ASSURED GUARANTY LTD 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward Looking Statements This Form 10-Q contains information that includes or is based upon forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements give the expectations or forecasts of future events of Assured Guaranty Ltd. (AGL) and its subsidiaries (collectively with AGL, Assured Guaranty or the Company). These statements can be identified by the fact that they do not relate strictly to historical or current facts and relate to future operating or financial performance. Any or all of Assured Guaranty’s forward looking statements herein are based on current expectations and the current economic environment and may turn out to be incorrect. 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 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. and China; (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, including the markets in which the Company participates; (iv) the possibility of a U.S. government shutdown, payment defaults on the debt of the U.S. government or instruments issued, insured or guaranteed by related institutions, agencies or instrumentalities, and downgrades to their credit ratings; (v) developments in the world’s financial and capital markets, including stresses in the financial condition of banking institutions in the U.S. and the possibility that increasing participation of unregulated financial institutions in these markets results in losses or lower valuations of assets, reduced liquidity and credit and/or contraction of these markets, that adversely affect repayment rates of insured obligors, Assured Guaranty’s insurance loss or recovery experience, or investments of Assured Guaranty; (vi) reduction in the amount of available insurance opportunities and/or in the demand for Assured Guaranty’s insurance; (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 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; (x) the possibility that underwriting insurance in new jurisdictions and/or covering new sectors or classes of business does not result in the benefits anticipated or subjects Assured Guaranty to negative consequences; (xi) increased competition, including from new entrants into the financial guaranty industry, nonpayment insurance and other forms of capital saving or risk syndication available to banks and insurers; (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 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 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 56 Table of Contents 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); (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. If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may vary materially from what the Company projected. 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 (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Available Information 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. Overview Business The Company reports its results of operations in two distinct segments, Insurance and Asset Management, consistent with the manner in which the Company’s chief operating decision maker reviews the business to assess performance and allocate resources. The Company’s Corporate division and other activities (including financial guaranty VIEs (FG VIEs) and consolidated investment vehicles (CIVs)) are presented separately. In the Insurance segment, the Company provides credit protection products to the U.S. and non-U.S. public finance (including infrastructure) and structured finance markets. 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. 57 Table of Contents 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 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. The U.S. 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. U.S. 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 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. In addition, consumer price inflation in the U.K. increases reported net par outstanding for certain U.K. 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 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 change of interest rates and credit spreads impact the Company in numerous ways. On the one hand, lower interest rates may increase the fair value of fixed-maturity securities currently held in the Company’s investment portfolio, encourage municipal bond issuance and positively impact the finances of some of the obligors whose payments the Company insures. On the other hand, lower interest rates may decrease the base on which the Company charges up-front premium on most new U.S. municipal bond transactions and may also decrease amounts the Company can earn on fixed-maturity securities newly acquired for its investment portfolio. Lower interest rates also are often accompanied by narrower 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 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 58 Table of Contents 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 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 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 four areas: (i) insurance; (ii) asset management, (iii) alternative investments; and (iv) capital management. Insurance 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 The Company seeks to grow its financial guaranty insurance portfolio through new business production in each of its markets: public finance (including infrastructure) and structured finance. The Company believes high-profile defaults by municipal obligors, such as Puerto Rico, Detroit, Michigan and Stockton, California as well as events such as the COVID-19 pandemic have led to increased awareness of the value of bond insurance and stimulated demand for the product. The Company believes there will be continued demand for its insurance in this market because, for those exposures that the Company guarantees, it undertakes the tasks of credit selection, analysis, negotiation of terms, surveillance and, if necessary, loss mitigation. The Company believes that its insurance: (i) encourages retail investors, who typically have fewer resources than the Company for analyzing municipal bonds, to purchase such bonds; (ii) enables institutional investors to operate more efficiently; and (iii) allows smaller, less well-known issuers to gain market access on a more cost-effective basis. The low interest rate environment and tight U.S. municipal credit spreads from when the financial crisis began in 2008 through early 2020 dampened demand for bond insurance compared with the levels before the financial crisis. After the onset of the COVID-19 pandemic in early 2020, credit spreads initially widened as a result of market concerns about the impact of the COVID-19 pandemic on some municipal credits, thereby improving demand for financial guaranty insurance even in a low interest rate environment, before narrowing again in 2022. The Company believes that, over time, wider credit spreads may improve demand for bond insurance. 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. The Company considers its involvement in both infrastructure and structured finance transactions to be beneficial because such transactions diversify both the Company’s business opportunities and its risk profile beyond U.S. public finance. The timing of new business production in the infrastructure and structured finance sectors is influenced by typically long lead times and therefore may vary from period to period. 59 Table of Contents U.S. Municipal Market Data and Bond Insurance Penetration Rates (1) Based on Sale Date First Quarter 2025 First Quarter 2024 Year Ended December 31, 2024 (dollars in billions, except number of issues and percentages) Par: New municipal bonds issued $ 118.6 $ 99.1 $ 495.9 Total insured $ 7.3 $ 7.1 $ 41.1 Insured by Assured Guaranty $ 4.7 $ 3.8 $ 24.0 Number of issues: New municipal bonds issued 1,882 1,613 8,640 Total insured 383 318 1,680 Insured by Assured Guaranty 222 152 791 Bond insurance market penetration based on: Par 6.2 % 7.2 % 8.3 % Number of issues 20.4 % 19.7 % 19.4 % Single A par sold 21.3 % 26.6 % 24.0 % Single A transactions sold 69.2 % 62.5 % 64.1 % $25 million and under par sold 27.2 % 23.0 % 23.8 % $25 million and under transactions sold 26.6 % 24.1 % 24.6 % ____________________ (1) Source: The amounts in the table are those reported by London Stock Exchange Group. The table excludes private placements and Corporate-CUSIP transactions insured by Assured Guaranty, certain of which the Company also considers to be public finance business. The Company also considers opportunities to acquire financial guaranty portfolios, whether by acquiring financial guarantors that are no longer actively writing new business or their insured portfolios, generally through reinsurance or novations. These transactions enable the Company to improve its future earnings and deploy excess capital. Merger of the U.S. Insurance Subsidiaries On August 1, 2024, 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. The Company believes that Assured Guaranty’s simplified organizational and capital structure following the merger will help it grow its business. The combined company, as compared with either AG or AGM before the merger, has a larger, more highly diversified insured portfolio, a larger investment portfolio and a larger capital base, creating a more efficient capital structure and greater claims-paying resources. In addition, the combined company, as compared with either AG or AGM before the merger, has larger regulatory single risk limits. Such limits are applicable to each individual financial guaranty insurer for obligations issued by a single entity and backed by a single revenue source. Since the combined company has greater 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 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. For public finance credits, 60 Table of Contents 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. 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. The Company has at times exercised this option, which uses cash but reduces projected future losses. The Company may also facilitate the issuance of refunding bonds, by either providing insurance on the refunding bonds or purchasing refunding bonds, or both. Refunding bonds may provide the issuer with payment relief. 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 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 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 61 Table of Contents 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. Summary of Share Repurchases Amount (1) Number of Shares Average price per share (1) (in millions, except per share data) 2013 - 2024 $ 5,362 150.27 $ 35.69 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 ____________________ (1) Excludes commissions and excise taxes. 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. The Company may in the future choose to issue new debt or redeem or purchase its existing debt. See “— Liquidity and Capital Resources — AGL and its U.S. Holding Companies.” Executive Summary This executive summary of management’s discussion and analysis highlights selected information and may not contain all of the information that is important to readers of this Quarterly Report. For a more detailed description of events, trends and uncertainties, as well as the capital, liquidity, credit, operational and market risks and the critical accounting policies and estimates affecting the Company, this Quarterly Report should be read in its entirety and in addition to the Company’s 2024 Annual Report on Form 10-K. The primary drivers of volatility in the Company’s net income include: 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. 62 Table of Contents Financial Performance of Assured Guaranty Financial Results First Quarter 2025 2024 (in millions, except per share amounts) GAAP Net income (loss) attributable to AGL $ 176 $ 109 Net income (loss) attributable to AGL per diluted share $ 3.44 $ 1.89 Weighted average diluted shares 50.7 57.1 Non-GAAP (1) Adjusted operating income (loss) $ 162 $ 113 Adjusted operating income per diluted share $ 3.18 $ 1.96 Weighted average diluted shares 50.7 57.1 Components of total adjusted operating income (loss) Insurance segment $ 168 $ 149 Asset Management segment 12 1 Corporate division (20) (37) Other (2) 2 — Adjusted operating income (loss) $ 162 $ 113 Insurance Segment Gross written premiums (GWP) $ 35 $ 61 Present value of new business production (PVP) (1) 39 63 Gross par written 5,002 3,743 As of March 31, 2025 As of December 31, 2024 Amount Per Share Amount Per Share (in millions, except per share amounts) Shareholders’ equity attributable to AGL $ 5,590 $ 112.80 $ 5,495 $ 108.80 Adjusted operating shareholders’ equity (1) 5,818 117.40 5,795 114.75 ABV (1) 8,562 172.79 8,592 170.12 Common shares outstanding (3) 49.6 50.5 ____________________ (1) See “— Non-GAAP Financial Measures” for a definition of the financial measures that were not determined in accordance with accounting principles generally accepted in the United States of America (GAAP), a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure, if available, and for additional details. (2) Relates to the effect of consolidating FG VIEs and CIVs. (3) See “— Overview — Key Business Strategies — Capital Management” above for information on common share repurchases. 63 Table of Contents Condensed Consolidated Results of Operations Condensed Consolidated Results of Operations Three Months Ended March 31, 2025 2024 (in millions) Revenues: Net earned premiums $ 91 $ 119 Net investment income 87 84 Net realized investment gains (losses) (16) 8 Fair value gains (losses) on credit derivatives 104 10 Fair value gains (losses) on CCS 2 (10) Fair value gains (losses) on FG VIEs 1 (3) Fair value gains (losses) on CIVs 19 22 Foreign exchange gains (losses) on remeasurement 37 (12) Fair value gains (losses) on trading securities 1 26 Other income (loss) 19 1 Total revenues 345 245 Expenses: Loss and LAE (benefit) 40 (1) Interest expense 22 23 Amortization of deferred acquisition costs (DAC) 5 6 Employee compensation and benefit expenses 60 58 Other operating expenses 42 39 Total expenses 169 125 Income (loss) before income taxes and equity in earnings (losses) of investees 176 120 Equity in earnings (losses) of investees 53 24 Income (loss) before income taxes 229 144 Less: Provision (benefit) for income taxes 44 31 Net income (loss) 185 113 Less: Noncontrolling interests 9 4 Net income (loss) attributable to Assured Guaranty Ltd. $ 176 $ 109 Effective tax rate 18.9 % 21.4 % 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: • 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, 64 Table of Contents • 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. subsidiaries generally taxed at the U.S. marginal corporate income tax rate of 21%, U.K. subsidiaries taxed at the U.K. 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 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 2025 2024 (in millions) U.S. $ 194 $ 129 Bermuda 46 30 U.K. (9) (11) France (2) (4) Total $ 229 $ 144 Adjusted Operating Income 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 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 Inflation By some key measures, consumer price inflation in the U.S. and the U.K. 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 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. 65 Table of Contents See “ — Overview — Economic Environment.” Russia’s Invasion of Ukraine Russia’s invasion of Ukraine has led to the imposition of economic sanctions by many western countries against Russia and certain Russian individuals, dislocation in global energy markets, massive refugee movements, and payment default by certain Russian credits. The economic sanctions imposed by western governments, along with decisions by private companies regarding their presence in Russia, continue to reduce western economic ties to Russia and to reshape global economic and political ties more generally, and the Company cannot predict all of the potential effects of the conflict on the world or on the Company. 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 $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 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 $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 Critical Accounting Estimates The preparation of financial statements in accordance with GAAP requires the application of accounting policies that often involve a significant degree of judgment and require the Company to make estimates and assumptions, based on available information, that affect the amounts of assets, liabilities, revenues and expenses reported in the condensed consolidated financial statements. Estimates are inherently subject to change and actual results could differ from those estimates, and the differences may be material to the condensed consolidated financial statements. Critical estimates and assumptions are periodically evaluated based on historical developments, market conditions, industry trends and other information that is reasonable under the circumstances. There can be no assurance that actual results will conform to estimates and assumptions and that reported results of operations will not be materially different in the future due to changes in these estimates and assumptions. Listed below are the accounting policies and estimates that the Company believes are most dependent on the application of judgment and assumptions. • Expected loss to be paid (recovered); • Fair value of certain assets and liabilities, primarily: • Investments (primarily Loss Mitigation Securities and alternative investments) • Assets and liabilities of FG VIEs • Credit derivatives; • Impairments of equity method investments and financial instruments; and • 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. 66 Table of Contents 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. Results of Operations by Segment The Company analyzes the operating performance of each segment using each segment’s adjusted operating income as described in Item 1, Financial Statements, Note 2, Segment Information. Insurance Segment Results Insurance Segment Results First Quarter 2025 2024 (in millions) Segment revenues Net earned premiums and credit derivative revenues $ 134 $ 122 Net investment income 86 83 Fair value gains (losses) on trading securities 1 26 Foreign exchange gains (losses) on remeasurement 4 — Other income (loss) 14 (2) Total segment revenues 239 229 Segment expenses Loss expense (benefit) (23) 4 Amortization of DAC 5 6 Employee compensation and benefit expenses 52 48 Other operating expenses 30 27 Total segment expenses 64 85 Equity in earnings (losses) of investees 30 40 Segment adjusted operating income (loss) before income taxes 205 184 Less: Provision (benefit) for income taxes 37 35 Segment adjusted operating income (loss) $ 168 $ 149 Net Earned Premiums and Credit Derivative Revenues Premiums are earned over the contractual lives, or in the case of insured obligations backed by homogeneous pools of assets, the remaining expected lives, of financial guaranty insurance contracts. The Company periodically estimates remaining expected lives of its insured obligations backed by homogeneous pools of assets and makes prospective adjustments for such changes in expected lives. Scheduled net earned premiums decrease each year unless replaced by a higher amount of new business or books of business acquired in business combinations. See Item 1, Financial Statements, Note 5, Contracts Accounted for as Insurance, Premiums, for additional information. Net earned premiums due to accelerations are attributable to changes in the expected lives of insured obligations driven by: (i) refundings of insured obligations; or (ii) terminations of insured obligations either through negotiated agreements or the exercise of the Company’s contractual rights to make claim payments on an accelerated basis. Refundings occur in the public finance market when municipalities and other public finance issuers pay down insured obligations prior to their originally scheduled maturities. Refundings tend to increase when issuers can refinance their debt obligations at lower rates than they are currently paying. 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 any remaining nonrefundable deferred premium revenue. The amortization of the Company’s outstanding 67 Table of Contents 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. Terminations have been more common in the structured finance asset class but may also occur in the public finance asset class. While each termination may have different terms, they all result in the expiration of the Company’s insurance risk, the acceleration of the recognition of the associated deferred premium revenue and the reduction of any remaining premiums receivable. Insurance Segment Net Earned Premiums and Credit Derivative Revenues First Quarter 2025 2024 (in millions) Net earned premiums: Financial guaranty insurance: Public finance Scheduled net earned premiums (1) $ 68 $ 65 Refundings and terminations 5 37 Total public finance 73 102 Structured finance Scheduled net earned premiums (1) 17 14 Accelerations — 2 Total structured finance 17 16 Specialty insurance and reinsurance 1 2 Total net earned premiums 91 120 Credit derivative revenues 43 2 Total net earned premiums and credit derivative revenues $ 134 $ 122 ____________________ (1) Includes accretion of discount. 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. 68 Table of Contents New Business Production Gross Written Premiums and New Business Production First Quarter 2025 2024 (in millions) GWP Public finance—U.S. $ 25 $ 44 Public finance—non-U.S. (1) 2 Structured finance—U.S. 7 13 Structured finance—non-U.S. 4 2 Total GWP $ 35 $ 61 PVP (1): Public finance—U.S. $ 25 $ 43 Public finance—non-U.S. 7 1 Structured finance—U.S. 2 15 Structured finance—non-U.S. 5 4 Total PVP $ 39 $ 63 Gross Par Written (1): Public finance—U.S. $ 4,269 $ 2,909 Public finance—non-U.S. 197 — Structured finance—U.S. 121 480 Structured finance—non-U.S. 415 354 Total gross par written $ 5,002 $ 3,743 ____________________ (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 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. U.S. 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. U.S. 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. 69 Table of Contents Non-U.S. 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. Non-U.S. 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 markets often has long lead times and therefore may vary from period to period. Financial Strength Ratings Demand for the financial guaranties issued by the Company’s insurance subsidiaries may be impacted by changes in the credit ratings assigned to them by the rating agencies. The financial strength ratings (or similar ratings) assigned to AGL’s insurance subsidiaries, along with the date of the most recent rating action (or confirmation) by the rating agency assigning the rating, are shown in the table below. S&P Global Ratings, a division of Standard & Poor’s Financial Services LLC (S&P) Kroll Bond Rating Agency Moody’s Ratings (Moody’s) A.M. Best Company, Inc. AG AA (stable) (5/28/24) AA+ (stable) (10/18/24) A1 (stable) (7/10/24) — AG Re AA (stable) (5/28/24) — — — Assured Guaranty Re Overseas Ltd. (AGRO) AA (stable) (5/28/24) — — A+ (stable) (7/19/24) Assured Guaranty UK Limited (AGUK) AA (stable) (5/28/24) AA+ (stable) (10/18/24) A1 (stable) (7/10/24) — Assured Guaranty (Europe) SA (AGE) AA (stable) (5/28/24) AA+ (stable) (10/18/24) — — Ratings are subject to continuous rating agency review and revision or withdrawal at any time. In addition, the Company periodically assesses the value of each rating assigned to each of its companies, and as a result of such assessment may request that a rating agency add or drop a rating from certain of its companies. There can be no assurance that any of the rating agencies will not take negative action on the financial strength ratings (or similar ratings) of AGL’s insurance subsidiaries in the future or cease to rate one or more of AGL’s insurance subsidiaries, either voluntarily or at the request of that subsidiary. Income from Investments Net investment income is a function of the yield that the Company earns on available-for-sale fixed-maturity securities and short-term investments and the size of such portfolio. 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 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 a stock redemption that occurred on August 5, 2024, certain alternative investments were distributed to AGMH, whose results are reported in the Corporate division. 70 Table of Contents Insurance Segment Income from Investments First Quarter 2025 2024 (in millions) Net investment income Fixed-maturity securities, available-for-sale $ 75 $ 63 Short-term investments 9 19 Intercompany loans 2 2 Other invested assets 1 — Investment income 87 84 Investment expenses (1) (1) Net investment income $ 86 $ 83 Fair value gains (losses) on trading securities $ 1 $ 26 Equity in earnings (losses) of investees Collateralized loan obligations (CLOs) $ 8 $ 20 Private healthcare investing 12 4 Asset-based/specialty finance 9 4 Middle market direct lending 1 3 Other — 9 Equity in earnings (losses) of investees $ 30 $ 40 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 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) The insured portfolio includes policies accounted for under several different accounting models depending on the characteristics of the contract and the Company’s control rights. For a discussion of methodologies and significant estimates for expected loss to be paid (recovered), see Part II, Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), of the Company’s 2024 Annual Report on Form 10-K. The GAAP accounting policies for measurement and recognition for each type of contract are described in the notes listed below in Part II, Item 8, Financial Statements and Supplementary Data, of the Company’s 2024 Annual Report on Form 10-K: 71 Table of Contents • Note 5 for contracts accounted for as insurance; • Note 6 for contracts accounted for as credit derivatives; • Note 8 for FG VIEs; and • Note 9 for fair value methodologies for credit derivatives and FG VIEs’ assets and liabilities. In order to efficiently evaluate and manage the economics of the entire insured portfolio, management compiles and analyzes expected loss information for all policies on a consistent basis. The discussion of losses that follows encompasses expected losses on all contracts in the insured portfolio regardless of accounting model, unless otherwise specified. Net expected loss to be paid (recovered) is equal to the present value of expected future cash outflows for loss and LAE payments, net of: (i) inflows for expected salvage, subrogation and other recoveries; (ii) excess spread on underlying collateral, as applicable; 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 for each sector regardless of the accounting model used. Current risk-free rates are used to discount expected losses at the end of each reporting period. Therefore, changes in such rates from period to period affect economic loss development and loss and LAE. However, the effect of changes in discount rates is not indicative of actual credit impairment or improvement. 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. Net Expected Loss to be Paid (Recovered) and Net Economic Loss Development (Benefit) by Accounting Model Net Expected Loss to be Paid (Recovered) Net Economic Loss Development (Benefit) As of First Quarter Accounting Model March 31, 2025 December 31, 2024 2025 2024 (in millions) Insurance $ 133 $ 90 $ 48 $ (7) FG VIEs 17 16 — — Credit derivatives — — (63) (1) — Total $ 150 $ 106 $ (15) $ (7) Net exposure rated BIG $ 9,547 $ 10,187 ___________________________________________ (1) Includes $63 million of recoveries related to the resolution of the LBIE litigation. 72 Table of Contents Net Expected Loss to be Paid (Recovered) Roll Forward by Sector First Quarter 2025 Sector Net Expected Loss to be Paid (Recovered) as of December 31, 2024 Net Economic Loss Development (Benefit) Net (Paid) Recovered Losses (1) Net Expected Loss to be Paid (Recovered) as of March 31, 2025 (in millions) Public finance: U.S. public finance $ 18 $ 29 $ (12) $ 35 Non-U.S. public finance 98 24 — 122 Public finance 116 53 (12) 157 Structured finance: U.S. RMBS (43) (3) 9 (37) Other structured finance 33 (65) 62 30 Structured finance (10) (68) 71 (7) Total $ 106 $ (15) $ 59 $ 150 First Quarter 2024 Sector Net Expected Loss to be Paid (Recovered) as of December 31, 2023 Net Economic Loss Development (Benefit) Net (Paid) Recovered Losses (1) Net Expected Loss to be Paid (Recovered) as of March 31, 2024 (in millions) Public finance: U.S. public finance $ 398 $ (3) $ (17) $ 378 Non-U.S. public finance 20 — — 20 Public finance 418 (3) (17) 398 Structured finance: U.S. RMBS 43 (3) (42) (2) Other structured finance 44 (1) (6) 37 Structured finance 87 (4) (48) 35 Total $ 505 $ (7) $ (65) $ 433 ____________________ (1) Net of ceded paid losses, whether or not such amounts have been settled with reinsurers. Ceded paid losses are typically settled 45 days after the end of the reporting period. Such amounts are recorded as reinsurance recoverable on paid losses in “other assets.” Effect of changes in the risk-free rates included in economic loss development (benefit) was a loss of $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 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. public finance exposures was primarily attributable to certain U.K. regulated utilities. U.S. RMBS : The economic benefit for U.S. 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. 73 Table of Contents First Quarter 2024 Net Economic Loss Development Public Finance: 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. U.S. RMBS: The net benefit attributable to U.S. RMBS was $3 million and was mainly attributable to higher recoveries for secured second lien charged-off loans. Insurance Segment Loss Expense The primary differences between net economic loss development and the amount reported as “loss and LAE (benefit)” in the consolidated statements of operations are that loss and LAE (benefit): (i) considers deferred premium revenue in the calculation of loss reserves for financial guaranty insurance contracts; (ii) eliminates loss and LAE related to 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. Expected loss to be expensed represents past or expected future net claim payments that have not yet been expensed. Such amounts will be expensed in future periods as deferred premium revenue amortizes into income on financial guaranty insurance policies. Expected loss to be expensed is the Company’s projection of incurred losses that will be recognized in future periods, excluding accretion of discount. When the expected loss to be expensed exceeds the deferred premium revenue, a loss is recognized in income for the amount of such excess. Therefore, the timing of loss recognition in income does not necessarily coincide with the timing of the actual credit impairment or improvement reported in net economic loss development. Transactions (particularly BIG transactions) acquired in business combinations or seasoned portfolios assumed from legacy financial guaranty insurers generally have the largest deferred premium revenue balances. To the extent that a BIG transaction has a large deferred premium revenue, the difference between economic development and loss and LAE may be significant. While expected loss to be paid (recovered) is an important measure that provides the present value of amounts that the Company expects to pay or recover in future periods regardless of accounting model, expected loss to be expensed is important because it presents the Company’s projection of net expected losses that will be recognized in the consolidated statement of operations in future periods as deferred premium revenue amortizes into income for financial guaranty insurance policies. The amount of Insurance segment loss expense, which includes losses on policies regardless of form, is a function of the amount of economic loss development discussed above and the deferred premium revenue amortization in a given period, on a contract-by-contract basis. The following table presents the Insurance segment loss expense (benefit). Insurance Segment Loss Expense (Benefit) First Quarter 2025 2024 (in millions) U.S. public finance $ 36 $ 1 Non-U.S. public finance 6 — Structured finance: U.S. RMBS — 2 Other structured finance (1) (65) 1 Structured finance (65) 3 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). 74 Table of Contents Employee Compensation and Benefit Expenses and Other Operating Expenses 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 Asset Management Segment Results First Quarter 2025 2024 (in millions) Segment revenues $ 6 $ 1 Less: Segment expenses 4 — Equity in earnings (losses) of investees 13 1 Segment adjusted operating income (loss) before income taxes 15 2 Less: Provision (benefit) for income taxes 3 1 Segment adjusted operating income (loss) $ 12 $ 1 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 Corporate Division Results First Quarter 2025 2024 (in millions) Revenues $ 4 $ 5 Expenses Interest expense 24 25 Employee compensation and benefit expenses 8 10 Other operating expenses 8 12 Total expenses 40 47 Equity in earnings (losses) of investees 16 — Adjusted operating income (loss) before income taxes (20) (42) Less: Provision (benefit) for income taxes — (5) Adjusted operating income (loss) $ (20) $ (37) 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. See “— Liquidity and Capital Resources — AGL and its U.S. Holding Companies, Intercompany Loans Payable” for additional information. Corporate division employee compensation and benefits expenses 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. 75 Table of Contents Other (Effect of Consolidating FG VIEs and 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: (i) FG VIEs; and (ii) CIVs. The Company eliminates the effects of intercompany transactions between its FG VIEs and CIVs and its insurance and asset management subsidiaries, as well as intercompany transactions between CIVs. Consolidating FG VIEs (as opposed to accounting for the related insurance contracts in the Insurance segment) has a significant gross-up effect on the consolidated financial statements, and includes: (i) the establishment of the FG VIEs’ assets and liabilities and related changes in fair value on the condensed consolidated financial statements; (ii) eliminating the premiums and losses/recoveries associated with the financial guaranty insurance contracts between the insurance subsidiaries and the FG VIEs; and (iii) eliminating the investment balances associated with the insurance subsidiaries’ purchases of the debt obligations of the FG VIEs. 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 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. 76 Table of Contents 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. Effect of Consolidating FG VIEs and CIVs on the Condensed Consolidated Statements of Operations Increase (Decrease) First Quarter 2025 2024 Effect on Financial Statement Line Item (in millions) Fair value gains (losses) on FG VIEs (1) $ 1 $ (3) Fair value gains (losses) on CIVs 19 22 Equity in earnings (losses) of investees (2) (6) (17) Other (3) (2) 2 Effect on income before tax 12 4 Less: Tax provision (benefit) 1 — Effect on net income (loss) 11 4 Less: Effect on noncontrolling interests (4) 9 4 Effect on net income (loss) attributable to AGL $ 2 $ — By Type of VIE FG VIEs $ — $ (1) CIVs 2 1 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 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. 77 Table of Contents Reconciliation to GAAP Reconciliation of Net Income (Loss) Attributable to AGL to Adjusted Operating Income (Loss) First Quarter 2025 First Quarter 2024 Total Per Diluted Share Total Per Diluted Share (in millions, except per share amounts) Net income (loss) attributable to AGL $ 176 $ 3.44 $ 109 $ 1.89 Less pre-tax adjustments: Realized gains (losses) on investments (16) (0.30) 8 0.14 Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives (2) (0.04) 10 0.16 Fair value gains (losses) on CCS 2 0.03 (10) (0.17) Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves 33 0.64 (12) (0.20) Total pre-tax adjustments 17 0.33 (4) (0.07) Less tax effect on pre-tax adjustments (3) (0.07) — — Adjusted operating income (loss) $ 162 $ 3.18 $ 113 $ 1.96 Gain (loss) related to FG VIE and CIV consolidation (net of tax provision (benefit) of $1 and $0) included in adjusted operating income $ 2 $ 0.05 $ — $ — Net Realized Investment Gains (Losses) The table below presents the components of net realized investment gains (losses). Net Realized Investment Gains (Losses) First Quarter 2025 2024 (in millions) Gross realized gains on sales of available-for-sale securities $ 3 $ 1 Gross realized losses on sales of available-for-sale securities (8) (3) Net foreign currency gains (losses) (1) — Change in the allowance for credit losses and intent to sell (1) (10) 10 Net realized investment gains (losses) $ (16) $ 8 ____________________ (1) Relates primarily to Loss Mitigation Securities. Non-Credit Impairment-Related Unrealized Fair Value Gains (Losses) on Credit Derivatives Changes in the fair value of credit derivatives occur because of changes in the Company’s own credit rating and credit spreads, collateral credit spreads, notional amounts, credit ratings of the referenced entities, expected terms, realized gains (losses) and other settlements, interest rates and other market factors. The components of changes in fair value of credit derivatives related to credit derivative revenues and changes in expected losses are included in Insurance segment results. Non-credit impairment-related changes in unrealized fair value gains and losses on credit derivatives are not included in the Insurance segment measure of adjusted operating income because they do not represent actual claims or losses and are expected to reverse to zero as the exposure approaches its maturity date. Changes in the fair value of the Company’s credit derivatives that do not reflect actual or expected claims or credit losses have no impact on the Company’s statutory claims-paying resources, rating agency capital or regulatory capital positions. Unrealized gains (losses) on credit derivatives may fluctuate significantly in future periods. Except for underlying credit impairment, which is recognized as loss expense in the Insurance segment, the fair value adjustments on credit derivatives in the insured portfolio are non-economic adjustments that reverse to zero over the remaining term of that portfolio. See Item 1, Financial Statements, Note 9, Fair Value Measurement, for additional information. 78 Table of Contents 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 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 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. dollar. 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. Premiums on European infrastructure and structured finance transactions typically are paid, in whole or in part, on an installment basis, whereas premiums on U.S. public finance transactions are often paid upfront. The following table presents the foreign exchange rates as of the balance sheet dates. Foreign Exchange Rates U.S. Dollar Per Foreign Currency 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 Euro $1.082 $1.035 $1.079 $1.104 Non-GAAP Financial Measures The Company discloses both: (i) financial measures determined in accordance with GAAP; and (ii) financial measures not determined in accordance with GAAP (non-GAAP financial measures). Financial measures identified as non-GAAP should not be considered substitutes for GAAP financial measures. The primary limitation of non-GAAP financial measures is the potential lack of comparability to financial measures of other companies, whose definitions of non-GAAP financial measures may differ from those of the Company. 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. The Company discloses the effect of FG VIE and CIV consolidation that is embedded in each non-GAAP financial measure, as applicable. The Company believes this information may also be useful to analysts and investors evaluating Assured Guaranty’s financial results. 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. 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: (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 79 Table of Contents 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; and (v) PVP. 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. The following paragraphs define each non-GAAP financial measure disclosed by the Company and describe why it is useful. To the extent there is a directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure and the most directly comparable GAAP financial measure is presented below. Adjusted Operating Income 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 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 (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 (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 (loss) attributable to AGL. Long-dated receivables and loss and LAE reserves represent the present value of future contractual or expected cash flows. Therefore, the current period’s foreign exchange remeasurement gains (losses) are not necessarily indicative of the total foreign exchange gains (losses) that the Company will ultimately recognize. 5) 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). 80 Table of Contents 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 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 that are reported on the consolidated balance sheet. 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. 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 result in 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. ABV is adjusted operating shareholders’ equity, as defined above, further adjusted for the following: 1) Elimination of deferred acquisition costs, net. These amounts represent net deferred expenses that have already been paid or accrued and will be expensed in future accounting periods. 2) Addition of the net present value of estimated net future revenue. See below. 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. 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. 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. 81 Table of Contents Reconciliation of Shareholders’ Equity Attributable to AGL to Adjusted Operating Shareholders’ Equity and ABV As of March 31, 2025 As of December 31, 2024 Total Per Share Total Per Share (dollars in millions, except share amounts) Shareholders’ equity attributable to AGL $ 5,590 $ 112.80 $ 5,495 $ 108.80 Less pre-tax adjustments: Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives 47 0.94 49 0.96 Fair value gains (losses) on CCS 4 0.08 2 0.05 Unrealized gain (loss) on investment portfolio (313) (6.32) (397) (7.86) Less taxes 34 0.70 46 0.90 Adjusted operating shareholders’ equity 5,818 117.40 5,795 114.75 Pre-tax adjustments: Less: DAC 181 3.65 176 3.47 Plus: Net present value of estimated net future revenue 199 4.01 202 3.99 Plus: Net deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed 3,415 68.92 3,473 68.75 Plus taxes (689) (13.89) (702) (13.90) 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 ABV (net of tax provision (benefit) of $(1) and $(2)) (4) (0.07) (6) (0.13) Net Present Value of Estimated Net Future Revenue: 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. Future installment premiums are discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than Loss Mitigation Securities. The discount rate is recalculated annually and updated as necessary. Net present value of estimated future revenue for an obligation may change from period to period due to a change in the discount rate or due to a change in estimated net future revenue for the obligation, which may change due 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. There is no corresponding GAAP financial measure. PVP or Present Value of New Business Production 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. Future installment premiums are discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than certain fixed-maturity securities such as Loss Mitigation Securities. 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 82 Table of Contents 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 First Quarter 2025 First Quarter 2024 Public Finance Structured Finance Public Finance Structured Finance U.S. Non - U.S. U.S. Non - U.S. Total U.S. Non - U.S. U.S. Non - U.S. Total (in millions) GWP $ 25 $ (1) $ 7 $ 4 $ 35 $ 44 $ 2 $ 13 $ 2 $ 61 Less: Installment GWP and other GAAP adjustments (1) 2 (1) 6 4 11 12 2 12 2 28 Upfront GWP 23 — 1 — 24 32 — 1 — 33 Plus: Installment premiums and other (2) 2 7 1 5 15 11 1 14 4 30 PVP $ 25 $ 7 $ 2 $ 5 $ 39 $ 43 $ 1 $ 15 $ 4 $ 63 ___________________ (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. Insured Portfolio Financial Guaranty Exposure The following tables present information in respect of the financial guaranty insured portfolio to supplement the disclosures and discussion provided in Item 1, Financial Statements, Note 3, Outstanding Exposure. 83 Table of Contents The following table presents the financial guaranty portfolio by sector, net of cessions to reinsurers. It includes all financial guaranty contracts outstanding as of the dates presented, regardless of the form written (i.e., credit derivative form or traditional financial guaranty insurance form) or the applicable accounting model (i.e., insurance, derivative or FG VIE). Financial Guaranty Portfolio Net Par Outstanding by Sector As of March 31, 2025 As of December 31, 2024 Sector (dollars in millions) Public finance: U.S. public finance: General obligation $ 78,405 $ 78,162 Tax backed 33,112 33,288 Municipal utilities 30,735 30,036 Transportation 26,712 26,958 Healthcare 14,293 14,007 Infrastructure finance 8,583 8,663 Higher education 7,828 7,381 Housing revenue 1,359 1,272 Renewable energy 163 164 Other public finance 1,227 1,244 Total U.S. public finance 202,417 201,175 Non-U.S. public finance: Regulated utilities 23,215 22,361 Infrastructure finance 14,839 14,961 Sovereign and sub-sovereign 9,358 9,181 Renewable energy 1,636 1,596 Pooled infrastructure 1,066 1,101 Total non-U.S. public finance 50,114 49,200 Total public finance 252,531 250,375 Structured finance: U.S. structured finance: Insurance reserve financings and securitizations 4,373 4,495 RMBS 1,474 1,507 Pooled corporate obligations 608 607 Financial products 527 492 Subscription finance facilities 217 185 Other structured finance 1,174 1,167 Total U.S. structured finance 8,373 8,453 Non-U.S. structured finance: Subscription finance facilities 1,336 1,385 Pooled corporate obligations 482 468 RMBS 222 221 Other structured finance 647 650 Total non-U.S. structured finance 2,687 2,724 Total structured finance 11,060 11,177 Total net par outstanding $ 263,591 $ 261,552 84 Table of Contents Exposure to Puerto Rico All of the Company’s insured exposure to various authorities and public corporations of the Commonwealth of Puerto Rico (Puerto Rico or the Commonwealth) is rated BIG. 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) 2025 (April 1 - June 30) $ — $ 3 2025 (July 1 - September 30) 68 78 2025 (October 1 - December 31) — 2 Subtotal 2025 68 83 2026 106 126 2027 106 122 2028 68 80 2029 39 47 2030-2034 141 157 2035-2039 4 4 Total $ 532 $ 619 Liquidity and Capital Resources AGL and its U.S. Holding Companies AGL directly owns (i) AG Re, an insurance company domiciled in Bermuda; and (ii) AGUS, a U.S. holding company with public debt outstanding. AGUS directly owns AGMH, a U.S. holding company with public debt outstanding. AGMH owns AG, an insurance company domiciled in Maryland. AGUS and AGMH are collectively referred to as the U.S. Holding Companies. Sources and Uses of Funds The liquidity of AGL and its U.S. Holding Companies is largely dependent on dividends, stock redemptions and other distributions from their operating subsidiaries (see “— Insurance Subsidiaries — Distributions from Insurance Subsidiaries” below) and access to external financing. The operating liquidity requirements of AGL and the U.S. Holding Companies include: • principal and interest on debt issued by AGUS and AGMH; • dividends on AGL’s common shares; and • the payment of operating expenses. 85 Table of Contents AGL and its U.S. Holding Companies may also require liquidity to: • make capital investments in their operating subsidiaries and in alternative investments; • fund acquisitions of new businesses; • purchase or redeem the Company’s outstanding debt; or • repurchase AGL’s common shares pursuant to AGL’s share repurchase authorization. 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 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. 86 Table of Contents Long-Term Debt Obligations The Company has outstanding long-term debt issued by the U.S. Holding Companies. See Part II, Item 8, Financial Statements and Supplementary Data, Note 11, Long-Term Debt and Credit Facilities, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and “— Guarantor and U.S. Holding Companies’ Summarized Financial Information” below. U.S. Holding Companies Long-Term Debt and Intercompany Loans As of March 31, 2025 As of December 31, 2024 (in millions) Effective Interest Rate Final Maturity Principal Amount AGUS - long-term debt 6.125% Senior Notes 6.125% 2028 $ 350 $ 350 3.15% Senior Notes 3.15% 2031 500 500 7% Senior Notes 6.40% 2034 200 200 3.6% Senior Notes 3.60% 2051 400 400 Series A Enhanced Junior Subordinated Debentures 3 month CME Term SOFR +2.64% 2066 150 150 AGUS long-term debt 1,600 1,600 AGUS - intercompany loans from: AG 3.50% 2029 250 250 AGRO 5.00% 2028 20 20 AGUS intercompany loans 270 270 Total AGUS long-term debt and intercompany loans 1,870 1,870 AGMH Junior Subordinated Debentures (1) 6.40% 2066 300 300 Total AGMH long-term debt 300 300 AGMH’s long-term debt purchased by AGUS (2) (154) (154) U.S. Holding Company long-term debt $ 2,016 $ 2,016 ____________________ (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%. (2) Represents principal amount of Junior Subordinated Debentures issued by AGMH that has been purchased by AGUS. From time to time, AGL and its subsidiaries have entered into intercompany loan facilities. For example, on October 25, 2013, AGL, as borrower, and AGUS, as lender, entered into a revolving credit facility pursuant to which AGL may, from time to time, borrow for general corporate purposes. Under the credit facility, AGUS committed to lend a principal amount not exceeding $225 million in the aggregate. The commitment under the revolving credit facility terminates on October 25, 2033 (the loan commitment termination date). The unpaid principal amount of each loan will bear semi-annual interest at a fixed rate equal to 100% of the then applicable interest rate as determined under Internal Revenue Code Section 1274(d). Accrued interest on all loans will be paid on the last day of each June and December and at maturity. AGL must repay unpaid principal amounts of the loans, if any, by the third anniversary of the loan commitment termination date. AGL has not drawn upon the credit facility. For more information, see the Company’s 2024 Annual Report on Form 10-K, Part II, Item 8. Financial Statements and Supplementary Data, Note 11, Long-Term Debt and Credit Facilities. 87 Table of Contents Guarantor and U.S. Holding Companies’ Summarized Financial Information AGL fully and unconditionally guarantees the payment of the principal of, and interest on, the $1,450 million aggregate principal amount of notes issued by the U.S. Holding Companies, the $450 million aggregate principal amount of junior subordinated debentures issued by the U.S. Holding Companies, and the intercompany loans. The following tables include summarized financial information for AGL and the U.S. Holding Companies, excluding their investments in subsidiaries. As of March 31, 2025 AGL U.S. Holding Companies (in millions) Assets, excluding investments in subsidiaries Fixed-maturity securities (1) $ 15 $ 3 Ownership interest in Sound Point — 411 Other invested assets — 139 Short-term investments and cash 53 286 Receivables from affiliates (2) 50 1 Dividends receivable from U.S. Holding Companies 120 — Other assets 2 42 Liabilities Long-term debt — 1,700 Loans payable to affiliates — 270 Payable to affiliates (2) 12 15 Dividends payable to AGL — 120 Other liabilities 13 86 ____________________ (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) Primarily represents receivables and payables with non-guarantor subsidiaries. First Quarter 2025 AGL U.S. Holding Companies (in millions) Revenues $ — $ 5 Expenses Interest expense — 24 Other expenses 12 3 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 88 Table of Contents The following table presents significant cash flow items for AGL and the U.S. Holding Companies (other than investment income, operating expenses and taxes) related to distributions from subsidiaries and outflows for debt service, dividends and other capital management activities. AGL and U.S. Holding Companies Selected Cash Flow Items First Quarter 2025 AGL U.S. Holding Companies (in millions) Dividends received from U.S. Holding Companies $ 150 $ — Dividends received from other subsidiaries — 75 Distributions from equity method investees (1) — 20 Interest paid on long-term debt — (21) Investments in subsidiaries — (3) Dividends paid to AGL — (150) Dividends paid to AGL shareholders (19) — Repurchases of common shares (2) (120) — ____________________ (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. Generally, dividends paid by a U.S. company to a Bermuda holding company are subject to a 30% withholding tax. After AGL became tax resident in the U.K., it became subject to the tax rules applicable to companies resident in the U.K., including the benefits afforded by the U.K.’s tax treaties. The income tax treaty between the U.K. and the U.S. reduces or eliminates the U.S. withholding tax on certain U.S. sourced investment income (to 5% or 0%), including dividends from U.S. subsidiaries to U.K. resident persons entitled to the benefits of the treaty. Insurance Subsidiaries The Company has several insurance subsidiaries. AG is an insurance subsidiary domiciled in Maryland. As of August 1, 2024, AG owns: (i) AGUK, an insurance subsidiary domiciled in the U.K.; and (ii) AGE, an insurance company domiciled in France. Until August 1, 2024, AGM was an insurance subsidiary of the Company domiciled in New York. See “— Overview — Key Business Strategies — Merger of the U.S. Insurance Subsidiaries” above. AGUK and AGE are collectively referred to as the European Insurance Subsidiaries. AG Re is an insurance company domiciled in Bermuda that owns AGRO, an insurance company that is also domiciled in Bermuda. Sources and Uses of Funds Liquidity of the insurance subsidiaries is primarily used to pay for: • operating expenses, • claims on the insured portfolio, • dividends or other distributions to parent, • reinsurance premiums, and • capital investments in their own subsidiaries and in alternative investments. Management believes that the insurance subsidiaries’ liquidity needs for the next twelve months can be met from current cash, short-term investments and operating cash flow, including premium collections and coupon payments as well as scheduled maturities and paydowns from their respective investment portfolios. The Company generally targets a balance of its most liquid assets including cash and short-term securities, U.S. 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 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. 89 Table of Contents 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. Financial Guaranty Policies Insurance policies issued provide, in general, that payments of principal, interest and other amounts insured may not be accelerated by the holder of the obligation. Amounts paid by the Company therefore are typically in accordance with the obligation’s original payment schedule, unless the Company accelerates such payment schedule, at its sole option. Premiums received on financial guaranty contracts are paid either upfront or in installments over the life of the insured obligations. 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 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 $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. The documentation for certain CDS was negotiated to require the Company to also pay if the obligor were to become bankrupt or if the reference obligation were restructured. Furthermore, some CDS documentation requires the Company to make a payment due to an event that is unrelated to the performance of the obligation referenced in the credit derivative. If events of default or termination events specified in the credit derivative documentation were to occur, the Company may be required to make a cash termination payment to its swap counterparty upon such termination. Any such payment would probably occur prior to the maturity of the reference obligation and be in an amount larger than the amount due for that period on a “pay-as-you-go” basis. Ordinary Dividends From Insurance Subsidiaries to Holding Companies The Company anticipates that, for the next twelve months, amounts paid by AGL’s direct and indirect insurance subsidiaries as dividends or other distributions will be a major source of the holding companies’ liquidity. The insurance subsidiaries’ ability to pay dividends depends upon their financial condition, results of operations, cash requirements, other potential uses for such funds and compliance with rating agency requirements, and is also subject to restrictions contained in the insurance laws and related regulations of their states of domicile. For more information, see Part II, Item 8, Financial Statements and Supplementary Data, Note 14, Insurance Company Regulatory Requirements, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of the Company’s dividend restrictions applicable to AG, AG Re and AGRO. Dividend restrictions by insurance subsidiary are as follows: • 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.” 90 Table of Contents • 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 From Insurance Company Subsidiaries to Holding Companies First Quarter 2025 2024 (in millions) Dividends paid by AG Re to AGL $ — $ 47 Dividends paid by AG to U.S. Holding Companies (1) 72 82 ___________________ (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. CCS AG is party to an arrangement that enables it to access, at its discretion, up to $400 million of capital, at any time, and has the right to use such capital for any purpose, including to pay claims. See Item 1, Financial Statements, Note 9, Fair Value Measurement. Investment Portfolio The Company’s principal objectives in managing its investment portfolio are to support the highest possible ratings for each operating company, 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 instruments. Other invested assets include other alternative investments, which are generally less liquid. For more information about the investment portfolio and a detailed description of the Company’s valuation of investments, see Item 1, Financial Statements, Note 7, Investments, and Note 9, Fair Value Measurement. 91 Table of Contents Investment Portfolio Carrying Value As of March 31, 2025 December 31, 2024 (in millions) Fixed-maturity securities, available-for-sale $ 6,415 $ 6,369 Fixed-maturity securities, trading (1) 137 147 Short-term investments 1,158 1,221 Other invested assets (2) 960 926 Total $ 8,670 $ 8,663 ____________________ (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 4.5 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 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 As of Rating March 31, 2025 December 31, 2024 AAA 12.5 % 12.5 % AA 35.1 35.0 A 23.4 23.6 BBB 16.7 16.3 BIG 8.4 8.1 Not rated 3.9 4.5 Total 100.0 % 100.0 % Other Investments 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. 92 Table of Contents Ownership Interest in Sound Point and Alternative Investments As of March 31, 2025 Investments CIVs Consolidated (in millions) 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 Private healthcare investing 164 — 164 Asset-based/specialty finance 148 (39) 109 Middle market direct lending 12 — 12 Other 159 — 159 Total $ 1,303 $ (39) $ 1,264 ____________________ (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 CIVs Consolidated (in millions) 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 Private healthcare investing 153 — 153 Asset-based/specialty finance 142 (33) 109 Middle market direct lending 11 — 11 Other 135 — 135 Total $ 1,302 $ (33) $ 1,269 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 Equity in earnings (losses) of alternative investments: CLOs 8 — 8 Private healthcare investing 12 — 12 Asset-based/specialty finance 9 (6) 3 Middle market direct lending 1 — 1 Other 16 — 16 Equity in earnings (losses) of investees 59 (6) 53 Total $ 72 $ (6) $ 66 ____________________ (1) Includes CLO equity tranches distributed from a CLO fund in the fourth quarter of 2024. 93 Table of Contents 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 Equity in earnings (losses) of alternative investments: CLOs 20 (15) 5 Private healthcare investing 4 — 4 Asset-based/specialty finance 4 (2) 2 Middle market direct lending 3 — 3 Other 6 — 6 Equity in earnings (losses) of investees 41 (17) 24 Total $ 42 $ (17) $ 25 Commitments The Company has agreed to invest an aggregate amount of $1.5 billion in alternative investments, including $1 billion in Sound Point managed investments. Unfunded commitments for alternative investments as of 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 $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, 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. FG VIEs and CIVs The Company manages its liquidity needs by evaluating cash flows without the effect of consolidating FG VIEs and CIVs; however, the Company’s condensed consolidated financial statements include the effect of consolidating FG VIEs and CIVs. The primary sources and uses of cash at Assured Guaranty’s FG VIEs and CIVs are as follows: • FG VIEs. The primary sources of cash in FG VIEs are the collection of principal and interest on the collateral supporting the debt obligations, and the primary uses of cash are the payment of principal and interest due on the debt obligations. The insurance subsidiaries are not primarily liable for the debt obligations issued by the VIEs they insure and would only be required to make payments on those insured debt obligations in the event that the issuer of such debt obligations defaults on any principal or interest due and only for the amount of the shortfall. 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. • CIVs. 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 94 Table of Contents 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. Liquidity available at the Company’s CIVs is not available for corporate liquidity needs, except to the extent of the Company’s investment in the funds, subject to redemption provisions. See Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, for additional information. 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. Summarized Condensed Consolidated Cash Flows First Quarter 2025 2024 (in millions) Net cash flows provided by (used in) operating activities, excluding FG VIEs and CIVs operating cash flows $ 87 $ (62) FG VIEs and CIVs operating cash flows — (12) Net cash flows provided by (used in) operating activities 87 (74) Net cash flows provided by (used in) investing activities, excluding FG VIEs and CIVs investing cash flows 130 257 FG VIEs and CIVs investing cash flows 4 (4) Net cash flows provided by (used in) investing activities 134 253 Net cash flows provided by (used in) financing activities, excluding FG VIEs and CIVs financing cash flows Dividends paid (19) (19) Repurchases of common shares (120) (129) Other (27) (28) FG VIEs and CIVs financing cash flows (4) (151) Net cash flows provided by (used in) financing activities (1) (170) (327) Effect of exchange rate changes 3 (1) Increase (decrease) in cash and cash equivalents and restricted cash 54 (149) Cash and cash equivalents and restricted cash at beginning of period 128 286 Cash and cash equivalents and restricted cash at the end of the period $ 182 $ 137 ____________________ (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 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 95 Table of Contents 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There were no material changes to the market risks to which the Company is exposed since December 31, 2024.