What changed in this filing

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Item 1A. Risk Factors

2023-11-08 compared with 2023-08-09 · 26 added, 31 removed, 1 unchanged (98% of the section changed)

See the risk factors set forth in Part I, “Item 1A.

Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Except as set forth below, there have been no material changes to the risk factors disclosed in such Annual Report on Form 10-K or Part II, “Item 1A.

Risk Factors” of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

From July 1, 2023, the Company’s interest in Sound Point is subject to the risks normally associated with a minority interest.

Since the Company holds a minority interest in Sound Point after the closing of the Sound Point Transaction, it is unable to control the business, management or policies of Sound Point.

For example, the Company is not be able to control the timing or amount of distributions from Sound Point and is not involved on a day-to-day basis with Sound Point’s operations or its decision-making with respect to its investment, reporting, internal control, legal, compliance or risk functions.

In most cases, the Company will be bound by the decisions made by the Managing Partner and Chief Investment Officer, other members of management and the Board of Managers of Sound Point.

In the event that the Managing Partner and Chief Investment Officer, other members of management and the Board of Managers of Sound Point have interests, objectives and incentives that differ from those of the Company, there can be no assurance that the decisions they make will be aligned with the interests of the Company.

Decisions made by the Managing Partner and Chief Investment Officer, other members of management and the Board of Managers of Sound Point not in the Company’s interest could have a material adverse effect on the Company’s interest in Sound Point and/or its investments in Sound Point funds, other vehicles and separately managed accounts.

An inability to obtain accurate and timely financial information from Sound Point or AHP may impair the Company’s ability to comply with reporting obligations under federal securities law.

The Company will be reliant on Sound Point and AHP to provide accurate and timely financial reporting that will allow the Company to timely prepare and file its own financial statements in accordance with GAAP and in compliance with SEC regulations and New York Stock Exchange listing rules.

As private companies, Sound Point and AHP are not subject to the reporting requirements of the Exchange Act and historically have not been required to prepare their financial statements in accordance with generally accepted accounting principles in the United States or in compliance with the SEC’s accounting regulations.

The Company expects to report its investments in Sound Point, the Sound Point funds and AHP funds on a one-quarter lag.

While each of Sound Point, AHP and their respective related parties have agreed to provide to the Company all financial information necessary to complete and file its periodic SEC reports on a timely basis, any failure by Sound Point, AHP or their respective related parties to provide the Company with accurate and timely financial information could result in a delay in the Company’s timely reporting of its results of operations for any period or it not filing one or more periodic reports with the SEC on time or inaccuracies in its financial statements.

The Company’s investments in Sound Point are subject to the risks of Sound Point’s business.

Sound Point’s business operates in highly competitive markets.

Sound Point competes with many other firms in every aspect of the asset management industry, including raising funds, seeking investments, and hiring and retaining professionals.

Sound Point’s ability to increase and retain AUM is directly related to the performance of the assets it manages as measured against market averages and the performance of its competitors.

Some of Sound Point’s competitors may have a lower cost of

funds and access to funding and other resources that are not available to Sound Point.

In addition, some of Sound Point’s competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than Sound Point does.

Furthermore, Sound Point may lose investment opportunities if it does not match its competitors’ pricing, terms and structure.

The loss of such investment opportunities may limit Sound Point’s ability to grow or cause it to have to shrink the size of its portfolio, which could decrease its earnings.

If Sound Point matches its competitors’ pricing, terms and structure, it may experience decreased earnings and increased risk of investment losses.

Sound Point is dependent on certain key personnel, including Sound Point’s Managing Partner and Chief Investment Officer, and its future success depends on their continued service.

The departure of any of Sound Point’s key personnel for any reason could have a material adverse effect on Sound Point’s business, financial condition or results of operations and, consequently, the Company’s interest in Sound Point and/or its investments in Sound Point funds, other vehicles and separately managed accounts.

Sound Point operates in a highly regulated industry and, as a registered investment adviser, is subject to the provisions of the Investment Advisers Act of 1940, as amended.

Sound Point is, from time to time, subject to formal and informal examinations, investigations, inquiries, audits and reviews from numerous regulatory authorities both in response to issues and questions raised in such examinations or investigations and in connection with the changing priorities of the applicable regulatory authorities across the market in general.

As a result, there can be no assurance that Sound Point will not become subject to possible enforcement actions.

Sound Point and its principals and employees could also be named as defendants in, or otherwise become involved in, a regulatory action or litigation.

Any such regulatory action or litigation could be disruptive, time-consuming, expensive and lead to negative financial and reputational consequences that have a material adverse effect on Sound Point’s business, financial condition or results of operations and, consequently, the Company’s interest in Sound Point and/or its investments in Sound Point funds, other vehicles and separately managed accounts.

Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (2022 Annual Report) and Part II, “Item 1A.

Risk Factors” for the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (Q2 Quarterly Report).

Except for the risk factors entitled, “Expansion of the categories and types of the Company’s investments (including those accounted for as CIVs) may expose it to increased credit, interest rate, liquidity and other risks” and “AGL, AG Re and AGRO may become subject to taxes in Bermuda after March 2035, which may adversely affect the Company’s future results of operations and on an investment in the Company,” set forth in the 2022 Annual Report, which are removed and replaced in their entirety as set forth below, there have been no material changes to the risk factors disclosed in the 2022 Annual Report or the Q2 Quarterly Report during the nine months ended September 30, 2023.

Expansion of the categories and types of the Company’s investments (including those accounted for as CIVs) , i ncluding allocations of investments to Sound Point and exclusivity arrangement with Sound Point may expose it to increased credit, interest rate, liquidity and other risks.

The Company is using Sound Point’s investment knowledge and experience to expand the categories and types of its alternative investments (including those accounted for as CIVs) by:

(a) allocating $1 billion of capital in Sound Point managed funds;

(b) redeploying initial amounts allocated to Sound Point in future Sound Point funds;

and (c) having Sound Point serve as the U.S.

Insurance Subsidiaries’ sole alternative credit manager.

This expansion of categories and types of investments, allocations to Sound Point and exclusivity arrangement with Sound Point may increase the credit, interest rate and liquidity risk in the Company’s investments (including those accounted for as CIVs).

In addition, the fair value of most of these assets are reported in results of operations and may be more volatile than other investments made by the Company.

As a result of the Company’s expansion of the categories and types of its investments, as of September 30, 2023, the U.S.

Insurance Subsidiaries had investments in Sound Point managed funds with a fair value of $378 million.

In addition, the Company had $252 million of other non-Sound Point alternative investments reported in the consolidated financial statements.

This expansion also has resulted in the Company investing a portion of its portfolio in assets that are less liquid than some of its other investments, and so may increase the risks described under “— Operational Risks — The ability of AGL and its subsidiaries to meet their liquidity needs may be limited”.

Expanding the categories and types of Company investments (including those accounted for as CIVs), allocations to Sound Point and exclusivity arrangement with Sound Point may also expose the Company to other types of risks, including reputational risks.

AGL, AG Re and AGRO may become subject to taxes in Bermuda, which may adversely affect the Company’s future results of operations and an investment in the Company.

The Bermuda Minister of Finance, under Bermuda’s Exempted Undertakings Tax Protection Act 1966, as amended, has given AGL, AG Re and AGRO an assurance that if any legislation is enacted in Bermuda that would impose tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then subject to certain limitations the imposition of any such tax will not be applicable to AGL, AG Re or AGRO, or any of AGL’s or its subsidiaries’ operations, stocks, debentures or other obligations until March 31, 2035.

Given the limited duration of the Minister of Finance’s assurance, the Company cannot be certain that it will not be subject to Bermuda tax after March 31, 2035.

Further, on August 8, 2023, the Bermuda Government issued the first of a series of public consultation papers as part of its considerations on the introduction of a corporate income tax that would be taken into account in calculating the effective

tax rate of Bermuda businesses under the OECD’s global anti-base erosion (GloBE) rules.

The second public consultation paper issued October 8, 2023, indicates that the Bermuda Government believes it is reasonable and proportionate for any new Bermuda corporate income tax regime to supersede any existing tax assurance certificates held by entities within the scope of the new Bermuda corporate income tax.

Under the current proposal, Bermuda corporate income tax would apply only to large multinational enterprises (MNEs), as defined in the GloBE rules, with EUR 750 million or more in total global revenue in at least two of the previous four accounting periods.

The proposed Bermuda corporate income tax legislation is currently anticipated to be effective for tax years beginning on or after January 1, 2025.

The Bermuda Government is considering if amendments are necessary to the existing tax assurance certificate regime to ensure that tax may be collected in Bermuda from entities which are subject to the proposed Bermuda corporate income tax regime.

Although we cannot predict when or if any new Bermuda corporate income tax law will be adopted or will become effective, the imposition of a Bermuda corporate income tax could, if applicable to the Company (or any Bermuda incorporated subsidiary of the Company), have an adverse effect on the Company's financial condition and results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors