What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-12 · 448 added, 639 removed, 884 unchanged (55% of the section changed)

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Assured Guaranty’s actual results may vary materially from those expressed in, or implied or projected by, the forward-looking information and statements.

Among factors that could cause actual results to differ adversely are:

(i) significant changes in inflation, interest rates, the world’s credit markets or segments thereof, credit spreads, foreign exchange rates or general economic conditions, including the possibility of a recession or stagflation;

(ii) geopolitical risk, terrorism and political violence risk, including those arising out of Russia’s invasion of Ukraine and intentional or accidental escalation between The North Atlantic Treaty Organization (NATO) and Russia, conflict in the Middle East and confrontation over Iran’s nuclear program, the polarized political environment in the United States (U.S.), and U.S.

– China strategic competition;

(iii) cybersecurity risk and the impacts of artificial intelligence, machine learning and other technological advances, including potentially increasing the risks of malicious cyber attacks, dissemination of misinformation, and disruption of markets;

Among factors that could cause actual results to differ materially are:

(i) significant changes in inflation, interest rates, the world’s credit markets or segments thereof, credit spreads, foreign exchange rates, tariff regimes or general economic conditions, including the possibility of a recession or stagflation;

(ii) geopolitical risk, terrorism and political violence risk, including those arising out of Russia’s invasion of Ukraine and intentional or accidental escalation between The North Atlantic Treaty Organization and Russia, conflicts in South Asia and the Middle East, confrontation over Iran’s nuclear program, the polarized political environment in the United States (U.S.), and strategic competition and tensions between the U.S.

(iv) the possibility of a U.S.

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(vii) the possibility that budget or pension shortfalls, difficulties in obtaining additional financing or other factors will result in credit losses or liquidity claims on obligations of state, territorial and local governments, their related authorities, public corporations and other obligors that Assured Guaranty insures or reinsures;

(viii) insured losses, including losses with respect to related legal proceedings, in excess of those expected by Assured Guaranty or the failure of Assured Guaranty to realize loss recoveries that are assumed in its expected loss estimates for insurance exposures, including as a result of the final resolution of Assured Guaranty’s Puerto Rico Electric Power Authority (PREPA) exposure or the amounts recovered on securities received in connection with the resolution of Puerto Rico exposures already resolved;

(viii) insured losses, including losses with respect to related legal proceedings, in excess of those expected by Assured Guaranty or the failure of Assured Guaranty to realize loss recoveries that are assumed in its expected loss estimates for insurance exposures, including below-investment-grade (BIG) healthcare, United Kingdom (U.K.) regulated utilities, European renewable energy, and Puerto Rico Electric Power Authority (PREPA) exposures;

(ix) the impact of Assured Guaranty satisfying its obligations under insurance policies with respect to legacy insured Puerto Rico bonds;

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(xii) the possibility that investments made by Assured Guaranty for its investment portfolio, including alternative investments, do not result in the benefits anticipated or subject Assured Guaranty to reduced liquidity at a time it requires liquidity, or to other negative or unanticipated consequences;

(xiii) the impacts of Assured Guaranty’s transactions with Sound Point Capital Management, LP (Sound Point, LP) and certain of its investment management affiliates (together with Sound Point, LP, Sound Point) and/or Assured Healthcare Partners LLC (AHP) on Assured Guaranty and its relationships with its shareholders, regulators, rating agencies, employees and the obligors it insures and on the asset management business contributed to Sound Point, LP and on the business of AHP and their relationships with their respective clients and employees;

(xiv) the possibility that strategic transactions made by Assured Guaranty, including the transactions with Sound Point and/or AHP and/or merger of Assured Guaranty Municipal Corp.

(xiii) the possibility that Assured Guaranty’s mergers, acquisitions, divestitures and other strategic transactions, including the transactions with Sound Point Capital Management, LP (Sound Point, LP) and certain of its investment management affiliates (together with Sound Point, LP, Sound Point) and/or Assured Healthcare Partners LLC (AHP) and/or merger of Assured Guaranty Municipal Corp.

(AGM) with and into Assured Guaranty Inc.

(AG, formerly Assured Guaranty Corp.), do not result in the benefits anticipated or subject Assured Guaranty to negative consequences;

(xv) the inability to control the business, management or policies of entities in which Assured Guaranty holds a minority interest;

(xvi) the impact of market volatility on the fair value of Assured Guaranty’s assets and liabilities subject to mark-to-market, including certain of its investments, contracts accounted for as derivatives, its committed capital securities, its consolidated investment vehicles and certain consolidated variable interest entities (VIEs);

(xvii) rating agency action, including a ratings downgrade, a change in outlook, the placement of ratings on watch for downgrade, or a change in rating criteria, at any time, of AGL or any of its insurance subsidiaries, and/or of any securities AGL or any of its subsidiaries have issued, and/or of transactions that AGL’s insurance subsidiaries have insured;

(xviii) the inability of Assured Guaranty to access external sources of capital on acceptable terms;

(xix) changes in applicable accounting policies or practices;

(xx) changes in applicable laws or

regulations, including insurance, bankruptcy and tax laws, or other governmental actions;

(xxi) the possibility that legal or regulatory decisions or determinations subject obligations that Assured Guaranty insures or reinsures to negative consequences;

(xxii) difficulties with the execution of Assured Guaranty’s business strategy;

(xxiii) loss of key personnel;

(xxiv) the effects of mergers, acquisitions and divestitures;

(xxv) public health crises, including pandemics and endemics, and the governmental and private actions taken in response to such events;

(xxvi) natural or man-made catastrophes;

(xxvii) the impact of climate change on Assured Guaranty’s business and regulatory actions taken related to such risk;

(xxviii) other risk factors identified in AGL’s filings with the U.S.

(AG, formerly Assured Guaranty Corp.), do not result in the benefits anticipated and/or subject Assured Guaranty to negative consequences;

(xiv) the inability to control the business, management or policies of entities in which Assured Guaranty holds a minority interest;

(xv) the impact of market volatility on the fair value of Assured Guaranty’s assets and liabilities subject to mark-to-market, including certain of its investments, contracts accounted for as derivatives, its committed capital securities (CCS), and its consolidated variable interest entities (VIEs);

(xvi) rating agency action, including a ratings downgrade, a change in outlook, the placement of ratings on watch for downgrade, or a change in rating criteria, at any time, of AGL or any of its insurance subsidiaries, and/or of any securities AGL or any of its subsidiaries have issued, and/or of transactions that AGL’s insurance subsidiaries have insured;

(xvii) the inability of Assured Guaranty to access external sources of capital on acceptable terms;

(xviii) changes in applicable laws or regulations, including insurance, bankruptcy and tax laws, including tariffs, or other governmental actions;

(xix) the possibility that legal or regulatory decisions or determinations subject Assured Guaranty or obligations that it insures or reinsures to negative consequences;

(xx) difficulties or delays with the execution of Assured Guaranty’s business strategy;

(xxi) loss of key personnel;

(xxii) changes in applicable

accounting policies or practices;

(xxiii) public health crises, including pandemics and endemics, and the governmental and private actions taken in response to such events;

(xxiv) natural or man-made catastrophes;

(xxv) the impact of climate change on Assured Guaranty’s business and regulatory actions taken related to such risk;

(xxvi) other risk factors identified in AGL’s filings with the U.S.

Securities and Exchange Commission (SEC);

(xxix) other risks and uncertainties that have not been identified at this time;

and (xxx) management’s response to these factors.

The foregoing review of important factors should not be construed as exhaustive, and should be read in conjunction with the other cautionary statements that are included in this Form 10-Q, as well as the risk factors included in the Company’s 2023 Annual Report on Form 10-K.

The Company undertakes no obligation to update publicly or review any forward looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

(xxvii) other risks and uncertainties that have not been identified at this time;

and (xxviii) management’s response to these factors.

The foregoing important factors should not be construed as exhaustive, and should be read in conjunction with the other cautionary statements that are included in this Form 10-Q, as well as the risk factors included in the Company’s 2024 Annual Report on Form 10-K.

The Company undertakes no obligation to update or review any forward looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Investors are advised, however, to consult any further disclosures the Company makes on related subjects in the Company’s reports filed with the SEC.

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Any forward looking statements in this Form 10-Q reflect the Company’s current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to its operations, results of operations, growth strategy and liquidity.

For these statements, the Company claims the protection of the safe harbor for forward looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act).

For these statements, the Company claims the protection of the safe harbor for forward looking statements contained in Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act).

Available Information

The Company maintains an internet web site at www.assuredguaranty.com .

The Company makes available, free of charge, on its web site (under www.assuredguaranty.com/sec-filings ) the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after the Company files such material with, or furnishes it to, the SEC.

The Company also makes available, free of charge, through its web site (under www.assuredguaranty.com/governance ) links to the Company’s Corporate Governance Guidelines, the Company’s Global Code of Ethics, AGL’s Bye-Laws and the charters for the committees of its Board of Directors.

In addition, the SEC maintains a web site (at www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The Company routinely posts important information for investors on its web site (under www.assuredguaranty.com/company-statements and, more generally, under the Investor Information tab at www.assuredguaranty.com/investor-information and Businesses tab at www.assuredguaranty.com/businesses ).

The Company also maintains a social media account on LinkedIn ( www.linkedin.com/company/assured-guaranty/ ).

The Company uses its web site and may use its social media account as a means of disclosing material information and for complying with its disclosure obligations under SEC Regulation FD (Fair Disclosure).

Accordingly, investors should monitor the Company Statements, Investor Information and Businesses portions of the Company’s web site as well as the Company’s social media account on LinkedIn, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

The information contained on, or that may be accessed through, the Company’s web site or social media account is not incorporated by reference into, and is not a part of, this report.

The Company maintains a website at assuredguaranty.com .

The Company makes available, free of charge, on its website (under assuredguaranty.com/sec-filings ) the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after the Company files such material with, or furnishes it to, the SEC.

The Company also makes available, free of charge, through its website (under assuredguaranty.com/governance ) links to the Company’s Corporate Governance Guidelines, its Global Code of Ethics, AGL’s Bye-Laws and the committee charters of AGL’s Board of Directors (the Board), as well as certain of the Company's environmental and social policies and statements.

In addition, the SEC maintains an Internet site (at sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The Company routinely posts important information for investors on its website (under assuredguaranty.com/company-statements and, more generally, under the Investor Information tab at assuredguaranty.com/investor-information and Businesses tab at assuredguaranty.com/businesses ).

The Company also maintains a social media account on LinkedIn ( linkedin.com/company/assured-guaranty/ ).

The Company uses its website and may use its social media account as a means of disclosing material information and for complying with its disclosure obligations under SEC Regulation FD (Fair Disclosure).

Accordingly, investors should monitor the Company Statements, Investor Information and Businesses portions of the Company’s website as well as the Company’s social media account on LinkedIn, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

The information contained on, or that may be accessed through, the Company’s website is not incorporated by reference into, and is not a part of, this report.

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.

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public finance (including infrastructure) and structured finance markets.

Until July 1, 2023, the Company served as investment advisor to collateralized loan obligations (CLOs) and opportunity funds, through Assured Investment Management LLC (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.

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

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

The Corporate division primarily consists of:

(i) interest expense and any losses on the extinguishment of the debt of Assured Guaranty US Holdings Inc.

(AGUS) and Assured Guaranty Municipal Holdings Inc.

(AGMH) (the U.S.

Holding Companies);

(ii) other corporate operating expenses of AGL and the U.S.

Holding Companies, and (iii) beginning in the three-month period ended September 30, 2024 (third quarter 2024), equity in earnings from certain alternative investments that were transferred from AG to AGMH as part of the share redemption that occurred on August 5, 2024 in connection with the merger of AGM with and into AG, as discussed below.

The Other category in the segment tables below primarily includes the effect of consolidating FG VIEs and CIVs (FG VIE and CIV consolidation), intersegment eliminations and, prior to July 1, 2023, the reclassification of reimbursable fund expenses.

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

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

See Item 1, Financial Statements, Note 2, Segment Information.

Economic Environment

Real gross domestic product increased at an annual rate of 2.8% in the third quarter 2024, compared to an increase of 3.0% in the three-month period ended June 30, 2024 (second quarter 2024), according to the third quarter 2024 advance estimate news release issued by the U.S.

Bureau of Economic Analysis.

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

unemployment rate, seasonally adjusted, stood at 4.1%, the same as where it stood at the end of second quarter 2024.

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

On April 2, 2025, the U.S.

government announced a “reciprocal tariff” strategy entailing extensive global tariff increases, with the objective of rectifying trade practices that contribute to large and persistent annual U.S.

goods trade deficits.

The announcement of global tariffs caused stock markets to drop, disrupted international trade, sent shocks through the global economy, and heightened volatility in the financial markets.

subsequently paused newly announced tariffs for most countries and suspended “reciprocal tariffs” on all countries except China.

As of May 8, 2025, China faces U.S.

tariffs of at least 145% as trade tensions deepen with the U.S., while the U.S.

maintains a 10% universal tariff for other countries as significant uncertainty remains.

tariffs can add to inflation, and the Company believes that ongoing uncertainty may increase volatility in U.S.

equities and other risk assets, curb corporate capital and consumer spending and raise the risk of recession.

Market volatility and the risk of recession may impact the Company in different ways.

The Company believes that a recession may make it more likely that obligors whose obligations it guarantees will default.

However, market volatility may also cause credit spreads to widen as investors seek security, which tends to create new business opportunities for the Company.

At the end of March 2025, the U.S.

unemployment rate, seasonally adjusted, stood at 4.2% near where it started the year at 4.1%.

According to the three-month period ended March 31, 2025 (first quarter 2025) advance estimate released by the U.S.

Bureau of Economic Analysis, real gross domestic product (GDP) decreased at an annual rate of 0.3% in first quarter 2025, primarily reflecting an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending, compared to a real GDP increase of 2.4% in the fourth quarter of 2024.

According to the U.S.

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

before seasonal adjustment for the 12-month period ending September 2024, as measured by the Consumer Price Index for All Urban Consumers, was 2.4%, as compared to 3.0% for the 12-month period ending June 2024.

According to the United Kingdom’s (U.K.) Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs rose 2.6 % for the 12 months through September 2024, down from 2.8% for the 12 months ended June 2024.

before seasonal adjustment for the 12-month period ending March 2025, as measured by the Consumer Price Index for All Urban Consumers, was 2.4%, as compared to 3.5% for the 12-month period ending March 2024.

According to the U.K.

Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs rose 3.4% for the 12 months through March 2025, as compared to 3.8% for the 12 months through March 2024.

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

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increases reported net par outstanding for certain U.K.

exposures with approximately $24.0 billion of net par outstanding as of September 30, 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 by 0.50% to a range of 4.75% to 5.00%, which was a reversal of the rate increases it had initiated in March 2022 to combat inflation.

exposures with approximately $24.1 billion of net par outstanding as of March 31, 2025, 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 follow.

At its November 6-7, 2024 meeting, the FOMC further lowered the federal funds rate by 0.25% to a range of 4.50% to 4.75%, 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 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.

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, March 18-19, 2025 and May 6-7, 2025 meetings, 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.

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 interest rates and credit spreads impact the Company in numerous ways.

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.

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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.

Lower interest rates also are often accompanied by narrower credit 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 3.60% for third quarter 2024, lower than the 3.82% average for second quarter 2024, and lower than the 3.77% average for the quarter ended September 2023.

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 third quarter 2024, which is flat compared to the 90 bps average for second quarter 2024, and narrower

than the 101 bps average for the quarter ended September 2023.

The MMD rate averaged 4.04% for the quarter ended March 2025, higher than the 3.74% average for the quarter ended December 2024 and higher than the 3.57% average for the quarter ended March 2024.

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) for the quarter ended March 2025, which is the same as the 90 bps average for the quarter

ended December 2024, and modestly narrower than the 92 bps average for the quarter ended March 2024.

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 6.08% as of September 26, 2024, down from 7.31% one year ago.

The Company believes that, despite recent decreases in mortgage interest rates, restricted housing inventory continues to influence home prices where demand outpaces supply.

According to Freddie Mac, the 30-year fixed-rate mortgage rate averaged 6.65% for the week ending March 27, 2025, lower than the 30-year mortgage rate average of 6.79% 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 residential mortgage-backed securities (RMBS) the Company insures.

The National Association of Realtors reported that year-over-year existing-home sales decreased 3.5% from September 2023 to September 2024, while the median existing-home sales price increased 3.0% from September 2023 ($392,700) to September 2024 ($404,500).

The National Association of Realtors reported that year-over-year existing-home sales decreased 2.4% from March 2024 to March 2025, and that the median existing-home sales price increased from March 2024 ($392,900) to March 2025 ($403,700), a 2.7% 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 or novation 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 Company believes that, over time, wider credit spreads may improve demand for bond insurance.

In certain segments of the infrastructure and structured finance markets, the Company believes its financial guaranty product is competitive with other financing options.

In certain segments of the non-U.S.

infrastructure and global structured finance markets, the Company believes its financial guaranty product is competitive with other financing options.

For example, certain investors may receive advantageous capital requirement treatment with the addition of the Company’s guaranty.

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Based on Sale Date

Nine Months 2024 Nine Months 2023 Year Ended December 31, 2023

First Quarter 2025 First Quarter 2024 Year Ended December 31, 2024

(dollars in billions, except number of issues and percentages)

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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 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.

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Insurance Subsidiaries

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

On August 1, 2024, the Company reorganized its U.S.

corporate structure and 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.

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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.

Since the combined company has greater statutory capital (i.e., combined 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.

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.

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.

In 2022, as a result of the resolution of the Company’s exposure to insured Puerto Rico credits experiencing payment default other than PREPA (2022 Puerto Rico Resolutions), the Company received cash, new general obligation bonds (New GO Bonds), new bonds backed by toll revenues (Toll Bonds, and together with New GO Bonds, New Recovery Bonds) and contingent value instruments (CVIs).

The CVIs are intended to provide creditors with additional recoveries tied to the outperformance of the Puerto Rico 5.5% Sales and Use Tax receipts against May 2020 certified fiscal plan projections, subject to annual and lifetime caps.

The Company may sell in the future any CVIs it continues to hold.

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 1, Financial Statements, Note 3, Outstanding Exposure, and the “—Insured Portfolio” section below.

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 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.

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 recognized a realized gain on credit derivatives in first quarter 2025 of $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 1, Financial Statements, Note 6, Contracts Accounted for as Credit Derivatives, 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 below-investment-grade (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 September 30, 2024 (excluding the value of the Company’s insurance) was $468 million.

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 March 31, 2025 (excluding the value of the Company’s insurance) was $497 million.

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.

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Refunding bonds may provide the issuer with payment relief.

Asset Management and Alternative Investments

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

Upon the closing of the transaction with Sound Point (Sound Point Transaction) and the transaction with AHP (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.

Asset Management

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 assets under management (AUM) (excluding AUM relating to AHP).

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

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

The Sound Point business was strengthened by the addition of assets under management (AUM) transitioned from the Company (excluding AUM relating to AHP).

See Item 1, Financial Statements, Note 1, Business and Basis of Presentation, for a description of the Company’s participation in the asset management business through its ownership interest in Sound Point.

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 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.

See Item 1, Financial Statements, Note 1, Business and Basis of Presentation, for a description of the alternative investments agreement with Sound Point.

Capital Management

The Company has developed strategies to efficiently manage capital within the Assured Guaranty group.

From 2013 through November 8, 2024, the Company has repurchased 150 million common shares for approximately $5.3 billion, representing approximately 77% of the total shares outstanding at the beginning of the repurchase program in 2013.

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 November 8, 2024, the remaining amount the Company was authorized to purchase was approximately $385 million of its common shares.

From 2013 through May 8, 2025, the Company has repurchased 152 million common shares for approximately $5.5 billion, representing approximately 78% of the total shares outstanding at the beginning of the repurchase program in 2013.

On November 8, 2024, the AGL Board authorized the repurchase of an additional $250 million of the Company’s common shares.

As of May 8, 2025, the remaining amount the Company was authorized to purchase was approximately $181 million of its common shares.

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

The timing, form and amount of the share repurchases under the program are at the discretion of management and will depend on a variety of factors, including funds available at the parent company, other potential uses for such funds, market conditions, the Company’s capital position, legal requirements and other factors.

The repurchase program may be modified,

extended or terminated by the Board at any time and it does not have an expiration date.

The repurchase program may be modified, extended or

terminated by the Board at any time and it does not have an expiration date.

See Item 1, Financial Statements, Note 12, Shareholders’ Equity, for additional information about the Company’s repurchases of its common shares.

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2013 - 2024 $ 5,362 150.27 $ 35.69

2024 (first quarter) 129 1.54 84.07

2024 (second quarter) 152 1.93 78.50

2024 (third quarter) 131 1.66 78.87

2024 (through November 8)

58 0.69 83.61

2025 (January 1 - March 31) 120 1.34 89.72

2025 (April 1 - May 8) 51 0.60 84.43

Cumulative repurchases since the beginning of 2013 $ 5,533 152.21 36.35

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(1) Excludes commissions and excise taxes.

As of September 30, 2024, the estimated accretive effect of the cumulative repurchases of common shares since the beginning of 2013 was approximately:

$56.63 per share in shareholders’ equity attributable to AGL, $58.75 per share in adjusted operating shareholders’ equity and $97.75 per share in adjusted book value.

In May 2024, the New York State Department of Financial Services (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 Maryland Insurance Administration (MIA) approved, and in third quarter 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.

As of March 31, 2025, the estimated accretive effect of the cumulative repurchases of common shares since the beginning of 2013 was approximately:

$58.23 per share in shareholders’ equity attributable to AGL, $61.71 per share in adjusted operating shareholders’ equity and $103.42 per share in adjusted book value (ABV).

Over the last several years, the Company has received approval from its insurance regulators to redeem a portion of its insurance subsidiaries’ stock and pay extraordinary dividends from its insurance subsidiaries.

Most recently, in connection with the merger of AGM with and into AG, the U.S.

insurance subsidiaries distributed, in aggregate, $400 million in cash and investments to the U.S.

Holding Companies.

See “Merger of the U.S.

Insurance Subsidiaries” above for a description of the merger of AGM with and into AG.

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.

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.

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

loss and loss adjustment expense (LAE), changes in fair value of credit derivatives, FG VIEs, CIVs, CVIs and committed capital securities (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 certain alternative investments, credit derivatives, FG VIEs, CIVs, trading securities and CCS, as well as foreign exchange gains (losses), the level of refundings of insured obligations, 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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Financial Results

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

(in millions, except per share amounts)

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Present value of new business production (PVP) (1)

63 46 281 249

Gross par written 5,002 3,743

As of September 30, 2024 As of December 31, 2023

As of March 31, 2025 As of December 31, 2024

Amount Per Share Amount Per Share

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Adjusted operating shareholders’ equity (1) 5,818 117.40 5,795 114.75

Adjusted book value (1) 8,582 166.47 8,765 155.92

ABV (1) 8,562 172.79 8,592 170.12

Common shares outstanding (3) 49.6 50.5

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Condensed Consolidated Results of Operations

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

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Net investment income 87 84

Asset management fees — — — 53

Net realized investment gains (losses) (16) 8

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Fair value gains (losses) on trading securities 1 26

Gain on sale of asset management subsidiaries — 255 — 255

Other income (loss) 19 1

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Interest expense 22 23

Amortization of deferred acquisition cost (DAC) 5 4 14 10

Employee compensation, benefit and other operating expenses:

Asset management subsidiaries 2 — 6 88

Insurance and other subsidiaries 89 91 271 281

Amortization of deferred acquisition costs (DAC) 5 6

Employee compensation and benefit expenses 60 58

Other operating expenses 42 39

Total expenses 169 125

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Net income (loss) attributable to Assured Guaranty Ltd.

$ 171 $ 157 $ 358 $ 363

Effective tax rate 18.9 % 21.4 %

Third Quarter 2024 Compared with Third Quarter 2023

Net income attributable to AGL for third quarter 2024 was higher compared with the three-month period ended September 30, 2023 (third quarter 2023) primarily due to:

• a benefit in net loss and LAE in third quarter 2024 of $51 million, compared with loss and LAE of $100 million in third quarter 2023, and

• foreign exchange gains on remeasurement of $55 million in third quarter 2024, compared with foreign exchange losses of $39 million in third quarter 2023.

First Quarter 2025 Compared with First Quarter 2024

Net income attributable to AGL for first quarter 2025 was higher compared with the three-month period ended March 31, 2024 (first quarter 2024) primarily due to:

• a fair value gain on credit derivatives related to the resolution of the LBIE litigation of $103 million in first quarter 2025,

• foreign exchange gains on remeasurement of $37 million in first quarter 2025, compared with foreign exchange losses of $12 million in first quarter 2024, and

• higher equity in earnings of investees in first quarter 2025, primarily generated by the Company’s investment in Sound Point and alternative investments in healthcare and legacy alternative investments.

These increases were offset in part by:

• the gain associated with the Sound Point Transaction and AHP Transaction, net of transaction expenses, of $241 million (pre-tax) in third quarter 2023.

Nine Months 2024 Compared with Nine Months 2023

Net income attributable to AGL for the nine-month period ended September 30, 2024 (nine months 2024) was lower compared with the nine-month period ended September 30, 2023 (nine months 2023) primarily due to:

• the gain associated with the Sound Point Transaction and AHP Transaction, net of transaction expenses, of $215 million (pre-tax) in nine months 2023,

• lower fair value gains on credit derivatives,

• lower net investment income primarily due to lower income on Loss Mitigation Securities, which were partially offset by higher short-term income, and

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

These decreases were offset in part by:

• a benefit in net loss and LAE in nine months 2024 of $54 million, compared with loss and LAE of $159 in nine months 2023,

• higher net earned premiums in nine months 2024 compared with nine months 2023 primarily due to one large refunded transaction, and

• higher foreign exchange gains on remeasurement of $43 million in nine months 2024, compared with $9 million in nine months 2023.

• a loss and LAE in first quarter 2025 of $40 million, compared with a benefit of $1 million in first quarter 2024,

• lower net earned premiums in first quarter 2025, compared with first quarter 2024 due to lower refundings of financial guaranty insurance exposures,

• lower gains on trading securities, which primarily consist of contingent value instruments (CVIs) issued by Puerto Rico, in first quarter 2025, compared with first quarter 2024, and

• net realized investment losses in first quarter 2025 primarily due to a change in the allowance for credit losses for Loss Mitigation Securities and realized losses on sales of securities, compared with gains in first quarter 2024.

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 Assured Guaranty Re Ltd.

marginal corporate tax rate of 25%, 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.

taxed at the Bermuda marginal corporate tax rate of 15% starting January 1, 2025 and 0% for 2024.

See Item 1, Financial Statements, Note 10, Income Taxes.

The following tables present pre-tax income by jurisdiction.

Pre-tax Income (Loss) by Tax Jurisdiction

First Quarter

(in millions)

Bermuda 46 30

France (2) (4)

Total $ 229 $ 144

Adjusted Operating Income

Adjusted operating income in third quarter 2024 was $130 million compared with $206 million in third quarter 2023.

The decrease was primarily due to the gain associated with the Sound Point Transaction and AHP Transaction in third quarter 2023, offset in part by a benefit in loss expense in third quarter 2024 compared with loss expense in third quarter 2023.

Adjusted operating income in nine months 2024 was $323 million, compared with $310 million in nine months 2023.

The increase was primarily due to a benefit in loss expense in nine months 2024, compared with a loss expense in nine months 2023, offset in part by a gain from the Sound Point Transaction and AHP Transaction in nine months 2023.

Adjusted operating income in first quarter 2025 was $162 million, compared with $113 million in first quarter 2024.

The increase was primarily due to the gain related to the resolution of the LBIE litigation and higher equity in earnings of investees from Sound Point and alternative investments in first quarter 2025, offset in part by a higher loss expense in U.S.

public finance, lower premiums on financial guaranty insurance contracts and lower unrealized gains on the trading portfolio in first quarter 2025.

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 September 30, 2024 increased compared with December 31, 2023, primarily due to net income of $358 million and other comprehensive income of $128 million, offset in part by share repurchases of $412 million and dividends of $52 million.

Adjusted operating shareholders’ equity and adjusted book value decreased primarily due to share repurchases and dividends, partially offset by operating income of $323 million and, in the case of adjusted book value, GWP of $254 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.

On a per share basis, shareholders’ equity attributable to AGL, adjusted operating shareholders’ equity and adjusted book value increased as of September 30, 2024 compared with December 31, 2023, due, in part, to the accretive effect of the

share repurchase program.

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

Book Value and ABV

Shareholders’ equity attributable to AGL and adjusted operating shareholders’ equity as of March 31, 2025 increased compared with December 31, 2024, primarily due to net income and unrealized gains on the investment portfolio, partially offset by share repurchases and dividends.

ABV decreased primarily due to share repurchases and dividends, partially offset by adjusted operating income of $162 million and GWP of $35 million.

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

On a per share basis, shareholders’ equity attributable to AGL, adjusted operating shareholders’ equity and ABV increased as of March 31, 2025 compared with December 31, 2024, due, in part, to the accretive effect of the share repurchase program.

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

Other Matters

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.

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

debt with par that accretes with increasing 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, 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 increases in interest rates from 2022 to 2024, 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 with 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 the Company’s largely fixed-rate fixed-maturity investment portfolio, dampen municipal bond issuance, and negatively impact the finances of some insured obligors.

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 $234 million in net par outstanding as of September 30, 2024, comprising $216 million net par exposure to the sovereign debt of Poland and $18 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 $207 million in net par outstanding as of March 31, 2025, comprising of the sovereign debt of Poland.

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.

The Company’s direct insurance exposure to the Middle East is generally limited to approximately $68 million in net par outstanding as of September 30, 2024, comprised of funded commitments to subscription finance facilities;

The Company’s direct insurance exposure to the Middle East is generally limited to approximately $87 million in net par outstanding as of March 31, 2025, comprised of funded commitments to subscription finance facilities;

however, such exposure may increase to a total of approximately $130 million to the extent all unfunded commitments under the facilities are ultimately funded.

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 currently has not identified any material impact on the ability of such exposures to pay their obligations.

Results of Operations

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• Investments (primarily Loss Mitigation Securities and alternative investments)

• Assets and liabilities of CIVs

• Assets and liabilities of FG VIEs

• Credit derivatives;

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

• Impairments of equity method investments and financial instruments;

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

See Part II, Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation, of the Company’s 2024 Annual Report on Form 10-K for the Company’s significant accounting policies which includes a reference to the applicable note where further details regarding the significant estimates and assumptions are provided, as well as Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of the Company’s 2024 Annual Report on Form 10-K for further details regarding the sensitivity analyses.

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Insurance Segment Results

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

(in millions)

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The premiums associated with the insured obligations of municipalities and other public finance issuers are generally received upfront when the obligations are issued and insured.

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 rate environment has led to a lower volume of refunding opportunities over the last several years.

When issuers pay down insured obligations, the Company is no longer on risk for payment defaults and therefore accelerates the recognition of any 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 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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Net Earned Premiums and Credit Derivative Revenues

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

(in millions)

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(1) Includes accretion of discount.

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

As of September 30, 2024, $3.7 billion of net deferred premium revenue on financial guaranty insurance remained to be earned over the life of the insurance contracts.

Net earned premiums and credit derivative revenues increased in first quarter 2025 compared with first quarter 2024 primarily due to credit derivative revenues related to the resolution of the LBIE litigation (see Item 1, Financial Statements, Note 6, Contracts Accounted for as Credit Derivatives), which were partially offset by lower financial guaranty refundings and terminations.

As of March 31, 2025, $3.7 billion of net deferred premium revenue on financial guaranty insurance remained to be earned over the life of the insurance contracts.

New Business Production

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New Business Production

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

(in millions)

Public finance—U.S.

$ 35 $ 29 $ 182 $ 129

Public finance—non-U.S.

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Public finance—U.S.

$ 34 $ 30 $ 193 $ 129

Public finance—non-U.S.

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Structured finance—non-U.S.

(2) 14 2 20 40

Total PVP $ 39 $ 63

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Public finance—non-U.S.

665 61 2,237 670

Structured finance—U.S.

551 267 1,245 1,101

Structured finance—non-U.S.

(2) 834 522 1,782 2,762

Total gross par written $ 5,002 $ 3,743

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(1) PVP and Gross Par Written in the table above are based on “close date,” when the transaction settles.

See “— Non-GAAP Financial Measures — PVP or Present Value of New Business Production.” PVP was discounted at 5.0% in third quarter 2024 and nine months 2024 and 4.0% in third quarter 2023 and nine months 2023.

(2) Nine months 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 Accounting Standards Codification (ASC) 460, Guarantees .

Third Quarter 2024

public finance GWP and PVP in third quarter 2024 were higher than the comparable GWP and PVP in third quarter 2023, primarily due to an increase in insured par and higher premium rates in primary market transactions.

The Company’s direct par written represented 60% of the total U.S.

municipal market insured issuance in third quarter 2024, compared with 61% in third quarter 2023, and the Company’s penetration of all municipal issuance was 4.2% in third quarter 2024 compared with 4.6% in third quarter 2023.

In third quarter 2024, non-U.S.

public finance GWP and PVP were higher than GWP and PVP in third quarter 2023 primarily due to guaranties of several U.K.

regulated utility and airport transactions in third quarter 2024.

Global structured finance GWP and PVP in third quarter 2024 were higher than the comparable GWP and PVP in third quarter 2023.

In third quarter 2024, the Company insured a transaction in Australia that provided protection on an approximately $600 million core lending portfolio for an Australian bank.

Nine Months 2024

public finance GWP and PVP in nine months 2024 were higher than GWP and PVP in nine months 2023, primarily due to several large transportation revenue transactions.

The Company’s direct par written represented 57% of the total U.S.

municipal market insured issuance in nine months 2024, compared with 62% in nine months 2023, and the Company’s penetration of all municipal issuance was 4.4% in nine months 2024 compared with 5.3% in nine months 2023.

In nine months 2024, non-U.S.

public finance GWP was lower than GWP in nine-months 2023, while non-U.S.

public finance PVP in nine months 2024 was higher than PVP in nine months 2023.

GWP declined mainly due to adjustments to the consumer price index that affects the present value of future premiums on the existing book of consumer price index linked insured obligations.

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

regulated utility and airport transactions, as well as the annual renewal of certain liquidity guarantees.

In nine months 2024, structured finance GWP and PVP were $38 million and $44 million, respectively, compared with GWP and PVP of $52 million and $82 million, respectively, in nine months 2023.

Structured finance GWP and PVP in nine months 2024 were primarily attributable to insurance securitization, bank balance sheet relief and subscription finance transactions.

See “— Non-GAAP Financial Measures — PVP or Present Value of New Business Production.” PVP was discounted at 5.0% in both first quarter 2025 and first quarter 2024.

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

Financial guaranty insurance and reinsurance GWP includes:

(i) amounts collected upfront on new business written;

(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 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 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 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 in first quarter 2025 were lower than GWP and PVP in first quarter 2024, primarily due to two large transportation transactions that were written in first quarter 2024.

The Company’s primary par written represented 64% of the total U.S.

municipal market insured par sold in first quarter 2025, compared with 53% in first quarter 2024, and the Company’s penetration of all municipal issuance was 3.9% in first quarter 2025 compared with 3.8% in first quarter 2024.

public finance GWP and PVP in the secondary market increased in first quarter 2025 compared with first quarter 2024.

The Company’s par written in the secondary market represented almost 10% of U.S.

public finance par written in first quarter 2025, compared with 1% in first quarter 2024.

public finance GWP and PVP in first quarter 2025 included U.K.

regulated utility transactions as well as a secondary market transaction for a U.K.

public sector entity.

public finance GWP in first quarter 2025 also included a reduction in the present value of estimated future premiums from certain transactions in the legacy insured portfolio.

Structured finance GWP and PVP in first quarter 2025 were primarily attributable to subscription finance and pooled corporate transactions.

Business activity in the non-U.S.

public finance and structured finance sectors typically 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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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 condensed consolidated statements on operations.

The fair value of remaining CVIs as of September 30, 2024 and December 31, 2023 was $136 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.

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

The fair value of remaining CVIs as of March 31, 2025 and December 31, 2024 was $115 million and $123 million, respectively.

Equity method investments in the Insurance segment include certain alternative investments.

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 September 30, 2024 was $122 million.

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

Insurance Segment

Income from Investments

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

(in millions)

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Fixed-maturity securities, available-for-sale $ 75 $ 63

Externally managed $ 53 $ 51 $ 154 $ 156

Loss Mitigation Securities 7 24 23 48

Puerto Rico, New Recovery Bonds — 1 — 5

Other 3 5 9 12

Short-term investments 9 19

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Equity in earnings (losses) of investees

CLOs $ 12 $ 7 $ 38 $ 23

Collateralized loan obligations (CLOs) $ 8 $ 20

Private healthcare investing 12 4

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Middle market direct lending 1 3

Other 6 6 18 13

Equity in earnings (losses) of investees $ 30 $ 40

Net investment income for third quarter 2024 decreased compared with third quarter 2023, primarily due to lower income on Loss Mitigation Securities.

Net investment income for nine months 2024 decreased compared with nine months 2023, primarily due to lower income on Loss Mitigation Securities, which were partially offset by higher short-term income as a result of higher short-term interest rates and higher average balances in the short-term investment portfolio.

The overall pre-tax book yield of available-for-sale fixed-maturity securities and short-term investments was 4.10% as of September 30, 2024 and 4.04% as of September 30, 2023.

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

Net investment income increased in first quarter 2025 compared with first quarter 2024, primarily due to investment income on CLO equity tranches.

Certain CLO equity tranche investments were reclassified to the available-for-sale fixed-maturity portfolio in the fourth quarter of 2024, with interest income now reported in net investment income, and changes in fair value reported in other comprehensive income.The Company had previously held the CLO equity tranches in a Sound Point managed fund with changes in net asset value reported in “equity in earnings (losses) of investees” in the Insurance segment.

This was partially offset by lower short-term investment income as a result of lower short-term interest rates and lower average short-term investment balances.

The Company’s overall pre-tax book yield of available-for-sale fixed-maturity securities and short-term investments was 4.58% as of March 31, 2025 and 3.87% as of March 31, 2024.

Equity in earnings (losses) of investees decreased to $30 million in first quarter 2025 compared with $40 million in first quarter 2024, primarily due to the reclassification of certain CLO equity tranches to the available-for-sale portfolio, as described above.

In addition, equity in earnings (losses) of investees in first quarter 2024 included $9 million related to certain alternative investments which AG transferred to AGMH as part of a stock redemption that occurred on August 5, 2024.

See “Corporate Division” below.

These decreases were partially offset by an increase in the net asset value of the AHP fund in first quarter 2025.

Other Income (Loss)

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

See Item 1, Financial Statements, Note 11, Contingencies, for additional information.

The increase in “other income (loss)” in first quarter 2025 was primarily attributable to consent and usage fees associated with the workout and purchase of bonds issued by a U.K.

regulated utility to which the Company has insured exposure.

Economic Loss Development (Benefit)

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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 are consistent by 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.

dollar denominated exposures were 3.74% and 4.10% as of September 30, 2024 and December 31, 2023, respectively.

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

dollar denominated exposures were 3.94% and 3.28% as of September 30, 2024 and December 31, 2023, 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 4.18% and 4.38% as of March 31, 2025 and December 31, 2024, 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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Net Expected Loss to be Paid (Recovered) Net Economic Loss Development (Benefit)

As of Third Quarter Nine Months

Accounting Model September 30, 2024 December 31, 2023 2024 2023 2024 2023

As of First Quarter

Accounting Model March 31, 2025 December 31, 2024 2025 2024

(in millions)

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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 1, Financial Statements, Note 3, Outstanding Exposure, and Note 4, Expected Loss to be Paid (Recovered).

(1) Includes $63 million of recoveries related to the resolution of the LBIE litigation.

Net Expected Loss to be Paid (Recovered)

Roll Forward by Sector

Third Quarter 2024

Sector Net Expected Loss to be Paid (Recovered) as of June 30, 2024 Net Economic Loss

Development (Benefit) (2)

Net Expected Loss to be Paid (Recovered) as of September 30, 2024

(in millions)

Public finance:

public finance $ 374 $ (23) $ (113) $ 238

public finance 37 46 (2) 81

Public finance 411 23 (115) 319

Structured finance:

RMBS — (56) 10 (46)

Other structured finance 36 (1) (2) 33

Structured finance 36 (57) 8 (13)

Total $ 447 $ (34) $ (107) $ 306

Third Quarter 2023

Sector Net Expected Loss to be Paid (Recovered) as of June 30, 2023 Net Economic Loss

Development (Benefit) (2)

Net Expected Loss to be Paid (Recovered) as of September 30, 2023

(in millions)

Public finance:

public finance $ 433 $ 135 $ (169) $ 399

public finance 10 (1) — 9

Public finance 443 134 (169) 408

Structured finance:

RMBS 73 (48) 13 38

Other structured finance 44 1 (1) 44

Structured finance 117 (47) 12 82

Total $ 560 $ 87 $ (157) $ 490

Nine Months 2024

First Quarter 2025

Sector Net Expected Loss to be Paid (Recovered) as of December 31, 2024 Net Economic Loss

Development (Benefit) (2)

Net Expected Loss to be Paid (Recovered) as of September 30, 2024

Development (Benefit) Net (Paid)

Net Expected Loss to be Paid (Recovered) as of March 31, 2025

(in millions)

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Total $ 106 $ (15) $ 59 $ 150

Nine Months 2023

First Quarter 2024

Sector Net Expected Loss to be Paid (Recovered) as of December 31, 2023 Net Economic Loss

Development (Benefit) (2)

Net Expected Loss to be Paid (Recovered) as of September 30, 2023

Development (Benefit) Net (Paid)

Net Expected Loss to be Paid (Recovered) as of March 31, 2024

(in millions)

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

(2) Effect of changes in the risk-free rates included in economic loss development (benefit) was a loss of $3 million in third quarter 2024, a benefit of $12 million in third quarter 2023, a loss of $1 million in nine months 2024 and a benefit of $8 million in nine months 2023.

Third Quarter 2024 Net Economic Loss Development

Effect of changes in the risk-free rates included in economic loss development (benefit) was a loss of $5 million in first quarter 2025 and a benefit of $3 million in first quarter 2024.

First Quarter 2025 Net Economic Loss Development

Public Finance:

The economic benefit of $23 million for U.S.

public finance exposures was primarily attributable to certain healthcare exposures.

The economic loss development of $29 million for U.S.

public finance exposures was primarily attributable to PREPA.

The economic loss development of $24 million for non-U.S.

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The economic benefit for U.S.

RMBS was $56 million and was primarily attributable to a $29 million benefit from higher assumed recoveries for charged-off second lien loans and a $15 million benefit from higher assumed recoveries for deferred principal balances of modified first lien loans.

See Item 1, Financial Statements, Note 4, Expected Loss to be Paid (Recovered), for additional information.

Third Quarter 2023 Net Economic Loss Development

Public Finance:

The economic loss development on U.S.

exposures of $135 million was primarily attributable to PREPA.

The economic benefit attributable to U.S.

RMBS of $48 million was primarily attributable to a $37 million benefit related to higher recoveries for secured second lien charged-off loans, an $11 million benefit related to changes in discount rates, and a $6 million benefit related to higher assumed recoveries for deferred principal in first lien transactions, partially offset by losses related to lower excess spread.

Nine Months 2024 Net Economic Loss Development

Public Finance:

The economic benefit of $14 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 $63 million for non-U.S.

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

regulated utilities and healthcare exposures.

The economic benefit for U.S.

RMBS was $69 million and was mainly attributable to a $41 million benefit from higher assumed recoveries for charged-off first and second lien loans and a $15 million benefit from higher assumed recoveries for deferred principal first lien balances.

RMBS was $3 million and was primarily attributable to higher recoveries for charged-off second lien loans, and improved performance in certain transactions.

Other Structured Finance :

The benefit attributable to other structured finance of $65 million was primarily attributable to recoveries related to the resolution of the LBIE litigation (see Item 1, Financial Statements, Note 6, Contracts Accounted for as Credit Derivatives).

See Item 1, Financial Statements, Note 4, Expected Loss to be Paid (Recovered), for additional information.

Nine Months 2023 Net Economic Loss Development

First Quarter 2024 Net Economic Loss Development

Public Finance:

The economic loss development on U.S.

public finance exposures was $193 million, which was primarily attributable to PREPA and healthcare exposures, partially offset by higher projected recoveries in other municipal exposures.

The economic benefit on U.S.

public finance exposures in first quarter 2024 was $3 million, which was primarily attributable to the improved performance across various credits.

The net benefit attributable to U.S.

RMBS was $52 million and was mainly attributable to a $50 million benefit related to higher recoveries for secured second lien charged-off loans, an $11 million benefit related to improved performance in certain transactions, a $9 million benefit related to changes in discount rates, and a $6 million benefit related to higher assumed recoveries for deferred principal in first lien transactions.

These benefits were partially offset by a $18 million loss development related to the return of certain funds previously received and $6 million related to lower excess spread.

RMBS was $3 million and was mainly attributable to higher recoveries for secured second lien charged-off loans.

Insurance Segment Loss Expense

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(ii) eliminates loss and LAE related to FG VIEs;

and (iii) does not include estimated losses on credit derivatives.

Insurance segment loss expense includes loss and LAE on financial guaranty insurance contracts and losses on credit derivatives, without giving effect to eliminations related to the consolidation of FG VIEs.

and (iii) does not include estimated losses or benefits on credit derivatives.

For financial guaranty insurance contracts, each transaction’s expected loss to be expensed is compared with the deferred premium revenue of that transaction.

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Loss Expense (Benefit)

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

(in millions)

public finance $ 36 $ 1

public finance 6 —

Structured finance:

RMBS (44) (38) (48) (35)

Other structured finance (1) (65) 1

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Total Insurance segment loss expense (benefit) $ (23) $ 4

____________________

(1) First quarter 2025 includes $63 million of recoveries in connection with the resolution of the LBIE litigation (see Item 1, Financial Statements, Note 6, Contracts Accounted for as Credit Derivatives).

Employee Compensation and Benefit Expenses and Other Operating Expenses

The increases in employee compensation and benefit expenses in third quarter 2024 and nine months 2024 compared with third quarter 2023 and nine months 2023, were primarily attributable to an increase in headcount and other employee benefit costs.

Other operating expenses in three months 2024 and nine months 2024 includes the write-off of $6 million of intangible assets attributable to insurance licenses in connection with AGM’s merger into AG.

The increases in employee compensation and benefit expenses and other operating expenses in first quarter 2025 compared with first quarter 2024 were primarily attributable to increased compensation and other expenses allocated to the Insurance segment.

Asset Management Segment Results

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

(in millions)

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Segment adjusted operating income (loss) $ 12 $ 1

Results in the table above represent (i) asset management and performance fees, amortization of intangible assets and compensation and other operating expenses of AssuredIM in the first six months of 2023, (ii) gains from Sound Point of $4 million in third quarter 2024 and $5 million in nine months 2024 (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, (iii) an impairment loss of $3 million in nine months 2024 for a smaller financial services advisory firm with a carrying value of $3 million as of September 30, 2024, and (iv) other asset management related income.

Results in the table above primarily represent (i) equity in earnings of Sound Point of $13 million in first quarter 2025 and $4 million in first quarter 2024 (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, (ii) an impairment loss of $3 million in first quarter 2024 for a smaller financial services advisory firm, and (iii) other asset management related income.

Corporate Division Results

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

(in millions)

Gain on sale of asset management subsidiaries $ — $ 255 $ — $ 255

Other 4 4 13 8

Total revenues 4 259 13 263

Revenues $ 4 $ 5

Interest expense 24 25

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Total expenses 40 47

Equity in earnings (losses) of investees 16 —

Adjusted operating income (loss) before income taxes (20) (42)

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Adjusted operating income (loss) $ (20) $ (37)

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

Corporate division interest expense primarily relates to debt issued by Assured Guaranty US Holdings Inc.

(AGUS) and Assured Guaranty Municipal Holdings Inc.

(AGMH) (the U.S.

Holding Companies), and also includes intersegment interest expense.

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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.

The decrease in operating

expenses in third quarter 2024 and nine months 2024, compared with third quarter 2023 and nine months 2023, was primarily due to expenses related to the Sound Point Transaction and AHP Transaction in 2023, and a value added tax adjustment in nine months 2023, partially offset by increases in premises related expenses in nine months 2024.

Transaction related expenses in the Corporate division for Sound Point and AHP were $14 million for third quarter 2023 and $40 million for nine months 2023.

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 the Board’s expenses, legal fees and other direct or allocated expense.

The decrease in employee compensation and benefit expenses and other operating expenses in first quarter 2025 compared with first quarter 2024 was primarily attributable to lower allocated expenses.

Equity in earnings of investees in first quarter 2025 relates to certain alternative investments, which AG transferred to AGMH as part of a stock redemption that occurred on August 5, 2024.

The carrying value of these transferred investments as of March 31, 2025 was $132 million.

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 1, Financial Statements, Note 2, Segment Information.

As described in 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.

The effect of consolidating FG VIEs and CIVs and intersegment eliminations are presented in “other.” See Item 1, Financial Statements, Note 2, Segment Information.

As described in Item 1, Financial Statements, 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:

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

Consolidating CIVs (as opposed to accounting for them as equity method investments) has a significant effect on assets, liabilities and cash flows, and includes:

Consolidating investment vehicles in which the Company invests (as opposed to accounting for them as equity method investments) has a significant effect on assets, liabilities and cash flows, and includes:

(i) the establishment of the assets and liabilities of the CIVs, and related changes in fair value;

(ii) eliminating the asset management fees earned by AssuredIM from the CIVs (prior to July 1, 2023);

(iii) eliminating the equity method investments of the insurance subsidiaries and AGAS, and related equity in earnings (losses) of investees;

and (iv) establishing noncontrolling interest 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 “noncontrolling interest”) on a consolidated basis.

(ii) eliminating the equity method investments of the insurance subsidiaries, and related equity in earnings (losses) of investees;

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

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 condensed consolidated statements of operations.

The amounts represent:

(i) the revenues and expenses of the FG VIEs and the CIVs and (ii) the consolidation adjustments and eliminations between consolidated FG VIEs or CIVs and the operating and investment subsidiaries.

(i) the revenues and expenses of the FG VIEs and the CIVs;

and (ii) the consolidation adjustments and eliminations between consolidated FG VIEs or CIVs and the operating and investment subsidiaries.

Effect of Consolidating FG VIEs and CIVs on the Condensed Consolidated Statements of Operations

Increase (Decrease)

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

Effect on Financial Statement Line Item (in millions)

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FG VIEs $ — $ (1)

CIVs 1 (10) 2 (17)

Effect on net income (loss) attributable to AGL $ 2 $ —

____________________

(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 nine months 2023, 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.

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 for those that are accounted for as CIVs.

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

(4) Represents the proportion of income of CIVs that is not attributable to the Company’s ownership interest.

Reconciliation to GAAP

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to Adjusted Operating Income (Loss)

Third Quarter 2024 Third Quarter 2023

Total Per Diluted Share Total Per Diluted Share

(in millions, except per share amounts)

Net income (loss) attributable to AGL $ 171 $ 3.17 $ 157 $ 2.60

Less pre-tax adjustments:

Realized gains (losses) on investments — — (9) (0.16)

Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives (2) (0.03) 6 0.12

Fair value gains (losses) on CCS (3) (0.06) (20) (0.33)

Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves 54 1.00 (37) (0.61)

Total pre-tax adjustments 49 0.91 (60) (0.98)

Less tax effect on pre-tax adjustments (8) (0.16) 11 0.16

Adjusted operating income (loss) $ 130 $ 2.42 $ 206 $ 3.42

Gain (loss) related to FG VIE and CIV consolidation (net of tax provision (benefit) of $(2) and $(2)) included in adjusted operating income $ (7) $ (0.12) $ (8) $ (0.13)

Nine Months 2024 Nine Months 2023

First Quarter 2025 First Quarter 2024

Total Per Diluted Share Total Per Diluted Share

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Net Realized Investment Gains (Losses)

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

(in millions)

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Change in the allowance for credit losses and intent to sell (1) (10) 10

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

Net realized investment gains (losses) $ (16) $ 8

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See Item 1, Financial Statements, Note 9, Fair Value Measurement, for additional information.

Nine months 2024 non-credit impairment-related unrealized fair value gains of $11 million were generated primarily due to the termination of certain structured finance policies.

Third quarter 2023 and nine months 2023 non-credit impairment unrealized fair value gains of $6 million and $109 million, respectively, were generated primarily as a result of generally lower collateral asset spreads and a widening of AG’s CDS spreads.

During first quarter 2025 non-credit impairment-related unrealized fair value losses of $2 million were generated primarily due to generally wider collateral asset spreads.

During first quarter 2024 non-credit impairment-related unrealized fair value gains of $10 million were generated primarily as a result of the termination of certain structured finance policies.

Fair Value Gains (Losses) on CCS

Fair value losses on CCS of $3 million, $20 million, $12 million and $35 million in third quarter 2024, third quarter 2023, nine months 2024 and nine months 2023, respectively, were primarily due to a tightening in market spreads.

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 gains on CCS of $2 million in first quarter 2025 were primarily due to a widening in market credit spreads.

Fair value losses on CCS of $10 million in first quarter 2024 were primarily due to a tightening in market credit spreads.

Fair value gains (losses) on CCS are heavily affected by, and in part fluctuate with, changes in market credit spreads and interest rates, 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 of $54 million gains, $37 million losses, $42 million gains and $9 million gains in third quarter 2024, third quarter 2023, nine months 2024 and nine months 2023, 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, as of September 30, 2024 and December 31, 2023, respectively, are denominated in currencies other than the U.S.

Foreign exchange gains of $33 million in first quarter 2025 and losses of $12 million in first quarter 2024 were primarily related 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% of gross premiums receivable, net of commissions payable, as of both March 31, 2025 and December 31, 2024, are denominated in currencies other than the U.S.

dollar, primarily the pound sterling and euro.

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Dollar Per Foreign Currency

As of September 30, 2024 As of December 31, 2023 As of September 30, 2023 As of December 31, 2022

As of March 31, 2025 As of December 31, 2024 As of March 31, 2024 As of December 31, 2023

Pound sterling $1.292 $1.252 $1.262 $1.273

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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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In the case of both the consolidated FG VIEs and the CIVs, the economic effect on the Company of each of the consolidated FG VIEs and CIVs is reflected primarily in the results of the Insurance segment.

Management of the Company and AGL’s Board of Directors use non-GAAP financial measures further adjusted to remove the effect of FG VIE and CIV consolidation (which the Company refers to as its core financial measures), as well as GAAP financial measures and other factors, to evaluate the Company’s results of operations, financial condition and progress towards long-term goals.

The Company uses core financial measures in its decision-making process for and in its calculation of

certain components of management compensation.

The Company’s management and AGL’s Board of Directors use non-GAAP financial measures further adjusted to remove the effect of FG VIE and CIV consolidation (which the Company refers to as its core financial measures), as well as GAAP financial measures and other factors, to evaluate the Company’s results of operations, financial condition and progress towards long-term goals.

The Company uses core financial measures in its decision-making process for and in its calculation of certain components of management compensation.

The financial measures that the Company uses to help determine compensation are:

(1) adjusted operating income, further adjusted to remove the effect of FG VIE and CIV consolidation;

(2) adjusted operating shareholders’ equity, further adjusted to remove the effect of FG VIE and CIV consolidation;

(3) adjusted book value per share, further adjusted to remove the effect of FG VIE and CIV consolidation;

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.

(i) adjusted operating income per share, further adjusted to remove the effect of FG VIE and CIV consolidation (core operating income per share);

(ii) adjusted operating shareholders’ equity per share, further adjusted to

remove the effect of FG VIE and CIV consolidation (core operating shareholders’ equity per share);

(iii) ABV per share, further adjusted to remove the effect of FG VIE and CIV consolidation (core ABV per share);

(iv) core operating return on equity, which is calculated as core operating income divided by the average of core operating shareholders’ equity at the beginning and end of the period;

The Company’s management believes that many investors, analysts and financial news reporters use adjusted operating shareholders’ equity and/or ABV, 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.

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.

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Adjusted Operating Income

Management believes that adjusted operating income is a useful measure because it clarifies the understanding of the operating results of the Company.

The Company’s management believes that adjusted operating income is a useful measure because it clarifies the understanding of the operating results of the Company.

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 fair value gains (losses) in excess of the present value of the expected estimated economic credit losses.

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.

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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.

Adjusted operating income per share is calculated by dividing adjusted operating income by the weighted average diluted shares.

The method for calculating weighted average diluted shares is in accordance with GAAP.

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

Adjusted Operating Shareholders’ Equity and Adjusted Book Value

Management believes that adjusted operating shareholders’ equity is a useful measure because it excludes the fair value adjustments on investments, credit derivatives and CCS that are not expected to result in economic gain or loss.

Adjusted Operating Shareholders’ Equity and ABV

The Company’s management believes that adjusted operating shareholders’ equity is a useful measure because it excludes the fair value adjustments on investments, credit derivatives and CCS that are not expected to result in economic gain or loss.

The Company’s management uses ABV, further adjusted to remove the effect of FG VIE and CIV consolidation, to measure the intrinsic value of the Company, excluding franchise value.

The Company’s management believes that ABV is a useful measure because it enables an evaluation of the Company’s in-force premiums and revenues net of expected losses.

Adjusted operating shareholders’ equity per share and ABV per share, each further adjusted for FG VIE and CIV consolidation (core operating shareholders’ equity per share and core ABV per share, respectively), are two 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 operating shareholders’ equity is defined as shareholders’ equity attributable to AGL, as reported under GAAP, adjusted for the following:

1) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives, 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.

1) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives that are reported on the consolidated balance sheet, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses.

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

2) Elimination of fair value gains (losses) on the Company’s CCS.

2) Elimination of fair value gains (losses) on the Company’s CCS that are reported on the consolidated balance sheet.

3) Elimination of unrealized gains (losses) on the Company’s investments that are recorded as a component of accumulated other comprehensive income (AOCI).

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) 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.

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.

Adjusted book value is adjusted operating shareholders’ equity, as defined above, further adjusted for the following:

ABV is adjusted operating shareholders’ equity, as defined above, further adjusted for the following:

1) Elimination of deferred acquisition costs, net.

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3) Addition of the deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed, net of reinsurance.

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.

This amount represents the present value of the expected future net earned premiums, net of the present value of expected losses to be expensed.

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.

Shares outstanding as of the end of the reporting period are used to calculate adjusted operating shareholders’ equity per share and ABV per share.

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

Reconciliation of Shareholders’ Equity Attributable to AGL

to Adjusted Operating Shareholders’ Equity and Adjusted Book Value

As of September 30, 2024 As of December 31, 2023

to Adjusted Operating Shareholders’ Equity and ABV

As of March 31, 2025 As of December 31, 2024

Total Per Share Total Per Share

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Pre-tax adjustments:

Deferred acquisition costs 172 3.33 161 2.87

DAC 181 3.65 176 3.47

Net present value of estimated net future revenue 199 4.01 202 3.99

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Plus taxes (689) (13.89) (702) (13.90)

Adjusted book value $ 8,582 $ 166.47 $ 8,765 $ 155.92

ABV $ 8,562 $ 172.79 $ 8,592 $ 170.12

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

Adjusted operating shareholders’ equity (net of tax provision (benefit) of $0 and $0) $ 3 $ 0.04 $ — $ 0.01

Adjusted book value (net of tax provision (benefit) of $(2) and $0) (9) (0.17) — —

ABV (net of tax provision (benefit) of $(1) and $(2)) (4) (0.07) (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.

The Company’s 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.

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PVP or Present Value of New Business Production

Management believes that PVP is a useful measure because it enables the evaluation of the value of new business production in the Insurance segment by taking into account the value of estimated future installment premiums on all new contracts underwritten in a reporting period as well as additional installment premiums and fees on existing contracts (which may result from supplements or fees or from the issuer not calling an insured obligation the Company projected would be called), regardless of form, which management believes GAAP gross written premiums and changes in fair value of credit derivatives do not adequately measure.

The Company’s management believes that PVP is a useful measure because it enables the evaluation of the value of new business production in the Insurance segment by taking into account the value of estimated future installment premiums on all new contracts underwritten in a reporting period as well as additional installment premiums and fees on existing contracts (which may result from supplements or fees or from the issuer not calling an insured obligation the Company projected would be called), regardless of form, which management believes GAAP GWP and changes in fair value of credit derivatives do not adequately measure.

PVP in respect of contracts written in a specified period is defined as gross upfront and installment premiums received and the present value of gross estimated future installment premiums.

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The discount rate is recalculated annually and updated as necessary.

Under GAAP, financial guaranty installment premiums are

discounted at a risk-free rate.

Additionally, under GAAP, management records future installment premiums on financial guaranty insurance contracts covering non-homogeneous pools of assets based on the contractual term of the transaction, whereas for PVP purposes, management records an estimate of the future installment premiums the Company expects to receive, which may be based upon a shorter period of time than the contractual term of the transaction.

Under GAAP, financial guaranty installment premiums are discounted at a risk-free rate.

Additionally, under GAAP, management records future installment premiums on financial

guaranty insurance contracts covering non-homogeneous pools of assets based on the contractual term of the transaction, whereas for PVP purposes, management records an estimate of the future installment premiums the Company expects to receive, which may be based upon a shorter period of time than the contractual term of the transaction.

Actual installment premiums may differ from those estimated in the Company’s PVP calculation due to factors including, but not limited to, changes in foreign exchange rates, prepayment speeds, terminations, credit defaults or other factors that affect par outstanding or the ultimate maturity of an obligation.

Reconciliation of GWP to PVP

Third Quarter 2024 Third Quarter 2023

Public Finance Structured Finance Public Finance Structured Finance

(in millions)

GWP $ 35 $ 7 $ 4 $ 15 $ 61 $ 29 $ (5) $ 15 $ 1 $ 40

Installment GWP and other GAAP adjustments (1) 2 (1) 2 15 18 6 (5) 15 1 17

Upfront GWP 33 8 2 — 43 23 — — — 23

Installment premiums and other (2) 1 2 3 14 20 7 2 12 2 23

PVP $ 34 $ 10 $ 5 $ 14 $ 63 $ 30 $ 2 $ 12 $ 2 $ 46

Nine Months 2024 Nine Months 2023

First Quarter 2025 First Quarter 2024

Public Finance Structured Finance Public Finance Structured Finance

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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.

Nine months 2023 also includes the present value of future premiums and fees associated with other guaranties written by the Company that, under GAAP, are accounted for under ASC 460, Guarantees.

Insured Portfolio

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Net Par Outstanding by Sector

As of September 30, 2024 As of December 31, 2023

As of March 31, 2025 As of December 31, 2024

Sector (dollars in millions)

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Housing revenue 1,359 1,272

Investor-owned utilities 325 329

Renewable energy 163 164

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public finance 202,417 201,175

Non-U.S public finance:

public finance:

Regulated utilities 23,215 22,361

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structured finance:

Insurance securitizations 4,665 4,379

Insurance reserve financings and securitizations 4,373 4,495

RMBS 1,474 1,507

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Subscription finance facilities 217 185

Consumer receivables 233 314

Other structured finance 1,174 1,167

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Exposure to Puerto Rico

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 1, Financial Statements, Note 3, Outstanding Exposure.

Exposure to Puerto Rico by Company

As of September 30, 2024

Net Par Outstanding

AG AG Re Total

Net Par Outstanding Gross

Par Outstanding

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.

The Company’s Puerto Rico net par and net debt service outstanding as of March 31, 2025 were $637 million and $744 million, respectively, compared with net par and net debt service outstanding as of December 31, 2024 of $637 million and $756 million, respectively.

As of March 31, 2025, the Company’s only remaining outstanding unresolved insured Puerto Rico exposure subject to a payment default was PREPA, to which the Company had net par and debt service outstanding of $532 million and $619 million, respectively.

As of December 31, 2024, the Company’s PREPA net par and debt service outstanding were $532 million and $629 million, respectively.

See “—Liquidity and Capital Resources—Insurance Subsidiaries, Financial Guaranty Policies” below and Item 1, Financial Statements, 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 March 31, 2025

Scheduled Net Par Amortization Scheduled Net Debt Service Amortization

(in millions)

Defaulted Puerto Rico Exposures

PREPA $ 377 $ 154 $ 531 $ 539

Total Defaulted 377 154 531 539

Resolved Puerto Rico Exposures (1)

Puerto Rico Highways and Transportation Authority (PRHTA) (Transportation revenue)

2025 (April 1 - June 30) $ — $ 3

2025 (July 1 - September 30) 68 78

2025 (October 1 - December 31) — 2

Subtotal 2025 68 83

2030-2034 141 157

PRHTA (Highway revenue) 23 1 24 24

Total Resolved 153 75 228 228

Non-Defaulting Puerto Rico Exposures (2)

Municipal Finance Agency (MFA)

University of Puerto Rico (U of PR) 1 — 1 1

Total Non-Defaulting 77 15 92 98

Total exposure to Puerto Rico $ 607 $ 244 $ 851 $ 865

2035-2039 4 4

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

See Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

(2) 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 September 30, 2024

Scheduled Net Par Amortization

2024 (4Q) 2025 (1Q) 2025 (2Q) 2025 (3Q) 2025 (4Q) 2026 2027 2028 2029 - 2033 2034 - 2038 2039 - 2041 Total

(in millions)

Defaulted Puerto Rico Exposures

PREPA $ — $ — $ — $ 68 $ — $ 105 $ 105 $ 68 $ 176 $ 9 $ — $ 531

Total Defaulted — — — 68 — 105 105 68 176 9 — 531

Resolved Puerto Rico Exposures

PRHTA (Transportation revenue) — — — — — — — — — 107 97 204

PRHTA (Highway revenue) — — — — — — — — 8 16 — 24

Total Resolved — — — — — — — — 8 123 97 228

Non-Defaulting Puerto Rico Exposures

MFA — — — 16 — 35 15 13 12 — — 91

U of PR — — — — — — — — 1 — — 1

Total Non-Defaulting — — — 16 — 35 15 13 13 — — 92

Total $ 532 $ 619

Amortization Schedule of Net Debt Service of Puerto Rico

As of September 30, 2024

Scheduled Net Debt Service Amortization

2024 (4Q) 2025 (1Q) 2025 (2Q) 2025 (3Q) 2025 (4Q) 2026 2027 2028 2029 - 2033 2034 - 2038 2039 - 2041 Total

(in millions)

Defaulted Puerto Rico Exposures

PREPA $ 3 $ 10 $ 2 $ 78 $ 2 $ 126 $ 122 $ 80 $ 200 $ 9 $ — $ 632

Total Defaulted 3 10 2 78 2 126 122 80 200 9 — 632

Resolved Puerto Rico Exposures

PRHTA (Transportation revenue) — 5 — 6 — 11 11 11 53 143 106 346

PRHTA (Highway revenue) — 1 — — — 1 1 1 15 18 — 37

Total Resolved — 6 — 6 — 12 12 12 68 161 106 383

Non-Defaulting Puerto Rico Exposures

MFA — 2 — 18 — 39 17 14 13 — — 103

U of PR — — — — — — — — 1 — — 1

Total Non-Defaulting — 2 — 18 — 39 17 14 14 — — 104

Total $ 3 $ 18 $ 2 $ 102 $ 2 $ 177 $ 151 $ 106 $ 282 $ 170 $ 106 $ 1,119

The remaining amounts owed for insured PRHTA bonds are payable in full by the Company’s insurance subsidiaries under their financial guaranty policies and are no longer dependent on the credit of PRHTA.

Liquidity and Capital Resources

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holding company with public debt outstanding.

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.

AGMH owns AG, an insurance company domiciled in Maryland.

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

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In the ordinary course of business, the Company evaluates its liquidity needs and capital resources in light of holding company expenses and dividend policy, as well as rating agency considerations.

The Company also subjects its cash flow projections and its assets to a stress test, maintaining a liquid asset balance of one and a half times its stressed operating company net cash flows.

The Company also subjects its cash flow projections and its assets to a stress test, maintaining a liquid asset balance of one and a half times its stressed operating company net cash flows over the next four quarters.

Management believes that AGL will have sufficient liquidity to satisfy its needs over the next twelve months.

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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Long-Term Debt and Intercompany Loans

As of September 30, 2024 As of December 31, 2023

As of March 31, 2025 As of December 31, 2024

(in millions)

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AGUS - intercompany loans from:

AG/AGM (1) 3.50% 2029 250 250

AG 3.50% 2029 250 250

AGRO 5.00% 2028 20 20

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____________________

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

(1) 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 Chicago Mercantile Exchange (CME) Term Secured Overnight Finance Rate (SOFR) plus 2.33%.

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Holding Companies, excluding their investments in subsidiaries.

As of September 30, 2024

As of March 31, 2025

Holding Companies

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Fixed-maturity securities (1) $ 15 $ 3

Investment in Sound Point — 417

Short-term investments, other invested assets and cash 26 475

Ownership interest in Sound Point — 411

Other invested assets — 139

Short-term investments and cash 53 286

Receivables from affiliates (2) 50 1

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____________________

(1) As of September 30, 2024, weighted average durations of AGL’s and the U.S.

(1) As of March 31, 2025, weighted average durations of AGL’s and the U.S.

Holding Companies’ fixed-maturity securities were 10.5 years and 3.4 years, respectively.

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

Nine Months 2024

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

First Quarter 2025

Holding Companies

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Income (loss) before provision for income taxes and equity in earnings (losses) of investees (12) (22)

Equity in earnings (losses) of investees — 29

Net income (loss) excluding investments in subsidiaries (12) 4

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Selected Cash Flow Items

Nine Months 2024

First Quarter 2025

Holding Companies

2 unchanged sentences

Holding Companies $ 150 $ —

Dividends received from subsidiaries 47 266

Dividends received from other subsidiaries — 75

Distributions from equity method investees (1) — 20

Interest on intercompany loans — (1)

Interest paid — (71)

Interest paid on long-term debt — (21)

Investments in subsidiaries — (3)

Redemption of stock by insurance subsidiaries — 267

Dividends paid to AGL — (150)

Dividends paid (52) —

Dividends paid to AGL shareholders (19) —

Repurchases of common shares (2) (120) —

____________________

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

(1) Includes distributions from Sound Point of $18 million and other alternative investments.

(2) See Item 1, Financial Statements, Note 12, Shareholders’ Equity, for additional information about share repurchases and authorizations.

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resident persons entitled to the benefits of the treaty.

For more information, see also Part II, Item 8.

Financial Statements and Supplementary Data, Note 12, Long-Term Debt and Credit Facilities, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

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

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Treasuries, agency RMBS and pre-refunded municipal bonds equal to 1.5 times its projected operating company cash flow needs over the next four quarters.

As of September 30, 2024, the Company intended to hold and had the ability to hold securities in an unrealized loss position until the date of anticipated recovery of amortized cost.

As of March 31, 2025, the Company intended to hold and had the ability to hold securities in an unrealized loss position until the date of anticipated recovery of amortized cost.

Beyond the next twelve months, the ability of the operating subsidiaries to declare and pay dividends may be influenced by a variety of factors, including market conditions, general economic conditions and, in the case of the Company’s insurance subsidiaries, insurance regulations and rating agency capital requirements.

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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, and will continue to pay the debt service on the remaining PRHTA insured obligations with a net par outstanding of $228 million as of September 30, 2024.

For example, the Company made substantial claim payments in 2022 and 2024 in connection with the resolution of certain defaulting 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 $531 million in insured net par outstanding of PREPA obligations as of September 30, 2024.

For more information, see Item 1, Financial Statements, Note 3, Outstanding Exposure, 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.

The Company had $532 million in insured net par outstanding of PREPA obligations as of March 31, 2025.

For more information, see Item 1, Financial Statements, Note 4, Expected Loss to be Paid (Recovered).

The terms of the Company’s credit default swap (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.

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Dividend restrictions by insurance subsidiary are as follows:

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

• Under Maryland’s insurance law, AG may, with prior notice to the Commissioner of its domiciliary regulator, the Maryland Insurance Administration (MIA), pay an ordinary dividend in an amount that, together with all dividends and distributions paid in the prior 12 months, does not exceed the lesser of 10% of its policyholders’ surplus (as of the prior December 31) or 100% of its adjusted net investment income during that period.

“Adjusted net investment income” means the sum of (x) AG’s net investment income during the 12-month period ending December 31 of the preceding year (excluding realized capital gains and pro rata distributions of its own securities), and (y) AG’s net investment income (excluding realized capital gains) from the three calendar years prior to the preceding calendar year that has not already been paid out as dividends.

The maximum amount available during 2025 for AG to distribute as ordinary dividends is 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.

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 by May 23, 2025 (and previously obtained the MIA’s non-objection to pay, and paid, an equivalent dividend on March 6, 2025).

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

Insurance Subsidiaries” above.

The Company expects the amount of ordinary dividends available for distribution by AG in 2024 to be approximately $400 million.

After giving effect to the respective $49 million and $59 million ordinary dividend amounts paid by AGM and AG (together, the U.S.

Insurance Subsidiaries) in 2024 prior to the merger, and $154 million ordinary dividend paid by AG after the merger, the amount available for distribution in the fourth quarter of 2024 is approximately $138 million.

• Based on the applicable law and regulations, in 2024 AG Re paid dividends of $47 million in the first nine months of the year and has the capacity to declare and pay additional dividends in 2024 in an aggregate amount up to $110 million as of September 30, 2024.

Additionally, in 2024 AG Re can make capital distributions in an aggregate amount up to $129 million without the prior approval of the Bermuda Monetary Authority.

Insurance Subsidiaries.”

• The Company expects the amount of dividends available for distribution by AG Re in 2025 to be approximately $222 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);

provided that such payment cannot exceed AG Re’s unencumbered assets ($222 million as of March 31, 2025) or its statutory surplus ($287 million as of March 31, 2025).

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

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to Holding Companies

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

(in millions)

Dividends paid by AG Re to AGL $ — $ 47

Dividends paid by U.S.

Insurance Subsidiaries to U.S.

Dividends paid by AG to U.S.

Holding Companies (1) 72 82

___________________

(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 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

(1) Prior to a reorganization of the Company’s U.S.

corporate structure, AG had been directly owned by AGUS.

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

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.

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Investment Portfolio

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.

Approximately 88% of the total available-for-sale fixed maturity 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 March 31, 2025, the Company had $6,415 million of available-for-sale fixed-maturity securities, of which $5,443 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, $240 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.

As interest rates fall, the fair value of fixed-maturity securities generally increases and, as interest rates rise, the fair value of fixed-maturity securities generally decreases.

The Company’s portfolio of fixed-maturity securities primarily consists of investment-grade, liquid

The Company’s portfolio of fixed-maturity securities primarily consists of investment-grade, liquid instruments.

Other invested assets include other alternative investments, which are generally less liquid.

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Carrying Value

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in millions)

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____________________

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

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

(1) Includes primarily CVIs received as part of resolutions of Puerto Rico exposures in 2022, which are not rated.

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

See Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

The Company’s available-for-sale fixed-maturity securities had a duration of 4.2 years and 3.9 years as of September 30, 2024 and December 31, 2023, respectively.

The Company’s available-for-sale fixed-maturity securities had a duration of 4.5 years and 4.3 years as of March 31, 2025 and December 31, 2024, respectively.

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 September 30, 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, and (ii) Puerto Rico securities received under the 2022 Puerto Rico Resolutions, which are not rated.

The following table summarizes the ratings distributions of the Company’s available-for-sale fixed-maturity securities as of March 31, 2025 and December 31, 2024.

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

See Item 1, Financial Statements, Note 7, Investments, for additional information.

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

Rating September 30, 2024 December 31, 2023

Rating March 31, 2025 December 31, 2024

AAA 12.5 % 12.5 %

BBB 16.7 16.3

BIG (1) 8.1 7.8

Not rated 3.9 4.5

Total 100.0 % 100.0 %

____________________

(1) Includes primarily Loss Mitigation Securities.

See Item 1, Financial Statements, Note 7, Investments, for additional information.

Other Investments

Other invested assets, which are generally less liquid than fixed-maturity securities, primarily consist of the investment 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 net asset value (NAV) included in the Insurance segment adjusted operating income.

As of September 30, 2024 and 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 condensed consolidated financial statements.

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 net asset value included in the Insurance segment adjusted operating income.

As of March 31, 2025 and December 31, 2024, one active fund in which the Company invests was accounted for as a CIV and the majority are accounted as equity method investments in the Company’s condensed consolidated financial statements.

See “— Commitments” below.

Investment in Asset Managers and Alternative Investments by Strategy

As of September 30, 2024

Investments Consolidation Adjustments (1) Consolidated

Ownership Interest in Sound Point and Alternative Investments

As of March 31, 2025

Investments CIVs Consolidated

(in millions)

Sound Point (1) $ 417 $ — $ 417

Alternative investments:

Fixed-maturity securities, available-for-sale $ 282 $ — $ 282

Fixed-maturity securities, trading 22 — 22

Other invested assets:

Ownership interest in Sound Point 411 — 411

CLOs 105 — 105

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____________________

(1) Certain CLO and asset-based/specialty finance funds are CIVs.

See Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

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

and European CLOs.

(3) Includes $75 million in alternative investments reported in “fixed-maturity securities, available-for-sale” and “fixed-maturity securities, trading” on the condensed consolidated balance sheets.

Investment in Asset Managers and Alternative Investments by Strategy

(1) The alternative investments, excluding the ownership interest in Sound Point, had an inception-to-date annualized internal rate of return of 13%.

Ownership Interest in Sound Point and Alternative Investments

As of December 31, 2024

Investments Consolidation Adjustments (1) Consolidated

Investments CIVs Consolidated

(in millions)

Sound Point (1) $ 429 $ — $ 429

Alternative investments:

Fixed-maturity securities, available-for-sale $ 319 $ — $ 319

Fixed-maturity securities, trading 24 — 24

Other invested assets:

Ownership interest in Sound Point 418 — 418

CLOs 100 — 100

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Total $ 1,302 $ (33) $ 1,269

____________________

(1) Certain CLO and asset-based/specialty finance funds are CIVs.

See Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

(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 condensed consolidated balance sheets.

Investment in Sound Point and Alternative Investments by Strategy

Third Quarter 2024

Investments Consolidation Adjustments (1) Consolidated

Income from Ownership Interest in Sound Point and Alternative Investments

First Quarter 2025

Investments CIVs Consolidated

(in millions)

Net investment income (1) $ 12 $ — $ 12

Fair value gains (losses) on trading securities 1 — 1

Equity in earnings (losses) of investees:

Equity in earnings of Sound Point 13 — 13

Alternative investments - change in fair value:

CLOs 12 (8) 4

Equity in earnings (losses) of alternative investments:

Private healthcare investing 12 — 12

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Middle market direct lending 1 — 1

Total $ 36 $ (14) $ 22

____________________

(1) Certain CLO and asset-based/specialty finance funds are CIVs.

See Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

Alternative Investments by Strategy

Third Quarter 2023

Investments Consolidation Adjustments (1) Consolidated

(in millions)

Alternative investments - change in fair value:

CLOs $ 5 $ (7) $ (2)

Private healthcare investing 12 — 12

Asset-based/specialty finance — — —

Other 16 — 16

Equity in earnings (losses) of investees 59 (6) 53

Total $ 72 $ (6) $ 66

____________________

(1) Certain CLO and asset-based/specialty finance funds are CIVs.

See Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

Investment in Sound Point and Alternative Investments by Strategy

Nine Months 2024

Investments Consolidation Adjustments (1) Consolidated

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

Income from Ownership Interest in Sound Point and Alternative Investments

First Quarter 2024

Investments CIVs Consolidated

(in millions)

Net investment income $ 1 $ — $ 1

Equity in earnings (losses) of investees:

Equity in earnings of Sound Point 4 — 4

Alternative investments - change in fair value:

Equity in earnings (losses) of alternative investments:

CLOs 20 (15) 5

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Middle market direct lending 3 — 3

Other 18 — 18

Total $ 92 $ (38) $ 54

____________________

(1) Certain CLO and asset-based/specialty finance funds are CIVs.

See Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

Alternative Investments by Strategy

Nine Months 2023

Investments Consolidation Adjustments (1) Consolidated

(in millions)

Alternative investments - change in fair value:

CLOs $ 21 $ (23) $ (2)

Private healthcare investing 21 (9) 12

Asset-based/specialty finance 3 (3) —

Other 13 — 13

Equity in earnings (losses) of investees 41 (17) 24

Total $ 42 $ (17) $ 25

____________________

(1) Certain CLO and asset-based/specialty finance funds are CIVs.

See Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

Beginning in the third quarter 2023, the Company records an equity method investment in Sound Point pursuant to the Sound Point Transaction described in Item 1, Financial Statements, 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 as of September 30, 2024 were $690 million.

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

Unfunded commitments for alternative investments as of March 31, 2025 were $608 million.

See Item 1, Financial Statements, Note 1, Business and Basis of Presentation, for a description of the alternative investments agreement with Sound Point.

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 $77 million as of September 30, 2024 and $234 million December 31, 2023.

The investment portfolio also contains securities that are held in trust by certain AGL subsidiaries or are otherwise restricted for the benefit of other AGL subsidiaries in accordance with statutory and regulatory requirements with a fair value of $1,176 million and $1,154 million as of September 30, 2024 and December 31, 2023, respectively.

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 $82 million as of March 31, 2025 and $79 million December 31, 2024.

The investment portfolio also contains securities that are held in trust by certain AGL subsidiaries or are otherwise restricted for the benefit of other AGL subsidiaries in accordance with statutory and regulatory requirements with a fair value of $1,079 million and $1,135 million as of March 31, 2025 and December 31, 2024, 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.

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 Part II, Item 8, Financial Statements and Supplementary Data, Note 16, Leases, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for a table of minimum lease obligations and other lease commitments.

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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.

The remaining liabilities of the Puerto Rico Trusts are payable by AG under its financial guaranty policies and are no longer dependent on the credit of PRHTA.

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 and borrowing funds to finance

The primary sources and uses of cash in the CIVs include using capital to make investments, generating cash income from investments, paying expenses and distributing cash flow to investors.

The assets and liabilities of the Company’s CIVs are held within separate legal entities.

The assets of the CIVs are not available to creditors of the Company, other than creditors of the applicable CIVs.

The assets of the CIVs are not available to creditors of the

Company, other than creditors of the applicable CIVs.

In addition, creditors of the CIVs have no recourse against the assets of the Company, other than the assets of such applicable CIVs.

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See Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, for additional information.

Condensed Consolidated Cash Flows

Condensed Consolidated Cash Flow Summary

The summarized condensed consolidated statements of cash flows in the table below present the cash flow effect for the aggregate of the Insurance and Asset Management businesses and holding companies, separately from the aggregate effect of consolidating FG VIEs and CIVs.

In the third quarter 2023, as a result of the Sound Point Transaction and AHP Transaction, the Company deconsolidated all CLOs and CLO warehouses and certain funds.

Therefore, beginning July 1, 2023, the Company’s cash flow statements no longer includes all the operating, investing and financing cash flow activity of those deconsolidated CIVs.

See Item 1, Financial Statements, Note 1, Business and Basis of Presentation, and Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, for additional information.

Summarized Condensed Consolidated Cash Flows

Third Quarter Nine Months

2024 2023 2024 2023

First Quarter

(in millions)

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Repurchases of common shares (120) (129)

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

Redemption of debt — (330) — (330)

Other (27) (28)

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(1) Claims paid on consolidated FG VIEs are presented in the condensed 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, was an outflow of $16 million in nine months 2024 and an outflow of $217 million in nine months 2023.

The decrease in cash outflows, other than those of the FG VIEs and CIVs, during

nine months 2024 was primarily due to a $97 million increase in premiums received, a $78 million decrease in net claim payments, a $31 million increase in return on capital from equity method investees, a $13 million increase in interest on short-term investments, and Sound Point Transaction and AHP Transaction expenses in 2023, which were partially offset by a $56 million increase in tax payments and the inclusion of cash flows for asset management subsidiaries in the nine months 2023 prior to the Sound Point Transaction.

Cash flows from operations attributable to FG VIEs and CIVs were inflows in nine months 2024 and nine months 2023.

Cash flow from operations in nine months 2023 included the operating activities of the CLOs and CLO warehouses in the first half of 2023 prior to the Sound Point Transaction.

The condensed 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.

Investing activities primarily consisted of net sales (purchases) of fixed-maturity and short-term investments and paydowns on and sales of FG VIEs’ assets.

The increase in investing cash inflows in nine months 2024 compared with the nine months 2023 was mainly attributable to net purchases of short-term and fixed-maturity securities in the nine months 2023, higher sales of trading securities in nine months 2024 and lower net sales of fixed-maturity securities in nine months 2024.

Investing inflows in both periods were used to fund claim payments and share repurchases.

See Item 1, Financial Statements, Condensed Consolidated Statements of Cash Flows, and 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) until July 1, 2023, CLO issuances and CLO warehouse financing activities.

The CIVs’ financing cash flows mainly included repayments of CLO warehouse financing debt and distributions from noncontrolling interests to CIVs.

Nine months 2024 FG VIE financing cash flows included the par paydown of Puerto Rico Trust liabilities of $144 million.

See Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

From October 1, 2024 through November 8, 2024, the Company repurchased an additional 692,513 of common shares.

As of November 8, 2024, the Company was authorized to purchase approximately $385 million of its common shares.

Cash flows from operating activities were inflows of $87 million in first quarter 2025 and outflows of $74 million in first quarter 2024.

The first quarter 2025 cash flow from operations includes the receipt of $97 million in satisfaction of the judgment the Company was awarded and its recoveries in connection with the resolution of the LBIE litigation.

In addition, first quarter 2025 cash flows from operations were higher than in first quarter 2024 due to a $61 million decrease in net claim payments.

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 decrease in investing cash inflows in first quarter 2025 compared with first quarter 2024 was mainly attributable to lower net sales of fixed-maturity securities in first quarter 2025, which were partially offset by higher net sales of short-term investments in first quarter 2025.

Investing inflows in both periods were used to fund

claim payments and share repurchases.

See Item 1, Financial Statements, Condensed Consolidated Statements of Cash Flows, and Note 4, Expected Loss to be Paid (Recovered), for additional information.

Financing activities primarily consist of (i) AGL share repurchases and dividends and (ii) paydowns of FG VIEs’ liabilities.

First quarter 2024 FG VIE financing cash flows included the par paydown of liabilities of certain trusts related to Puerto Rico exposures of $144 million.

From April 1, 2025 through May 8, 2025, the Company repurchased an additional 603 thousand of common shares.

As of May 8, 2025, the Company was authorized to purchase approximately $181 million of its common shares.

For more information about the Company’s share repurchases and authorizations, see Item 1, Financial Statements, Note 12, Shareholders’ Equity.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis