Ambac Financial : Proxy Statement 2023 Annual Report

2024 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS &

PROXY STATEMENT

Ambac Financial Group, Inc.

One World Trade Center

New York, NY 10007

Tel: [phone]

April 26, 2024

To Our Fellow Stockholders:

It is our pleasure to invite you to our 2024 Annual Meeting of Stockholders to be held on June 5, 2024 at 11:00 a.m. (Eastern). The meeting will be conducted in a virtual only format. Stockholders can participate from any geographic location with Internet connectivity. We believe this format allows for maximum stockholder participation. Stockholders may view a live webcast of the Annual Meeting and submit questions digitally during the meeting at www.virtualshareholdermeeting.com/AMBC2024. Please refer to the General Information - Participating in the Annual Meeting section of the Proxy Statement for more details.

We are taking advantage of the Securities and Exchange Commission ("SEC") rules that allow companies to furnish proxy materials to stockholders via the internet. This electronic process gives you fast, convenient access to the materials, reduces the impact on the environment and reduces our printing and mailing costs. If you received a Notice Regarding the Availability of Proxy Materials ("Internet Notice") by mail, you will not receive a printed copy of the proxy materials unless you specifically request them. The Internet Notice instructs you on how to access and review all of the important information contained in this Proxy Statement, as well as how to submit your proxy over the internet. If you want more information, please see the General Information section of this Proxy Statement or visit the Annual Meeting of Stockholders section of our Investor Relations website at http://ir.ambac.com.

Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible. You may vote over the internet or by phone or, if you requested to receive printed proxy materials, by mailing a proxy or voting instruction card. Please review the instructions on each of your voting options described in this Proxy Statement, as well as in the Internet Notice you received in the mail.

Thank you for your interest in Ambac.
Sincerely,
Jeffrey S. Stein	Claude LeBlanc
Chairman	President and Chief Executive Officer

	AMBAC FINANCIAL GROUP, INC.
	NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS
Time and Date	11:00 a.m. (Eastern) on June 5, 2024
Place	The 2024 Annual Meeting of Stockholders will be conducted in a virtual format at
	www.virtualshareholdermeeting.com/AMBC2024.* Stockholders of record will be
	able to vote and ask questions during the meeting through the online platform.
Items of Business ....	(1) To elect seven members of the Board of Directors to hold office until the next
	annual meeting of stockholders or until their respective successors have been
	elected and qualified.

1. To approve, on an advisory basis, the compensation of our named executive officers.
2. To ratify the appointment of KPMG LLP as Ambac's independent registered public accounting firm for the fiscal year ending December 31, 2024.
3. To approve Ambac's 2024 Incentive Compensation Plan.

Adjournments and

Postponements........

1. To approve an amendment to Ambac's Certificate of Incorporation to delete certain provisions in Section 4.01 that reference the Bankruptcy Code and related restrictions on the issuance of non-voting equity securities.
2. To approve an amendment to Ambac's Certificate of Incorporation to replace the reference to the "Wisconsin Insurance Commissioner" with a reference to the "relevant Insurance Commissioners of the states of domicile of the insurance companies controlled by the Corporation."
3. To approve an amendment to Ambac's Certificate of Incorporation to extend the exculpation provision in Section 7.01 of Article VII to include officers, as well as directors.

Any action on the items of business described above will be considered at the Annual Meeting at the time and on the date specified above or at any time and date to which the Annual Meeting may be properly adjourned or postponed.

Record Date	You are entitled to vote only if you were an Ambac stockholder as of the close of
	business on April 10, 2024 (Record Date). You will need proof of ownership of our
	common stock to enter the meeting.
Voting	Your vote is very important. Whether or not you plan to attend the Annual
	Meeting, we encourage you to read this Proxy Statement and submit your proxy or
	voting instructions as soon as possible. For specific instructions on how to vote
	your shares, please refer to the instructions on the Notice Regarding the
	Availability of Proxy Materials ("Internet Notice") you received in the mail, the
	section titled "General Information - Information About the Annual Meeting and
	Voting" in this Proxy Statement or, if you requested to receive printed proxy
	materials, your enclosed proxy or voting instruction card.
	By order of the Board of Directors,
	William J. White
	Corporate Secretary

• Stockholders can participate from any geographic location with Internet connectivity. We believe this format allows for maximum stockholder participation. Stockholders may view a live audio webcast of the Annual Meeting and submit questions digitally during the meeting at www.virtualshareholdermeeting.com/AMBC2024. Please refer to the General Information - participating in the Annual Meeting section of the Proxy Statement for more details.

This notice of Annual Meeting and Proxy Statement and form of proxy are being distributed and made available on or

about April 26, 2024.

Table of Contents

PROXY STATEMENT SUMMARY	1
Performance Against Compensation Metrics	2
Response to 2023 Say on Pay Vote and
Stockholder Outreach	5
Key Features of Our Executive Compensation
Program	5
CORPORATE SOCIAL RESPONSIBILITY
AND SUSTAINABILITY	6
Business Model	6
Corporate Governance	7
ESG Governance and Oversight	8
Environmental	9
Climate Change Risk	9
Data Security and Privacy	9
Corporate Social Responsibility	10
Diversity and Inclusion	10
Training, Development and Well-Being of
Employees	10
Philanthropy	11
Guiding Principles Concerning Responsible
Investing	11
GENERAL INFORMATION	12
INCORPORATION BY REFERENCE	20
DIRECTORS, EXECUTIVE OFFICERS,
AND CORPORATE GOVERNANCE	21
Board of Directors	21
Board Leadership Structure	25
Board Committees	25
Board's Role in Risk Oversight	27
Director Independence	28
Compensation Committee Interlocks and Insider
Participation	28
Consideration of Director Nominees	28
Executive Sessions	29
Outside Advisors	29
Board Effectiveness	29

Corporate Governance Guidelines	30
Code of Business Conduct and Ethics	30
Board Compensation Arrangements for Non-
Employee Directors	30
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT	34
EXECUTIVE COMPENSATION	36
Executive Officers	36
Compensation Discussion and Analysis	38
Compensation Committee Report	59
2023 Summary Compensation Table	60
Grants of Plan-Based Awards in 2023	61
Agreement with Claude LeBlanc	62
Agreements with Other Executive Officers	63
Outstanding Equity Awards at 2023 Fiscal
Year-End	66
Stock Vested in 2023	66
Potential Payments Upon Termination or
Change-in-Control	67
Pay Ratio Disclosure	69
Pay Versus Performance	70
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM	74
THE AUDIT COMMITTEE REPORT	75
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS	76
PROPOSAL NUMBER 1	78
PROPOSAL NUMBER 2	79
PROPOSAL NUMBER 3	80
PROPOSAL NUMBER 4	81
PROPOSAL NUMBER 5	91
PROPOSAL NUMBER 6	92
PROPOSAL NUMBER 7	94
Appendix A	95
Appendix B - Notice to Stockholders
Pursuant to Section 204(g) of the DGCL	109

Ambac Financial Group, Inc. | i | 2024 Proxy Statement

PROXY STATEMENT SUMMARY

Below are the highlights of important information you will find in this Proxy Statement for Ambac Financial Group, Inc. ("Ambac" or the "Company") and its subsidiaries. As it is only a summary, please review the complete Proxy Statement before you vote.

Ambac Financial Group Fiscal Year 2023 Highlights

Performance Highlights:

The following events summarize our performance highlights for fiscal year 2023:

• Increased Specialty Property and Casualty Insurance production by 79% from 2022. Specialty Property and Casualty Insurance production includes gross premiums written by Ambac's Specialty Property and Casualty Insurance segment ("Everspan") and premiums placed by the Insurance Distribution segment ("Cirrata").
• Increased Everspan gross premiums written to $273 million in 2023, which was an 87% increase from 2022, with total net earned premiums and program fees of $60.5 million. The Combined Ratio, which factors both underwriting results and expense management, of 106.5% was a significant reduction from 156.5% in 2022. The business diversified its MGA program partners whereby at year-end, Everspan had 23 programs, up from 14 a year ago. Everspan added 11 new underwritten programs in 2023. Equally important, its programs spanned a wide range of business classes, including commercial auto, excess liability, workers compensation and general liability, among others.
• Increased premiums placed by Cirrata to $231 million, which was an 70% increase from 2022 with total revenues of $52 million. This growth has been fueled by both organic initiatives and the financial performance of recent acquisitions. Cirrata has acquired and onboarded three companies over the last 18 months and now operates four entities across various classes of business, including specialty commercial auto, professional liability, inland marine, employer stop loss and affinity Accident & Health ("A&H") programs. Cirrata EBITDA margin1, driven primarily by strong margins at All Trans, exceeded 52%.
• Acquired Riverton Insurance Agency, representing approximately $40 million of expected premium placed for Cirrata.
• Reported net income of $5 million for the full year 2023.
• Increased Book Value per Share by 8% to $30.13 and Adjusted Book Value per Share by 2% to $28.74
• Decreased our insured portfolio net par outstanding at the Legacy Financial Guarantee business by 14% to $20 billion from $23 billion at year-end 2022. This includes a reduction in Watch List and Adversely Classified Credits by 26%, to $3.5 billion from $4.7 billion at year end 2022. The above mentioned declines were primarily the result of active de- risking transactions.
• Reduced Gross Operating Run Rate Expense in the fourth quarter of 2023 to $15.1 million

• Cirrata EBITDA margin performance measure represents EBITDA as a percentage of net commissions

Ambac Financial Group, Inc. | 1 | 2024 Proxy Statement

Performance Against Compensation Metrics

Performance Against 2023 Short Term Incentive Plan Metrics.Short Term Incentive Plan ("STIP") awards for 2023 were 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 at the Company related to (i) earned premium and program fees, and number of underwritten programs, at Everspan; (ii) the number of new managing general agencies ("MGAs") and non-program business added, and EBITDA margin, at Cirrata Group; (iii) reductions in Net Par Outstanding in the legacy financial guarantee insured portfolio; and (iv) reductions in Gross Operating Run Rate Expense; while the remaining 30% of an executive officer's annual STIP award was based on strategic performance goals, many of which are based on objective, quantifiable or financial outcomes.

For the 2023 fiscal year, we established the following goals for each of our STIP financial performance metrics and assigned weighting factors as follows:

Earned premium and program fees at Everspan ($ in millions)

Number of underwritten programs at Everspan

Number of new MGAs and non-program business added at Cirrata

EBITDA margin at Cirrata

Net Par Outstanding ($ in billions)

Gross Operating Run Rate Expenses ($ in millions)

Weighting

Factor

28.6%

7.1%

14.3%

21.4%

14.3%

14.3%

Threshold

$9

6

4

35% $20.8 $15.9

Target

$12

8

6

45% $20.2 $15.4

Maximum

$14

10

8

50% $19.3 $15.0

Number of Underwritten Programs

at Everspan

(# Programs)

Earned Premiums and Program Fees

at Everspan

($ in Millions)

12					$30.0
10			10	$25.0
8			$20.0
8
6							$14.0
6					$15.0
				$12.0
4					$10.0	$9.0
2					$5.0
0							$-
Threshold Target	Maximum	Threshold Target Maximum
		Threshold		Target			Maximum ------ Actual

Ambac Financial Group, Inc. | 2 | 2024 Proxy Statement

Number of new MGAs and Non Program

business at Cirrata

(# Programs)

EBITDA Margin at Cirrata

10	8	60%	45%	50%
8
6
40%	35%
6
4
4
	20%
2
0		-%
Threshold Target Maximum	Threshold Target Maximum

Net Par Outstanding (1)

($ in Billions)

Gross Operating

Run Rate Expenses (2)

($ in Millions)

$22.0					$16.0	$15.9
$21.0	$20.8				$15.5	$15.4
	$20.2						$15.0
$20.0					$15.0
		$19.3
$19.0					$14.5
$18.0					$14.0
Threshold Target	Maximum	Threshold Target Maximum
		Threshold		Target			Maximum ------ Actual

1. Reductions in Net Par Outstanding as of December 31, 2023 under the STIP were measured against Net Par Outstanding as of January 1, 2023.
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.

With respect to earned premium and program fees at Everspan, Ambac exceeded/ the maximum performance goal set for that metric as earned premium and program fees at Everspan were $27.4 million. With respect to the number of underwritten programs at Everspan, Ambac exceeded the maximum performance goal with eleven programs in total.

With respect to the number of new MGAs and non-program business being added at Cirrata, Ambac failed to achieved threshold performance with just two being added in 2023. With respect to EBITDA margin at Cirrata, Ambac exceeded the maximum performance goal with an EBITDA margin of 52.6%.

With respect to reductions in Net Par Outstanding, Ambac exceeded the maximum performance goal set for that metric as Net Par Outstanding was reduced to $18.9 billion. With respect to reductions in Gross Operating Run Rate Expenses, Ambac exceeded the target performance goal set for that metric, as Gross Operating Run Rate Expenses for the fourth quarter of 2023 was $15.1 million.

Performance against 2020 LTIP metrics. In 2020, the Compensation Committee revised the Long Term Incentive Plan ("LTIP") performance metrics to better align management's goals with certain key drivers of shareholder value: risk reduction, and managing the event driven nature of Ambac's business. Performance stock unit ("PSU") awards granted in 2020 were measured based on Ambac Assurance Corporation ("AAC") performance, with (i) reductions in Watch List and

Ambac Financial Group, Inc. | 3 | 2024 Proxy Statement

Adversely Classified Credits weighted at 70% and (ii) improvements in Net Asset Value weighted at 30%. While the payout of PSUs granted in 2020 would not settle for a three year period and be subject to the relative Total Shareholder Return ("rTSR") modifier, the measurement period for determining the achievement of goals against the pre-set metrics was set at two years (based on stockholder feedback, this performance measurement period was changed from two years to three years in all subsequent periods). All Ambac LTIP awards for our executive officers are paid in Ambac common stock at the end of a settlement period.

At Ambac Assurance and Subsidiaries

	Watch List & Adversely
Net Asset Value (1)	Classified Credits Outstanding (1)	Percentage of Target
($ in millions)	($ in billions)	Award Earned
$(140)	$9.992	200%
$(250)	$10.727	100%
$(450)	$11.467	-%

1. Linear interpolation between levels results in a proportionate amount of the Ambac LTIP Target Award becoming earned and vested.

The 2020 PSU awards paid out in early 2023, following the end of a three year settlement period at December 31, 2023. The following graph/charts shows the Company's actual performance over the two year measurement period running from January 1, 2020 through December 31, 2021, compared to the achievement levels set forth in the chart above.

			AAC		Watch List & Adversely Classified Credits Outstanding
			Adjusted Net Asset Value
			($ in Millions)				($ in Billions)
$200.0			$15.0
							$12.8
$100.0		200%				$10.4
				$10.0			145%
	$-
	$(5.5)
					$5.0
$(100.0)
$(106.0)
$(200.0)			$-	-%
2020	2021			2020	2021
		AAC Adjusted NAV	Percentage of Target			AAC WLACC	Percentage of Target

In addition, the final 2020 LTIP performance stock unit award payout at the end of a three year settlement period was reduced as a result of the impact of the rTSR modifier which serves as an additional metric with respect to performance based LTIP award payouts. The Net Asset Value at the end of the performance period was $(5.5) million. Improvements in Net Asset Value over the performance period was driven by debt reduction from surplus note exchanges, along with the resulting lower net interest expense; investment performance; improvements from active de-risking; and favorable RMBS loss reserve development; partially offset by an AUK tax payment. Watchlist & Adversely Classified Credit net par outstanding at AAC was reduced to $10.4 billion during the performance period and was driven by active de-risking of 38 credits totaling $1.7 billion. Ambac's rTSR lagged against our peers and resulted in a total shareholder return over the three year performance period of -22.79% and a ranking of 10 out of the 11 peer participants. As a result after applying Ambac's rTSR modifier the LTIP performance multiple was reduced by 10%.

Ambac Financial Group, Inc. | 4 | 2024 Proxy Statement