NEW YORK--(BUSINESS WIRE)--Ambac Financial Group, Inc. (NYSE: AMBC), a financial services holding company, today announced, consistent with its platform diversification strategy, that it has entered into an agreement to acquire 80% of the membership interests of each of Xchange Benefits, LLC and Xchange Affinity Underwriting Agency, LLC, subject to customary closing conditions. Xchange, whose management principals will retain the remaining 20% of the company, will continue operating under its existing brand as it seeks to expand its underwriting partnership with its key carriers in connection with its planned growth strategy.
Xchange is a property and casualty Managing General Underwriter (MGU), specializing in accident and health insurance. Since its inception in 2010, Xchange has built a successful business supported by major insurers, reinsurers, third party administrators, brokers and producers. The acquisition by Ambac will enable Xchange to realize its significant growth potential through geographic and product diversification, accelerating its strategic plans.
Claude LeBlanc, Ambac’s President and CEO, stated: “As part of our broader specialty program insurance strategy we have been actively pursuing acquisition opportunities in the MGU and Managing General Agent (MGA) sector. We expect the acquisition of Xchange to be immediately accretive to Ambac and allow us to use our net operating losses. We also believe that the acquisition furthers Ambac’s commitment to unlocking long-term shareholder value by generating recurring fee-based income with attractive risk adjusted returns. The Xchange team has delivered outstanding underwriting results for their carrier partners and we look forward to welcoming the team to the Ambac family.”
Peter McGuire, Xchange’s President and Chief Executive Officer, stated, “We are thrilled to be joining the Ambac family as they transition to the specialty program market. This transaction provides us with a strategic partner plus access to permanent capital that will accelerate our planned growth strategy and Ambac will benefit from a proven, established niche MGU with a history of consistently strong operating results and carrier support.”
Ambac’s platform diversification strategy includes building a dynamic platform with both admitted and non-admitted carriers, as well as MGAs and MGUs.
Ambac continues to progress Pillar I of its specialty insurance strategy via the Everspan Group platform which will include participatory fronting admitted and non-admitted specialty program carriers. Everspan Insurance Company (“Everspan Insurance”), an admitted carrier, was recently redomesticated to Arizona and has received approval for broader property and casualty licenses from the Arizona Department of Insurance and Financial Institutions. Additionally, the Everspan Group also successfully established a new surplus lines carrier, Everspan Indemnity Insurance Company, also domiciled in Arizona.
Ambac’s Pillar II strategy is focused on fee-based MGA and MGU businesses. The acquisition of Xchange marks the first step towards the development of Pillar II, which we expect to expand in the coming year via acquisitions and organic growth platforms.
Debevoise & Plimpton LLP acted as legal advisor and UBS Investment Bank acted as financial adviser to Ambac on the transaction.
About Xchange
Founded in 2010, the Xchange Group is a diverse group of business units focused on the global insurance and reinsurance industry. Led by a team who have industry leading experience, Xchange Group, underwrites, consults, creates products, creates retail distribution, structures risk, transacts reinsurance, advises on capital deployment and most importantly, listens to their clients.
About Ambac
Ambac Financial Group, Inc. (“Ambac” or “AFG”), headquartered in New York City, is a financial services holding company whose principal subsidiaries, Ambac Assurance Corporation and Ambac Assurance UK Limited, are financial guarantee insurance companies currently in runoff. Outstanding policies include financial guarantees of public finance and structured finance obligations in the public and private sectors globally. Ambac’s common stock trades on the New York Stock Exchange under the symbol “AMBC”. The Amended and Restated Certificate of Incorporation of Ambac contains substantial restrictions on the ability to transfer Ambac’s common stock. Subject to limited exceptions, any attempted transfer of common stock shall be prohibited and void to the extent that, as a result of such transfer (or any series of transfers of which such transfer is a part), any person or group of persons shall become a holder of 5% or more of Ambac’s common stock or a holder of 5% or more of Ambac’s common stock increases its ownership interest. Ambac is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, we use our website to convey information about our businesses, including the anticipated release of quarterly financial results, quarterly financial, statistical and business-related information, and the posting of updates to the status of certain residential mortgage backed securities litigations. For more information, please go to www.ambac.com.
