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Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-28 · 437 added, 600 removed, 1031 unchanged (50% of the section changed)

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Discussion related to the results of operations for the Company’s comparison of 2023 results to 2022 results have been omitted in this Form 10-K.

The Company’s comparison of 2022 results to 2021 results is included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 , under Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Company reports its results of operations in two distinct segments, Insurance and Asset Management, consistent with the manner in which the Company’s chief operating decision maker (CODM) reviews the business to assess performance and allocate resources.

The Company’s Corporate division and other activities (including financial guaranty VIEs (FG VIEs) and consolidated investment vehicles (CIVs)) are presented separately.

The Company’s comparison of 2023 results to 2022 results is included in the Company’s A nnual Report on Form 10-K for the fiscal year ended December 31, 2023 , under Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Company reports its results of operations in two distinct segments, Insurance and Asset Management, consistent with the manner in which the Company’s chief operating decision maker reviews the business to assess performance and allocate resources.

The Company’s Corporate division and other activities (including financial guaranty VIEs (FG VIEs) and CIVs) are presented separately.

In the Insurance segment, the Company provides credit protection products to the U.S.

public finance (including infrastructure) and structured finance markets.

Until July 1, 2023, the Company served as investment advisor to CLO and opportunity funds, through AssuredIM LLC and its investment management affiliates (together with AssuredIM LLC, AssuredIM).

Beginning July 1, 2023, the Company participates in the asset management business through its ownership interest in Sound Point as described below.

The Corporate division consists primarily of interest expense on the debt of Assured Guaranty US Holdings Inc.

(AGUS) and Assured Guaranty Municipal Holdings Inc.

(AGMH) (the U.S.

Holding Companies), as well as other operating expenses attributed to holding company activities, including administrative services performed by certain subsidiaries for the holding companies.

Other activities include the effect of consolidating FG VIEs and CIVs (FG VIE and CIV consolidation).

See Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation, and Note 2, Segment Information.

Asset Management Transactions

On July 1, 2023, Assured Guaranty contributed to Sound Point, LP the AssuredIM Contributed Business, as contemplated by the Transaction Agreement entered into with Sound Point on April 5, 2023.

As a result, Sound Point now manages CLOs consisting of $35.2 billion in AUM as of December 31, 2023, making Sound Point the fifth largest CLO manager globally by AUM (based on December 31, 2023 CreditFlux CLO manager rankings).

Assured Guaranty received, subject to certain potential post-closing adjustments, approximately 30% of the common interests in Sound Point, LP, and certain other interests in Sound Point.

In addition, in accordance with the terms of the Letter Agreement, effective July 1, 2023, the U.S.

Insurance Subsidiaries, (i) engaged Sound Point as their sole alternative credit manager, and (ii) transitioned to Sound Point the management of certain existing alternative investments and related commitments.

The Letter Agreement also provides that, in the first two years of Sound Point’s engagement, the U.S.

Insurance Subsidiaries, including through AGAS, would, subject to regulatory approval, make new investments in funds, other vehicles and separately managed accounts managed by Sound Point which, when aggregated with the alternative investments and commitments transitioned from AssuredIM and any reinvestments (collectively, Sound Point Investments), and investments made by other Assured Guaranty affiliates, will total $1 billion.

The Letter Agreement contemplates a long-term investment partnership between Sound Point and Assured Guaranty, whereby the U.S.

Insurance Subsidiaries have agreed to reinvest all returns of capital from Sound Point Investments for a period of 15 years, until July 1, 2038.

Similarly, the Letter Agreement provides for reinvestment by the U.S.

Insurance Subsidiaries of all gains and dividends from Sound Point Investments in the first two years of Sound Point’s engagement, and reinvestment of half of all

such gains and dividends thereafter until July 1, 2033 (the transactions contemplated under the Transaction Agreement and the Letter Agreement, the Sound Point Transaction).

On July 1, 2028, the U.S.

Insurance Subsidiaries may choose to reduce the amounts invested or required to be reinvested in certain Sound Point Investments under the Letter Agreement, subject to adjustment in Assured Guaranty’s portion of its ownership interest in Sound Point.

To the extent not required to be reinvested by the Letter Agreement, all proceeds from Sound Point Investments received in accordance with their operative investment documents can be distributed to the U.S.

Insurance Subsidiaries.

See Item 8, Financial Statements and Supplementary Data, Note 7, Investments and Cash.

In July 2023, Assured Guaranty sold all of its equity interests in Assured Healthcare Partners LLC (AHP), which manages healthcare funds, to an entity owned and controlled by the managing partner of AHP (AHP Transaction).

In connection with the AHP Transaction, the Company agreed to remain a strategic investor in certain AHP managed funds, is retaining its portion of certain carried interest in certain AHP managed funds and received other consideration.

The Company participates in the asset management business through its ownership interest in Sound Point.

Business, Asset Management, and Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation.

The Corporate division primarily consists of the results of holding companies that have issued public equity or debt.

The Other category in the segment tables below primarily includes the effect of consolidating FG VIEs and CIVs (FG VIE and CIV consolidation).

See Item 8, Financial Statements and Supplementary Data, Note 2, Segment Information.

Economic Environment

Real gross domestic product (GDP) increased 2.5% in 2023, compared to an increase of 1.9% in 2022, according to the advance estimate released by the U.S.

Real gross domestic product (GDP) increased 2.8% in 2024, compared to an increase of 2.9% in 2023, according to the second estimate released by the U.S.

Bureau of Economic Analysis (BEA).

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At the end of December 2024, the U.S.

unemployment rate, seasonally adjusted, stood at 3.7%, near where it started the year at 3.5%, and down from the COVID-19 pandemic high of 14.7% in April 2020.

unemployment rate, seasonally adjusted, stood at 4.1%, higher than where it started the year at 3.8%.

The Company believes a more robust economy makes it less likely that obligors whose obligations it guarantees will default.

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Bureau of Labor Statistics, the inflation rate in the U.S.

before seasonal adjustment for the 12-month period ending December 2023, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), was 3.4%, as compared to 6.5% for the 12-month period ending December 2022.

According to the U.K.’s Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs (CPIH) was 4.2% in the 12 months through December 2023 as compared to 9.2% for the 12 months through December 2022.

Consumer price inflation in the U.K.

increases reported net par outstanding for certain U.K exposures with approximately $22.9 billion of net par outstanding as of December 31, 2023, and also increases projected future installment premiums on the portion of such exposure that pays at least a portion of the premium on an installment basis over the term of the exposure.

With the Federal Open Market Committee (FOMC) acknowledging the need to combat inflation, in March 2022 the FOMC began again raising the target range for the federal funds rate and stated that it would reduce its holdings of treasury securities and agency debt and agency mortgage-backed securities.

From March 2022 through July 2023, the FOMC raised the federal funds rate from a target range of 0% to 0.25% to a range of 5.25% to 5.50%.

The FOMC has repeatedly declared that it seeks to achieve maximum employment, and inflation at the rate of 2% over the longer run.

In determining the extent to which additional policy firming may be appropriate to return inflation to 2% over time, the FOMC indicated that it will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.

Since its July 2023 meeting, the FOMC has maintained the federal funds rate at 5.25% to 5.50%, including through its most recent meeting held January 30-31, 2024, stating that it would continue to assess additional information and its implications for monetary policy.

The level and direction of interest rates and credit spreads impact the Company in numerous ways.

On the one hand, higher interest rates may reduce the fair value of fixed-maturity securities currently held in the Company’s investment portfolio, dampen municipal bond issuance and negatively impact the finances of some of the obligors whose payments the Company insures.

On the other hand, higher interest rates are often accompanied by wider spreads, which may make the Company’s credit enhancement products more attractive in the U.S.

municipal bond market and increase the level of premiums it can charge for those products.

before seasonal adjustment for the 12-month period ending December 2024, as measured by the Consumer Price Index for All Urban Consumers, was 2.9%, as compared to 3.4% for the 12-month period ending December 2023.

According to the U.K.

Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs rose 3.5% for the 12 months through December 2024, as compared to 4.2% for the 12 months through December 2023.

The Company believes that higher inflation may put pressure on the budgets of obligors whose obligations it guarantees and make defaults more likely.

In addition, consumer price inflation in the U.K.

increases reported net par outstanding for certain U.K.

exposures with approximately $23.2 billion of net par outstanding as of December 31, 2024, and also increases projected future installment premiums on the portion of such exposure that pays at least a portion of the premium on an installment basis over the term of the exposure.

At its September 17-18, 2024 meeting, the Federal Open Market Committee (FOMC) decided to lower the federal funds rate, which was a reversal of the rate increases it had initiated in March 2022 to combat inflation.

The federal funds rate is the rate at which banks lend to and borrow from each other, is the benchmark for most interest rates, and tends to influence mortgage rates.

As the federal funds rate decreases, interest rates, including mortgage rates, tend to decrease.

From September 2024 through December 2024, the FOMC lowered the federal funds rate from a target range of 5.25% to 5.50% to a range of 4.25% to 4.50%.

At its January 28-29, 2025 meeting, the FOMC held the federal funds at a range of 4.25% to 4.50%, stating

that it seeks to achieve maximum employment and inflation at the rate of 2% over the longer run, and that the risks to achieving its employment and inflation goals are roughly in balance.

In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the FOMC has indicated it will carefully assess incoming data, the evolving outlook, and the balance of risks.

These assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

The level and direction of change of interest rates and credit spreads impact the Company in numerous ways.

On the one hand, lower interest rates may increase the fair value of fixed-maturity securities currently held in the Company’s investment portfolio, encourage municipal bond issuance and positively impact the finances of some of the obligors whose payments the Company insures.

On the other hand, lower interest rates may decrease the base on which the Company charges up-front premium on most new U.S.

municipal bond transactions and may also decrease amounts the Company can earn on fixed-maturity securities newly acquired for its investment portfolio.

Lower interest rates also are often accompanied by narrower spreads, which may also decrease the level of premiums the Company can charge for those products.

The 30-year AAA Municipal Market Data (MMD) rate is a measure of interest rates in the Company’s largest financial guaranty insurance market, U.S.

public finance.

The MMD rate averaged 3.65% for 2023, higher than the 3.00% and 1.54% average of 2022 and 2021, respectively.

Meanwhile, the difference, or credit spread, between the 30-year BBB-rated general obligation relative to the 30-year AAA MMD averaged 101 basis points (bps) in 2023.

This represented an increase from an average of 90 bps and 70 bps in 2022 and 2021, respectively.

The Company believes that, over time, wider spreads could permit it to increase its premium rates on new business, and higher interest rates may also increase the amount the Company can earn on its largely fixed-maturity securities.

Additionally, the Company believes that higher interest rates are discouraging some homeowners from moving as many are locked into lower mortgage interest rates at the homes in which they reside, which, in turn, is restricting housing inventory and leading to an increase in home prices as demand outpaces supply.

The increase in housing prices may benefit distressed RMBS the Company insures.

The National Association of Realtors reported that year-over-year existing-home sales declined 6.2% from December 2022 to December 2023, while the median existing-home sales price increased 4.4% from December 2022 ($366,500) to December 2023 ($382,600).

The MMD rate averaged 3.68% for 2024, similar to the 3.65% rate in 2023 but higher than the 3.00% average for 2022.

Meanwhile, the difference, or credit spread, between the 30-year BBB-rated general obligation relative to the 30-year AAA MMD averaged 90 basis points (bps) in 2024, which is narrower compared to the 101 bps average for 2023, but the same as the 90 bps average for 2022.

The Company believes that wider spreads could permit it to increase its premium rates on new business.

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.85% as of December 26, 2024, near the 30-year mortgage rate of 6.61% from one year ago.

The Company believes that restricted housing inventory continues to influence home prices where demand outpaces supply.

Higher housing prices may benefit distressed RMBS the Company insures.

The National Association of Realtors reported that year-over-year existing-home sales increased 9.3% from December 2023 to December 2024, and that the median existing-home sales price also increased from December 2023 ($381,400) to December 2024 ($404,400), a 6.0% increase.

Key Business Strategies

The Company continually evaluates its business strategies and is currently pursuing key business strategies in three areas:

The Company continually evaluates its business strategies and is currently pursuing key business strategies in four areas:

(i) insurance;

(ii) asset management and alternative investments;

and (iii) capital management.

The Company seeks to grow the insurance business through new business production, acquisitions of legacy financial guarantors or reinsurance of their insured portfolios, and to continue to mitigate losses in its current insured portfolio.

(ii) asset management, (iii) alternative investments;

and (iv) capital management.

The Company seeks to grow the insurance business through new business production in established sectors and jurisdictions and by entering into new markets and classes of business.

The Company also furthers its insurance strategy by mitigating losses in its insured portfolio.

Growth of the Insured Portfolio

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The low interest rate environment and tight U.S.

municipal credit spreads from when the financial crisis began in 2008 through early 2020 dampened demand for bond insurance compared to the levels before the financial crisis.

municipal credit spreads from when the financial crisis began in 2008 through early 2020 dampened demand for bond insurance compared with the levels before the financial crisis.

After the onset of the COVID-19 pandemic in early 2020, credit spreads initially widened as a result of market concerns about the impact of the COVID-19 pandemic on some municipal credits, thereby improving demand for financial guaranty insurance even in a low interest rate environment, before narrowing again in 2022.

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The amounts in the table are those reported by Thomson Reuters.

The table excludes Corporate-CUSIP transactions insured by Assured Guaranty, certain of which the Company also considers to be public finance business.

The Company also considers opportunities to acquire financial guaranty portfolios, whether by acquiring financial guarantors who are no longer actively writing new business or their insured portfolios, generally through reinsurance.

The amounts in the table are those reported by London Stock Exchange Group.

The table excludes private placements and Corporate-CUSIP transactions insured by Assured Guaranty, certain of which the Company also considers to be public finance business.

The Company also considers opportunities to acquire financial guaranty portfolios, whether by acquiring financial guarantors that are no longer actively writing new business or their insured portfolios, generally through reinsurance or novations.

These transactions enable the Company to improve its future earnings and deploy excess capital.

Merger of the U.S.

Insurance Subsidiaries

On August 1, 2024, AGM merged with and into AG, with AG as the surviving company.

Upon the merger all liabilities of AGM, including insurance policies issued or assumed by AGM, became obligations of AG.

The Company believes that Assured Guaranty’s simplified organizational and capital structure following the merger will help it grow its business.

The combined company, as compared with either AG or AGM before the merger, has a larger, more highly diversified insured portfolio, a larger investment portfolio and a larger capital base, creating a more efficient capital structure and greater claims-paying resources.

In addition, the combined company, as compared with either AG or AGM before the merger, has larger regulatory single risk limits.

Such limits are applicable to each individual financial guaranty insurer for obligations issued by a single entity and backed by a single revenue source.

Since the combined company has greater policyholder’s surplus and contingency reserves, as compared to standalone AG or AGM before the merger, the dollar amounts for its single risk limits on obligations issued by a single entity and backed by a single revenue source are also greater.

Prior to the merger, AG had been directly owned by AGUS.

As a result of the merger, effective as of August 1, 2024, AG is directly owned by AGMH, a subsidiary of AGUS.

Loss Mitigation

In an effort to avoid, reduce or recover losses and potential losses in its insurance portfolio, the Company employs a number of strategies.

In the public finance area, the Company believes its experience and the resources it is prepared to deploy, as well as its ability to provide bond insurance or other contributions as part of a solution, result in more favorable outcomes in distressed public finance situations than would be the case without its participation.

In the public finance area, the Company believes its experience and the resources it is prepared to deploy, as well as its ability to provide bond insurance or other solutions, result in more favorable outcomes in distressed public finance situations than would be the case without its participation.

This has been illustrated by the Company’s role in negotiating various agreements in connection with the restructuring of obligations of the Commonwealth of Puerto Rico and various obligations of its related authorities and public corporations, as well as Detroit, Michigan and Stockton, California.

The Company will also, where appropriate, pursue litigation to enforce its rights.

The Company will also, where appropriate, participate in litigation to enforce or defend its rights.

For example, the Company initiated a number of legal actions to enforce its rights with respect to obligations of the Commonwealth of Puerto Rico and various obligations of its related authorities and public corporations.

After over five years of negotiations, 2022 was a turning point for resolving a substantial portion of the Company’s Puerto Rico exposure in accordance with four orders entered by the United States District Court of the District of Puerto Rico (Federal District Court of Puerto Rico) related to the Company’s exposure to all defaulting Puerto Rico credits except PREPA (2022 Puerto Rico Resolutions) as discussed in Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure — Exposure to Puerto Rico.

As a result of the 2022 Puerto Rico Resolutions, the Company’s obligations under its insurance policies covering debt of the Puerto Rico Convention Center District Authority (PRCCDA) and Puerto Rico Infrastructure Authority (PRIFA) were extinguished, and its insurance exposure to Puerto Rico general obligations (GO) bonds, Public Buildings Authority (PBA) bonds and Puerto Rico Highway and Transportation Authority (PRHTA) bonds was greatly reduced.

The Company believes the 2022 Puerto Rico Resolutions mark significant milestones in its Puerto Rico loss mitigation efforts.

In connection with the 2022 Puerto Rico Resolutions, the Company received substantial amounts of cash, new general obligation bonds (New GO Bonds) and new bonds backed by toll revenues (Toll Bonds, and together with New GO Bonds, New Recovery Bonds) and contingent

value instruments (CVIs) associated with its direct exposures.

The Company has sold some of the New Recovery Bonds and CVIs it had received in connection with the 2022 Puerto Rico Resolutions and may continue to sell amounts it still retains, subject to market conditions.

The Company continues to work to resolve its remaining unresolved defaulted Puerto Rico exposure, PREPA.

For more information about developments in Puerto Rico and related recovery litigation being pursued by the Company, see Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure, and the Insured Portfolio section below.

The Company is, and for several years has been, working with the servicers of some of the RMBS transactions it insures to encourage the servicers to provide alternatives to distressed borrowers that will encourage them to continue making payments on their loans to help improve the performance of the related RMBS.

In addition, the Company successfully defended claims brought by Lehman Brothers International (Europe) (in administration) (LBIE) and prevailed in its counterclaim against LBIE;

following the exhaustion of LBIE’s appeals, the Company will recognize a gain in the first quarter of 2025 of approximately $103 million, which represents the full satisfaction of the judgment it was awarded and its claims for attorneys’ fees, expenses and interest in connection with this litigation.

See, Item 8, Financial Statements and Supplementary Data, Note 17, Contingencies, Litigation, for additional information.

The Company is, and for several years has been, working with the servicers of some of the U.S.

RMBS transactions it insures to encourage the servicers to provide alternatives to distressed borrowers that will encourage them to continue making payments on their loans to help improve the performance of the related RMBS.

For public finance credits, the Company’s surveillance function monitors and proactively engages with the distressed credits to offer assistance aimed to improve operations and financial performance, including access to external consultants and other industry experts.

The Company may also purchase attractively priced obligations, including BIG obligations, that it has insured and for which it had expected losses to be paid, in order to mitigate the economic effect of insured losses (Loss Mitigation Securities).

The fair value of Loss Mitigation Securities as of December 31, 2024 (excluding the value of the Company’s insurance) was $479 million.

In some instances, the terms of the Company’s policy give it the option to pay principal on an accelerated basis on an obligation on which it has paid a claim, thereby reducing the amount of guaranteed interest due in the future.

In some instances, the terms of the Company’s policy or the terms of certain workout orders and resolutions give it the option to pay principal on an accelerated basis on an obligation on which it has paid a claim, thereby reducing the amount of guaranteed interest due in the future.

The Company has at times exercised this option, which uses cash but reduces projected future losses.

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Refunding bonds may provide the issuer with payment relief.

Asset Management and Alternative Investments

Asset Management

Until July 1, 2023, the Company pursued its asset management strategy through AssuredIM.

With the consummation of the Sound Point Transaction and AHP Transaction, effective as of July 1, 2023, the Company participates in the asset management business through its ownership interest in Sound Point, and no longer directly manages investments for third parties.The Company’s ownership interest in Sound Point furthers its strategy of participating in a fee-based earnings stream independent of the risk-based premiums generated by its financial guaranty business.

Upon the closing of the transaction with Sound Point (Sound Point Transaction) and the AHP Transaction, effective as of July 1, 2023, the Company participates in the asset management business through its ownership interest in Sound Point, and no longer directly manages investments for third parties.

The Company’s ownership interest in Sound Point furthers its strategy of participating in a fee-based earnings stream independent of the risk-based premiums generated by its financial guaranty business.

The Sound Point business was strengthened by the addition of AssuredIM’s AUM (excluding AUM relating to AHP).

See Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation, for a description of the Sound Point Transaction.

The Company expects its relationship with Sound Point to also enhance its alternative investment opportunities.

Upon closing of the Sound Point Transaction and the AHP Transaction in July, the Company has increased the aggregate amount it has agreed to invest in alternative investments to $1.5 billion, including $1 billion in Sound Point managed investments, subject to regulatory approval.

Of the $1.5 billion, the U.S.

Insurance Subsidiaries through their jointly owned investment subsidiary, AGAS, are authorized to invest up to $750 million plus previously distributed gains of $108 million for a total of $858 million as of December 31, 2023.

As of December 31, 2023, AGAS commitments to funds managed by Sound Point and AHP were $775 million.

See Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation, for a description of the Sound Point Transaction and the AHP Transaction.

Alternative Investments

The Company seeks to maintain an investment portfolio that supports the requirements of its insurance subsidiaries, strategic initiatives and liquidity needs, while maximizing the income it earns from such investments.

In support of that goal, the Company aims to diversify the types of investments in its portfolio.

The Company expects its relationship with Sound Point to also enhance its alternative investment opportunities and the return on its investments.

The Company has agreed to invest an aggregate amount of $1.5 billion in alternative investments, including $1 billion in Sound Point managed investments.

Capital Management

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From 2013 through February 27, 2025, the Company has repurchased 151 million common shares for approximately $5.4 billion, representing approximately 78% of the total shares outstanding at the beginning of the repurchase program in 2013.

On November 1, 2023, the AGL Board of Directors (the Board) authorized the repurchase of an additional $300 million of its common shares.

Under this and previous authorizations, as of February 27, 2024, the Company was authorized to purchase $228 million of its common shares.

On May 2, 2024 and November 8, 2024, the AGL Board of Directors (the Board) authorized the repurchase of an additional $300 million and $250 million, respectively, of the Company’s common shares.

Under this and previous authorizations, as of February 27, 2025, the remaining amount the Company was authorized to purchase was approximately $276 million of its common shares.

Shares may be repurchased from time to time in the open market or in privately negotiated transactions.

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Cumulative repurchases since the beginning of 2013 $ 5,438 151.10 35.99

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(1) Excludes commissions and excise taxes.

As of December 31, 2024, the estimated accretive effect of the cumulative repurchases of common shares since the beginning of 2013 was approximately:

$54.83 per share in shareholders’ equity attributable to AGL, $59.27 per share in adjusted operating shareholders’ equity, and $100.61 per share in adjusted book value.

In December 2023, the Maryland Insurance Administration approved, and AGC implemented, the redemption of $200 million of its shares of common stock from AGUS.

In May 2024, the NYDFS approved, and AGM implemented, the redemption of approximately $100 million of AGM’s shares of common stock from AGMH.

In connection with the merger of AGM into AG, the MIA approved, and in the third quarter of 2024 AG implemented, the redemption of approximately $300 million of AG’s shares of common stock from AGMH in exchange for cash of $167 million and the remainder in alternative investments.

The Company considers the appropriate mix of debt and equity in its capital structure.

In 2023, the Company issued $350 million in 6.125% Senior Notes due in 2028, and used the proceeds primarily to redeem $330 million of 5% Senior Notes due in 2024.

In 2021, the Company also redeemed $600 million in long-dated high coupon debt using a portion of the proceeds from the issuance of $900 million in shorter-dated, lower coupon debt.

Proceeds from the debt issuances that were not used to redeem debt were used for general corporate purposes, including share repurchases.

Since the second quarter of 2017, AGUS has also purchased $154 million in principal of AGMH’s outstanding Junior Subordinated Debentures.

The Company may choose to redeem or make additional purchases of this or other Company debt in the future.

The Company may in the future choose to issue new debt or redeem or purchase its existing debt.

See “— Liquidity and Capital Resources — AGL and its U.S.

Holding Companies”, and Item 8, Financial Statements and Supplementary Data, Note 12, Long-Term Debt and Credit Facilities.

Holding Companies.”

Executive Summary

The primary drivers of volatility in the Company’s net income include:

loss and LAE changes in fair value of credit derivatives, FG VIEs, CIVs, CVIs and CCS, as well as foreign exchange gains (losses), the level of refundings of insured obligations, changes in the value of the Company’s alternative investments, the effects of any large transactions, settlements, commutations and loss mitigation strategies, among other factors.

loss and loss adjustment expense (LAE), changes in fair value of credit derivatives, FG VIEs, CIVs, trading securities and CCS, as well as foreign exchange gains (losses), the level of refundings of insured obligations, changes in the value of the Company’s alternative investments, the effects of any large transactions, settlements, commutations and loss mitigation strategies, among other factors.

Changes in laws and regulations, among other factors, may also have a significant effect on reported net income or loss in a given reporting period.

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Weighted average diluted shares 54.3 59.6 63.9

Gain (loss) related to FG VIE and CIV consolidation included in adjusted operating income $ (21) $ (6) $ 30

Gain (loss) related to FG VIE and CIV consolidation included in adjusted operating income per share $ (0.35) $ (0.10) $ 0.41

Components of total adjusted operating income (loss)

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Adjusted book value (1) 8,592 170.12 8,765 155.92

Gain (loss) related to FG VIE and CIV consolidation included in adjusted operating shareholders’ equity 5 0.07 17 0.28

Gain (loss) related to FG VIE and CIV consolidation included in adjusted book value — — 11 0.19

Common shares outstanding (4) 50.5 56.2

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(1) See “— Non-GAAP Financial Measures” for a definition of the financial measures that were not determined in accordance with accounting principles generally accepted in the United States of America (GAAP), a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure, if available, and for additional details.

(2) In 2023, the Corporate division results include the gain on the Sound Point Transaction and AHP Transaction.

(3) Relates to the effect of consolidating FG VIEs and CIVs.

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Interest expense 91 90 81

Loss on extinguishment of debt — — 175

Amortization of deferred acquisition cost (DAC) 20 13 14

Employee compensation and benefit expenses 251 258 230

Other operating expenses 217 167 179

Employee compensation, benefit and other operating expenses:

Asset management subsidiaries 6 91 140

Insurance and other subsidiaries 355 377 285

Total expenses 446 733 536

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Effective tax rate 19.7 % (13.9) % 7.2 %

Net income attributable to AGL in 2023 was higher compared with 2022 primarily due to the following:

• the gain associated with the Sound Point Transaction and AHP Transaction, net of transaction expenses, of $222 million (pre-tax),

• the benefit related to Bermuda tax law changes of $189 million,

• foreign exchange remeasurement gains in 2023, compared with losses on 2022,

• higher income from fixed-maturity and alternative investment portfolio,

• fair value gains on credit derivatives in 2023 compared with losses in 2022, and

• fair value gains on trading securities in 2023 compared with losses in 2022.

These increases were partially offset by:

• lower net earned premiums in 2023 compared with 2022, which benefited from premium accelerations related to the 2022 Puerto Rico resolutions, and

• higher loss and LAE in 2023 compared with 2022.

Net income attributable to AGL in 2024 was lower compared with 2023 primarily due to the following:

• the gain associated with the Sound Point Transaction and AHP Transaction, net of transaction expenses, of $175 million (after-tax) in 2023,

• the benefit related to Bermuda tax law changes of $189 million in 2023,

• lower fair value gains on credit derivatives of $24 million in 2024 compared with $114 million in 2023,

• foreign exchange remeasurement losses of $27 million in 2024, compared with gains of $53 million in 2023, and

• lower other income due to the reversal of a previously recorded litigation accrual of $20 million in 2023.

These decreases were partially offset by:

• lower loss and LAE, which was a benefit of $26 million in 2024 compared with a loss of $162 million in 2023,

• a large refunded transaction which was the primary driver of the increase in net earned premiums to $403 million in 2024 from $344 million in 2023, and

• higher equity earnings from the alternative investment portfolio, which was $62 million in 2024 compared with $28 million in 2023.

The Company’s effective tax rate reflects the proportion of income recognized by each of the Company’s operating subsidiaries, with U.S.

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subsidiaries taxed at the U.K.

marginal corporate tax rate of 19% prior to March 31, 2023 and 25% after April 1 2023, the French subsidiary taxed at the French marginal corporate tax rate of 25%, and no taxes for the Company’s Bermuda subsidiaries, unless subject to U.S.

tax by election or as a U.S.

controlled foreign corporation.

In 2023, the Company also recognized a benefit of $189 million attributable to changes in Bermuda tax laws and a $19 million benefit related to a change in New York State tax law.

See Part II, Item 8, Financial Statements and Supplementary Data, Note 14, Income Taxes.

marginal corporate tax rate of 25% for periods starting April 1, 2023, and 19% for periods ending on or before March 31, 2023, and the French subsidiary taxed at the French marginal corporate tax rate of 25%, and Assured Guaranty Re Ltd.

(AG Re) and Cedar Personnel Ltd.

taxed at the Bermuda marginal corporate tax rate of 0%.

Effective January 1, 2024, the U.K.

adopted a global minimum tax rate of 15% under the Organization for Economic Co-Operation and Development’s Base Erosion and Profit Shifting Pillar Two rules.

See Part I, Item 1, Business - Regulation, and Part II, Item 8, Financial Statements and Supplementary Data, Note 13, Income Taxes.

Adjusted Operating Income

Adjusted operating income in 2024 was $389 million, compared with $648 million in 2023.

The increase was primarily due to the gain associated with the Sound Point Transaction and AHP Transaction, the benefit attributable to Bermuda tax law changes, and fair value gains on trading securities, offset in part by higher loss expense and lower net earned premiums in 2023, compared with 2022 which included premium accelerations of $133 million related to the 2022 Puerto Rico Resolutions.

The decrease was primarily due to the gain associated with the Sound Point Transaction and AHP Transaction and the benefit attributable to Bermuda tax law changes in 2023, offset in part by a benefit in loss expense in 2024 compared with a loss expense in 2023 and higher net earned premiums in 2024.

See “— Results of Operations — Reconciliation to GAAP” for the reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).

Book Value and Adjusted Book Value

Shareholders’ equity attributable to AGL as of December 31, 2023 increased compared with December 31, 2022, due to net income and unrealized gains on investments, which was partially offset by dividends and share repurchases.

Adjusted operating shareholders’ equity and adjusted book value increased primarily due to the gain on the Sound Point Transaction and AHP Transaction of $160 million after-tax and the benefit due attributable to Bermuda tax law change of $189 million, offset in part by dividends and share repurchases of $267 million, and in the case of adjusted book value, the increase was also primarily due to GWP of $357 million, partially offset by economic loss development of $164 million.

Shareholders’ equity attributable to AGL as of December 31, 2024 decreased compared with December 31, 2023, due to share repurchases of $508 million and dividends of $68 million, offset in part by net income.

Adjusted operating shareholders’ equity and adjusted book value also decreased primarily due to share repurchases and dividends, partially offset by adjusted operating income of $389 million, and in the case of adjusted book value, the increase was also due to GWP of $440 million.

See “— Non-GAAP Financial Measures” below for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity and adjusted book value.

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By some key measures, consumer price inflation in the U.S.

was higher in recent years than it has been in decades, and interest rates generally increased.

was higher in recent years than it has been in decades.

In addition, government policies such as increased deficit spending or the imposition of tariffs on imported goods could increase inflationary pressures in the future.

Consumer price inflation in the U.K.

impacts the Company directly by increasing exposure for certain index-linked U.K.

debt with par that accretes with increasing inflation, and also increasing projected future installment premiums on the portion of such exposure that pays at least some of the premium on an installment basis over the term of the exposure.

Consumer price inflation may also impact the Company indirectly to the extent it makes it more difficult for obligors to make their debt payments, and may be accompanied by higher interest rates.

Higher interest rates impact the Company in numerous other ways.

For example, higher interest rates are often accompanied by wider credit spreads, which may make the Company’s credit enhancement products more attractive in the market and increase the level of premiums it can charge for that product.

Despite the recent increases in interest rates since 2022, the pace of credit spread widening was more modest and market penetration of municipal bond insurance in the U.S.

public finance market remained relatively flat compared to 2021 when interest rates were lower.

Over time, higher interest rates also increase the amount the Company can earn on its largely fixed-maturity investment portfolio.

However, higher interest rates may, in turn, reduce the fair value of its largely fixed-rate fixed-maturity investment portfolio, dampen municipal bond issuance and negatively impact the finances of some insured obligors.

can impact the Company directly by increasing exposure for certain index-linked U.K.

debt with par that accretes based on inflation, and also by increasing projected future installment premiums on the portion of such exposure that pays at least some of the premium on an installment basis over the term of the exposure.

Consumer price inflation may also impact the Company indirectly to the extent it makes it more difficult for obligors to make their debt payments.

See “— Overview — Economic Environment.”

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The Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, and have identified no material direct exposure to Ukraine or Russia.

In fact, the Company’s direct insurance exposure to eastern Europe generally is limited to approximately $263 million in net par outstanding as of December 31, 2023, comprising $220 million net par exposure to the sovereign debt of Poland and $43 million net par exposure to a toll road in Hungary.

In fact, the Company’s direct

insurance exposure to eastern Europe generally is limited to approximately $214 million in net par outstanding as of December 31, 2024, comprised of $198 million net par exposure to the sovereign debt of Poland and $16 million net par exposure to a toll road in Hungary.

The Company rates all such exposure investment grade.

Middle East Conflict

In light of recent events in the Middle East, the Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, for exposures to the Middle East.

In light of events in the Middle East, the Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, for exposures to the Middle East.

After review, the Company’s surveillance and treasury functions have identified no material direct exposure to such area.

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The Company rates all such insurance exposure investment grade.

January 2025 Los Angeles Wildfires

In January 2025, a series of destructive wildfires affected Los Angeles, California.

The Company’s surveillance function has reviewed the Company’s insurance portfolio for exposures located within Los Angeles County and has identified no material impact to its exposure located directly within the perimeter of the wildfires.

Results of Operations

Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires the application of accounting policies that often involve a significant degree of judgment and require the Company to make estimates and assumptions, based on available information, that affect the amounts of assets, liabilities, revenues and expenses reported in the financial statements.

Estimates are inherently subject to change and actual results could differ from those estimates, and the differences may be material to the consolidated financial statements.

Critical estimates and assumptions are periodically evaluated based on historical developments, market conditions, industry trends and other information that is reasonable under the circumstances.

There can be no assurance that actual results will conform to estimates and assumptions and that reported results of operations will not be materially different in the future due to changes in these estimates and assumptions from time to time.

Listed below are the accounting policies and estimates that the Company believes are most dependent on the application of judgment and assumptions.

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• Fair value of certain assets and liabilities, primarily:

◦ Investments

◦ Assets and liabilities of CIVs

◦ Investments (primarily Loss Mitigation Securities and alternative investments)

◦ Assets and liabilities of FG VIEs

◦ Credit derivatives;

• Acquisition date fair value of equity method investment in Sound Point;

• Acquisition date fair value of the equity method ownership interest in Sound Point;

• Impairments of equity method investments and financial instruments;

• Income tax assets and liabilities, including the recoverability of deferred tax assets (liabilities) including the Bermuda deferred tax asset reported in 2023.

• Income tax assets and liabilities, including the recoverability of all deferred tax assets (liabilities) and in particular the Bermuda deferred tax asset recorded in 2023.

Results of Operations by Segment

The Company reports its results of operations in two distinct segments, Insurance and Asset Management, consistent with the manner in which the Company’s CODM reviews the business to assess performance and allocate resources.

The following describes the components of each segment, along with the Corporate division and Other categories.

The Insurance and Asset Management segments and the Corporate division are presented without giving effect to the consolidation of FG VIEs and CIVs.

The Company analyzes the operating performance of each segment using each segment’s adjusted operating income as described in Item 8, Financial Statements and Supplementary Data, Note 2, Segment Information.

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Fair value gains (losses) on trading securities 52 74 (34)

Foreign exchange gains (losses) on remeasurement and other income (loss) (1) 54 5 15

Foreign exchange gains (losses) on remeasurement (1) 3 (5)

Other income (loss) 14 51 10

Total segment revenues 821 855 757

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Segment adjusted operating income (loss) $ 525 $ 621 $ 413

____________________

(1) Other income (loss) consists of recurring items such as commutation gains (losses), ancillary fees on financial guaranty policies for commitments and consents, and if applicable, other revenue items on financial guaranty insurance and reinsurance contracts such as loss mitigation recoveries.

Net Earned Premiums and Credit Derivative Revenues

Premiums are earned over the contractual lives, or in the case of insured obligations backed by homogeneous pools of assets, the remaining expected lives, of financial guaranty insurance contracts.

The Company periodically estimates remaining

expected lives of its insured obligations backed by homogeneous pools of assets and makes prospective adjustments for such changes in expected lives.

The Company periodically estimates remaining expected lives of its insured obligations backed by homogeneous pools of assets and makes prospective adjustments for such changes in expected lives.

Scheduled net earned premiums decrease each year unless replaced by a higher amount of new business, or books of business acquired in business combinations.

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When issuers pay down insured obligations, the Company is no longer on risk for payment defaults, and therefore accelerates the recognition of the remaining nonrefundable deferred premium revenue.

The amortization of the Company’s outstanding book of business along with the previously high levels of refunding activity, and the higher interest rates environment has led to a lower volume of refunding opportunities over the last several years, except for refundings of Puerto Rico policies under the 2022 Puerto Rico Resolutions.

The amortization of the Company’s outstanding book of business along with the previously high levels of refunding activity and the higher interest rate environment has led to a lower volume of refunding opportunities over the last several years.

Terminations are generally negotiated agreements with beneficiaries resulting in the extinguishment of the Company’s insurance obligation.

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Scheduled net earned premiums (1) 63 62 58

Terminations — — 2

Accelerations 2 — —

Total structured finance 65 62 58

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Credit derivative revenues 11 10 11

Scheduled net earned premiums 9 9 13

Terminations 1 2 7

Total credit derivative revenues 10 11 20

Total net earned premiums and credit derivative revenues $ 417 $ 357 $ 508

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(1) Includes accretion of discount.

Net earned premiums and credit derivative revenues decreased in 2023 compared with 2022 primarily due to refundings of $133 million in 2022 related to the 2022 Puerto Rico Resolutions discussed in Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure.

Net earned premiums and credit derivative revenues increased in 2024 compared with 2023 primarily due to a large refunded transaction in the first quarter of 2024.

As of December 31, 2024, $3.7 billion of net deferred premium revenue on financial guaranty insurance remained to be earned over the life of the insurance contracts.

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See “— Non-GAAP Financial Measures — PVP or Present Value of New Business Production.” PVP was discounted at 5.0%, 4.0% and 2.5% in 2024, 2023 and 2022, respectively.

(2) 2023 PVP and gross par written include the present value of future gross revenues and exposure, respectively, associated with a financial guaranty written by the Company that, under GAAP, is accounted for under ASC 460, Guarantees .

GWP relates to insurance and reinsurance contracts for both financial guaranty and specialty business.

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(ii) the present value of future contractual or expected premiums on new financial guaranty business written (discounted at risk-free rates);

and (iii) the effects of changes in the estimated lives of certain transactions in the in-force book of business.

and (iii) the effects of changes in the estimated premium or lives of certain transactions in the in-force book of business.

Specialty business GWP is recorded as premiums are due.

Credit derivatives are accounted for at fair value and therefore are not included in GWP.

Credit derivatives are accounted for at fair value and therefore not included in GWP.

PVP and gross par written include the present value of future gross revenues and exposure, respectively, associated with a financial guaranty written by the Company that, under GAAP, is accounted for under Accounting Standards Codification (ASC) 460, Guarantees .

The non-GAAP financial measure, PVP, includes upfront premiums and the present value of expected future installments on new business at the time of issuance, discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, for all contracts regardless of form or accounting model.

See “— Non-GAAP Financial Measures” below.

public finance GWP and PVP both declined in 2023 compared with 2022 primarily due to a decline in secondary market GWP and PVP of $71 million due to less market opportunity, offset in part by an increase in assumed GWP and PVP of $47 million and $46 million, respectively.

municipal bond market penetration, based on par written, was 8.8% in 2023 compared with 8.0% in 2022.

In 2023, the Company insured 61% of the insured par of new issuances sold, compared with 59% in 2022.

public finance GWP and PVP increased in 2023 compared with 2022.

In 2023, non-U.S.

public finance GWP and PVP includes included guarantees of transactions in the airport, university housing, regulated utility and transportation sector, as well as guarantees of local authority and social housing transactions.

Structured finance GWP and PVP increased in 2023 compared with 2022.

2023 structured finance GWP and PVP included several insurance securitizations and subscription finance facility transactions.

Structured finance PVP in 2023 also included a large specialty business guaranty.

public finance GWP and PVP in 2024 were higher than GWP and PVP in 2023 primarily due to a large transportation revenue transaction.

The Company’s direct par written represented 58% of the total U.S.

primary municipal market insured par sold in 2024, compared with 61% in 2023, and the Company’s penetration of all municipal issuance was 4.8% in 2024 compared with 5.4% in 2023.

public finance GWP increased while PVP decreased in 2024 compared with 2023.

GWP in 2024 includes the present value of additional future premiums on a large existing transaction, which is not captured in PVP.

New business in 2024 primarily included secondary market guaranties of several U.K.

regulated utility and airport transactions, as well as new and renewed liquidity guarantees in the infrastructure sector.

In 2024, structured finance GWP and PVP decreased compared with 2023.

Structured finance GWP and PVP in 2024 were primarily attributable to insurance securitizations, bank balance sheet relief transactions, a guaranty of a diversified real estate portfolio and subscription finance transactions.

Business activity in the non-U.S.

public finance and structured finance sectors often has long lead times and therefore may vary from period to period.

public finance and structured finance markets often has long lead times and therefore may vary from period to period.

Financial Strength Ratings

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Best Company,

AGM AA (stable) (7/13/23) AA+ (stable) (10/20/23) A1 (stable) (3/18/22) —

AGC AA (stable) (7/13/23) AA+ (stable) (10/20/23) (1) —

AG AA (stable) (5/28/24) AA+ (stable) (10/18/24) A1 (stable) (7/10/24) —

AG Re AA (stable) (5/28/24) — — —

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AGE AA (stable) (5/28/24) AA+ (stable) (10/18/24) — —

____________________

(1) AGC requested that Moody’s withdraw its financial strength ratings of AGC in January 2017, but Moody’s denied that request.

Moody's rates AGC A2 (stable).

Ratings are subject to continuous rating agency review and revision or withdrawal at any time.

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The investment yield on fixed-maturity securities is a function of market interest rates at the time of investment as well as the type, credit quality and maturity of the securities in this portfolio.

CVIs issued by Puerto Rico and received as part of the 2022 Puerto Rico Resolutions are classified as trading with changes in fair value reported in “fair value gains (losses) on trading securities” in the consolidated statements on operations.

The fair value of such instruments as of December 31, 2023 and December 31, 2022 was $318 million and $303 million, respectively.

Equity method investments in the Insurance segment include investments that the U.S.

Insurance Subsidiaries make in certain alternative investments, primarily Sound Point and AHP funds.

The income (loss) on such investments is reported in “equity in earnings (losses) of investees” and typically represents the Company’s share of earnings of its other investees.

The fair value of remaining CVIs as of December 31, 2024 and December 31, 2023 was $123 million and $318 million, respectively.

Equity method investments in the Insurance segment include investments that AG Asset Strategies LLC (AGAS) makes in certain alternative investments, primarily Sound Point and AHP funds.

The income (loss) on such investments is reported in “equity in earnings (losses) of investees” and typically represents the Company’s share of earnings of its investees.

As part of the August 5, 2024 AG stock redemption, certain alternative investments were distributed to AGMH, whose results are reported in the Corporate division.

The carrying value of these transferred investments as of December 31, 2024 was $118 million.

Insurance Segment

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Fixed-maturity securities, available-for-sale $ 263 $ 297 $ 260

Externally managed (1) $ 207 $ 199 $ 210

Loss Mitigation Securities 58 35 42

Puerto Rico, New Recovery Bonds 12 7 —

Other (2) 20 19 23

Short-term investments 70 65 13

Intercompany loans 10 10 10

Other investment assets 3 1 1

Other invested assets 1 3 1

Investment income 344 375 284

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CLOs $ 47 $ 50 $ (2)

Asset-based 5 5 19

Healthcare 19 (11) 30

Private healthcare investing 11 19 (11)

Asset-based/specialty finance 24 5 5

Middle market direct lending 2 — —

Other 18 8 (43)

Equity in earnings (losses) of investees $ 102 $ 82 $ (51)

____________________

(1) Includes income on the portion of the CLO portfolio that was managed by AssuredIM prior to July 1, 2023.

(2) Include income on the portion of the municipal bond portfolio that was managed by AssuredIM prior to July 1, 2023.

Net investment income for 2023 increased compared to 2022, primarily due to the increase in short-term rates and higher average short-term balances, and higher income on loss mitigation securities.

Net investment income for 2024 decreased compared to 2023, primarily due to the lower income on Loss Mitigation Securities and lower average asset balances due in part to sale of new general obligation bonds and new bonds backed by toll revenues (together, New Recovery Bonds) received as part of the 2022 Puerto Rico Resolutions, partially offset by higher income related to the distribution of assets to alternative investments from CIVs.

The overall pre-tax book yield of available-for-sale fixed-maturity securities and short-term investments was 4.57% as of December 31, 2024 and 4.09% as of December 31, 2023.

Foreign Exchange Gains (Losses) on Remeasurement and Other Income (Loss)

“Foreign exchange gains (losses) on remeasurement and other income (loss)” in 2023 primarily relates to the reversal of a previously recorded litigation accrual of $20 million, commutation gains of $10 million and foreign exchange gain on remeasurement of $3 million.

See Item 8, Financial Statements and Supplementary Data, Note 18, Commitments and Contingencies, for additional information.

Economic Loss Development

Equity in earnings (losses) of investees for 2024 increased compared to 2023, primarily due to higher balances in the alternative investment portfolio and higher fair value gains on alternative investments.

The Company has a consolidated CLO fund, that has been reported on a one-quarter lag with changes in net asset value (NAV) reported in “equity in earnings (losses) of investees”.

In the fourth quarter of 2024, the Company transferred the underlying investments to its fixed-maturity securities, available-for-sale portfolio.

Beginning in the fourth quarter of 2024, interest income from the transferred CLOs are reported in net investment income with changes in fair value reported in other comprehensive income.

Other Income (Loss)

The decrease in “other income (loss)” in 2024 compared with 2023 was primarily attributable to the reversal of a previously recorded litigation accrual of $20 million and commutation gains of $10 million in 2023.

See Item 8, Financial Statements and Supplementary Data, Note 17, Contingencies, for additional information.

Economic Loss Development (Benefit)

The insured portfolio includes policies accounted for under several different accounting models depending on the characteristics of the contract and the Company’s control rights.

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and (iii) amounts ceded to reinsurers.

Assumptions used in the determination of the net expected loss to be paid (recovered) such as delinquency, severity, discount rates and expected time frames to recovery were consistent by sector regardless of the accounting model used.

Assumptions used in the determination of the net expected loss to be paid (recovered) such as delinquency, severity, discount rates and expected time frames to recovery are consistent for each sector regardless of the accounting model used.

Current risk-free rates are used to discount expected losses at the end of each reporting period.

Therefore, changes in such rates from period to period affect economic loss development and loss and LAE.

However, the effect of changes in discount rates is not indicative of actual credit impairment or improvement in the period.

The weighted average discount rates used to discount expected losses (recoveries) for U.S.

denominated exposures were 4.10%, 4.08% and 1.02% as of December 31, 2023, 2022 and 2021, respectively.

However, the effect of changes in discount rates is not indicative of actual credit impairment or improvement.

The weighted average discount rates used to discount expected losses (recoveries) were 4.38%, 4.09% and 4.08% as of December 31, 2024, 2023 and 2022, respectively.

The composition of economic loss development (benefit) by accounting model and by sector is presented in the tables that follow, and the drivers of economic loss development (benefit) are discussed below.

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____________________

(1) The expected loss to be paid for FG VIEs primarily relates to trusts established as part of the 2022 Puerto Rico Resolutions (Puerto Rico Trusts).

See Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure, and Note 4, Expected Loss to be Paid (Recovered).

(1) In 2023, the net expected loss to be paid for FG VIEs primarily related to trusts established as part of the 2022 Puerto Rico Resolutions (Puerto Rico Trusts) and in 2024, the Company satisfied its remaining direct insured obligations and deconsolidated the remaining Puerto Rico Trusts.

See Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered).

(2) The increase in BIG is primarily related to downgrades of certain U.K.

regulated utility exposures.

Net Expected Loss to be Paid (Recovered)

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Such amounts are recorded as reinsurance recoverable on paid losses in “other assets.”

Effect of changes in the risk-free rates included in economic loss development (benefit) was a loss of $3 million in 2023 and a benefit of $115 million in 2022.

Effect of changes in the risk-free rates included in economic loss development (benefit) was a loss of $4 million in 2024 and a loss of $3 million in 2023.

2024 Net Economic Loss Development

Public Finance:

The economic loss development on U.S.

exposures in 2023 was $201 million, which was primarily attributable to PREPA and healthcare exposures, partially offset by higher projected recoveries in other municipal exposures.

The benefit attributable to U.S.

RMBS of $56 million was primarily attributable to a $53 million benefit related to to higher recoveries for secured second lien charged-off loans and a $13 million benefit related to improved performance in certain transactions, partially offset by $17 million of loss development related to the return of certain previously received funds.

The economic benefit of $9 million for U.S.

public finance exposures was primarily attributable to certain healthcare exposures, partially offset by higher expected loss adjustment expenses related to certain Puerto Rico exposures.

The economic loss development of $81 million for non-U.S.

public finance exposures was primarily attributable to certain U.K.

regulated utilities and healthcare exposures.

The net benefit attributable to U.S.

RMBS of $75 million was mainly attributable to a $43 million benefit from higher assumed and realized recoveries for secured second lien charged-off loans and a $15 million benefit from higher assumed recoveries for first lien deferred principal balances.

See Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), for additional information.

2023 Net Economic Loss Development

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The economic loss development on U.S.

exposures in 2022 was $19 million, which was primarily attributable to certain Puerto Rico and health care exposures, partially offset by the effect of changes in discount rates.

In 2022, the Company had net recovered losses of $187 million in the U.S.

public finance sector related primarily to the claims paid on $2.0 billion net par under the 2022 Puerto Rico Resolutions, net of recoveries, which were in the form of cash, New Recovery Bonds and CVIs.

The net benefit attributable to U.S.

RMBS of $143 million was mainly related to a $58 million benefit related to changes in discount rates, a $49 million benefit related to improvement in transaction performance, a $30 million benefit related to higher recoveries on charged-off second lien loans, a $27 million benefit related to loss mitigation activity, a $26 million benefit related to updates in projected default curves and a $17 million benefit on certain assumed RMBS transactions related to a settlement between a ceding company and a representations and warranties (R&W) provider.

These items were all partially offset by loss of $79 million related to lower excess spread.

exposures in 2023 was $201 million, which was primarily attributable to PREPA and healthcare exposures, partially offset by higher projected recoveries in other municipal exposures.

The benefit attributable to U.S.

RMBS of $56 million was primarily attributable to a $53 million benefit related to higher recoveries for secured second lien charged-off loans and a $13 million benefit related to improved performance in certain transactions, partially offset by $17 million of loss development related to the return of certain previously received funds.

Insurance Segment Loss Expense

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Therefore, the timing of loss recognition in income does not necessarily coincide with the timing of the actual credit impairment or improvement reported in net economic loss development.

Transactions (particularly BIG transactions) acquired in a business combination or seasoned portfolios assumed from legacy financial guaranty insurers generally have the largest deferred premium revenue balances.

Therefore, the largest differences between net economic loss development and loss and LAE on financial guaranty insurance contracts generally relate to those policies.

While expected loss to be paid (recovered) is an important measure that provides the present value of amounts that the Company expects to pay or recover in future periods on all contracts, expected loss to be expensed is important because it presents the Company’s projection of net expected losses that will be recognized in the consolidated statement of operations in future periods as deferred premium revenue amortizes into income for financial guaranty insurance policies.

The amount of Insurance segment loss expense, which includes all policies regardless of form, is a function of the amount of economic loss development discussed above and the deferred premium revenue amortization in a given period, on a contract-by-contract basis.

Transactions (particularly BIG transactions) acquired in business combinations or seasoned portfolios assumed from legacy financial guaranty insurers generally have the largest deferred premium revenue balances.

To the extent that a BIG transaction has a large deferred premium revenue, the difference between economic development and loss and LAE may be significant.

While expected loss to be paid (recovered) is an important measure that provides the present value of amounts that the Company expects to pay or recover in future periods regardless of accounting model, expected loss to be expensed is important because it presents the Company’s projection of net expected losses that will be recognized in the consolidated statement of operations in future periods as deferred premium revenue amortizes into income for financial guaranty insurance policies.

For additional information on the expected timing of net expected losses to be expensed see Item 8, Financial Statements and Supplementary Data, Note 5, Contracts Accounted for as Insurance.

The amount of Insurance segment loss expense, which includes losses on policies regardless of form, is a function of the amount of economic loss development discussed above and the deferred premium revenue amortization in a given period, on a contract-by-contract basis.

The following table presents the Insurance segment loss expense (benefit).

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Total Insurance segment loss expense (benefit) $ (18) $ 161 $ 12

The difference between public finance loss expense and economic benefit in 2022 was primarily attributable to the release of unearned premium reserve related to the 2022 Puerto Rico Resolutions.

As a result, the Company recognized loss and LAE expense that had not previously been reported in the statement of operations, and corresponding net earned premiums were recognized for the remaining deferred premium revenue on the extinguished Puerto Rico exposures.

For additional information on the expected timing of net expected losses to be expensed see Item 8, Financial Statements and Supplementary Data, Note 5, Contracts Accounted for as Insurance.

Employee Compensation and Benefit Expenses and Other Operating Expenses

The increase in 2023 from 2022 was primarily attributable to increases in value added taxes, certain employee benefit related costs, and legal expenses.

The increase in employee compensation and benefit expenses in 2024 from 2023 was primarily attributable to an increase in headcount and other employee benefit costs.

Other operating expenses increased in 2024 from 2023 primarily due to the write-off of $6 million of intangible assets attributable to insurance licenses in connection with AGM’s merger with and into AG.

Provision (Benefit) for Income Taxes

The tax provision in 2024 includes $13 million of global minimum tax for the Company’s Bermuda subsidiaries.

The tax benefit in 2023 was primarily related to the $189 million benefit recognized in connection with the enactment of the 15% Bermuda corporate income tax in December 2023.

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Segment adjusted operating income (loss) $ 5 $ 3 $ (6)

Results in the table above represent (i) revenues (asset management and performance fees), amortization of intangible assets and compensation and other operating expenses of AssuredIM for 2021, 2022 and the first half of 2023, prior to the Sound Point Transaction and the AHP Transaction, as well as (ii) equity in earnings of Sound Point for the third quarter of 2023 (Sound Point results are reported on a one quarter lag), net of the amortization of finite-lived intangible assets associated with the basis difference in Sound Point and (iii) other asset management related income.

Results in the table above primarily represent (i) equity in earnings of Sound Point since the third quarter of 2023 (Sound Point results are reported on a one-quarter lag), net of the amortization of finite-lived intangible assets associated with the basis difference in Sound Point, and incentive fees, and (ii) the consolidated results of AssuredIM for 2022 and the first half of 2023, prior to the Sound Point Transaction and the AHP Transaction.

See Item 8, Financial Statements and Supplementary Data, Note 7, Investments and Cash, for additional information.

Assets Under Management

Until July 1, 2023, the effective date of the Sound Point Transaction and the AHP Transaction, the Company used AUM as one of the metrics to measure progress in its Asset Management segment.

AUM refers to the assets managed, advised or serviced by an asset manager.

AssuredIM AUM as of June 30, 2023 was $16.4 billion.

As of July 1, 2023, the management of approximately $15.1 billion of AUM (of which $385 million was attributable to the Company) was transferred to Sound Point.

Also in July 2023, the management of approximately $1.3 billion in remaining AUM (of which $185 million was attributable to the Company) was transferred with the sale of AHP to an entity owned and controlled by its managing partner.

AHP will continue to manage the healthcare funds.

In the second quarter of 2023, (i) the management of approximately $159 million in AUM in respect of certain wind-down and opportunity funds in their harvesting periods (when the funds are past their investment periods and the value of the investments are realized) were transferred to a third party liquidator and (ii) management of approximately $513 million at fair value in investment grade municipal bonds and CLOs under an investment management agreement was transferred to an internal manager and to one of the Company’s external fixed-maturity security managers.

Effective with the Sound Point Transaction and the AHP Transaction, the Company no longer has any AUM.

See Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation.

Corporate Division Results

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Gain on sale of asset management subsidiaries $ — $ 262 $ —

Other 17 13 4

Total revenues 17 275 4

Interest expense 101 99 89

Loss on extinguishment of debt — — 175

Employee compensation and benefit expenses 32 38 30

1 unchanged sentence

Total expenses 169 216 143

Equity in earnings (losses) of investees 5 — —

Adjusted operating income (loss) before income taxes (147) 59 (139)

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See Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation.

Corporate division interest expense primarily relates to debt issued by the U.S.

Holding Companies, and also includes intersegment interest expense of $10 million in 2023, 2022 and 2021, related primarily to the $250 million AGUS debt issued to the U.S.

Insurance Subsidiaries.

On August 21, 2023, AGUS issued $350 million of 6.125% Senior Notes due 2028.

On September 25, 2023, AGUS used the proceeds of this issuance to redeem $330 million of 5% Senior Notes due 2024.

The interest expense in 2023 was higher than in 2022 due to additional interest expense on the 6.125% Senior Notes and higher interest on the variable rate AGMH Series A Enhanced Junior debentures.

Corporate division interest expense primarily relates to debt issued by AGUS and AGMH (the U.S.

Holding Companies), and also includes intersegment interest expense.

See “— Liquidity and Capital Resources — AGL and its U.S.

Holding Companies, Intercompany Loans Payable,” for additional information.

Corporate division employee compensation and benefits expenses are an allocation of expenses based on time studies and represent the costs incurred and time spent on holding company activities, capital management, corporate oversight and governance including Board of Director expenses, legal fees and other direct or allocated expenses.

In 2023, operating expenses also include expenses related to the Sound Point Transaction and AHP Transaction and a higher charge for value added taxes.

Transaction related expenses in the corporate division for Sound Point and AHP were $40 million, consisting primarily of $25 million advisory and consent fees and $8 million legal fees.

Corporate division employee compensation and benefits expenses and other operating expenses are an allocation of expenses based on time studies and represent the costs incurred and time spent on holding company activities, capital management, corporate oversight and governance including Board of Director expenses, legal fees and other direct or allocated expense.

The decrease in operating expenses in 2024 was primarily due to expenses related to the Sound Point Transaction and AHP Transaction and a higher charge for value added taxes in 2023.

Transaction related expenses in the Corporate division for Sound Point and AHP in 2023 were $40 million, consisting primarily of $25 million advisory and consent fees and $8 million legal fees.

Equity in earnings of investees in 2024 relates to certain alternative investments, which AG transferred to AGMH as part of the share redemption that occurred on August 5, 2024.

The provision for income taxes in 2023 included a $19 million benefit attributable to a change in New York State tax law.

Other (Effect of Consolidating FG VIEs and CIVs)

The effect of consolidating FG VIEs and CIVs, intersegment eliminations, and reclassifications of reimbursable fund expenses to revenue are presented in “other.” See Item 8, Financial Statements and Supplementary Data, Note 2, Segment Information.

The types of entities the Company consolidates when it is deemed to be the primary beneficiary primarily include:

(i) entities whose debt obligations the insurance subsidiaries insure;

(ii) custodial trusts established in connection with the consummation of the 2022 Puerto Rico Resolutions;

and (iii) investment vehicles such as (a) Sound Point and AHP funds and (b) prior to July 1, 2023, collateralized financing entities and CLO warehouses.

The effect of consolidating FG VIEs and CIVs, intersegment eliminations and, prior to July 1, 2023, reclassifications of reimbursable fund expenses to revenue, are presented in “other.” See Item 8, Financial Statements and Supplementary Data, Note 2, Segment Information.

As described in Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, the types of entities the Company consolidates when it is deemed to be the primary beneficiary primarily include:

and (ii) CIVs.

The Company eliminates the effects of intercompany transactions between its FG VIEs and CIVs and its insurance and asset management subsidiaries, as well as intercompany transactions between CIVs.

Consolidating FG VIEs (as opposed to accounting for the related insurance contracts in the Insurance segment), has a significant gross-up effect on the consolidated financial statements, and includes:

(i) the establishment of the FG VIEs’ assets

and liabilities and related changes in fair value on the consolidated financial statements;

(ii) eliminating the premiums and losses/recoveries associated with the financial guaranty insurance contracts between the insurance subsidiaries and the FG VIEs;

(i) the establishment of the FG VIEs’ assets and liabilities and related changes in fair value on the consolidated financial statements;

(ii) eliminating the premiums and

losses/recoveries associated with the financial guaranty insurance contracts between the insurance subsidiaries and the FG VIEs;

and (iii) eliminating the investment balances associated with the insurance subsidiaries’ purchases of the debt obligations of the FG VIEs.

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and (iv) establishing noncontrolling interest (NCI) for amounts not owned by the Company.

The economic effect of the U.S Insurance Subsidiaries’ ownership interests in CIVs is presented in the Insurance segment as equity in earnings (losses) of investees, while the effect of CIVs is presented as separate line items (“fair value gains (losses) on consolidated investment vehicles” and “NCI”) on a consolidated basis.

As a result of the Sound Point Transaction and AHP Transaction, the Company deconsolidated CIV assets of $4.7 billion and CIV liabilities of $4.4 billion.

The net effect of consolidating CIVs included a $16 million loss triggered by the Sound Point Transaction and AHP Transaction in 2023 and a $31 million gain on consolidation in 2021, as described in Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

The economic effect of AG’s ownership interests in CIVs is presented in the Insurance segment as “equity in earnings (losses) of investees,” while the effect of CIVs is presented as separate line items (“fair value gains (losses) on consolidated investment vehicles” and “noncontrolling interest”) on a consolidated basis.

The table below reflects the effect of consolidating FG VIEs and CIVs on the consolidated statements of operations.

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____________________

(1) Changes in fair value of the FG VIEs’ assets and liabilities that are attributable to factors other than (i) changes in the Company’s own credit risk on FG VIE liabilities with recourse and (ii) unrealized gains and losses on available-for-sale fixed maturity securities.

(2) Represents the elimination of the equity in earnings (losses) of investees of AGAS and the other subsidiaries’ investments in certain alternative investments, primarily Sound Point and AHP funds (and prior to July 1, 2023, AssuredIM managed funds).

(3) Includes net earned premiums, net investment income, asset management fees, foreign exchange gains (losses) on remeasurement, other income (loss), loss and LAE (benefit) and other operating expenses.

(1) Changes in fair value of the FG VIEs’ assets and liabilities that are attributable to factors other than (i) changes in the Company’s own credit risk on the FG VIEs’ liabilities with recourse and (ii) unrealized gains and losses on available-for-sale fixed maturity securities.

(2) Represents the elimination of the equity in earnings (losses) of investees of AGAS and the other subsidiaries’ investments in certain alternative investments, primarily Sound Point funds (and prior to July 1, 2023, AssuredIM managed funds).

(3) Includes net earned premiums, net investment income, foreign exchange gains (losses) on remeasurement, other income (loss), loss and LAE (benefit), and for 2023 and 2022, other operating expenses and asset management fees.

(4) Represents the proportion of consolidated funds managed by Sound Point and prior to July 1, 2023, AssuredIM funds’ income that is not attributable to AGAS’ or any other subsidiaries’ ownership interest.

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Gain (loss) related to FG VIE and CIV consolidation (net of tax provision (benefit) of $(2), $(5) and $- included in adjusted operating income $ (6) $ (21) $ (6)

Year Ended December 31,

2024 2023 2022

(per share amounts)

Net income (loss) attributable to AGL $ 6.87 $ 12.30 $ 1.92

Less pre-tax adjustments:

Realized gains (losses) on investments 0.16 (0.23) (0.87)

Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives 0.27 1.75 (0.27)

Fair value gains (losses) on CCS (0.19) (0.57) 0.37

Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves (0.47) 0.84 (1.72)

Total pre-tax adjustments (0.23) 1.79 (2.49)

Less tax effect on pre-tax adjustments — (0.27) 0.27

Adjusted operating income (loss) $ 7.10 $ 10.78 $ 4.14

Gain (loss) related to FG VIE and CIV consolidation included in adjusted operating income $ (0.12) $ (0.35) $ (0.10)

Net Realized Investment Gains (Losses)

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Net foreign currency gains (losses) (2) (1) (4)

Change in allowance for credit losses and intent to sell (14) (21) (7)

Change in the allowance for credit losses and intent to sell (1) 18 (14) (21)

Other net realized gains (losses) 2 (1) 11

Net realized investment gains (losses) $ 9 $ (14) $ (56)

Sales of New Recovery Bonds received as part of the 2022 Puerto Rico Resolutions were the primary components of gross realized gains on sales in 2023 and 2022 and gross realized losses on sales in 2022.

____________________

(1) Relates primarily to Loss Mitigation Securities.

Sales of New Recovery Bonds received as part of the 2022 Puerto Rico Resolutions were the primary components of gross realized gains on sales in 2023 and gross realized losses on sales in 2022.

Non-Credit Impairment-Related Unrealized Fair Value Gains (Losses) on Credit Derivatives

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Except for underlying credit impairment, which is recognized as loss expense in the Insurance segment, the fair value adjustments on credit derivatives in the insured portfolio are non-economic adjustments that reverse to zero over the remaining term of that portfolio.

The impact of changes in credit spreads will vary based upon the volume, tenor, interest rates and other market conditions at the time fair values are determined.

In addition, since each transaction has unique collateral and structural terms, the underlying change in fair value of each transaction may vary considerably.

The fair value of credit derivative contracts also reflects the Company’s own credit cost based on the price to purchase credit protection on AGC.

Due to the relatively low volume and characteristics of CDS contracts remaining in AGM’s portfolio, changes in AGM’s CDS spreads do not significantly affect the fair value of these CDS contracts.

The Company determines its own credit risk based on quoted CDS prices traded on AGC at each balance sheet date.

Generally, a widening of credit spreads of the underlying obligations results in unrealized losses and the tightening of credit spreads of the underlying obligations results in unrealized gains.

A widening of the CDS prices traded on AGC has an effect of offsetting unrealized losses that result from widening general market credit spreads, while a narrowing of the CDS prices traded on AGC has an effect of offsetting unrealized gains that result from narrowing general market credit spreads.

The valuation of the Company’s credit derivative contracts requires the use of models that contain significant, unobservable inputs.

The models used to determine fair value are primarily developed internally based on market conventions for similar transactions that the Company observed in the past.

There has been very limited new issuance activity in this market since 2009 and, as of December 31, 2023, market prices for the Company’s credit derivative contracts were generally not available.

Inputs to the estimate of fair value include various market indices, credit spreads, the Company’s own credit spread and estimated contractual payments.

See Item 8, Financial Statements and Supplementary Data, Note 9, Fair Value Measurement, for additional information.

During 2023, non-credit impairment-related unrealized fair value gains were generated primarily as a result of generally lower collateral asset spreads.

During 2022, non-credit impairment-related unrealized fair value losses were generated primarily as a result of wider asset spreads, partially offset by the increased cost to buy protection on AGC, as the market cost of AGC’s credit protection increased during the period, and changes in discount rates.

For those CDS transactions that were pricing at or above their floor levels, when the cost of purchasing CDS protection on AGC, which management refers to as the CDS spread on AGC, increased, the implied spreads that the Company (or another comparable entity) would expect to receive on these transactions decreased.

During 2024, non-credit impairment-related unrealized fair value gains of $14 million were generated primarily due to the termination of certain structured finance policies and generally lower collateral asset spreads.

During 2023, non-credit impairment-related unrealized fair value gains of $106 million were generated primarily as a result of generally lower collateral asset spreads.

Fair Value Gains (Losses) on CCS

Fair value losses on CCS in 2023 were primarily due to a tightening in market spreads.

Fair value gains on CCS in 2022 were primarily driven by an increase in LIBOR.

Fair value gains (losses) of CCS are heavily affected by, and in part fluctuate with, changes in market spreads and interest rates, credit spreads and other market factors and are not expected to result in an economic gain or loss.

Fair value losses on CCS of $10 million in 2024 and $35 million in 2023 were primarily due to a tightening in market spreads.

Fair value gains (losses) on CCS are heavily affected by, and in part fluctuate with, changes in market spreads and interest rates, credit spreads and other market factors and are not expected to result in an economic gain or loss.

Foreign Exchange Gain (Loss) on Remeasurement

Foreign exchange gains and losses in all periods primarily relate to remeasurement of long-dated premiums receivable, for which the Company records the present value of future installment premiums, and are mainly due to changes in the exchange rate of the pound sterling and, to a lesser extent, the euro relative to the U.S.

Foreign exchange gains and losses of $26 million losses, $51 million gains and $110 million losses in 2024, 2023 and 2022, respectively, primarily relate to remeasurement of long-dated premiums receivable, for which the Company records the present value of future installment premiums, and are mainly due to changes in the exchange rate of the pound sterling and, to a lesser extent, the euro relative to the U.S.

Approximately 69% and 70% of gross premiums receivable, net of commissions payable at December 31, 2024 and December 31, 2023, respectively, are denominated in currencies other than the U.S.

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The Company believes its presentation of non-GAAP financial measures provides information that is necessary for analysts to calculate their estimates of Assured Guaranty’s financial results in their research reports on Assured Guaranty and for investors, analysts and the financial news media to evaluate Assured Guaranty’s financial results.

GAAP requires the Company to consolidate entities where it is deemed to be the primary beneficiary which include:

• FG VIEs, which the Company does not own and where its exposure is limited to its obligation under the financial guaranty insurance contract, and

• CIVs in which certain subsidiaries invest.

GAAP requires the Company to consolidate entities where it is deemed to be the primary beneficiary which include FG VIEs, which the Company does not own and where its exposure is limited to its obligation under the financial guaranty insurance contract, and CIVs in which certain subsidiaries invest.

The Company discloses the effect of FG VIE and CIV consolidation that is embedded in each non-GAAP financial measure, as applicable.

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Management believes that many investors, analysts and financial news reporters use adjusted operating shareholders’ equity and/or adjusted book value, each further adjusted to remove the effect of FG VIE and CIV consolidation, as the principal financial measures for valuing AGL’s current share price or projected share price and also as the basis of their decision to recommend, buy or sell AGL’s common shares.

Management also believes that many of the Company’s fixed income investors also use adjusted operating shareholders’ equity, further adjusted to remove the effect of FG VIE and CIV consolidation, to evaluate the Company’s capital adequacy.

Adjusted operating income, further adjusted for the effect of FG VIE and CIV consolidation, enables investors and analysts to evaluate the Company’s financial results in comparison with the consensus analyst estimates distributed publicly by financial databases.

4 unchanged sentences

Adjusted operating income is defined as net income (loss) attributable to AGL, as reported under GAAP, adjusted for the following:

1) Elimination of realized gains (losses) on the Company’s investments, except for gains and losses on securities classified as trading.

1) Elimination of realized gains (losses) on the Company’s investments that are recognized in net income (loss) attributable to AGL, except for gains and losses on securities classified as trading.

The timing of realized gains and losses, which depends largely on market credit cycles, can vary considerably across periods.

The timing of sales is largely subject to the Company’s discretion and influenced by market opportunities, as well as the Company’s tax and capital profile.

2) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives that are recognized in net income, which is the amount of unrealized fair value gains (losses) in excess of the present

value of the expected estimated economic credit losses, and non-economic payments.

2) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives that are recognized in net income (loss) attributable to AGL, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments.

Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, the Company’s credit spreads, and other market factors and are not expected to result in an economic gain or loss.

3) Elimination of fair value gains (losses) on the Company’s CCS that are recognized in net income.

3) Elimination of fair value gains (losses) on the Company’s CCS that are recognized in net income (loss) attributable to AGL.

Such amounts are affected by changes in market interest rates, the Company’s credit spreads, price indications on the Company’s publicly traded debt and other market factors and are not expected to result in an economic gain or loss.

4) Elimination of foreign exchange gains (losses) on remeasurement of net premium receivables and loss and LAE reserves that are recognized in net income.

4) Elimination of foreign exchange gains (losses) on remeasurement of net premium receivables and loss and LAE reserves that are recognized in net income (loss) attributable to AGL.

Long-dated receivables and loss and LAE reserves represent the present value of future contractual or expected cash flows.

Therefore, the current period’s foreign exchange remeasurement gains (losses) are not necessarily indicative of the total foreign exchange gains (losses) that the Company will ultimately recognize.

5) Elimination of the tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

5) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

See “— Results of Operations — Reconciliation to GAAP” for a reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).

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The AOCI component of the fair value adjustment on the investment portfolio is not deemed economic because the Company generally holds these investments to maturity and therefore would not recognize an economic gain or loss.

4) Elimination of the tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

4) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

Management uses adjusted book value, further adjusted to remove the effect of FG VIE and CIV consolidation, to measure the intrinsic value of the Company, excluding franchise value.

Adjusted book value per share, further adjusted for FG VIE and CIV consolidation (core adjusted book value), is one of the key financial measures used in determining the amount of certain long-term compensation elements to management and employees and used by rating agencies and investors.

Adjusted book value per share, further adjusted for FG VIE and CIV consolidation (core adjusted book value), is one of the key financial measures used in determining the amount of

certain long-term compensation elements to management and employees and used by rating agencies and investors.

Management believes that adjusted book value is a useful measure because it enables an evaluation of the Company’s in-force premiums and revenues net of expected losses.

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This amount represents the present value of the expected future net earned premiums, net of the present value of expected losses to be expensed, which are not reflected in GAAP equity.

4) Elimination of the tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

4) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

The unearned premiums and revenues included in adjusted book value will be earned in future periods, but actual earnings may differ materially from the estimated amounts used in determining current adjusted book value due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults and other factors.

2 unchanged sentences

As of December 31, 2024 As of December 31, 2023

After-Tax Per Share After-Tax Per Share

Total Per Share Total Per Share

(dollars in millions, except share amounts)

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Gain (loss) related to FG VIE and CIV consolidation included in:

Adjusted operating shareholders’ equity (net of tax provision of $1 and $4)

Adjusted operating shareholders’ equity (net of tax provision (benefit) of $0 and $1)

$ — $ 0.01 $ 5 $ 0.07

Adjusted book value (net of tax provision (benefit) of $(2) and $0)

(6) (0.13) — —

Net Present Value of Estimated Net Future Revenue

Management believes that this amount is a useful measure because it enables an evaluation of the present value of estimated net future revenue for non-financial guaranty insurance contracts.

This amount represents the net present value of estimated future revenue from these contracts (other than credit derivatives with net expected losses), net of reinsurance, ceding commissions and premium taxes.

This amount represents the net present value of

estimated future revenue from these contracts (other than credit derivatives with net expected losses), net of reinsurance, ceding commissions and premium taxes.

Future installment premiums are discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than Loss Mitigation Securities.

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_____________

(1) Includes the present value of new business on installment policies discounted at the prescribed GAAP discount rates, GWP adjustments on existing installment policies due to changes in assumptions and other GAAP adjustments.

(1) Includes the present value of new business on installment policies discounted at the prescribed GAAP discount rates, and GWP adjustments on existing installment policies due to changes in assumptions and other GAAP adjustments.

(2) Includes the present value of future premiums and fees on new business paid in installments discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than certain fixed-maturity securities such as Loss Mitigation Securities.

The years 2023 and 2022 also include the present value of future premiums and fees associated with other guaranties written by the Company that, under GAAP, are accounted for under Accounting Standards Codification (ASC) 460, Guarantees.

Includes the present value of future premiums and fees associated with other business written by the Company that, under GAAP, are accounted for under ASC 460, Guarantees.

Insured Portfolio

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The following tables present information in respect of the financial guaranty insured portfolio to supplement the disclosures and discussion provided in Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure.

The following table presents the financial guaranty portfolio by sector, net of cessions to reinsurers.

It includes all financial guaranty contracts outstanding as of the dates presented, regardless of the form written (i.e., credit derivative form or traditional financial guaranty insurance form) or the applicable accounting model (i.e., insurance, derivative or FG VIE consolidation).

Financial Guaranty Portfolio

Net Par Outstanding by Sector

As of December 31, 2023 As of December 31, 2022

Sector (in millions)

Public finance:

public finance:

General obligation $ 74,609 $ 71,868

Tax backed 33,060 33,752

Municipal utilities 29,300 26,436

Transportation 22,052 19,688

Healthcare 12,604 11,304

Infrastructure finance 8,796 6,955

Higher education 7,250 7,137

Housing revenue 1,152 959

Investor-owned utilities 329 332

Renewable energy 167 180

Other public finance 970 1,025

public finance 190,289 179,636

Non-U.S public finance:

Regulated utilities 20,545 17,855

Infrastructure finance 15,430 13,915

Sovereign and sub-sovereign 9,869 9,526

Renewable energy 2,030 2,086

Pooled infrastructure 1,133 1,081

Total non-U.S.

public finance 49,007 44,463

Total public finance 239,296 224,099

Structured finance:

structured finance:

Insurance securitizations 4,379 3,879

RMBS 1,774 1,956

Pooled corporate obligations 631 625

Financial products 464 453

Consumer receivables 314 437

Subscription finance facilities 178 72

Other structured finance 892 806

structured finance 8,632 8,228

structured finance:

Subscription finance facilities 444 219

Pooled corporate obligations 425 344

Other structured finance 104 105

Total non-U.S structured finance 1,225 931

Total structured finance 9,857 9,159

Total net par outstanding $ 249,153 $ 233,258

Second-to-pay insured par outstanding represents transactions the Company has insured that are already insured by another financial guaranty insurer and where the Company’s obligation to pay under its insurance of such transactions arises only if both the obligor on the underlying insured obligation and the primary financial guaranty insurer default.

The Company underwrites such transactions based on the underlying insured obligation without regard to the primary financial guaranty insurer and internally rates the transaction the higher of the rating of the underlying obligation and the rating of the primary financial guarantor.

The second-to-pay insured par outstanding as of both December 31, 2023 and 2022 was $4.3 billion.

The tables below show the Company’s ten largest U.S.

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Pennsylvania (Commonwealth of) 2,132 1.1 BBB+

Lower Colorado River Authority 1,642 0.8 A

Metro Washington Airports Authority (Dulles Toll Road) 1,631 0.8 BBB+

New York Metropolitan Transportation Authority 1,481 0.8 A-

New York Power Authority 1,460 0.8 AA-

Foothill/Eastern Transportation Corridor Agency, California 1,326 0.7 BBB+

JFK New Terminal One, New York 1,600 0.8 BBB-

Alameda Corridor Transportation Authority, California 1,373 0.7 BBB

North Texas Tollway Authority 1,355 0.7 A+

CommonSpirit Health, Illinois 1,000 0.5 A-

San Joaquin Hills Transportation, California 988 0.5 BBB

New York Power Authority 1,334 0.7 AA-

New York Metropolitan Transportation Authority 1,314 0.7 A-

Foothill/Eastern Transportation Corridor Agency, California 1,269 0.5 BBB+

Total of top ten U.S.

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Private US Insurance Securitization $ 1,196 14.1 % AA-

Private US Insurance Securitization 950 11.0 A+

Private US Insurance Securitization 1,100 13.0 AA-

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Private US Insurance Securitization 398 4.7 AA-

Private Middle Market CLO 167 2.0 A

DB Master Finance LLC 165 2.0 BBB

Private Middle Market CLO 125 1.5 BBB

SLM Student Loan Trust 2007-A 123 1.5 AA

Private Middle Market CLO 129 1.5 AAA

Private US Insurance Securitization 120 1.4 AA

DB Master Finance LLC 119 1.4 BBB

Total of top ten U.S.

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(dollars in millions)

Southern Water Services Limited United Kingdom $ 2,409 4.8 % BBB

Thames Water Utilities Finance PLC United Kingdom 2,106 4.2 BBB

Southern Water Services Limited United Kingdom $ 2,611 5.0 % BB

Thames Water Utilities Finance Plc United Kingdom 2,133 4.1 B

Southern Gas Networks PLC United Kingdom 2,082 4.0 BBB+

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National Grid Gas PLC United Kingdom 1,657 3.2 A-

Quebec Province Canada 1,436 2.8 AA-

Channel Link Enterprises Finance PLC France, United Kingdom 1,257 2.5 BBB

Yorkshire Water Services Finance Plc United Kingdom 1,243 2.4 BBB

British Broadcasting Corporation (BBC) United Kingdom 1,042 2.1 A+

Channel Link Enterprises Finance PLC France, United Kingdom 1,214 2.3 BBB

Quebec Province Canada 1,021 2.0 AA-

Capital Hospitals (Issuer) PLC United Kingdom 980 1.9 BBB-

Total of top ten non-U.S.

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$50 million through $100 million 666 39,195 15.7

$100 million to $200 million 343 41,453 17.3

$100 million through $200 million 365 44,094 17.6

$200 million or greater 237 72,164 28.7

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$50 million through $100 million 53 1,485 13.3

$100 million to $200 million 54 1,990 20.2

$100 million through $200 million 52 2,345 21.0

$200 million or greater 84 6,372 57.0

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Exposure to Puerto Rico

The Company had insured exposure to obligations of various authorities and public corporations of the Commonwealth of Puerto Rico (Puerto Rico or the Commonwealth) aggregating $1.1 billion net par outstanding as of

December 31, 2023, all of which was rated BIG.

Beginning on January 1, 2016, a number of Puerto Rico exposures have defaulted on bond payments, and the Company has now paid claims on all of its Puerto Rico exposures except the Municipal Finance Agency (MFA), the Puerto Rico Aqueduct and Sewer Authority (PRASA), and the University of Puerto Rico (U of PR).

The following tables present information in respect of the Puerto Rico exposures to supplement the disclosures and discussions provided in “—Liquidity and Capital Resources—Insurance Subsidiaries, Financial Guaranty Policies” below and Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure.

Exposure to Puerto Rico by Company

As of December 31, 2023

Net Par Outstanding

AGM AGC AG Re Eliminations (1) Total Net Par Outstanding Gross Par Outstanding

(in millions)

Defaulted Puerto Rico Exposures

PREPA $ 377 $ 67 $ 180 $ — $ 624 $ 633

Total Defaulted 377 67 180 — 624 633

Resolved Puerto Rico Exposures (2)

PRHTA (Transportation revenue) 14 157 87 (14) 244 244

PRHTA (Highway revenue) 109 11 8 — 128 128

Total Resolved 123 168 95 (14) 372 372

Other Puerto Rico Exposures (3)

MFA 84 6 18 — 108 114

PRASA and U of PR — 1 — — 1 1

Total Other 84 7 18 — 109 115

Total exposure to Puerto Rico $ 584 $ 242 $ 293 $ (14) $ 1,105 $ 1,120

____________________

(1) Net par outstanding eliminations relate to second-to-pay policies under which an Assured Guaranty insurance subsidiary guarantees an obligation already insured by another Assured Guaranty insurance subsidiary.

(2) Resolved pursuant to the 2022 Puerto Rico Resolutions.

Consideration (e.g.

Toll Bonds and CVIs) received under the HTA Plan related to the remaining insured exposure is reported in FG VIEs’ assets (see Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles).

(3) All debt service on these insured exposures have been paid to date without any insurance claim being made on the Company.

The following tables show the scheduled amortization of the various obligations of Puerto Rico’s authorities and public corporations insured by the Company.

The Company guarantees payments of debt service when those amounts are scheduled to be paid and cannot be required to pay on an accelerated basis.

In the event that obligors default on their obligations, the Company would only pay the shortfall between the debt service due in any given period and the amount paid by the obligors.

Amortization Schedule of Net Par of Puerto Rico

As of December 31, 2023

Scheduled Net Par Amortization

2024 Q1 2024 Q2 2024 Q3 2024 Q4 2025 2026 2027 2028 2029 -2033 2034 -2038 2039 -2041 Total

(in millions)

Defaulted Puerto Rico Exposures

PREPA $ — $ — $ 93 $ — $ 68 $ 105 $ 105 $ 68 $ 176 $ 9 $ — $ 624

Total Defaulted — — 93 — 68 105 105 68 176 9 — 624

Resolved Puerto Rico Exposures

PRHTA (Transportation revenue) — — — — — — — — — 127 117 244

PRHTA (Highway revenue) — — — — — — — — 44 84 — 128

Total Resolved — — — — — — — — 44 211 117 372

Other Puerto Rico Exposures

MFA — — 16 — 16 35 15 13 13 — — 108

PRASA and U of PR — — 1 — — — — — — — — 1

Total Other Puerto Rico Exposures — — 17 — 16 35 15 13 13 — — 109

Total $ — $ — $ 110 $ — $ 84 $ 140 $ 120 $ 81 $ 233 $ 220 $ 117 $ 1,105

Amortization Schedule of Net Debt Service of Puerto Rico

All of the Company’s insured exposure to various authorities and public corporations of the Commonwealth of Puerto Rico (Puerto Rico or the Commonwealth) is rated BIG.

Puerto Rico net par and net debt service outstanding as of December 31, 2024 were $637 million and $756 million respectively, compared with net par and net debt service outstanding as of December 31, 2023 of $1,105 million and $1,508 million, respectively.

As of December 31, 2024, the Company’s only remaining outstanding insured Puerto Rico exposure subject to a payment default was PREPA, which had net par and debt service outstanding of $532 million and $629 million, respectively.

As of December 31, 2023, PREPA net par and debt service outstanding were $624 million and $751 million, respectively.

See “—Liquidity and Capital Resources—Insurance Subsidiaries, Financial Guaranty Policies” below and Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), for more information.

The following table shows the scheduled amortization for PREPA.

The Company guarantees payment of interest and principal when those amounts are scheduled to be paid and cannot be required to pay on an accelerated basis, although in certain circumstances it may elect to do so.

When obligors default on their obligations, the Company is only required to pay the shortfall between the debt service due in any given period and the amount paid by the obligors.

Amortization Schedule of PREPA

Net Par Outstanding and Net Debt Service Outstanding

As of December 31, 2024

Scheduled Net Debt Service Amortization

2024 Q1 2024 Q2 2024 Q3 2024 Q4 2025 2026 2027 2028 2029 -2033 2034 -2038 2039 -2041 Total

(in millions)

Defaulted Puerto Rico Exposures

PREPA $ 12 $ 3 $ 105 $ 3 $ 92 $ 126 $ 122 $ 80 $ 199 $ 9 $ — $ 751

Total Defaulted 12 3 105 3 92 126 122 80 199 9 — 751

Resolved Puerto Rico Exposures

PRHTA (Transportation revenue) 6 — 6 — 13 13 12 13 65 172 128 428

PRHTA (Highway revenue) 3 — 3 — 7 7 7 7 76 93 — 203

Total Resolved 9 — 9 — 20 20 19 20 141 265 128 631

Other Puerto Rico Exposures

MFA 3 — 19 — 20 39 17 14 13 — — 125

PRASA and U of PR — — 1 — — — — — — — — 1

Total Other Puerto Rico Exposures 3 — 20 — 20 39 17 14 13 — — 126

Total $ 24 $ 3 $ 134 $ 3 $ 132 $ 185 $ 158 $ 114 $ 353 $ 274 $ 128 $ 1,508

In the fourth quarter of 2023, all of the Toll Bonds in the Puerto Rico Trusts were called, resulting in cash proceeds of $154 million.

Such cash proceeds comprise the vast majority of the assets in the Puerto Rico Trusts as of December 31, 2023.

In January 2024, such proceeds were used to pay down a portion of the liabilities of the Puerto Rico Trusts.

The remaining liabilities of the Puerto Rico Trusts will be paid by the U.S.

Insurance Subsidiaries under their financial guaranty policies and are no longer dependent on the credit of PRHTA.

Financial Guaranty Exposure to U.S.

The following table presents information in respect of the U.S.

RMBS exposures to supplement the disclosures and discussion provided in Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure, and Note 4, Expected Loss to be Paid (Recovered).

RMBS exposures represent 0.7% of the total net par outstanding, and BIG U.S.

RMBS represent 17.3% of total BIG net par outstanding as of December 31, 2023.

Distribution of U.S.

RMBS by Year Insured and Type of Exposure as of December 31, 2023

Year insured:

First Lien Alt-A

First Lien Option

ARMs Subprime

First Lien Second

Lien Total Net Par Outstanding

Scheduled Net Par Amortization Scheduled Net Debt Service Amortization

(in millions)

2004 and prior $ 8 $ 7 $ — $ 301 $ 9 $ 325

2005 21 110 14 178 40 363

2006 21 22 1 37 93 174

2025 (January 1 - March 31) $ — $ 10

2025 (April 1 - June 30) — 3

2025 (July 1 - September 30) 68 78

2025 (October 1 - December 31) — 2

Subtotal 2025 68 93

2030-2034 141 157

2035-2037 4 4

Total exposures $ 50 $ 318 $ 30 $ 1,100 $ 276 $ 1,774

Exposures rated BIG $ 30 $ 191 $ 14 $ 602 $ 104 $ 941

Total $ 532 $ 629

Liquidity and Capital Resources

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Holding Companies

AGL directly owns (i) AG Re, an insurance company domiciled in Bermuda, and (ii) AGUS, a U.S.

AGL directly owns (i) AG Re, an insurance company domiciled in Bermuda;

and (ii) AGUS, a U.S.

holding company with public debt outstanding.

AGUS directly owns:

(i) AGC, an insurance company domiciled in Maryland;

and (ii) AGMH, a U.S.

AGUS directly owns AGMH, another U.S.

holding company with public debt outstanding.

AGMH directly owns AGM, an insurance subsidiary domiciled in New York.

As of August 1, 2024, AGMH directly owns AG, an insurance company domiciled in Maryland.

Until August 1, 2024, AGMH directly owned AGM, an insurance company domiciled in New York.

See “— Overview — Key Business Strategies — Merger of the U.S.

Insurance Subsidiaries” above.

AGUS and AGMH are collectively referred to as the U.S.

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The liquidity of AGL and its U.S.

Holding Companies is largely dependent on dividends and other distributions from their operating subsidiaries (see “— Insurance Subsidiaries — Distributions from Insurance Subsidiaries” below for a description of dividend and other capital distribution restrictions) and their access to external financing.

Holding Companies is largely dependent on dividends, stock redemptions and other distributions from their operating subsidiaries (see “— Insurance Subsidiaries — Distributions from Insurance Subsidiaries” below) and access to external financing.

The operating liquidity requirements of AGL and the U.S.

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Holding Companies may also require liquidity to:

• make capital investments in their operating subsidiaries;

• make capital investments in their operating subsidiaries and in alternative investments;

• fund acquisitions of new businesses;

5 unchanged sentences

See “— Overview— Key Business Strategies, Capital Management” above for information on common share repurchases.

External Financing

From time to time, AGL and its subsidiaries have sought external debt or equity financing in order to meet their obligations.

External sources of financing may or may not be available to the Company and, if available, the cost of such financing may not be acceptable to the Company.

Long-Term Debt Obligations

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6.125% Senior Notes 6.125%

2028 $ 350 $ 350

3.15% Senior Notes 3.15% 2031 500 500

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AGUS - intercompany loans from:

AGC and AGM 3.50% 2029 250 250

AG/AGM (1) 3.50% 2029 250 250

AGUS intercompany loans 270 270

5 unchanged sentences

____________________

(1) Until June 30, 2023, the Series A Enhanced Junior Subordinated Debentures paid interest based on LIBOR.

The reference to LIBOR in such debentures has been replaced with a rate based on Three-Month Chicago Mercantile Exchange (CME) Term Secured Overnight Finance Rate (SOFR).

(2) If the AGMH Junior Subordinated Debentures are outstanding after December 15, 2036, then the principal amount of the outstanding debentures will bear interest at One-Month CME Term SOFR plus 2.33%.

(1) Effective August 1, 2024, AGM merged with and into AG, with AG as the surviving company.

(3) Represents principal amount of Junior Subordinated Debentures issued by AGMH that has been purchased by AGUS.

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On August 21, 2023, AGUS issued $350 million of 6.125% Senior Notes due 2028.

On September 25, 2023, AGUS

redeemed $330 million of 5% Senior Notes due 2024.

On September 25, 2023, AGUS redeemed $330 million of 5% Senior Notes due 2024.

See Item 8, Financial Statements and Supplementary Data, Note 11, Long-Term Debt and Credit Facilities.

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Intercompany Loans Payable

On October 1, 2019, the U.S.

Insurance Subsidiaries made 10-year, 3.5% interest rate intercompany loans to AGUS, aggregating $250 million, to fund the acquisition of BlueMountain Capital Management LLC (AssuredIM LLC, now known as Sound Point Luna LLC) and its associated entities, and the related capital contributions.

On October 1, 2019, AG made a 10-year, 3.5% interest rate intercompany loan to AGUS, in the amount of $250 million, to fund the acquisition of BlueMountain Capital Management LLC (AssuredIM LLC, now known as Sound Point Luna LLC) and its associated entities, and the related capital contributions.

Interest is payable annually in arrears on each anniversary of the note, and commenced on October 1, 2020.

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AGUS has the right to prepay the principal amount of the notes in whole or in part at any time, or from time to time, without payment of any premium or penalty.

In addition, in 2012 AGUS borrowed $90 million from its affiliate AGRO to fund the acquisition of Municipal Assurance Corp.

In 2023, the maturity date was extended to December 2028.

AGUS repaid $10 million in 2021 in outstanding principal as well as accrued and unpaid interest.

There were no repayments in 2023 and 2022.

As of December 31, 2023, $20 million remained outstanding.

Guarantor and U.S.

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AGL fully and unconditionally guarantees the payment of the principal of, and interest on, the $1,450 million aggregate principal amount of notes issued by the U.S.

Holding Companies, and the $450 million aggregate principal amount of junior subordinated debentures issued by the U.S.

Holding Companies, the $450 million aggregate principal amount of junior subordinated debentures issued by the U.S.

Holding Companies and the intercompany loans.

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(in millions)

Assets, excluding investments in subsidiaries

Fixed-maturity securities (1)

Investment in Sound Point — 429

Short-term investments, other invested assets and cash 23 325

Ownership Interest in Sound Point — 418

Other invested assets — 124

Short-term investments and cash 52 367

Receivables from affiliates (2) 67 —

Receivable from U.S.

Dividends receivable from U.S.

Holding Companies 150 —

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Payable to affiliates (2) 14 14

Payable to AGL — 80

Dividends payable to AGL — 150

Other liabilities 13 84

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(1) As of December 31, 2024, weighted average durations of AGL’s and the U.S.

Holding Companies’ fixed-maturity securities (excluding AGUS’s investment in AGMH’s debt) were 9.7 years and 4.2 years, respectively.

(2) Represents receivable and payables with non-guarantor subsidiaries.

Holding Companies’ fixed-maturity securities were 10.6 years and 3.5 years, respectively.

(2) Primarily represents receivables and payables with non-guarantor subsidiaries.

Year Ended December 31, 2024

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(in millions)

Gain on sale of asset management subsidiaries $ — $ 265

Other income — 7

Revenues $ 2 $ 13

Interest expense — 101

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Income (loss) before provision for income taxes and equity in earnings (losses) of investees (40) (102)

Net income (loss) (45) 105

Net income (loss) excluding investments in subsidiaries (40) (85)

The following table presents significant cash flow items for AGL and the U.S.

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(in millions)

Dividends received from subsidiaries (1) $ 306 $ 370

Interest on intercompany loans — (10)

Interest paid — (87)

Dividends received from U.S.

Holding Companies $ 540 $ —

Dividends received from other subsidiaries 97 404

Distributions from equity method investees (1) — 37

Interest paid on intercompany loans — (10)

Interest paid on long term debt — (88)

Investments in subsidiaries — (14)

Return of capital from subsidiaries — 2

Redemption of stock by AGC — 200

Redemption of stock by insurance subsidiaries — 267

Dividends paid to AGL — (540)

Dividends paid by AGL

Dividends paid to AGL shareholders (68) —

Repurchases of common shares (2) (502) —

Issuance of long-term debt, net of issuance costs — 345

Redemption of debt — (330)

____________________

(1) AGL’s dividends include dividends from AGUS.

(1) Includes distributions from Sound Point and other alternative investments.

(2) See Item 8, Financial Statements and Supplementary Data, Note 18, Shareholders’ Equity, for additional information about share repurchases and authorizations.

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resident persons entitled to the benefits of the treaty.

External Financing

From time to time, AGL and its subsidiaries have sought external debt or equity financing in order to meet their obligations.

External sources of financing may or may not be available to the Company and, if available, the cost of such financing may not be acceptable to the Company.

Insurance Subsidiaries

The Company has several insurance subsidiaries.

Insurance Subsidiaries consist of AGM and AGC.

AG is an insurance subsidiary domiciled in Maryland.

As of August 1, 2024, AG owns:

(i) AGUK, an insurance subsidiary domiciled in the U.K;

and (ii) AGE, an insurance company domiciled in France.

Until August 1, 2024, AGM was an insurance subsidiary of the Company domiciled in New York.

See “— Overview — Key Business Strategies — Merger of the U.S.

Insurance Subsidiaries” above.

AGUK and AGE are collectively referred to as the European Insurance Subsidiaries.

AG Re is an insurance company domiciled in Bermuda, which owns AGRO, an insurance subsidiary, also domiciled in Bermuda.

AG Re is an insurance company domiciled in Bermuda that owns AGRO, an insurance company that is also domiciled in Bermuda.

Sources and Uses of Funds

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• dividends or other distributions to parent,

• reinsurance premiums,

• principal of and, interest on, surplus notes, where applicable, and

• capital investments in their own subsidiaries and in alternative investments, where appropriate.

• reinsurance premiums, and

• capital investments in their own subsidiaries and in alternative investments.

Management believes that the insurance subsidiaries’ liquidity needs for the next twelve months can be met from current cash, short-term investments and operating cash flow, including premium collections and coupon payments as well as scheduled maturities and paydowns from their respective investment portfolios.

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Payments made in settlement of the Company’s obligations arising from its insured portfolio may, and often do, vary significantly from year to year, depending primarily on the frequency and severity of payment defaults and whether the Company chooses to accelerate its payment obligations in order to mitigate future losses.

For example, the Company made substantial claim payments in 2022 in connection with the resolution of certain Puerto Rico credits.

For example, the Company made substantial claim payments in 2022 and 2024 in connection with the resolution of certain Puerto Rico credits.

The Company is continuing its efforts to resolve the one remaining unresolved Puerto Rico insured exposure that is in payment default, PREPA.

The Company had $532 million in insured net par outstanding of PREPA obligations as of December 31, 2024.

For more information, see Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure, and Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

The terms of the Company’s CDS contracts generally are modified from standard CDS contract forms approved by International Swaps and Derivatives Association, Inc.

For more information, see Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), and Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

The terms of the Company’s credit default swaps (CDS) contracts generally are modified from standard CDS contract forms approved by International Swaps and Derivatives Association, Inc.

such that the circumstances giving rise to the Company’s obligation to make loss payments are similar to those for its financial guaranty insurance contracts.

The documentation for certain CDS were negotiated to require the Company to also pay if the obligor becomes bankrupt or if the reference obligation were restructured.

The documentation for certain CDS was negotiated to require the Company to also pay if the obligor were to become bankrupt or if the reference obligation were restructured.

Furthermore, some CDS documentation requires the Company to make a payment due to an event that is unrelated to the performance of the obligation referenced in the credit derivative.

2 unchanged sentences

The following table presents estimated probability weighted expected cash outflows under direct and assumed financial guaranty contracts, whether accounted for as insurance or credit derivatives, including claim payments under contracts in consolidated FG VIEs, as of December 31, 2024.

This amount does not include amounts related to loss adjustment expenses.

This amount is not reduced for cessions under reinsurance contracts or recoveries attributable to Loss Mitigation Securities.

This amount includes any benefit anticipated from excess spread or other recoveries within the contracts but does not reflect any benefit for recoveries under breaches of R&W.

This amount includes any benefit anticipated from excess spread or other recoveries within the contracts but does not reflect any benefit for recoveries under breaches of representation and warranty.

This amount also excludes estimated recoveries for past claims paid for policies in the public finance sector.

Financial Statements and Supplementary Data, Note 5, Contracts Accounted for as Insurance.

Estimated Expected Claim Payments

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Total $ 1,071

Distributions From Insurance Subsidiaries to Holding Companies

Ordinary Dividends From Insurance Subsidiaries to Holding Companies

The Company anticipates that, for the next twelve months, amounts paid by AGL’s direct and indirect insurance subsidiaries as dividends or other distributions will be a major source of the holding companies’ liquidity.

The insurance subsidiaries’ ability to pay dividends depends upon their financial condition, results of operations, cash requirements, other potential uses for such funds, and compliance with rating agency requirements, and is also subject to restrictions contained in the insurance laws and related regulations of their states of domicile.

The insurance subsidiaries’ ability to pay dividends depends upon their financial condition, results of operations, cash requirements, other potential uses for such funds and compliance with rating agency requirements, and is also subject to restrictions contained in the

insurance laws and related regulations of their states of domicile.

For more information, see Item 8, Financial Statements and Supplementary Data, Note 14, Insurance Company Regulatory Requirements.

Dividend restrictions by insurance subsidiary are as follows:

• The maximum amount available during 2024 for AGM (a subsidiary of AGMH) to distribute as dividends without regulatory approval is approximately $265 million, of which approximately $47 million is available for distribution in the first quarter of 2024.

• The maximum amount available during 2024 for AGC (a subsidiary of AGUS) to distribute as ordinary dividends is approximately $117 million, of which approximately $35 million is available for distribution in the first quarter of 2024.

• Based on the applicable law and regulations, in 2024 AG Re has the capacity to:

(i) make capital distributions in an aggregate amount up to $129 million without the prior approval of the Bermuda Monetary Authority (the Authority);

and (ii) declare and pay dividends in an aggregate amount up to approximately $226 million as of December 31, 2023.

Such dividend capacity is further limited by:

(i) the actual amount of AG Re’s unencumbered assets, which amount changes from time to time due in part to collateral posting requirements and which was approximately $138 million as of December 31, 2023;

and (ii) the amount of statutory surplus, which, as of December 31, 2023, was $47 million.

Distributions From Insurance Company Subsidiaries

• The Company expects the amount of ordinary dividends available for distribution by AG in 2025 to be approximately $287 million.

Such payments would be payable in the second half of 2025 because AG’s ordinary dividends were concentrated in the second half of 2024 following the August 1, 2024 merger of AGM with and into AG.

Under Maryland’s insurance law, AG may make an ordinary dividend payment in 2025 only when such amount, together with other dividends and distributions paid in the prior 12 months, does not exceed its expected 2025 ordinary dividend capacity of $287 million (i.e., a 12-month look back of dividends and distributions).

However, in order to enable AG to make payments over the course of the year, AG has put in place for 2025 a quarterly process with the MIA, pursuant to which AG will confirm that the MIA does not object to AG dividending $71.8 million (i.e., 25%) of the $287 million amount in each calendar quarter of 2025.

Pursuant to this process, AG obtained the MIA’s non-objection to pay, and expects to pay, a $71.8 million dividend on March 7, 2025.

See Part I, Item 1, Business - Regulation, and Part II, Item 7, Management’s Discussion and Analysis of Financial Conditions and Results of Operations – Overview – Key Business Strategies – Merger of the U.S.

Insurance Subsidiaries.

• The Company expects the amount of dividends available for distribution by AG Re in 2025 to be approximately $192 million.

Based on applicable law and regulations, in 2025 AG Re has the capacity to declare and pay dividends in an aggregate amount up to 25% of the prior year statutory surplus (i.e., up to $272 million as of December 31, 2024);

provided that such payment cannot exceed AG Re’s unencumbered assets ($192 million as of December 31, 2024) or its statutory surplus ($229 million as of December 31, 2024).

Additionally, in 2025 AG Re can make capital distributions in an aggregate amount up to $129 million without the prior approval of the Authority.

Ordinary Dividends From Insurance Subsidiaries

to Holding Companies

2 unchanged sentences

(in millions)

Dividends paid by AGC to AGUS $ 102 $ 207 $ 94

Dividends paid by AGM to AGMH 257 266 291

Dividends paid by AG Re to AGL 97 53 —

Redemption of common stock by AGC from AGUS 200 — —

Dividends paid by AG to U.S.

Holding Companies (1) 400 358 473

___________________

(1) 2021 included fixed-maturity securities with a fair value of $46 million.

(1) Prior to the merger of AGM with and into AG, with AG as the surviving company, AG had been directly owned by AGUS.

As a result of the merger, effective as of August 1, 2024, AG is directly owned by AGMH, a subsidiary of AGUS.

Stock Redemptions by Insurance Subsidiaries

In May 2024, NYDFS approved, and AGM implemented, the redemption of approximately $100 million of AGM’s shares of common stock from AGMH.

In connection with the merger of AGM into AG, the MIA approved, and in third quarter of 2024 AG implemented, the redemption of approximately $300 million of AG’s shares of common stock from AGMH in exchange for cash of $167 million and the remainder in alternative investments.

Committed Capital Securities

Each of AGC and AGM is party to an arrangement that enables it to access, at its discretion, up to $200 million of capital, at any time, and has the right to use such capital for any purpose, including to pay claims.

The arrangement entails four custodial trusts (Woodbourne Capital Trust I, II, III and IV) relating to AGC and four custodial trusts (Sutton Capital Trust I, II, III and IV) relating to AGM, each of which issued $50 million face amount of “committed capital securities” and invested the proceeds of that issuance in eligible assets that would enable the trust to have the cash necessary to respond to AGC’s or AGM’s exercise, respectively, of a put option.

The put option consists of a right that each of AGC and AGM has, pursuant to separate put agreements that AGC and AGM entered into with each of the trusts, to issue to each trust $50 million of non-cumulative redeemable perpetual preferred stock, in exchange for an equivalent amount of cash (i.e., an aggregate of $200 million for each of AGC and AGM).

When AGC or AGM exercises its put option, the relevant trust(s) must liquidate the portfolio of high-quality, liquid assets that it currently maintains and use the liquidation proceeds to purchase AGC or AGM preferred stock, as applicable.

The put agreements have no scheduled termination date or maturity, but may be terminated upon the occurrence of certain specified events.

None of the events that would give rise to a termination of the put agreements have occurred.

Accordingly, each of AGC and AGM currently has the ability to exercise put options to raise up to $200 million of capital at any time.

AG is party to an arrangement that enables it to access, at its discretion, up to $400 million of capital, at any time, and has the right to use such capital for any purpose, including to pay claims.

See Item 8, Financial Statements and Supplementary Data, Note 9, Fair Value Measurement.

Investment Portfolio

The Company’s principal objectives in managing its investment portfolio are to support the highest possible ratings for each operating company, to manage investment risk within the context of the underlying portfolio of insurance risk, to maintain sufficient liquidity to cover unexpected stress in the insurance portfolio, and to maximize after-tax net investment income.

Approximately 60% of the total investment portfolio is managed by external parties.

In accordance with the Company’s investment guidelines, each of the three external investment managers is required to maintain the Company’s investment portfolio with an overall credit quality rated at a minimum of A+/A1/A+ by S&P/Moody’s/Fitch Inc., respectively.

The Company’s principal objectives in managing its investment portfolio are to support the highest possible ratings for each operating company, manage investment risk within the context of the underlying portfolio of insurance risk, maintain sufficient liquidity to cover unexpected stress in the insurance portfolio and maximize after-tax net investment income.

As of December 31, 2024, the Company had $7,590 million of available-for-sale fixed-maturity and short-term investments, of which

$5,452 million were managed by three investment managers who are required to, in accordance with the Company’s investment guidelines, maintain their portion of the Company’s investment portfolio with an overall credit quality rated at a minimum of A+/A1/A+ by S&P/Moody’s/Fitch Ratings Inc.

In addition, $277 million of available-for-sale fixed-maturity securities were CLO equity tranches managed by Sound Point.

Changes in interest rates affect the value of the Company’s fixed-maturity securities.

13 unchanged sentences

____________________

(1) As of December 31, 2023 and December 31, 2022, includes $14 million and $358 million, respectively, of New Recovery Bonds received in connection with the consummation of the 2022 Puerto Rico Resolutions.

(2) Represents CVIs received under the 2022 Puerto Rico Resolutions, which are not rated.

(1) Includes primarily CVIs received under the 2022 Puerto Rico Resolutions, which are not rated.

(2) Excludes investments in Sound Point funds that are consolidated.

See Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

The Company’s available-for-sale fixed-maturity securities had a duration of 4.3 years as of December 31, 2024 and 3.9 years as of December 31, 2023, respectively.

Available-for-Sale and Trading Fixed-Maturity Securities By Rating

Available-for-Sale Fixed-Maturity Securities By Rating

The following table summarizes the ratings distributions of the Company’s available-for-sale fixed-maturity securities as of December 31, 2024 and December 31, 2023.

Ratings generally reflect the lower of Moody’s and S&P classifications, except for (i) Loss Mitigation Securities, which use Assured Guaranty’s internal ratings classifications, or (ii) Puerto Rico securities received under the 2022 Puerto Rico Resolutions, which are not rated.

Ratings generally reflect the lower of Moody’s and S&P classifications, except for (i) Loss Mitigation Securities, which use Assured Guaranty’s internal ratings classifications, rated BIG, and (ii) CLO equity tranches, which are not rated.

See Item 8, Financial Statements and Supplementary Data, Note 7, Investments and Cash, for additional information.

Distribution of Available-for-Sale Fixed-Maturity Securities by Rating

3 unchanged sentences

BBB 16.3 11.7

BIG (1) 7.8 7.4

Not rated 4.5 1.4

Total 100.0 % 100.0 %

____________________

(1) Includes primarily Loss Mitigation Securities.

See Item 8, Financial Statements and Supplementary Data, Note 7, Investments and Cash, for additional information.

(2) As of December 31, 2022, primarily includes New Recovery Bonds received in connection with the consummation of the 2022 Puerto Rico Resolutions.

Portfolio of Obligations of State and Political Subdivisions

The Company’s fixed-maturity securities include issuances by a wide number of municipal authorities across the U.S.

The Company’s fixed-maturity available-for-sale securities include issuances by a wide number of municipal authorities across the U.S.

and its territories.

The following table presents the components of the Company’s $1,940 million (fair value) of obligations of state and political subdivisions included in the Company’s available-for-sale fixed-maturity securities investment portfolio as of December 31, 2024.

Fair Value of Available-for-Sale Fixed-Maturity Securities Investment Portfolio of Obligations of State and Political Subdivisions

Fair Value of Available-for-Sale Fixed-Maturity Securities Investment Portfolio

of Obligations of State and Political Subdivisions

As of December 31, 2024 (1)

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California $ 45 $ 55 $ 245 $ 345 $ 355

New York 4 41 258 303 309

Texas 15 63 212 290 307

New York 3 35 162 200 209

Massachusetts 43 — 60 103 107

Florida — 1 101 102 108

Washington 13 27 56 96 101

Massachusetts 58 — 79 137 139

Illinois 8 12 56 76 79

Pennsylvania 14 5 71 90 91

Washington DC 28 — 41 69 69

Colorado — 20 38 58 60

Pennsylvania 12 2 32 46 48

Arizona — — 43 43 44

All others 65 69 331 465 499

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Other Investments

Other invested assets, which are generally less liquid than fixed-maturity securities primarily consist of the investment in Sound Point and fund investments across a variety of strategies.

Other invested assets, which are generally less liquid than fixed-maturity securities, primarily consist of the ownership interest in Sound Point and alternative investments across a variety of strategies.

The Insurance segment reports the Company’s percentage ownership of Sound Point funds and AHP funds as equity method investments with changes in NAV included in the Insurance segment adjusted operating income.

As of December 31, 2023, three of the funds in which the Company invests are consolidated and the remaining are accounted as equity method investments in the Company’s consolidated financial statements.

As of December 31, 2022, all of the funds in which the Company directly invested were consolidated in the consolidated financial statements.

As of December 31, 2024, one active fund in which the Company invests was accounted for as a CIV and the remaining are accounted as equity method investments in the Company’s consolidated financial statements.

See “— Commitments” below.

Investment in Assets Managers and Alternative Investments by Strategy

Ownership Interest in Sound Point and Alternative Investments

As of December 31, 2024

Investments Eliminations Consolidated

Investments CIVs Consolidated

(in millions)

Sound Point (1) $ 429 $ — $ 429

Alternative investments:

Fixed-maturity securities, available-for-sale (1) $ 319 $ — $ 319

Fixed-maturity securities, trading 24 — 24

Other invested assets:

Ownership interest in Sound Point 418 — 418

CLOs 100 — 100

Asset-based 192 (82) 110

Healthcare 102 — 102

Private healthcare investing 153 — 153

Asset-based/specialty finance 142 (33) 109

Middle market direct lending 11 — 11

Other 135 — 135

1 unchanged sentence

____________________

(1) The investment in Sound Point is carried on the equity method.

(2) Represents primarily investments in the equity of U.S.

and European CLOs.

(3) Includes $34 million in alternative investments reported in fixed-maturity securities, available-for-sale, on the consolidated balance sheets.

Alternative Investments by Strategy

(1) Include CLO equity tranches distributed from the CLO fund in the fourth quarter of 2024.

Ownership Interest in Sound Point and Alternative Investments

As of December 31, 2023

Investments Eliminations Consolidated

Investments CIVs Consolidated

(in millions)

Fixed-maturity securities, available-for-sale $ 34 $ — $ 34

Other invested assets:

Sound Point 429 — 429

CLOs 302 (223) 79

Asset-based 101 (101) —

Healthcare 91 (91) —

Municipal bonds (1) 105 (105) —

Private healthcare investing 102 — 102

Asset-based/specialty finance 166 (82) 84

Middle market direct lending 5 — 5

Other 130 — 130

Total $ 1,168 $ (305) $ 863

____________________

(1) In the first quarter of 2023, the fund distributed substantially all of its available cash to the AGAS and other investors in the fund.

Change in Fair Value of Alternative Investments by Strategy

Income from Ownership Interest in Sound Point and Alternative Investments

Year Ended December 31, 2024

Investments Eliminations Consolidated

Investments CIVs Consolidated

(in millions)

Sound Point $ 5 $ — $ 5

Net investment income (1) $ 15 $ — $ 15

Fair value gains (losses) on trading securities 2 — 2

Equity in earnings of Sound Point 6 — 6

Equity in earnings (losses) of alternative investments:

CLOs 47 (33) 14

Asset-based 5 (4) 1

Healthcare 19 (9) 10

Private healthcare investing 11 — 11

Asset-based/specialty finance 24 (14) 10

Middle market direct lending 2 — 2

Other 19 — 19

Total $ 126 $ (47) $ 79

Change in Fair Value of Alternative Investments by Strategy

____________________

(1) Includes CLO equity tranches distributed from the CLO fund in the fourth quarter of 2024.

Income from Ownership Interest in Sound Point and Alternative Investments

Year Ended December 31, 2023

Investments Eliminations Consolidated

Investments CIVs Consolidated

(in millions)

Net investment income $ 1 $ — $ 1

Equity in earnings of Sound Point 5 — 5

Equity in earnings (losses) of alternative investments:

CLOs 50 (46) 4

Asset-based 5 (5) —

Healthcare (11) 13 2

Municipal bonds (2) 2 —

Other (44) — (44)

Private healthcare investing 19 (9) 10

Asset-based/specialty finance 5 (4) 1

Total $ 88 $ (59) $ 29

Change in Fair Value of Alternative Investments by Strategy

Income from Alternative Investments

Year Ended December 31, 2022

Investments Eliminations Consolidated

Investments CIVs Consolidated

(in millions)

Equity in earnings (losses) of alternative investments:

CLOs $ (2) $ 2 $ —

Asset-based 19 (19) —

Healthcare 30 — 30

Municipal bonds 2 (2) —

Private healthcare investing (11) 13 2

Asset-based/specialty finance 5 (5) —

Other (43) 2 (41)

Total $ (51) $ 12 $ (39)

Upon closing of the Sound Point Transaction and the AHP Transaction in July, the Company has increased the aggregate amount it has agreed to invest in alternative investments to $1.5 billion, including the $1 billion in Sound Point managed investments, subject to regulatory approval, which includes $739 million of invested capital (at fair value), and $779

million in unfunded commitments.

Beginning in the third quarter of 2023, the Company records an equity method ownership interest in Sound Point pursuant to the Sound Point Transaction described in Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation.

The Company has agreed to invest an aggregate amount of $1.5 billion in alternative investments, including $1 billion in Sound Point managed investments.

Unfunded commitments for alternative investments as of December 31, 2024 were $610 million.

See Part II, Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation, for a description of the Sound Point Transaction.

Of the $1.5 billion mentioned above, the U.S.

As of December 31, 2023, AGAS commitments to Sound Point and AHP funds were $775 million (of which $534 million was funded with a NAV of $571 million).

This capital was committed to several funds, each dedicated to a single strategy, including CLOs, asset-based finance and healthcare structured capital.

As of December 31, 2023, three of the eight funds in which AGAS invests are accounted for as CIVs.

Restricted Assets

Based on fair value, fixed-maturity securities, short-term investments and cash that are either held in trust for the benefit of third-party ceding insurers in accordance with statutory requirements, placed on deposit to fulfill state licensing requirements, or otherwise pledged or restricted, totaled $79 million and $234 million as of December 31, 2024 and December 31, 2023, respectively.

The investment portfolio also contains securities that are held in trust by certain AGL subsidiaries or otherwise restricted for the benefit of other AGL subsidiaries in accordance with statutory and regulatory requirements in the amount of $1,154 million and $1,169 million, based on fair value as of December 31, 2023 and December 31, 2022, respectively.

The investment portfolio also contains securities that are held in trust by certain AGL subsidiaries or otherwise restricted for the benefit of other AGL subsidiaries in accordance with statutory and regulatory requirements with a fair value of $1,135 million and $1,154 million as of December 31, 2024 and December 31, 2023, respectively.

Lease Obligations

The Company has entered into several lease agreements for office space in Bermuda;

San Francisco;

Asheville, North Carolina;

and other locations with various lease terms.

See Item 8, Financial Statements and Supplementary Data, Note 17, Leases, for a table of minimum lease obligations and other lease commitments.

The Company has entered into several lease agreements for office space in Bermuda, New York, London, Paris, and other locations with various lease terms.

See Item 8, Financial Statements and Supplementary Data, Note 16, Leases, for a table of minimum lease obligations.

FG VIEs and CIVs

5 unchanged sentences

AGL’s and its insurance subsidiaries’ creditors do not have any rights with regard to the collateral supporting the debt issued by the FG VIEs.

In the fourth quarter of 2023, all of the Toll Bonds in the Puerto Rico Trusts were called, resulting in cash proceeds of $154 million.

Such cash proceeds comprise the vast majority of the assets in the Puerto Rico Trusts as of December 31, 2023.

In January 2024, such proceeds were used to pay down a portion of the liabilities of the Puerto Rico Trusts.

The remaining liabilities of the Puerto Rico Trusts are payable by the U.S.

Insurance Subsidiaries under their financial guaranty policies and are no longer dependent on the credit of PRHTA.

The primary sources and uses of cash in the CIVs are raising capital from investors, using capital to make investments, generating cash income from investments, paying expenses, distributing cash flow to investors and borrowing funds to finance investments.

The primary sources and uses of cash in the CIVs include, using capital to make investments, generating cash income from investments, paying expenses, distributing cash flow to investors.

The assets and liabilities of the Company’s CIVs are held within separate legal entities.

6 unchanged sentences

In the third quarter of 2023, as a result of the Sound Point Transaction and AHP Transaction, the Company deconsolidated all CLOs and CLO warehouses and certain funds.

As a result, beginning July 1, 2023, the Company’s cash flow statements will no longer include all the operating, investing and financing cash flow activity of the deconsolidated CIVs.

See Item 8, Financial Statements and Supplementary Data, and Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, for additional information.

Therefore, beginning July 1, 2023, the Company’s cash flow statements no longer include all the operating, investing and financing cash flow activity of those deconsolidated CIVs.

See Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation, and Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, for additional information.

Summarized Consolidated Cash Flows

12 unchanged sentences

Issuance of long-term debt, net of issuance costs — 345 —

Redemptions and purchases of debt, including make-whole payment (330) — (619)

Redemption of debt — (330) —

Other (28) (19) (8)

9 unchanged sentences

(1) Claims paid on consolidated FG VIEs are presented in the consolidated statements of cash flows as a component of paydowns on FG VIEs’ liabilities in financing activities as opposed to operating activities.

Cash flows from operations, excluding FG VIEs and CIVs, were an outflow of $108 million in 2023 and an outflow of $1,056 million in 2022.

The decrease in outflows during 2023 was primarily due to a $964 million decrease in net claim payments, primarily due to the 2022 Puerto Rico Resolutions as well as a decrease of $101 million in tax payments.

Cash flows from operations attributable to FG VIE and CIV were inflows in 2023 and outflows in 2022, primarily because all the CLOs and CLO warehouses, which generally reported significant operating cash flows, had limited operating activities and new issuances in the first half of 2023 pending the closing of the Sound Point Transaction and AHP Transaction, at which point the CLOs and CLO warehouses were deconsolidated.

The consolidated statements of cash flows present the investing activities of the consolidated Sound Point funds, which were formerly known as AssuredIM funds, and CLOs as cash flows from operations.

The increase in inflows in 2023 compared with 2022 was mainly due to a decrease of $3,084 million in investment purchases, partially offset by a decrease of investment sales, maturities and paydowns of $1,122 million.

Investing activities primarily consisted of net sales (purchases) of debt and short-term investments, and paydowns on and sales of FG VIEs’ assets.

The decrease in investing cash inflows in 2023 compared with 2022 was mainly attributable to an increase in short-term investments in 2023 compared to net sales of short-term and fixed-maturity securities in 2022.

In 2022, investing inflows were used to fund claim payments under the 2022 Puerto Rico Resolutions and share repurchases.

See Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure, for additional information.

Financing activities primarily consist of (i) AGL share repurchases and dividends, (ii) paydowns of FG VIEs’ liabilities and (iii) CLO issuances and CLO warehouse financing activities.

The CIVs’ financing cash flows mainly included issuances and repayments of CLOs and CLO warehouse financing debt in 2022.

The decrease in financing cash flow activity from VIEs was primarily due to a decrease of $2,363 million in issuances, partially offset by a decrease in repayments of $1,002 million by the previously consolidated CLOs and CLO warehouses.

The proceeds from CLO issuances and CLO warehouse borrowings were used to fund the purchases of loans.

FG VIEs’ cash flows relate to the paydowns of FG VIEs’ liabilities.

Cash flows from operating activities were inflows of $47 million in 2024 and $461 million in 2023.

The decrease in cash inflows during 2024 was primarily due to a $457 million decrease in net cash flows from CIVs, most of which were deconsolidated in 2023 as a result of the Sound Point Transaction, an $86 million increase in tax payments, a $56 million increase in net claim payments, which were partially offset by a $93 million increase in premiums received, a $40 million increase in return on capital from equity method investees, and Sound Point Transaction and AHP Transaction expenses in 2023.

Investing activities primarily consisted of net sales (purchases) of fixed-maturity securities and short-term investments, and paydowns on and sales of FG VIEs’ assets.

The increase in investing cash inflows in 2024 compared with 2023 was mainly attributable to net purchases of short-term and fixed-maturity securities in 2023, higher sales of CVIs in 2024 and lower net sales of fixed-maturity securities in 2024.

Investing inflows in both periods were used to fund claim payments and share repurchases.

See Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), for additional information.

Financing activities primarily consist of (i) AGL share repurchases and dividends, (ii) paydowns of FG VIEs’ liabilities, and (iii) until July 1, 2023, CLO issuances and CLO warehouse financing activities.

In 2024, FG VIEs’ financing cash flows were $375 million, which primarily related to the paydown of Puerto Rico Trust liabilities.

The CIVs’ financing cash flows in 2023 included repayments of CLO warehouse financing debt of $166 million and distributions from noncontrolling interests to CIVs.

See Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

From January 1, 2025 through February 27, 2025, the Company repurchased an additional 829 thousand common shares.

As of February 27, 2024, the Company was authorized to purchase $228 million of its common shares.

As of February 27, 2025, the Company was authorized to purchase approximately $276 million of its common shares.

For more information about the Company’s share repurchases and authorizations, see Item 8, Financial Statements and Supplementary Data, Note 18, Shareholders’ Equity.

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-K

Item 7. Management’s Discussion and Analysis