AMBC

Ambac Financial ($AMBC) CEO Continues Buying Amid 48% Stock Decline, Business Transformation Nears Completion

10/01/2025 21:03

Ambac Financial Group ($AMBC) is sending strikingly contrasting signals to investors. While the stock has plummeted 48% from $17.42 to $8.94 over the past 15 months, company insiders who know the business best have been aggressively buying shares, creating an intriguing investment puzzle. Ambac Financial Group, formerly a leader in financial guarantee insurance, is currently transforming into a specialty property & casualty (P&C) insurance company. With a market cap of $377 million, this small-cap insurer has been restructuring since the 2008 financial crisis, working to eliminate legacy risks while building new growth drivers through subsidiaries like Cirrata and Everspan in the specialty insurance space. Most notable is CEO Claude LeBlanc's consistent buying pattern. He purchased 25,000 shares for $268,950 on August 7, 2024, followed by 40,000 shares for $260,000 on May 14, 2025, another 25,000 shares for $175,750 on August 11, 2025, and most recently 25,000 shares for $213,500 on October 1, 2025. Remarkably, he continued buying even when shares traded in the $6-7 range, demonstrating unwavering confidence. Director Michael Price has also been aggressive, purchasing a total of 166,298 shares across two transactions in August 2024 and May 2025. This insider buying reflects the company's structural transformation. Ambac is finalizing the sale of its legacy financial guarantee business, Ambac Assurance Corporation, to Oaktree Capital Management, which will transform the company into a pure-play P&C insurer. The October 1, 2025 CEO purchase was actually related to the settlement of Deferred Share Units (DSUs) triggered by this transaction's closing. Financially, the company shows mixed results typical of a business in transition. Q1 2025 specialty P&C premium production surged 70% to $318 million, with Cirrata's adjusted EBITDA more than doubling to $12.1 million year-over-year. However, one-time costs from legacy business cleanup have resulted in near-term losses, contributing to the stock's underperformance. Key metrics investors should monitor include: First, pure P&C insurance performance after the Oaktree transaction completes in Q3 2025. Second, management's guidance to achieve $80-90 million adjusted EBITDA by 2028. Third, Everspan's combined ratio improvement from the current 102.1% through expense ratio optimization. Risks include intensifying competition in specialty insurance markets, potential underwriting losses in new business lines due to limited experience, and liquidity constraints typical of small-cap stocks that can amplify volatility. Despite these challenges, positive factors are converging. Analysts maintain 'strong buy' ratings with 12-month price targets of $15-17, suggesting 68-90% upside potential. Most importantly, the persistent and aggressive insider buying, particularly by the CEO during the stock's weakest periods, strongly suggests the current price significantly undervalues the company's intrinsic worth. Looking ahead, near-term volatility will likely persist until the business transformation completes. However, re-rating momentum could emerge in Q4 2025-Q1 2026 as legacy risks are eliminated and specialty insurance growth becomes evident. If management's 2028 adjusted EBITDA targets appear achievable, the current undervaluation could represent a compelling investment opportunity for patient investors willing to navigate the transformation period.