Company Strategy & Highlights - Ambac sold its Legacy Financial Guarantee business for $420 million in cash[4] - Ambac acquired ArmadaCare, a specialty A&H MGA, for $250 million in cash and new debt[4] - Ambac converted its investment in Pivix Specialty Insurance Services, Inc to a controlling equity stake[4] - Ambac repurchased 3,142,554 shares in October 2025, representing 6.5% of basic weighted average shares outstanding[4] - Ambac launched 1889 Specialty, an MGA specializing in management liability and professional lines for financial institutions[5] Financial Performance (Q3 2025) - Premium production was up 32% to $343 million[6] - Insurance distribution premiums produced were up 69% to $245 million[7] - Everspan gross premium written of $97 million were down 16% due to the non-renewal of certain programs in 2024[7, 8] - Insurance Distribution Revenue was up 80%[7] - Organic growth of Insurance Distribution was 40%[7]

Core Insights - Ambac Financial Group, Inc. reported a significant organic revenue growth of 40% in its Insurance Distribution segment, contributing to an overall revenue increase of 80% to $43 million for the quarter compared to $24 million in Q3'24 [1] Financial Performance - The Insurance Distribution segment recorded a net loss to shareholders of $5 million for the quarter, an improvement from a net loss of $7 million in Q3'24 [2] - Adjusted EBITDA for the Insurance Distribution segment surged by 272% to $10 million, up from $2.4 million in Q3'24, while adjusted EBITDA to shareholders increased by 183% to $6 million from $2.1 million [2] - Total revenues from continuing operations dipped by 5% to $67 million in Q3'25, down from $70 million in Q3'24, primarily due to reduced earned premiums at Everspan and the impact of previous gains [3][4] - Everspan's gross and net premiums written decreased by 16% and 46%, respectively, totaling $97.1 million and $18 million compared to $115 million and $32.7 million in Q3'24 [4] - The net loss to shareholders from continuing operations increased by $14 million to $32 million in Q3'25, compared to $18 million last year [4] Expense Analysis - Total expenses rose by 9% to $99 million in Q3'25 from $91 million the previous year, driven by increases in G&A expenses, intangible amortization, and interest expenses related to acquisitions [5] - G&A expenses included costs associated with exiting the financial guarantee business and the acquisition of ArmadaCare, which offset lower nominal losses and acquisition expenses at Everspan [6] Strategic Developments - Adjusted EBITDA from continuing operations to Ambac shareholders was a loss of $3 million in Q3'25, compared to a gain of $2 million last year, influenced by lower adjusted EBITDA at Everspan and expenses related to M&A and legacy litigation [7] - The company repurchased 3.1 million shares in October at an average price of $8.48, representing 6.7% of shares outstanding [8] - The CEO emphasized the focus on growth and profitability in specialty P&C businesses following the sale of the legacy financial guarantee business, highlighting strong performance in the insurance distribution segment [8] - The company anticipates improved combined ratios for Everspan as it scales between 2026 and 2027 and is optimistic about future prospects, reinforced by share repurchases [9] - Ambac expanded its partnership with Pivix and announced the launch of 1889 Specialty, a new MGA venture, indicating strategic growth initiatives [9]

Core Viewpoint - Ambac Financial Group has rebranded as Octave Specialty Group, Inc., marking a significant transformation into a leading specialty insurance platform, with a new trading ticker symbol "NYSE: OSG" set to commence on November 20, 2025 [2][3]. Company Overview - The rebranding follows the successful divestiture of the legacy financial guarantee business, indicating a focused strategy on building and acquiring high-performing managing general agency (MGA) businesses across the U.S., U.K., and Bermuda [2][3]. - Octave Specialty Group aims to create a harmonized portfolio of niche insurance distribution and underwriting businesses, emphasizing operational excellence, disciplined growth, and innovation [6]. Brand Identity - The new brand identity includes a logo, visual system, and website that reflect the company's commitment to innovation, collaboration, and performance [4]. - The brand name "Octave" symbolizes the harmony of distinct notes, representing the integration of diverse yet connected high-performing specialty businesses to enhance long-term shareholder value [4][5]. Structural Changes - Cirrata Group has been rebranded as Octave Partners, serving as the company's acquisition division, while Beat Capital Partners is now known as Octave Ventures, its incubation division [7].

Financial Position - Total assets decreased to $2,147,890 thousand as of September 30, 2025, from $8,058,378 thousand at December 31, 2024, reflecting a significant reduction[10] - Total liabilities decreased to $1,000,469 thousand from $6,862,857 thousand, indicating a significant reduction[10] - Stockholders' equity decreased to $959,174 thousand from $1,054,661 thousand, a decline of approximately 9%[10] - The balance of stockholders' equity decreased to $959,174 thousand as of September 30, 2025, down from $1,670,034 thousand at the same date in 2024[17] - Total financial liabilities were $152,877 million as of September 30, 2025, with no short-term debt reported[84] Revenue and Income - Total revenues for the three months ended September 30, 2025, were $66,606,000, a decrease from $70,005,000 in the same period of 2024, representing a decline of approximately 6.3%[12] - Net income attributable to shareholders for the three months ended September 30, 2025, was a loss of $112,620,000 compared to a loss of $27,503,000 in 2024, indicating a significant increase in losses[12] - Total revenues from continuing operations for the nine months ended September 30, 2025, were $184,319, an increase from $170,593 for the same period in 2024, representing an 8.0% growth[60] - Total revenues for the nine months ended September 30, 2025, were $121,050, down 19.7% from $150,687 in 2024[66] - The company reported a total of $4,855,000 in revenue recognized in accordance with ASC 606 for the three months ended September 30, 2025[124] Expenses - Total expenses for the three months ended September 30, 2025, were $98,685,000, up from $90,762,000 in 2024, reflecting an increase of about 8.5%[12] - Total expenses from continuing operations rose to $254,479 for the nine months ended September 30, 2025, up from $209,338 in 2024, reflecting a 21.5% increase[60] - Total expenses for the three months ended September 30, 2025, were $88,425, significantly higher than $49,906 in the same period of 2024[66] Investments and Cash Flow - Total investments increased to $455,228 thousand, up from $312,915 thousand year-over-year, indicating a growth of approximately 45.5%[10] - Cash and cash equivalents rose to $51,767 thousand, compared to $47,275 thousand in the previous year, showing an increase of about 5.3%[10] - Cash flows from operating activities from continuing operations resulted in a net cash outflow of $51,617 thousand for 2025, compared to a net cash inflow of $76,394 thousand in 2024[19] - The company generated $407,300 thousand from the sale of a subsidiary in 2025, significantly higher than $14,119 thousand in 2024[19] Premiums and Receivables - Premium receivables increased to $74,760 thousand, up from $57,222 thousand, representing a growth of approximately 30.7%[10] - The company reported net premiums earned of $17,027,000 for the three months ended September 30, 2025, down from $27,441,000 in 2024, a decrease of approximately 38%[12] - Net premiums earned for the Specialty Property & Casualty Insurance segment were $17.027 million in Q3 2025, compared to $27.441 million in Q3 2024, reflecting a decrease of about 38%[58] - Total net premiums earned for the nine months ended September 30, 2025, were $50,987,000, compared to $48,908,000 for the same period in 2024, representing an increase of approximately 2.2%[100] Goodwill and Intangible Assets - The company reported a significant increase in goodwill to $445,382 thousand from $418,234 thousand, indicating a growth of about 6.5%[10] - Total intangible assets as of September 30, 2025, amounted to $394,343,000, an increase from $371,680,000 as of December 31, 2024, reflecting a growth of 6.1%[120] Legal and Regulatory Matters - Everspan may face disputes regarding the scope of coverage under its policies, which could lead to liabilities beyond those anticipated or reserved[150] - Allegations of bad faith in claims handling could result in extensive litigation, potentially impacting Everspan's financial condition[151] - Legal accruals for litigation against Ambac are either not applicable or not material to its financial position, but adverse outcomes could be significant[154] - The COFINA Case involves allegations against Ambac and others regarding improper use of their role in bond restructuring, with claims for breach of contract and bad faith refusal to pay[156] Shareholder Actions - Ambac's share repurchase program allows for the repurchase of up to $50,000,000 of common shares, with $8,449,000 remaining in unused authorization as of the latest report[135] - The company repurchased 292,191 shares in 2025 at an average price of $11.30 per share, with a total cost of $3,301,000[137] Accounting and Standards - The company is evaluating the impact of new accounting standards (ASU 2025-06 and ASU 2024-03) on its financial statements, with effective dates after December 15, 2027[52][53] - The fair value of fixed maturity investment securities is primarily based on market prices from independent pricing sources, with many classified as Level 2 due to infrequent trading[87] Risk Management - The company recorded an allowance for credit losses of less than a million as of September 30, 2025, indicating effective risk management practices[112] - The top five reinsurers accounted for 60.2% of total reinsurance recoverables on paid and unpaid losses, with General Reinsurance Company being the largest at $148,776[111]

Financial Performance - Total revenue from continuing operations for Q3 2025 was $67 million, a decrease of 5% compared to $70 million in Q3 2024[7] - Adjusted EBITDA from continuing operations to Ambac shareholders was $(3) million, compared to $2 million in the same prior-year period[10] - Net loss from continuing operations attributable to Ambac shareholders was $(31.7) million, a 75% increase compared to $(18.1) million in Q3 2024[6] - For the three months ended September 30, 2025, the net income attributable to shareholders was $(112,620) thousand, compared to $(27,503) thousand for the same period in 2024, representing a decline of 309%[23] - The diluted earnings per share for the three months ended September 30, 2025, was $(2.35), compared to $(0.63) for the same period in 2024, indicating a significant decrease[23] - The company reported a net loss from continuing operations of $(30,838) thousand for the three months ended September 30, 2025, compared to $(19,890) thousand for the same period in 2024[23] - The net income (loss) from continuing operations for the nine months ended September 30, 2025, was $(66,130,000), compared to $(37,978,000) for the same period in 2024, indicating a worsening performance[39] - The adjusted net income (loss) attributable to shareholders for the nine months ended September 30, 2025, was $(26,546,000), compared to $(2,929,000) for the same period in 2024[39] Revenue and Premiums - Total P&C premium production increased by 32% for the quarter to $343 million[1] - Organic revenue growth in the Insurance Distribution segment was 40.0% for the quarter[15] - Total revenues for the nine months ended September 30, 2025, were $184,319 thousand, an increase of 8% from $170,593 thousand in the same period of 2024[23] - Total insurance distribution revenue for the nine months ended September 30, 2025, was $117,261,000, representing a significant increase of 113% from $55,166,000 in 2024[40] - Insurance distribution premiums placed for the nine months ended September 30, 2025, were $728,493,000, a substantial increase of 153% compared to $288,463,000 in 2024[42] - Gross premiums written for Q3 2025 were $97,185,000, a decrease from $115,154,000 in Q3 2024, representing a decline of approximately 15.6%[35][36] - Specialty Property & Casualty Insurance gross premiums written for the three months ended September 30, 2025, were $97,185,000, down 16% from $115,154,000 in 2024[42] - For the nine months ended September 30, 2025, gross premiums written were $280,347,000, a decrease of 13% compared to $322,782,000 for the same period in 2024[38] Expenses and Losses - Total expenses for the nine months ended September 30, 2025, were $254,479 thousand, up from $209,338 thousand in the same period of 2024, reflecting a 22% increase[23] - Total expenses from continuing operations in Q3 2025 were $98,685,000, compared to $90,762,000 in Q3 2024, an increase of approximately 8.7%[35][36] - The company incurred acquisition and integration-related expenses of $229,000 in Q3 2025, while in Q3 2024, these expenses were significantly higher at $14,854,000[35][36] - The company reported a net loss from discontinued operations of $(80,890) thousand for the three months ended September 30, 2025, compared to $(9,386) thousand for the same period in 2024[23] Equity and Assets - Stockholders' equity attributable to common shareholders decreased to $843.4 million, or $18.06 per share, from $859.8 million, or $18.53 per share, as of June 30, 2025[18] - The total assets as of September 30, 2025, were $2,147,890 thousand, a significant decrease from $8,522,386 thousand as of June 30, 2025, primarily due to the assets of discontinued operations[25] - The company’s cash and cash equivalents increased to $51,767 thousand as of September 30, 2025, compared to $46,383 thousand as of June 30, 2025[25] Operational Challenges and Risks - Ambac Financial Group faces significant risks including high volatility in stock price and uncertainty in achieving value for securities holders[46] - The company anticipates potential underwriting losses in its specialty property and casualty insurance business, which may affect loss reserves and financial results[47] - Ambac's ability to generate sufficient cash to service its debt and financial obligations is a critical concern, with potential refinancing challenges[47] - The company is exposed to credit risks across its investment portfolios and with reinsurers, which could impact overall financial stability[47] - Ambac's operational flexibility may be adversely affected by its current indebtedness, limiting strategic business pursuits[47] - The company is at risk of losing key relationships necessary for business production in its specialty insurance sectors[47] - Ambac's risk management policies may not adequately address certain risks, potentially leading to significant losses[47] - The company faces challenges in adapting to rapid regulatory changes, which could impact its business strategies[47] - Ambac is vulnerable to system security risks, including data protection breaches and cyber attacks, which could disrupt operations[47] - The company may struggle with integrating acquired businesses, which could hinder its expansion plans and value creation[47]

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Core Insights - Third Avenue Management's "Third Avenue Small-Cap Value Fund" reported a return of 7.18% in Q3 2025, underperforming compared to the MSCI USA Small-Cap Value Index at 8.97% and the Russell 2000 Value Index at 12.60% [1] - The fund's performance was positively influenced by contributions from a diverse range of businesses [1] Company Specifics - Ambac Financial Group, Inc. (NYSE:AMBC) was highlighted in the fund's investor letter, with a one-month return of 3.11% and a 52-week loss of 26.73% [2] - As of November 5, 2025, Ambac's stock closed at $8.28 per share, with a market capitalization of $384.206 million [2] - Ambac is undergoing a significant transition, having received regulatory approval to sell its legacy financial guarantee business to Oaktree Capital Management, resulting in a substantial cash inflow [3] - Following the sale, Ambac announced plans to acquire ArmadaCare for $250 million, primarily funded by the proceeds from the aforementioned sale [3]

Performance Overview - The Third Avenue Small-Cap Value Fund returned 7.18% in Q3 2025, underperforming the MSCI USA Small Cap Value Index at 8.97% and the Russell 2000 Value Index at 12.60% [2] - The Fund's annualized returns for the trailing three-year and five-year periods were 15.11% and 16.09%, respectively [2] Positive Contributors - Supernus Pharmaceuticals (SUPN) was the largest positive contributor, benefiting from a strong financial position, profitability, an expanding neurology drug portfolio, and a successful acquisition [3] - Investors Title Company (ITIC) saw positive performance due to increased real estate refinancing activity [3] - UMB Financial Corporation (UMBF) successfully integrated its acquisition of Heartland Financial, showcasing operational competence [3] Negative Contributors - Atlanta Braves Holdings (BATRA) was a negative contributor, though it is perceived to have an attractive asset base and potential for favorable resource conversion [4] - UniFirst Corporation (UNF) faced pressure to demonstrate its value proposition after rejecting an acquisition offer from Cintas Corporation (CTAS) [4] - FRP Holdings (FRPH) was impacted by a lack of confidence in government spending affecting the D.C. metro area [4] Investment Strategy - The Fund focuses on acquiring companies in transitional states, aiming to capitalize on undervalued businesses with potential for future growth [5] - Investment activity emphasizes companies that are well-financed, trading at discounts to net asset value, and have identifiable levers for value creation [6] - The Fund's turnover rate is approximately 20%, indicating a long-term investment horizon of about five years, contrasting with the average turnover of 91.7% in the small-cap value fund universe [7] Types of Investment Opportunities - The Fund identifies three broad types of investment opportunities: 1. Companies facing industry-wide headwinds that can improve through restructuring [9] 2. Companies with current economic returns that have underappreciated self-help opportunities [9] 3. Event-driven situations that offer unique return profiles through transformational changes [9] Recent Transactions - Ambac Financial (AMBC) completed the sale of its legacy financial guarantee business, leading to a significant cash inflow and a transformation towards insurance distribution [11][12] - The Fund initiated new positions in Boise Cascade (BCC) and Rogers Corporation (ROG) during the quarter, while also adding to existing positions like UniFirst Corporation (UNF) [14] Company Profiles - Boise Cascade is a leading manufacturer and distributor of building materials, facing challenges due to slowing housing activity but retaining a strong financial position [15][16] - Rogers Corporation specializes in electronic and materials technology solutions, facing growth challenges but possessing valuable intellectual property and a strong balance sheet [18][19][20]

Core Insights - The Advanced Materials and Battery Council (AMBC) has appointed former Queensland Premier Annastacia Palaszczuk as its new Chair, aiming to drive national growth in Australia's advanced materials and battery value chain [2][5] - The leadership transition is expected to enhance industry collaboration, policy advancement, and support for investment and job creation across Australia [5][6] Group 1: Leadership Changes - Annastacia Palaszczuk has been appointed as Chair of AMBC, bringing extensive experience in policy delivery and industrial development [2] - Lynnard Cucksey has been appointed as interim CEO, focusing on collaboration and practical approaches to support AMBC members [5][6] - Outgoing Chair Craig Nicol expressed confidence in the new leadership team and highlighted the significant growth of Australia's advanced materials industry during his tenure [6] Group 2: AMBC's Objectives - AMBC aims to strengthen national capability and industry scale, supporting the entire value chain from upstream resources to end-of-life recovery [6] - The organization will focus on advancing priority policy settings to facilitate growth in the battery industry [5] Group 3: Company Overview - Graphene Manufacturing Group Ltd. (GMG) is a clean-technology company that develops energy-saving and energy storage solutions using proprietary graphene production processes [7] - GMG's current focus includes scaling up commercial capabilities and securing market applications for its products, such as graphene-enhanced HVAC coatings and lubricants [8][9] - The company is collaborating with the University of Queensland to develop graphene aluminium-ion batteries and improve lithium-ion battery performance [9]

Core Insights - Ambac Financial Group, Inc. (AMBC) is a financial services company focused on providing financial guarantees and risk management solutions primarily in the United States [1] Company Actions - On October 1, 2025, CEO LeBlanc Claude purchased 25,000 shares of AMBC at $8.54 per share, increasing his total ownership to 1,021,777 shares, indicating confidence in the company's future despite current financial challenges [2][6] - AMBC held an M&A call on September 30, 2025, with key leaders and Truist Securities, Inc. participants, aimed at engaging with investors and discussing strategic initiatives [3] Financial Metrics - AMBC has a negative price-to-earnings (P/E) ratio of -0.61, while its price-to-sales ratio is 1.27, indicating that investors are paying $1.27 for every dollar of sales [4] - The enterprise value to sales ratio is 1.62, reflecting the company's valuation relative to its sales, suggesting stable sales valuation despite earnings challenges [4] - The enterprise value to operating cash flow ratio is -11.53, and the earnings yield is -1.64%, highlighting difficulties in generating cash flow from operations [5] - AMBC's debt-to-equity ratio is 0.17, indicating a low level of debt compared to equity, and a current ratio of 1.86 suggests a strong ability to cover short-term liabilities with short-term assets [5][6]