000 | 1,125,000 | — | 1,125,000 | | Benefits(5) | — | 57,213 | — | 57,213 | | Total | $13,747,992 | $12,486,973 | $— | $13,499,473 | | David Trick | | | | | | Severance payment(1) | $— | $1,762,500 | $— | $2,350,000 | | RSU settlement(2) | 1,483,200 | 1,483,200 | — | 1,483,200 | | PSU settlement(3) | 1,570,270 | — | — | — | | Pro-rata Annual STIP Award(4) | 425,000 | 425,000 | — | 425,000 | | Benefits(5) | — | 49,725 | — | 49,725 | | Total | $3,478,470 | $3,720,425 | $— | $4,307,925 | | David Barranco | | | | | | Severance payment(1) | $— | $500,000 | $— | $500,000 | | RSU settlement(2) | 987,029 | 987,029 | — | 987,029 | | PSU settlement(3) | 1,442,960 | — | — | — | | Benefits(5) | — | 42,793 | — | 42,793 | | Total | $2,429,989 | $1,529,822 | $— | $1,529,822 | | Stephen M. Ksenak | | | | | | Severance payment(1) | $— | $1,500,000 | $— | $2,000,000 | | RSU settlement(2) | 1,200,599 | 1,200,599 | — | 1,200,599 | | PSU settlement(3) | 1,273,210 | — | — | — | | Pro-rata Annual STIP Award(4) | 400,000 | 400,000 | — | 400,000 | | Benefits(5) | — | 53,181 | — | 53,181 | | Total | $2,873,809 | $3,153,780 | $— | $3,653,780 | | R. Sharon Smith | | | | | | Severance payment(1) | $— | $1,387,500 | $— | $1,850,000 | | RSU settlement(2) | 1,297,865 | 1,297,865 | — | 1,297,865 | | PSU settlement(3) | 1,400,519 | — | — | — | | Pro-rata Annual STIP Award(4) | 425,000 | 425,000 | — | 425,000 | | Benefits(5) | — | 49,725 | — | 49,725 | | Total | $3,123,384 | $3,160,090 | $— | $3,622,590 |

  40. Potential Payments Upon Termination or Change-in-Control

    (1)Pursuant to the employment agreements between Ambac and each of Messrs. LeBlanc, Trick and Ksenak, and Ms. Smith, each such officer is entitled to receive the severance payments listed above if terminated “without cause”, or if they resign for “good reason.” See "Agreement with Claude LeBlanc," and “Agreements with Other Executive Officers.” Pursuant to Ambac's Severance Pay Plan, as described below, Mr. Barranco is entitled to receive the severance payments listed above if terminated “without cause” (or “Just Cause,” as that term is used in the Severance Pay Plan). (2)Each of our named executive officers received RSUs grants on February 28, 2022, and March 3, 2023, and March 13, 2024. The remainder of the February 28, 2022 RSU awards vested and settled in on February 28, 2025. The remainder of the March 3, 2023 RSU awards vest and settle in equal annual installments on March 3, 2025 and March 3, 2026. The remainder of the March 13, 2024 RSU awards vest and settle in equal annual installments on March 13, 2025, and March 3, 2026, and March 3, 2027. In certain cases, our named executive officers elected to defer the settlement of their RSUs into deferred share units for personal tax planning reasons. The value of RSUs reflected in the table includes these deferred share units. Valuation of all RSU awards is based upon the closing price of our common stock on December 31, 2024. (3)With respect to the 2022, 2023 and 2024 PSU awards, if a termination occurred prior to the last day of the performance period by reason of death, the beneficiaries of the named executive officer would be entitled to receive the number of PSUs that the named executive officer would have been entitled to receive at a 100% overall payout multiple regardless of the outcome of any of the performance conditions. No amounts are included above with respect to 2022, 2023 and 2024 PSU awards for a termination by reason of disability nor involuntary termination without "Cause" or by Executive for "Good Reason", because any required payout cannot be determined until the end of the relevant performance period. (4)Pursuant to the terms of the employment agreements for each of Messrs. LeBlanc, Trick, and Ksenak, and Ms. Smith, each of these executive officers is entitled receive a pro-rated portion of the annual STIP award that he or she would have received in the absence of such termination. Assuming a December 31, 2024 termination, each of Messrs. LeBlanc, Trick and Ksenak, and Ms. Smith were assumed to have received their target STIP award for 2024 as approved by the Compensation Committee in February of 2024. (5)Messrs. LeBlanc, Trick and Ksenak, and Ms. Smith, and their eligible dependents will be entitled to continue to participate in such basic medical and life insurance programs of the Company as are in effect from time to time, on the same terms and conditions as applicable to active senior executives of the Company, for twelve months or, if earlier, until the date said executive becomes eligible to receive coverage from another employer or is otherwise no longer eligible to receive COBRA continuation coverage. Pursuant to Ambac's Severance Pay Plan, in addition to the severance payments listed, Mr. Barranco would be entitled to receive reimbursement for a portion of the premiums paid for COBRA continuation coverage in the same amount as was previously paid by the Company for the same group health insurance coverage under the Company's group health plan for the first twelve months following his termination of employment. The amounts included in the table reflect the cost of COBRA benefit continuation coverage under the plan in which the particular executive is enrolled, less the monthly active employee cost of these benefits, as well as for Messrs. LeBlanc, Trick and Ksenak and Ms. Smith the cost of continued life insurance coverage for the 12 month severance period. Each of our named executive officers received both a PSU and an RSU award agreement in connection with their LTIP awards in 2022, 2023, and 2024. In general, these agreements provided that unvested PSUs and RSUs would be forfeited on termination of employment, except (i) if a termination occurred by reason of disability, an involuntary termination by the Company other than for “cause,” or retirement, the recipient would be entitled to receive the PSU award which would only be payable at the end of the relevant performance period and based on the satisfaction of the performance conditions, if any, related to such award, and the full value of any unvested RSU award at the time of termination; and (ii) if a termination occurred prior to the last day of the performance period by reason of death, the beneficiaries of the named executive officer would be entitled to receive the number of PSUs that the named executive officer would have been entitled to receive at a 100% overall payout multiple regardless of the outcome of any of the performance conditions and the full value of any unvested RSU award. Except in the case of death, since the value of any payout pursuant PSU award cannot be determined until the end of the performance period, no amounts are included in the table above with respect to any other category of termination for the 2022, 2023, or 2024 PSU awards. As of December 31, 2024, Ambac did not have any contracts, agreements, plans or arrangements that provided for a payment to a named executive officer solely upon a change-in control of Ambac.

  41. Pay Ratio Disclosure

    Pay Ratio Disclosure Presented below is the ratio of annual total compensation of our Chief Executive Officer ("CEO") to the median of the annual total compensation of all our employees (excluding our CEO). The ratio presented below is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Securities Exchange Act of 1934. In identifying our median employee, we calculated the annual total compensation of each employee for the twelve month period that ended on December 31, 2024. Total compensation for these purposes included base salary, annual cash incentive award, and any equity awards granted in 2024 and was calculated using internal payroll/tax records. We did not apply any cost-of-living adjustments as part of the calculation. We selected the median employee based on the 190 full-time and part-time workers who were employed as of December 31, 2024, including independent contractors that we determined were our employees exclusively for the purpose complying with SEC reporting on “Pay Ratio Disclosure.” We did not exclude any non-U.S. employees using the SEC’s permitted exclusions under Item 402(u) of Regulation S-K. The 2024 annual total compensation as determined under Item 402 of Regulation S-K for our CEO was $6,340,720. The 2024 annual total compensation as determined under Item 402 of Regulation S-K for our median employee was $179,231. The ratio of our CEO’s annual total compensation to the median of the annual total compensation of all our employees (excluding our CEO) for fiscal year 2024 is 35.4 to 1.

  42. Pay Versus Performance

    Pay Versus Performance This “Pay Versus Performance” section provides information concerning executive pay ("compensation actually paid" as defined by the SEC) and Company performance for each of the fiscal years ending December 31, 2020, 2021, 2022, 2023, and 2024. The Compensation Committee did not consider this pay versus performance disclosure when making compensation decisions. These amounts have been calculated as required by SEC rules and do not reflect the actual amounts of compensation earned or realized by our NEOs. The following table below provides information concerning executive pay and Company performance as required under SEC Regulation S-K Item 402(v).

  43. Pay Versus Performance

    | | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2) | Average Summary Compensation Table Total for Non-PEO NEOs (1) | Average Compensation Actually Paid to Non-PEO NEOs (2) | Value of Initial Fixed $100 Investment Based On: | | | | Net Income (Loss) (in millions) | | Company-Selected Performance Measure - rTSR percentile rank (4) | | Year | | | | | Total Shareholder Return | | Peer Group Total Shareholder Return (3) | | | | | | 2024 | $6,340,720 | $1,789,951 | $2,041,272 | $1,045,001 | | 59 | | 150 | | (556) | 10th | | 2023 | $6,917,719 | $7,049,544 | $2,200,003 | $2,229,021 | | 76 | | 130 | | 5 | 39th | | 2022 | $6,185,762 | $9,867,444 | $2,058,411 | $2,882,417 | | 81 | | 105 | | 522 | 45th | | 2021 | $6,979,315 | $8,273,439 | $2,190,289 | $2,413,753 | | 75 | | 145 | | (17) | 7th | | 2020 | $6,011,501 | $2,777,279 | $1,989,183 | $1,431,419 | | 71 | | 131 | | (437) | 20th |

  44. Pay Versus Performance

    (1) The registrant's Principle Executive Officer ("PEO") for the years 2020, 2021, 2022, 2023, and 2024 was Claude LeBlanc. Non-PEO NEOs for the years 2020, 2021, 2022, 2023, and 2024 were Messrs. Trick, Barranco, and Ksenak, and Ms. Smith. (2) Compensation Actually Paid ("CAP") equals the Summary Compensation Table total, adjusted to replace the grant date value of stock unit awards with the sum of: (i) the fair value of all equity grants made during the year valued as of the last day of the year; (ii) the year over year changes in fair value of prior year awards that remain outstanding at the end of the year presented; and (iii) for awards that vested in the year presented, the changes in fair value of from prior year end to the vesting date. There were no equity awards that were granted and vested in the same year during the years presented. There were no dividends paid on unvested stock awards during the years presented. The assumptions used to calculate an award's fair value do not materially differ from the disclosed valuation assumptions used to calculate grant date fair value. The following tables contain a reconciliation of the amounts reported for (i) total compensation in the Summary Compensation Table with the amounts reported for Compensation Actually Paid in each of the years indicated for the PEO, and (ii) an average of the total compensation in the Summary Compensation Table with the amounts reported for the average Compensation Actually Paid to the Non-PEO NEOs, respectively.

  45. Pay Versus Performance

    | | Reconciliation of Summary Compensation Table Total to Compensation Actually Paid for the PEO | | | | | | | | | | | | | Year | Summary Compensation Table Total | | Deduct Grant Date Fair Value of Stock Unit Awards | | Add Year-end fair value of stock unit awards granted | | Add change in fair value of prior year outstanding awards | | Add change in fair value of prior year vested awards | | Compensation Actually Paid | | | 2024 | | 6,340,720 | | (3,788,006) | | 2,494,082 | | (3,177,612) | | (79,233) | | 1,789,951 | | 2023 | | 6,917,719 | | (4,125,142) | | 4,396,779 | | 461,933 | | (601,745) | | 7,049,544 | | 2022 | | 6,185,762 | | (3,420,095) | | 4,906,825 | | 2,649,464 | | (454,512) | | 9,867,444 | | 2021 | | 6,979,315 | | (4,358,942) | | 3,779,167 | | 1,335,745 | | 538,154 | | 8,273,439 | | 2020 | | 6,011,501 | | (3,285,787) | | 2,534,939 | | (2,206,007) | | (277,367) | | 2,777,279 |

  46. Pay Versus Performance

    | | Reconciliation of the Average Summary Compensation Table Total to the Average Compensation Actually Paid to the non-PEO NEOs | | | | | | | | | | | | | Year | Average Summary Compensation Table Total | | Deduct Grant Date Average Fair Value of Stock Unit Awards | | Add Year-end average fair value of stock unit awards granted | | Add change in average fair value of prior year outstanding awards | | Add change in average fair value of prior year vested awards | | Average Compensation Actually Paid | | | 2024 | | 2,041,272 | | (829,407) | | 546,093 | | (695,746) | | (17,211) | | 1,045,001 | | 2023 | | 2,200,003 | | (903,227) | | 962,697 | | 102,449 | | (132,901) | | 2,229,021 | | 2022 | | 2,058,411 | | (748,853) | | 1,074,383 | | 577,697 | | (79,221) | | 2,882,417 | | 2021 | | 2,190,289 | | (947,297) | | 821,299 | | 281,351 | | 68,111 | | 2,413,753 | | 2020 | | 1,989,183 | | (725,939) | | 560,051 | | (303,616) | | (88,260) | | 1,431,419 |

  47. Pay Versus Performance

    (3) Peer group total shareholder return represents the performance of the S&P Completion index (SPCMI). (4) Ambac selected relative total shareholder return ("rTSR") as the company-selected measure ("CSM") for 2024 as reflected in the table above. rTSR is presented as the percentile rank of Ambac's Total Shareholder Return ("TSR") as compared to the TSR of all members of the peer group. SEC regulations require Ambac to designate a CSM that in its assessment represents the most important financial performance measure (that is not total shareholder return or net income) used by Ambac to link CAP of our NEOs, for the most recently completed fiscal year, to performance. This measure was first approved by Ambac's Compensation Committee for the 2019 LTIP issuance with a three year performance period, therefore, the rTSR reported in the above chart for 2020 represents two outstanding LTIP award issuances while 2021, 2022, 2023 and 2024 represent four outstanding LTIP award issuances, respectively. While rTSR has been selected as Ambac's CSM it is not the most important measure used by the Board in determination of compensation. For the most recent year, reductions in Watch List and Adversely Classified Credits at AAC were given more weight in determining compensation but under SEC regulations this measure does not meet the criteria of a CSM. rTSR may not have been the most important financial performance measure for years 2020, 2021, 2022, 2023, and 2024 and Ambac may determine a different CSM to be the most important financial performance measure in future years. Description of the Relationship Between Compensation Actually Paid to our Named Executive Officers and Company Performance: The following graph describes the relationship between Compensation Actually Paid ("CAP") to the principal executive officer and the Average Compensation Actually Paid to the Non-PEO NEOs and Ambac's cumulative total shareholder return ("Ambac TSR") over the last five fiscal years. The following graph compares Ambac's TSR and the S&P Completion index cumulative TSR over the last five fiscal years. The comparison assumes $100 was invested in the Company and in the S&P Completion index for the period starting December 31, 2019 and was held through the end of each fiscal year listed in the first table set forth above. Historical stock performance is not necessarily indicative of future stock performance. The following graph describes the relationship between CAP to our named executive officers and Ambac's Net Income over the last five fiscal years. Ambac has selected rTSR as its CSM. The rTSR measure is the percentile rank of Ambac's TSR as compared to the TSR of all members of the peer group within each LTIP issuance, ranked in descending order (including Ambac). This measure was first approved by Ambac's Compensation Committee for the 2019 LTIP issuance with a three year performance period, therefore, the rTSR reported in the below chart for 2020 represents two outstanding LTIP award issuances while all other years represent three outstanding LTIP award issuances. The following graph shows the relationship of CAP compared with percentile rank rTSR, over the last five fiscal years. Company’s Most Important Financial (and Non-Financial) Performance Measures: The following table contains a list that shows the most important financial performance measures used by Ambac's Compensation Committee to link compensation actually paid to the named executive officers to Company performance for the most recently completed fiscal year.

  48. Pay Versus Performance

    | ● | Reductions in Net Par Outstanding in the insured portfolio | ● | Number of underwritten programs at Everspan | | ● | Reductions in Gross Operating Run Rate Expenses | ● | EBITDA margins at Cirrata | | ● | Earned premium and program fees at Everspan | ● | Number of new MGAs and non-program business at Cirrata | | ● | Reductions in Watch List and Adversely Classified Credits | ● | Relative Total Shareholder Return | | ● | Cumulative Xchange EBITDA | | |