ASSURED GUARANTY LTD 10-Q

ITEM 1. FINANCIAL STATEMENTS Assured Guaranty Ltd. Condensed Consolidated Balance Sheets (Unaudited) (dollars in millions except share data) As of September 30, 2025 December 31, 2024 Assets Investments: Fixed-maturity securities, available-for-sale, at fair value, net of allowance for credit loss of $ 54 and $ 60 (amortized cost of $ 6,492 and $ 6,827 ) $ 6,278 $ 6,369 Fixed-maturity securities, trading, at fair value 136 147 Short-term investments, at fair value 1,332 1,221 Other invested assets (includes $ 4 and $ 4 , at fair value) 1,012 926 Total investments 8,758 8,663 Cash 157 121 Premiums receivable, net of commissions payable 1,583 1,551 Deferred acquisition costs 190 176 Salvage and subrogation recoverable 453 396 Financial guaranty variable interest entities’ assets, at fair value 145 147 Assets of consolidated investment vehicles (includes $ 132 and $ 99 , at fair value) 136 101 Other assets (includes $ 159 and $ 131 , at fair value) 679 746 Total assets $ 12,101 $ 11,901 Liabilities Unearned premium reserve $ 3,663 $ 3,719 Loss and loss adjustment expense reserve 308 268 Long-term debt 1,702 1,699 Financial guaranty variable interest entities’ liabilities, at fair value ($ 150 and $ 155 with recourse, $ 9 and $ 9 without recourse) 159 164 Other liabilities (includes $ 31 and $ 34 , at fair value) 532 498 Total liabilities 6,364 6,348 Commitments and contingencies (Notes 3, 4, 7 and 11) Shareholders’ equity Common shares ($ 0.01 par value, 500,000,000 shares authorized; 46,708,564 and 50,505,320 shares issued and outstanding) — 1 Retained earnings 5,836 5,878 Accumulated other comprehensive income (loss), net of tax of $( 39 ) and $( 75 ) ( 179 ) ( 385 ) Deferred equity compensation 1 1 Total shareholders’ equity attributable to Assured Guaranty Ltd. 5,658 5,495 Nonredeemable noncontrolling interests (Note 8) 79 58 Total shareholders’ equity 5,737 5,553 Total liabilities and shareholders’ equity $ 12,101 $ 11,901 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 Table of Contents Assured Guaranty Ltd. Condensed Consolidated Statements of Operations (Unaudited) (dollars in millions except share data) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenues Net earned premiums $ 94 $ 97 $ 274 $ 300 Net investment income 94 82 270 247 Net realized investment gains (losses) ( 10 ) — ( 32 ) 2 Fair value gains (losses) on credit derivatives 5 3 110 19 Fair value gains (losses) on committed capital securities 8 ( 3 ) 9 ( 12 ) Fair value gains (losses) on financial guaranty variable interest entities 3 ( 7 ) 6 ( 11 ) Fair value gains (losses) on consolidated investment vehicles 17 21 40 54 Foreign exchange gains (losses) on remeasurement ( 23 ) 55 93 43 Fair value gains (losses) on trading securities 8 9 11 52 Other income (loss) 11 12 52 22 Total revenues 207 269 833 716 Expenses Loss and loss adjustment expenses (benefit) ( 30 ) ( 51 ) 38 ( 54 ) Interest expense 22 22 67 68 Amortization of deferred acquisition costs 6 5 16 14 Employee compensation and benefit expenses 50 47 160 153 Other operating expenses 44 44 131 124 Total expenses 92 67 412 305 Income (loss) before income taxes and equity in earnings (losses) of investees 115 202 421 411 Equity in earnings (losses) of investees 20 18 76 47 Income (loss) before income taxes 135 220 497 458 Less: Provision (benefit) for income taxes 21 44 92 88 Net income (loss) 114 176 405 370 Less: Noncontrolling interests 9 5 21 12 Net income (loss) attributable to Assured Guaranty Ltd. $ 105 $ 171 $ 384 $ 358 Earnings per share: Basic $ 2.20 $ 3.23 $ 7.82 $ 6.57 Diluted $ 2.18 $ 3.17 $ 7.73 $ 6.44 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 Table of Contents Assured Guaranty Ltd. Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (in millions) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net income (loss) $ 114 $ 176 $ 405 $ 370 Change in net unrealized gains (losses) on: Investments with no credit impairment, net of tax provision (benefit) of $ 12 , $ 25 , $ 29 and $ 16 37 152 174 111 Investments with credit impairment, net of tax provision (benefit) of $ 3 , $ 3 , $ 7 and $ 4 9 10 29 18 Change in net unrealized gains (losses) on investments 46 162 203 129 Change in instrument-specific credit risk on financial guaranty variable interest entities’ liabilities with recourse, net of tax provision (benefit) 1 ( 1 ) 1 ( 1 ) Other, net of tax provision (benefit) 1 — 2 — Other comprehensive income (loss) 48 161 206 128 Comprehensive income (loss) 162 337 611 498 Less: Comprehensive income (loss) attributable to noncontrolling interests 9 5 21 12 Comprehensive income (loss) attributable to Assured Guaranty Ltd. $ 153 $ 332 $ 590 $ 486 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents Assured Guaranty Ltd. Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) (dollars in millions, except share data) For the Three Months Ended September 30, 2025 Total Shareholders’ Equity Attributable to Assured Guaranty Ltd. Common Shares Outstanding Common Shares Par Value Retained Earnings Accumulated Other Comprehensive Income (Loss) Deferred Equity Compensation Total Nonredeemable Noncontrolling Interests Shareholders’ Equity As of June 30, 2025 48,109,439 $ — $ 5,859 $ ( 227 ) $ 1 $ 5,633 $ 96 $ 5,729 Net income — — 105 — — 105 9 114 Dividends ($ 0.34 per share) — — ( 16 ) — — ( 16 ) — ( 16 ) Deconsolidation — — — — — — ( 26 ) ( 26 ) Common shares repurchases ( 1,423,121 ) — ( 120 ) — — ( 120 ) — ( 120 ) Share-based compensation 22,246 — 8 — — 8 — 8 Other comprehensive income — — — 48 — 48 — 48 As of September 30, 2025 46,708,564 $ — $ 5,836 $ ( 179 ) $ 1 $ 5,658 $ 79 $ 5,737 For the Three Months Ended September 30, 2024 Total Shareholders’ Equity Attributable to Assured Guaranty Ltd. Common Shares Outstanding Common Shares Par Value Retained Earnings Accumulated Other Comprehensive Income (Loss) Deferred Equity Compensation Total Nonredeemable Noncontrolling Interests Shareholders’ Equity As of June 30, 2024 53,185,707 $ 1 $ 5,929 $ ( 392 ) $ 1 $ 5,539 $ 56 $ 5,595 Net income — — 171 — — 171 5 176 Dividends ($ 0.31 per share) — — ( 16 ) — — ( 16 ) — ( 16 ) Common shares repurchases ( 1,658,441 ) — ( 132 ) — — ( 132 ) — ( 132 ) Share-based compensation 29,484 — 5 — — 5 — 5 Distributions — — — — — — ( 7 ) ( 7 ) Other comprehensive income — — — 161 — 161 — 161 As of September 30, 2024 51,556,750 $ 1 $ 5,957 $ ( 231 ) $ 1 $ 5,728 $ 54 $ 5,782 4 Table of Contents Assured Guaranty Ltd. Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) - (Continued) (dollars in millions, except share data) For the Nine Months Ended September 30, 2025 Total Shareholders’ Equity Attributable to Assured Guaranty Ltd. Common Shares Outstanding Common Shares Par Value Retained Earnings Accumulated Other Comprehensive Income (Loss) Deferred Equity Compensation Total Nonredeemable Noncontrolling Interests Shareholders’ Equity As of December 31, 2024 50,505,320 $ 1 $ 5,878 $ ( 385 ) $ 1 $ 5,495 $ 58 $ 5,553 Net income — — 384 — — 384 21 405 Dividends ($ 1.02 per share) — — ( 53 ) — — ( 53 ) — ( 53 ) Common shares repurchases ( 4,295,854 ) ( 1 ) ( 371 ) — — ( 372 ) — ( 372 ) Share-based compensation 499,098 — ( 2 ) — — ( 2 ) — ( 2 ) Other comprehensive income — — — 206 — 206 — 206 As of September 30, 2025 46,708,564 $ — $ 5,836 $ ( 179 ) $ 1 $ 5,658 $ 79 $ 5,737 For the Nine Months Ended September 30, 2024 Total Shareholders’ Equity Attributable to Assured Guaranty Ltd. Common Shares Outstanding Common Shares Par Value Retained Earnings Accumulated Other Comprehensive Income (Loss) Deferred Equity Compensation Total Nonredeemable Noncontrolling Interests Shareholders’ Equity As of December 31, 2023 56,217,305 $ 1 $ 6,070 $ ( 359 ) $ 1 $ 5,713 $ 52 $ 5,765 Net income — — 358 — — 358 12 370 Dividends ($ 0.93 per share) — — ( 52 ) — — ( 52 ) — ( 52 ) Common shares repurchases ( 5,126,047 ) — ( 417 ) — — ( 417 ) — ( 417 ) Share-based compensation 465,492 — ( 2 ) — — ( 2 ) — ( 2 ) Distributions — — — — — — ( 10 ) ( 10 ) Other comprehensive income — — — 128 — 128 — 128 As of September 30, 2024 51,556,750 $ 1 $ 5,957 $ ( 231 ) $ 1 $ 5,728 $ 54 $ 5,782 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents Assured Guaranty Ltd. Condensed Consolidated Statements of Cash Flows (Unaudited) (in millions) Nine Months Ended September 30, 2025 2024 Net cash flows provided by (used in) operating activities $ 220 $ 1 Cash flows from investing activities: Fixed-maturity securities, available-for-sale: Purchases ( 1,226 ) ( 968 ) Sales 533 575 Maturities and paydowns 1,104 577 Short-term investments with original maturities of over three months: Purchases ( 3 ) ( 1 ) Maturities and paydowns — 5 Net sales (purchases) of short-term investments with original maturities of less than three months ( 103 ) 172 Sales of fixed-maturity securities, trading 8 233 Maturities and paydowns of fixed-maturity securities, trading 14 5 Paydowns of financial guaranty variable interest entities’ assets 16 18 Purchases of and contributions to other invested assets ( 95 ) ( 103 ) Sales of and return of capital from other invested assets 39 35 Other ( 9 ) ( 4 ) Net cash flows provided by (used in) investing activities 278 544 Cash flows from financing activities: Dividends paid ( 53 ) ( 52 ) Repurchases of common shares ( 369 ) ( 412 ) Net paydowns of financial guaranty variable interest entities’ liabilities ( 13 ) ( 157 ) Payments related to tax withholding for share-based compensation ( 34 ) ( 30 ) Other 2 2 Distributions to noncontrolling interests from consolidated investment vehicles — ( 10 ) Net cash flows provided by (used in) financing activities ( 467 ) ( 659 ) Effect of foreign exchange rate changes 5 2 Increase (decrease) in cash and cash equivalents and restricted cash 36 ( 112 ) Cash and cash equivalents and restricted cash at beginning of period 128 286 Cash and cash equivalents and restricted cash at end of period $ 164 $ 174 (continued on next page) 6 Table of Contents Assured Guaranty Ltd. Condensed Consolidated Statements of Cash Flows (Unaudited) - (Continued) (in millions) Nine Months Ended September 30, 2025 2024 Supplemental cash flow information Income taxes paid (received) $ 40 $ 59 Interest paid on long-term debt 63 66 Supplemental disclosure of non-cash activities: Receipt of fixed-maturity securities, available-for-sale $ 9 $ — As of September 30, 2025 September 30, 2024 Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets: Cash $ 157 $ 147 Cash and cash equivalents of consolidated investment vehicles 4 23 Restricted cash (included in other assets) 3 4 Cash and cash equivalents and restricted cash at the end of period $ 164 $ 174 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Business and Basis of Presentation Business Assured Guaranty Ltd. (AGL and, together with its subsidiaries, Assured Guaranty or the Company) is a Bermuda-based holding company that provides, through its wholly-owned operating subsidiaries, credit protection products to the United States (U.S.) and non-U.S. public finance (including infrastructure) and structured finance markets. Assured Guaranty also participates in the asset management business. Insurance Through its insurance subsidiaries, the Company applies its credit underwriting judgment, risk management skills and capital markets experience primarily to offer financial guaranty insurance that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments. If an obligor defaults on a scheduled payment, including a scheduled principal or interest payment (collectively, debt service), the Company is required under its unconditional and irrevocable financial guaranty to pay the amount of the shortfall to the holder of the obligation. The Company markets its financial guaranty insurance directly to issuers and underwriters of public finance and structured finance securities as well as to investors in such obligations. The Company guarantees obligations issued principally in the U.S. and the United Kingdom (U.K.), and also guarantees obligations issued in other countries and regions, including Western Europe and Australia. The Company also provides specialty insurance and reinsurance on transactions with risk profiles similar to those of its structured finance exposures written in financial guaranty form. The Company’s principal insurance subsidiaries are: • Assured Guaranty Inc. (AG), domiciled in Maryland and formerly known as Assured Guaranty Corp., and its insurance subsidiaries: • Assured Guaranty UK Limited, organized in the U.K.; • Assured Guaranty (Europe) SA, organized in France; • Assured Guaranty Re Ltd. (AG Re), domiciled in Bermuda, and its insurance subsidiary: • Assured Guaranty Re Overseas Ltd. (AGRO), domiciled in Bermuda. The Company designated certain assets and liabilities supporting the Insurance segment as held for sale in the first quarter of 2023. These assets and liabilities had carrying values of $ 30 million (reported in “other assets”) and $ 4 million (reported in “other liabilities”), respectively, as of September 30, 2025, and were sold in the fourth quarter of 2025. The Company is evaluating the effect on its consolidated financial statements. Asset Management The Company participates in the asset management business through its approximately 30 % ownership interest in Sound Point Capital Management, LP (Sound Point, LP) and certain of its investment management affiliates (together with Sound Point, LP, Sound Point). In addition, in accordance with the terms of a letter agreement (Letter Agreement), effective July 1, 2023, AG (i) engaged Sound Point as its sole alternative credit manager, and (ii) transitioned to Sound Point the management of certain existing alternative investments and related commitments. The Letter Agreement also provides that AG, including through its investment subsidiary AG Asset Strategies LLC (AGAS), would, subject to the terms and conditions of the Letter Agreement, make new investments in funds, other vehicles and separately managed accounts managed by Sound Point which, when aggregated with the alternative investments and commitments transitioned from the Company and any reinvestments (collectively, Sound Point Investments), and investments made by other Assured Guaranty affiliates, will total $ 1 billion. AG has made substantial investments with Sound Point across a variety of their strategies in order to seek to enhance its investment returns and anticipates continuing to invest with Sound Point pursuant to the terms of the Letter Agreement. The Letter Agreement contemplates a long-term investment partnership between Sound Point and Assured Guaranty, whereby AG agreed to reinvest all returns of capital from Sound Point Investments until July 1, 2038. Similarly, under the Letter Agreement AG agreed to reinvest all gains and dividends from Sound Point Investments through July 1, 2025, and reinvest half of all such gains and dividends thereafter until July 1, 2033. On July 1, 2028, AG may choose to reduce the amounts invested or required to be reinvested in certain Sound Point Investments under the Letter Agreement, subject to adjustment of Assured Guaranty’s ownership interest in Sound Point. To the extent not required to be reinvested by the Letter Agreement, all proceeds from Sound Point Investments received in accordance with their operative investment documents can be distributed to AG. See Note 7, Investments. 8 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued U.S. Holding Companies AGL directly or indirectly owns several holding companies, two of which - Assured Guaranty US Holdings Inc. (AGUS) and Assured Guaranty Municipal Holdings Inc. (AGMH) (collectively, the U.S. Holding Companies) - have public debt outstanding. Basis of Presentation The unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). In management’s opinion, all material adjustments necessary for a fair statement of the financial condition, results of operations and cash flows of the Company, including its consolidated variable interest entities (VIEs), are reflected in the periods presented and are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These unaudited interim condensed consolidated financial statements are as of September 30, 2025 and cover the three-month period ended September 30, 2025 (third quarter 2025), the three-month period ended September 30, 2024 (third quarter 2024), the nine-month period ended September 30, 2025 (nine months 2025) and the nine-month period ended September 30, 2024 (nine months 2024). Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but is not required for interim reporting purposes, has been condensed or omitted. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. Certain prior year balances have been reclassified to conform to the current period’s presentation. The unaudited interim condensed consolidated financial statements include the accounts of AGL, its direct and indirect subsidiaries, and its consolidated financial guaranty VIEs (FG VIEs) and consolidated investment vehicles (CIVs). See Note 8, Variable Interest Entities. Intercompany accounts and transactions between and among all consolidated entities have been eliminated. All amounts are reported in U.S. dollars, unless otherwise specified. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2024 filed with the U.S. Securities and Exchange Commission. Recent Accounting Standards Adopted In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract . This ASU refines the scope of Accounting Standards Codification (ASC) 815 to clarify which contracts are subject to derivative accounting and provides clarification under ASC 606 for share-based payments from a customer in a revenue contract. The Company elected to early adopt this ASU as of January 1, 2025, with no effect on the Company's consolidated financial statements. Recent Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The amendments require enhanced annual disclosures regarding the rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024. The Company will apply the amendments in this ASU prospectively to all annual periods beginning after December 15, 2024. The adoption of this ASU will affect certain of the Company’s income tax disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) . The amendments in this ASU require disclosure about specific expense categories, including employee compensation, depreciation and intangible asset amortization, in the notes to financial 9 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued statements at interim and annual reporting periods. This ASU is effective in fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. Prospective application is required, and retrospective application is permitted. The Company is evaluating when and how it will adopt this ASU and the effect that the amendments in this ASU may have on its expense disclosures. In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software . This ASU updates the capitalization guidance for internal-use software development costs by removing all references to software development project stages and providing new guidance requiring an entity to start capitalizing when both of the following occur: (i) management has authorized and committed to funding the software project; and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. This ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. This ASU allows entities to adopt the new guidance prospectively, retrospectively, or with a modified transition. The Company is evaluating when and how it will adopt this ASU and the effect it may have on its consolidated financial statements. 2. Segment Information The Company reports its results of operations in two segments: Insurance and Asset Management. The Company separately reports the results of its Corporate division and the effects of consolidating FG VIEs and CIVs. This presentation is consistent with the manner in which the Chief Executive Officer and President, the chief operating decision maker (CODM), reviews the business to assess performance and allocate resources. The CODM predominantly uses adjusted operating income to allocate resources for each segment in the annual budget and forecasting process and to assess the performance for each segment. The Company analyzes the operating performance of each segment using “segment adjusted operating income (loss).” Results for each segment and division include specifically identifiable expenses as well as intersegment expense allocations, as applicable, based on time studies and other cost allocation methodologies based on headcount or other metrics. Segment adjusted operating income is defined as “net income (loss) attributable to AGL,” adjusted for the following items, which primarily affect the Insurance segment and Corporate division: • Elimination of realized gains (losses) on the Company’s investments, except for gains and losses on securities classified as trading. • Elimination of non-credit impairment-related fair value gains (losses) on credit derivatives that are recognized in net income, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses. • Elimination of fair value gains (losses) on the Company’s committed capital securities (CCS) that are recognized in net income. • Elimination of foreign exchange gains (losses) on remeasurement of net premium receivables and loss and loss adjustment expense (LAE) reserves that are recognized in net income. • 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. In addition to the adjustments listed above, segment adjusted operating income (loss) differs from GAAP in other respects. The Insurance segment includes: (i) premiums and losses from the financial guaranty insurance policies issued by AG that guarantees the FG VIEs’ debt; and (ii) the insurance subsidiaries’ share of earnings from all their investments in funds managed by Sound Point in “equity in earnings (losses) of investees.” Under GAAP, (i) FG VIEs are consolidated by AG and the premiums and losses/recoveries associated with the financial guaranty policies in respect of the FG VIEs’ debt are eliminated (the reconciliation tables below present the FG VIEs and related eliminations in “other”); and (ii) certain investments in funds managed by Sound Point are, or were in prior periods, accounted for as CIVs (in the reconciliation tables below, the CIVs and related eliminations of the Insurance segment’s “equity in earnings (losses) of investees” associated with the Company’s ownership interest in CIVs are presented in “other”). The Company does not report assets by reportable segment as the CODM does not assess performance or allocate resources based on assets. 10 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued The Insurance segment primarily consists of the adjusted operating income (loss) of the Company’s insurance subsidiaries and AGAS. The Asset Management segment includes the results of the Company’s equity method ownership interest in Sound Point and other asset management-related incentive fees. The Corporate division primarily consists of: (i) interest expense and any losses on the extinguishment of the U.S. Holding Companies’ debt; (ii) other corporate operating expenses of AGL and the U.S. Holding Companies, (iii) beginning in the third quarter of 2024, equity in earnings from certain alternative investments that were transferred from AG to AGMH as part of a stock redemption that occurred on August 5, 2024, and (iii) gains and losses associated with certain corporate development or other strategic initiatives. The Other category in the tables below primarily includes the effect of consolidating FG VIEs, CIVs and intersegment eliminations. See Note 8, Variable Interest Entities. The following table presents information for the Company’s operating segments. Intersegment revenues include transactions between and among the segments, the Corporate division and Other category. Segment Information Third Quarter 2025 2024 Insurance Asset Management Insurance Asset Management (in millions) Third-party revenues $ 204 $ 6 $ 202 $ 1 Intersegment revenues 2 2 2 1 Segment revenues 206 8 204 2 Segment loss and LAE (benefit) ( 31 ) — ( 53 ) — Segment employee compensation and benefit expenses 44 — 40 — Segment amortization of deferred acquisition costs (DAC) 6 — 5 — Other segment items (2) 32 4 36 2 Segment expenses 51 4 28 2 Segment equity in earnings (losses) of investees 16 — 28 4 Less: Segment provision (benefit) for income taxes 26 1 42 — Segment adjusted operating income (loss) $ 145 $ 3 $ 162 $ 4 Selected components of segment adjusted operating income: Net investment income $ 94 $ — $ 82 $ — Non-cash compensation and operating expenses (3) 15 — 18 — 11 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Nine Months 2025 2024 Insurance (1) Asset Management Insurance Asset Management (in millions) Third-party revenues $ 637 $ 24 $ 615 $ 8 Intersegment revenues 7 5 7 2 Segment revenues 644 29 622 10 Segment loss and LAE (benefit) ( 27 ) — ( 49 ) — Segment employee compensation and benefit expenses 140 — 128 — Segment amortization of DAC 16 — 14 — Other segment items (2) 91 17 90 6 Segment expenses 220 17 183 6 Segment equity in earnings (losses) of investees 48 12 83 2 Less: Segment provision (benefit) for income taxes 83 5 95 1 Segment adjusted operating income (loss) $ 389 $ 19 $ 427 $ 5 Selected components of segment adjusted operating income: Net investment income $ 269 $ — $ 246 $ — Non-cash compensation and operating expenses (3) 47 — 46 — _____________________ (1) Nine months 2025 results include the gain recognized in connection with the Lehman Brothers International (Europe) (in administration) (LBIE) litigation, which represents the full satisfaction of the judgment the Company was awarded and its claims for attorneys’ fees, expenses and interest. See Note 6, Contracts Accounted for as Credit Derivatives, for additional information. (2) Other segment items for the Insurance segment include professional services expenses, maintenance, depreciation expense, lease expense, investment management expenses and certain overhead expenses; and for the Asset Management segment include expenses associated with incentive fees. (3) Amounts consist of depreciation, amortization and share-based compensation expenses. 12 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued The tables below present a reconciliation of significant components of segment information to the comparable consolidated amounts. Reconciliation of Segment Information to Consolidated Information Three Months Ended September 30, 2025 Equity in Earnings (Losses) of Investees Less: Net Income (Loss) Attributable to AGL Revenues Expenses Provision (Benefit) for Income Taxes Noncontrolling Interests (in millions) Segments: Insurance $ 206 $ 51 $ 16 $ 26 $ — $ 145 Asset Management 8 4 — 1 — 3 Total segments 214 55 16 27 — 148 Corporate division 3 38 9 ( 2 ) — ( 24 ) Other 13 ( 1 ) ( 5 ) — 9 — Subtotal 230 92 20 25 9 124 Reconciling items: Realized gains (losses) on investments ( 10 ) — — — — ( 10 ) Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives 1 — — — — 1 Fair value gains (losses) on CCS 8 — — — — 8 Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves ( 22 ) — — — — ( 22 ) Tax effect — — — ( 4 ) — 4 Consolidated $ 207 $ 92 $ 20 $ 21 $ 9 $ 105 Reconciliation of Segment Information to Consolidated Information Three Months Ended September 30, 2024 Equity in Earnings (Losses) of Investees Less: Net Income (Loss) Attributable to AGL Revenues Expenses Provision (Benefit) for Income Taxes Noncontrolling Interests (in millions) Segments: Insurance $ 204 $ 28 $ 28 $ 42 $ — $ 162 Asset Management 2 2 4 — — 4 Total segments 206 30 32 42 — 166 Corporate division 4 37 — ( 4 ) — ( 29 ) Other 8 ( 2 ) ( 14 ) ( 2 ) 5 ( 7 ) Subtotal 218 65 18 36 5 130 Reconciling items: Realized gains (losses) on investments — — — — — — Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives — 2 — — — ( 2 ) Fair value gains (losses) on CCS ( 3 ) — — — — ( 3 ) Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves 54 — — — — 54 Tax effect — — — 8 — ( 8 ) Consolidated $ 269 $ 67 $ 18 $ 44 $ 5 $ 171 13 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Reconciliation of Segment Information to Consolidated Information Nine Months Ended September 30, 2025 Equity in Earnings (Losses) of Investees Less: Net Income (Loss) Attributable to AGL Revenues Expenses Provision (Benefit) for Income Taxes Noncontrolling Interests (in millions) Segments: Insurance $ 644 $ 220 $ 48 $ 83 $ — $ 389 Asset Management 29 17 12 5 — 19 Total segments 673 237 60 88 — 408 Corporate division 11 117 28 ( 5 ) — ( 73 ) Other 29 ( 5 ) ( 12 ) — 21 1 Subtotal 713 349 76 83 21 336 Reconciling items: Realized gains (losses) on investments ( 32 ) — — — — ( 32 ) Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives 61 63 — — — ( 2 ) Fair value gains (losses) on CCS 9 — — — — 9 Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves 82 — — — — 82 Tax effect — — — 9 — ( 9 ) Consolidated $ 833 $ 412 $ 76 $ 92 $ 21 $ 384 Reconciliation of Segment Information to Consolidated Information Nine Months Ended September 30, 2024 Equity in Earnings (Losses) of Investees Less: Net Income (Loss) Attributable to AGL Revenues Expenses Provision (Benefit) for Income Taxes Noncontrolling Interests (in millions) Segments: Insurance $ 622 $ 183 $ 83 $ 95 $ — $ 427 Asset Management 10 6 2 1 — 5 Total segments 632 189 85 96 — 432 Corporate division 13 128 — ( 14 ) — ( 101 ) Other 28 ( 12 ) ( 38 ) ( 2 ) 12 ( 8 ) Subtotal 673 305 47 80 12 323 Reconciling items: Realized gains (losses) on investments 2 — — — — 2 Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives 11 — — — 11 Fair value gains (losses) on CCS ( 12 ) — — — — ( 12 ) Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves 42 — — — — 42 Tax effect — — — 8 — ( 8 ) Consolidated $ 716 $ 305 $ 47 $ 88 $ 12 $ 358 14 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued 3. Outstanding Exposure The Company sells credit protection primarily in financial guaranty insurance form. The Company may also sell credit protection in other forms of insurance or by issuing policies that guarantee payment obligations under credit default swaps (CDS). The Company’s guaranties of CDS are generally structured 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 Company seeks to limit its exposure to losses by underwriting obligations that it views to be investment grade at inception, although on occasion it may underwrite new issuances that it views to be below-investment-grade (BIG), typically as part of its loss mitigation strategy for existing troubled exposures. The Company also seeks to acquire portfolios of insurance from financial guarantors that are no longer writing new business by acquiring such companies, providing reinsurance on or novating a portfolio of insurance; in such instances, the Company evaluates the risk characteristics of the target portfolio, which may include some BIG exposures, as a whole in the context of the proposed transaction. The Company diversifies its insured portfolio across sector and geography and, in the structured finance portfolio, generally requires subordination or collateral to protect it from loss. Reinsurance may be used in order to reduce net exposure to certain insured transactions. Public finance obligations insured by the Company primarily consist of general obligation bonds supported by the taxing powers of U.S. state or municipal governmental authorities, as well as tax-supported bonds, revenue bonds and other obligations supported by covenants from state or municipal governmental authorities or other municipal obligors to impose and collect fees and charges for public services or specific infrastructure projects. The Company includes within public finance obligations those obligations backed by the cash flow from leases or other revenues from projects serving substantial public purposes, including utilities, toll roads, healthcare facilities and government office buildings as well as obligations issued by U.S. and non-U.S. sovereign and sub-sovereign issuers and governmental authorities. Structured finance obligations insured by the Company are generally issued by special purpose entities, including VIEs, and backed by pools of assets having an ascertainable cash flow or market value or other specialized financial obligations. Some of these VIEs are consolidated as described in Note 8, Variable Interest Entities. Unless otherwise specified, the outstanding par and debt service amounts presented in this note include outstanding exposures on these VIEs whether or not they are consolidated. The Company also provides specialty insurance and reinsurance, and other types of financial guaranties, that are consistent with its risk profile and benefit from its underwriting experience. Surveillance Categories The Company segregates its insured portfolio into investment grade and BIG surveillance categories to facilitate the appropriate allocation of resources to monitoring and loss mitigation efforts and to aid in establishing the appropriate cycle for periodic review of each exposure. BIG exposures include all exposures with internal credit ratings below BBB-. The Company’s internal credit ratings are based on internal assessments of the likelihood of default and loss severity in the event of default. Internal credit ratings are expressed on a ratings scale similar to that used by the rating agencies and generally reflect an approach similar to that employed by the rating agencies, except that the Company’s internal credit ratings focus on future performance rather than lifetime performance. The Company monitors its insured portfolio and refreshes its internal credit ratings on individual exposures in quarterly, semi-annual or annual cycles based on the Company’s view of the exposure’s credit quality, future loss potential, volatility and sector. More extensive monitoring and intervention are employed for all BIG surveillance categories, with internal credit ratings reviewed quarterly. Exposures identified as BIG are subjected to further review to determine (i) the probability of a future loss, (ii) the calculation of the expected future loss to be paid, and (iii) whether the Company has paid a claim for which it expects to be reimbursed within one year (liquidity claim) or a claim for which it does not expect to be reimbursed within one year. Ratings on exposures in sectors identified as under the most stress or with the most potential volatility are also reviewed every quarter, although the Company may also review a rating in response to developments impacting a credit when a ratings review is not scheduled. For assumed exposures, the Company may use the ceding company’s credit ratings of transactions where it is impractical for it to assign its own rating. 15 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued The Company assigns each BIG exposure to one of the three BIG surveillance categories below, which generally represent the following: • BIG 1: Below-investment-grade exposures for which there are possible future losses, on a present value basis, and the aggregate probability weighting of scenarios with future losses is less than 50 %, regardless of whether the Company has or has not paid a liquidity claim. • BIG 2: Below-investment-grade exposures for which there are possible future losses, on a present value basis, and the aggregate probability weighting of scenarios with future losses is 50 % or more, but for which no claims (other than liquidity claims) have yet been paid. • BIG 3: Below-investment-grade exposures for which future losses are expected, on a present value basis, and the aggregate probability weighting of scenarios with future losses is 50 % or more, and for which claims, other than liquidity claims, have been paid. For purposes of classifying BIG exposures into one of the three BIG categories, the Company calculates the present value of projected claim payments and recoveries using the pre-tax book yield of the investment portfolio as the applicable discount rate. As discussed in Note 4, Expected Loss to be Paid (Recovered), for financial statement measurement purposes, the Company uses risk-free rates (as determined each quarter) for discounting, rather than the pre-tax book yield of the investment portfolio, to calculate the expected losses to be paid. Expected losses to be paid (recovered) are based on probability weighted scenarios and serve as the basis for the loss reserves reported in accordance with GAAP. Financial Guaranty Exposure The Company measures its financial guaranty exposure in terms of (i) gross and net par outstanding and (ii) gross and net debt service. The Company typically guarantees the payment of debt service when due. Since most of these payments are due in the future, the Company generally uses gross and net par outstanding as a proxy for its financial guaranty exposure. Gross par outstanding generally represents the principal amount of the insured obligation at a point in time. Net par outstanding equals gross par outstanding net of any reinsurance. The Company includes in its par outstanding calculation the impact of any consumer price index inflator to the reporting date as well as, in the case of accreting (zero-coupon) obligations, accretion to the reporting date. Non-U.S. dollar denominated par outstanding is translated at the spot rate at the end of the reporting period. The Company has, from time to time, purchased securities 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). Amounts attributable to Loss Mitigation Securities are excluded from par and debt service outstanding, and are instead reported as Loss Mitigation Securities in the investment portfolio. The Company manages such securities as investments and not insurance exposure. As of September 30, 2025 and December 31, 2024, the Company excluded net par outstanding of $ 801 million and $ 1.2 billion attributable to Loss Mitigation Securities. Gross debt service outstanding represents the sum of all estimated future debt service payments on the insured obligations, on an undiscounted basis. Net debt service outstanding equals gross debt service outstanding net of any reinsurance. Future debt service payments include the estimated impact of any consumer price index inflator after the reporting date, as well as, in the case of accreting (zero-coupon) obligations, accretion after the reporting date. The Company calculates its debt service outstanding as follows: • for insured obligations that are not supported by homogeneous pools of assets (which category includes most of the Company’s public finance transactions), as the total estimated contractual future debt service due through maturity, regardless of whether the obligations may be called and regardless of whether, in the case of obligations where principal payments are due when an underlying asset makes a principal payment, the Company believes the obligations will be repaid prior to contractual maturity; and • for insured obligations that are supported by homogeneous pools of assets that are contractually permitted to prepay principal (which category includes, for example, residential mortgage-backed securities (RMBS)), as the total estimated expected future debt service due on insured obligations through their respective expected terms, which 16 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued reflects the Company’s expectations as to whether the obligations may be called and, in the case of obligations where principal payments are due when an underlying asset makes a principal payment, when the Company expects principal payments to be made prior to contractual maturity. The calculation of debt service requires the use of estimates, which the Company updates periodically, including estimates and assumptions for the expected remaining term of insured obligations supported by homogeneous pools of assets, updated interest rates for floating and variable rate insured obligations, behavior of consumer price indices for obligations with consumer price index inflators, foreign exchange rates and other assumptions based on the characteristics of each insured obligation. Debt service is a measure of the estimated maximum potential exposure to insured obligations before considering the Company’s various legal rights to the underlying collateral and other remedies available to it under its financial guaranty contract. Actual debt service may differ from estimated debt service due to refundings, terminations, negotiated restructurings, prepayments, changes in interest rates on variable rate insured obligations, consumer price index behavior differing from that projected, changes in foreign exchange rates on non-U.S. dollar denominated insured obligations and other factors. Financial Guaranty Portfolio Debt Service and Par Outstanding As of September 30, 2025 As of December 31, 2024 Gross Net Gross Net (in millions) Debt Service Public finance $ 426,334 $ 426,261 $ 403,789 $ 403,718 Structured finance 12,929 12,503 12,674 12,248 Total financial guaranty $ 439,263 $ 438,764 $ 416,463 $ 415,966 Par Outstanding Public finance $ 263,472 $ 263,418 $ 250,429 $ 250,375 Structured finance 11,883 11,457 11,603 11,177 Total financial guaranty $ 275,355 $ 274,875 $ 262,032 $ 261,552 In addition to amounts shown in the table above, the Company had outstanding commitments to provide financial guaranties of $ 1.6 billion of public finance gross par and $ 2.2 billion of structured finance gross par as of September 30, 2025. These commitments are contingent on the satisfaction of all conditions set forth in the financial guaranties and may expire unused or be canceled at the counterparty’s request. Therefore, the total commitment amount does not necessarily reflect actual future guaranteed amounts. The Company and Financial Guaranty Insurance Company (FGIC) had been parties to a novation agreement, dated as of February 8, 2024 (Novation Agreement) pursuant to which certain FGIC policies insuring approximately $ 353 million of public finance (including infrastructure) gross par and approximately $ 50 million of structured finance gross par as of December 31, 2023 could in the future have been novated to the Company in accordance with the terms and conditions of the Novation Agreement. The Novation Agreement was entered into in connection with a potential transaction that would accelerate the run-off of FGIC’s insured portfolio (Proposed Transaction), and the Proposed Transaction and novations contemplated by the Novation Agreement, had been subject in all respects to review and approval by New York State Department of Financial Services (NYDFS). On September 10, 2024, following the NYDFS’s review of the Proposed Transaction and information submitted by FGIC, FGIC received a written communication from the NYDFS stating that the NYDFS does not support the Proposed Transaction. The Novation Agreement provided that either the Company or FGIC could terminate such agreement in accordance with its terms in the event the Proposed Transaction did not occur on or prior to September 30, 2025. As the Proposed Transaction did not occur by such date, the Company terminated the Novation Agreement effective October 6, 2025. 17 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Financial Guaranty Portfolio by Internal Rating As of September 30, 2025 Public Finance U.S. Public Finance Non-U.S. Structured Finance U.S. Structured Finance Non-U.S. Total Rating Category Net Par Outstanding % Net Par Outstanding % Net Par Outstanding % Net Par Outstanding % Net Par Outstanding % (dollars in millions) AAA $ 22 — % $ 1,873 3.7 % $ 474 5.8 % $ 515 15.4 % $ 2,884 1.0 % AA 17,346 8.2 2,522 4.9 5,303 65.5 134 4.0 25,305 9.3 A 121,320 57.2 12,422 24.2 766 9.5 2,698 80.4 137,206 49.9 BBB 69,807 32.9 27,581 53.7 706 8.7 8 0.2 98,102 35.7 BIG 3,596 1.7 6,929 13.5 853 10.5 — — 11,378 4.1 Total net par outstanding $ 212,091 100.0 % $ 51,327 100.0 % $ 8,102 100.0 % $ 3,355 100.0 % $ 274,875 100.0 % Financial Guaranty Portfolio by Internal Rating As of December 31, 2024 Public Finance U.S. Public Finance Non-U.S. Structured Finance U.S. Structured Finance Non-U.S. Total Rating Category Net Par Outstanding % Net Par Outstanding % Net Par Outstanding % Net Par Outstanding % Net Par Outstanding % (dollars in millions) AAA $ 25 — % $ 2,074 4.2 % $ 512 6.1 % $ 470 17.3 % $ 3,081 1.2 % AA 17,664 8.8 2,854 5.8 5,386 63.7 58 2.1 25,962 9.9 A 111,502 55.5 13,046 26.5 952 11.3 2,117 77.7 127,617 48.8 BBB 69,096 34.3 24,828 50.5 707 8.3 79 2.9 94,710 36.2 BIG 2,888 1.4 6,398 13.0 896 10.6 — — 10,182 3.9 Total net par outstanding $ 201,175 100.0 % $ 49,200 100.0 % $ 8,453 100.0 % $ 2,724 100.0 % $ 261,552 100.0 % Financial Guaranty Portfolio Components of BIG Net Par Outstanding As of September 30, 2025 BIG Net Par Outstanding Net Par BIG 1 BIG 2 BIG 3 Total BIG Outstanding (in millions) Public finance: U.S. public finance $ 2,584 $ 416 $ 596 $ 3,596 $ 212,091 Non-U.S. public finance 4,494 2,435 — 6,929 51,327 Public finance 7,078 2,851 596 10,525 263,418 Structured finance: U.S. RMBS 173 28 579 780 1,400 Other structured finance — 18 55 73 10,057 Structured finance 173 46 634 853 11,457 Total $ 7,251 $ 2,897 $ 1,230 $ 11,378 $ 274,875 18 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Financial Guaranty Portfolio Components of BIG Net Par Outstanding As of December 31, 2024 BIG Net Par Outstanding Net Par BIG 1 BIG 2 BIG 3 Total BIG Outstanding (in millions) Public finance: U.S. public finance $ 2,119 $ 137 $ 632 $ 2,888 $ 201,175 Non-U.S. public finance 5,879 519 — 6,398 49,200 Public finance 7,998 656 632 9,286 250,375 Structured finance: U.S. RMBS 104 29 686 819 1,507 Other structured finance — 21 56 77 9,670 Structured finance 104 50 742 896 11,177 Total $ 8,102 $ 706 $ 1,374 $ 10,182 $ 261,552 Financial Guaranty Portfolio BIG Net Par Outstanding and Number of Risks As of September 30, 2025 Net Par Outstanding Number of Risks (2) Description Financial Guaranty Insurance (1) Credit Derivatives Total Financial Guaranty Insurance (1) Credit Derivatives Total (dollars in millions) BIG 1 $ 7,226 $ 25 $ 7,251 92 3 95 BIG 2 2,893 4 2,897 10 1 11 BIG 3 1,230 — 1,230 95 3 98 Total BIG $ 11,349 $ 29 $ 11,378 197 7 204 Financial Guaranty Portfolio BIG Net Par Outstanding and Number of Risks As of December 31, 2024 Net Par Outstanding Number of Risks (2) Description Financial Guaranty Insurance (1) Credit Derivatives Total Financial Guaranty Insurance (1) Credit Derivatives Total (dollars in millions) BIG 1 $ 8,074 $ 28 $ 8,102 98 3 101 BIG 2 702 4 706 12 1 13 BIG 3 1,374 — 1,374 97 3 100 Total BIG $ 10,150 $ 32 $ 10,182 207 7 214 _____________________ (1) Includes FG VIEs. (2) A risk represents the aggregate of the financial guaranty policies that share the same revenue source for purposes of making debt service payments. 19 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Specialty Business The Company also guarantees specialty business with risk profiles similar to those of its structured finance exposures written in financial guaranty form. Specialty Business As of September 30, 2025 As of December 31, 2024 Gross Exposure Net Exposure Gross Exposure Net Exposure (in millions) Diversified real estate (1) $ 2,071 $ 2,071 $ 2,004 $ 2,004 Insurance reserve financings and securitizations 1,502 1,179 1,449 1,126 Pooled corporate obligations 840 840 868 868 Aircraft residual value insurance 147 87 147 87 ____________________ (1) Excess-of-loss guaranty of a minimum amount of billed rent on a diversified portfolio of real estate properties with an internal rating of AAA that matures in 2044. This guaranty is accounted for in accordance with ASC 460, Guarantees. All exposures in the table above are rated investment grade, except for aircraft residual value insurance gross and net exposure of $ 5 million as of both September 30, 2025 and December 31, 2024. In addition to the amounts shown in the table above, as of September 30, 2025, the Company had $ 60 million of outstanding aggregate gross aircraft residual value insurance commitments. These commitments are contingent on the satisfaction of specified conditions and may expire unused or be cancelled at the request of the respective counterparty. Therefore, the total commitment amount does not necessarily reflect actual future covered amounts . 4. Expected Loss to be Paid (Recovered) 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. Cash flows are discounted at current risk-free rates. The Company updates the discount rates each quarter and reflects the effect of such changes in economic loss development. Expected cash outflows and inflows are probability weighted cash flows that reflect management’s assumptions about the likelihood of all possible outcomes based on all information available to the Company. Those assumptions consider the relevant facts and circumstances and are consistent with the information tracked and monitored through the Company’s surveillance and risk-management functions. Expected loss to be paid (recovered) is important in that it represents the present value of amounts that the Company expects to pay or recover in future periods. The Company removes any related expected loss to be paid (recovered) associated with Loss Mitigation Securities. For Loss Mitigation Securities, the difference between the purchase price of the insured obligation and the fair value excluding the value of the Company’s insurance (on the date of acquisition) is treated as a paid loss. See Note 7, Investments, and Note 9, Fair Value Measurement. Similarly, in cases where issuers of insured obligations elected (or where an issuer and the Company negotiated) to deliver the underlying collateral, insured obligation or a new security to the Company, expected loss to be paid (recovered) is adjusted accordingly and the asset received is prospectively accounted for under the applicable guidance for that instrument. Economic loss development (benefit) represents the change in net expected loss to be paid (recovered) attributable to the effects of changes in the economic performance of insured transactions, changes in assumptions based on observed market trends, changes in discount rates, accretion of discount and the economic effects of loss mitigation efforts. In order to effectively evaluate and manage the economics and liquidity of the entire insured portfolio, management assigns ratings and calculates expected loss to be paid (recovered), on a contract-by-contract basis, in the same manner for all its exposures regardless of form or differing accounting models. The exposure reported in Note 3, Outstanding Exposure, includes policies accounted for under various accounting models depending on the characteristics of the contract and the Company’s control rights. The three primary models are: (i) insurance, as described in Note 5, Contracts Accounted for as 20 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Insurance; (ii) derivatives, as described in Note 6, Contracts Accounted for as Credit Derivatives, and Note 9, Fair Value Measurement; and (iii) FG VIE consolidation, as described in Note 8, Variable Interest Entities. The Company has paid and may pay future claims and/or recover past claims on policies which fall under each of these accounting models. This note provides information regarding expected loss to be paid (recovered), regardless of the accounting method. Loss Estimation Process The financial guaranties issued by the Company insure the credit performance of the guaranteed obligations over an extended period of time, in some cases over 30 years, and in most circumstances the Company has no right to cancel such financial guaranties. As a result, the Company’s estimate of ultimate loss on a policy is subject to significant uncertainty over the life of the insured transaction. Credit performance can be affected by, among other things, economic, fiscal and financial market and political developments over the life of most contracts. 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. The Company does not use traditional actuarial approaches to determine its estimates of expected losses. The determination of expected loss to be paid (recovered) is an inherently subjective process involving numerous estimates, assumptions and judgments by management, using both internal and external data sources with regard to frequency and severity of loss, economic projections, governmental actions, legal developments, negotiations, recovery rates, delinquency and prepayment rates, timing of cash flows and other factors that affect credit performance. These estimates, assumptions and judgments, and the factors on which they are based, may change materially over a reporting period, and have a material effect on the Company’s financial statements. Each quarter, the Company may revise its scenarios and update its assumptions, including the probability weightings of its scenarios, based on public as well as nonpublic information obtained through its surveillance and loss mitigation activities. Changes over a reporting period in the Company’s loss estimates for public finance obligations supported by specified revenue streams, such as revenue bonds issued by toll road authorities, municipal and regulated utilities, airport authorities or healthcare systems, generally will be influenced by factors impacting their revenue levels, such as changes in demand; changing demographics; and other economic and regulatory factors, especially if the obligations do not benefit from financial support from other tax revenues or governmental authorities. Changes over a reporting period in the Company’s loss estimates for its tax-supported and general obligation public finance transactions generally will be influenced by factors impacting the public issuer’s ability and willingness to pay, such as changes in the economy and population of the relevant area; changes in the issuer’s ability or willingness to raise taxes, decrease spending or receive federal assistance; new legislation; rating agency actions that affect the issuer’s ability to refinance maturing obligations or issue new debt at a reasonable cost; changes in the priority and amount of pensions and other obligations owed to workers; developments in restructuring or settlement negotiations; and other political and economic factors. Changes in loss estimates may also be affected by the Company’s loss mitigation efforts and other variables. Changes in the Company’s loss estimates for structured finance transactions can be influenced by the performance of the assets supporting those transactions, by macroeconomic factors and by specific actions taken to mitigate losses. For example, changes over a reporting period in the Company’s loss estimates for its RMBS transactions may be influenced by factors such as the level and timing of loan defaults experienced, changes in housing prices, discount rates and results from the Company’s loss mitigation activities. In recent years, expected losses to be paid (recovered) for U.S. RMBS have also been affected by changes in the amount of recoveries on first lien deferred principal balances and second lien charged-off loans. Actual losses will ultimately depend on future events, transaction performance or other factors that are difficult to predict. As a result, the Company’s current projections of certain losses may be subject to considerable uncertainty and may not reflect the Company’s ultimate claims paid. In some instances, the terms of the Company’s policy or the terms of certain workout orders and resolutions give the Company the option to pay principal losses that have been recognized in the transaction but which it is not yet required to pay, thereby reducing the amount of guaranteed interest due in the future. The Company has sometimes exercised this option, which results in an acceleration of cash outflows but reduces overall losses paid. The Company’s reserve committees estimate expected loss to be paid (recovered) by reviewing analyses that consider various scenarios with corresponding probabilities assigned to them. Depending upon the characteristics of the risk, the 21 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Company’s view of the potential size of any loss and the information available to the Company, that analysis may be based upon individually developed cash flow models, internal credit rating assessments, sector-driven loss severity assumptions and/or judgmental assessments. In the case of its assumed business, the Company may conduct its own analysis or use loss estimates provided by ceding insurers. Each quarter, the Company’s reserve committees review and refresh their loss projection assumptions, scenarios and the probabilities they assign to those scenarios based on developments during the period and their view of future performance. 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 Third Quarter Nine Months Accounting Model September 30, 2025 December 31, 2024 2025 2024 2025 2024 (in millions) Insurance (see Note 5) $ 92 $ 90 $ ( 35 ) $ ( 31 ) $ 51 $ ( 19 ) FG VIEs (see Note 8) 12 16 ( 4 ) ( 1 ) ( 5 ) — Credit derivatives (see Note 6) — — 1 ( 2 ) ( 63 ) ( 1 ) Total $ 104 $ 106 $ ( 38 ) $ ( 34 ) $ ( 17 ) $ ( 20 ) The following tables present a roll forward of net expected loss to be paid (recovered) for all contracts, which are accounted for under one of the following accounting models: insurance, derivative or FG VIE. The Company used risk-free rates for U.S. and non-U.S. currencies that ranged from 1.92 % to 5.70 % with a weighted average of 4.02 % as of September 30, 2025 and 1.98 % to 5.22 % with a weighted average of 4.38 % as of December 31, 2024. Net Expected Loss to be Paid (Recovered) Roll Forward Third Quarter Nine Months 2025 2024 2025 2024 (in millions) Net expected loss to be paid (recovered), beginning of period $ 186 $ 447 $ 106 $ 505 Economic loss development (benefit) due to: Accretion of discount 2 5 5 14 Changes in discount rates — 3 6 1 Changes in timing and assumptions ( 40 ) ( 42 ) ( 28 ) ( 35 ) Total economic loss development (benefit) (1) ( 38 ) ( 34 ) ( 17 ) ( 20 ) Net (paid) recovered losses (1) ( 44 ) ( 107 ) 15 ( 179 ) Net expected loss to be paid (recovered), end of period $ 104 $ 306 $ 104 $ 306 ____________________ (1) Nine months 2025 amounts include recoveries recognized in connection with the resolution of the LBIE litigation. See Note 6, Contracts Accounted for as Credit Derivatives, for additional information. 22 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Net Expected Loss to be Paid (Recovered) Roll Forward by Sector Third Quarter 2025 Sector Net Expected Loss to be Paid (Recovered) as of June 30, 2025 Net Economic Loss Development (Benefit) Net (Paid) Recovered Losses (1) Net Expected Loss to be Paid (Recovered) as of September 30, 2025 (in millions) Public finance: U.S. public finance $ 53 $ ( 2 ) $ ( 81 ) $ ( 30 ) Non-U.S. public finance 139 ( 6 ) — 133 Public finance 192 ( 8 ) ( 81 ) 103 Structured finance: U.S. RMBS ( 35 ) ( 31 ) 7 ( 59 ) Other structured finance (2) 29 1 30 60 Structured finance ( 6 ) ( 30 ) 37 1 Total $ 186 $ ( 38 ) $ ( 44 ) $ 104 Third Quarter 2024 Sector Net Expected Loss to be Paid (Recovered) as of June 30, 2024 Net Economic Loss Development (Benefit) Net (Paid) Recovered Losses (1) Net Expected Loss to be Paid (Recovered) as of September 30, 2024 (in millions) Public finance: U.S. public finance $ 374 $ ( 23 ) $ ( 113 ) $ 238 Non-U.S. public finance 37 46 ( 2 ) 81 Public finance 411 23 ( 115 ) 319 Structured finance: U.S. RMBS — ( 56 ) 10 ( 46 ) Other structured finance 36 ( 1 ) ( 2 ) 33 Structured finance 36 ( 57 ) 8 ( 13 ) Total $ 447 $ ( 34 ) $ ( 107 ) $ 306 Nine Months 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 September 30, 2025 (in millions) Public finance: U.S. public finance $ 18 $ 51 $ ( 99 ) $ ( 30 ) Non-U.S. public finance 98 36 ( 1 ) 133 Public finance 116 87 ( 100 ) 103 Structured finance: U.S. RMBS ( 43 ) ( 40 ) 24 ( 59 ) Other structured finance (2) 33 ( 64 ) 91 60 Structured finance ( 10 ) ( 104 ) 115 1 Total $ 106 $ ( 17 ) $ 15 $ 104 23 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Nine Months 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 September 30, 2024 (in millions) Public finance: U.S. public finance $ 398 $ ( 14 ) $ ( 146 ) $ 238 Non-U.S. public finance 20 63 ( 2 ) 81 Public finance 418 49 ( 148 ) 319 Structured finance: U.S. RMBS 43 ( 69 ) ( 20 ) ( 46 ) Other structured finance 44 — ( 11 ) 33 Structured finance 87 ( 69 ) ( 31 ) ( 13 ) Total $ 505 $ ( 20 ) $ ( 179 ) $ 306 ____________________ (1) Amounts are 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.” (2) Nine months 2025 amounts include recoveries recognized in connection with the resolution of the LBIE litigation. See Note 6, Contracts Accounted for as Credit Derivatives, for additional information. Includes cash proceeds for recoveries related to claims previously paid. The tables above include (i) net LAE paid (recovered) of $ 5 million, $ 5 million, $( 51 ) million and $ 25 million for third quarter 2025, third quarter 2024, nine months 2025 and nine months 2024, respectively, and (ii) net expected LAE to be paid of $ 4 million as of September 30, 2025 and $ 11 million as of December 31, 2024. Public Finance The largest components of the public finance net expected losses to be paid (recovered) relate to certain insured healthcare and U.K. regulated utility exposures, as well as Puerto Rico Electric Power Authority (PREPA). The total net expected loss to be paid for public finance exposures is net of expected recoveries of $ 310 million and $ 265 million as of September 30, 2025 and December 31, 2024, respectively, for certain claims and LAE that have already been paid. In third quarter 2025, the economic benefit for public finance transactions was primarily attributable to certain healthcare exposures. In nine months 2025, the economic loss development for public finance transactions was primarily attributable to higher expected losses for certain U.K. regulated utility exposures, PREPA and certain healthcare exposures. U.K. Regulated Utility and European Renewable Energy As of September 30, 2025, the Company insures net par of £ 3.8 billion (or $ 5.2 billion) of BIG U.K. regulated utility and € 792 million (or $ 930 million) of BIG European renewable energy transactions that are experiencing operational strain. As of September 30, 2025, the Company had £ 1.7 billion (or $ 2.3 billion) of net par outstanding of Thames Water Utilities Finance PLC (Thames), a BIG U.K. regulated utility. All of the Company’s insured exposure to Thames is to senior Class A debt at the regulated operating company level and not holding company debt or subordinated debt. The Company, as part of the Thames senior Class A creditor group, continues to engage the Water Services Regulation Authority (the governmental body responsible for the economic regulation of the privatized water and sewage industry in England and Wales, or Ofwat), His Majesty’s Treasury and other members of the U.K. Government in restructuring negotiations, and is taking other actions to work out this insured credit. The first scheduled principal payment that comes due under the Company’s Thames exposure is in 2037. The Company is actively working to mitigate losses and reduce risk. Following sustained controversy about the failures in the wider water sector, the U.K. Government formed an independent commission to conduct a wide ranging review (known as the Cunliffe review) in recognition of the need for fundamental reform. The final report, published in 2025, is the most comprehensive review since the industry’s privatization and covers a wide range of topics, including regulatory reform, company governance, long term investment, the legislative framework and overall strategy and planning in the water system. Key amongst the many recommendations in this final report 24 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued was the overhaul of the regulatory system and the consolidation of the U.K. water utility regulators into a single regulator. Some of the recommendations, if implemented, are expected to improve the financial condition of the Company’s insured obligations. The U.K. Government indicated that it is reviewing the report and will publish a white paper in late 2025 with its full response. Healthcare Certain BIG healthcare exposures are experiencing rising labor costs due to competition for labor and shortages in certain markets. Additionally, inflation has increased the cost of medical supplies, medical equipment and pharmacy products, while U.S. hospitals with large Medicaid and Medicare payor mixes have not seen reimbursement levels keep pace with rising costs and may be further impacted by recent cuts to Medicaid funding that will go into effect in 2026 and 2027. The combined revenue and expense challenges have led to cash flow and liquidity stress in certain transactions. In addition, certain credits are struggling to make, or are in dispute as to who should fund, necessary capital expenditures and improvements to facilities. Puerto Rico All of the Company’s exposure to the Commonwealth of Puerto Rico (Puerto Rico or the Commonwealth) and its various authorities and public corporations is rated BIG. The Company’s Puerto Rico net par and net debt service outstanding as of September 30, 2025 were $ 553 million and $ 645 million, respectively, compared with net par and net debt service outstanding as of December 31, 2024 of $ 637 million and $ 756 million, respectively. Defaulting Puerto Rico Exposure As of September 30, 2025, the Company’s only unresolved outstanding insured Puerto Rico exposure subject to a payment default was PREPA. As of September 30, 2025, the Company’s PREPA net par and debt service outstanding were $ 464 million and $ 539 million, respectively. As of December 31, 2024, the Company’s PREPA net par and debt service outstanding were $ 532 million and $ 629 million, respectively. The PREPA bonds are secured by a lien on the net revenues of the electric system. The default of PREPA’s obligations has been the subject of restructuring negotiations, mediation and litigation since 2014. Puerto Rico Litigation Currently, there are numerous legal actions relating to defaults by PREPA on debt service payments and related matters and the Company is a party to a number of them. The Company has taken legal action, and may take additional legal action in the future, to enforce its rights with respect to the remaining Puerto Rico obligations it still insures. In addition, the Commonwealth, the Financial Oversight and Management Board (FOMB) established under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) and others have taken legal action naming the Company as a party. Certain legal actions involving the Company and relating to defaults by the Commonwealth and its authorities and public corporations were resolved in 2022. The remaining proceedings relate to PREPA’s default, including two related recently active proceedings and a number of proceedings that remain stayed pending the U.S. District Court for the District of Puerto Rico’s (Federal District Court of Puerto Rico) determination on a plan of adjustment and disclosure statement, as described below. PREPA – Recently Active Proceedings Lien Challenge Adversary Proceeding and Appeal. On March 22, 2023, the Federal District Court of Puerto Rico held that the PREPA bondholders had perfected liens only in revenues that had been deposited in the sinking fund established under the PREPA trust agreement and related funds over which the bond trustee had control but did not have a lien on future revenues until deposited in those funds. The Federal District Court of Puerto Rico also held, however, that PREPA bondholders do have recourse under the PREPA trust agreement in the form of an unsecured net revenue claim. At that time, the Federal District Court of Puerto Rico declined to value the unsecured net revenue claim or the method for its determination. The ultimate value of the claim, according to the Federal District Court of Puerto Rico, should be determined through a claim estimation proceeding. 25 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued On June 26, 2023, the Federal District Court of Puerto Rico issued an opinion and order estimating the unsecured net revenue claim to be $ 2.4 billion as of July 3, 2017. Subject to their appeal of the Federal District Court of Puerto Rico’s ruling on the scope of lien, PREPA bondholders had sought an unsecured net revenue claim of approximately $ 8.5 billion. On November 28, 2023, the Federal District Court of Puerto Rico finally adjudicated all claims and counterclaims in the PREPA lien challenge adversary proceeding. On November 30, 2023, the Company filed a notice of appeal with the U.S. Court of Appeals for the First Circuit (First Circuit) for portions of the March 22, 2023 decision, including the lien scope ruling and the need for a claim estimation proceeding, as well as the June 26, 2023 claim estimation ruling. On June 12, 2024, the First Circuit held that bondholders have a claim against PREPA for the full principal amount of the bonds, plus matured interest, that there was no need for a claim estimation proceeding because the PREPA bonds specify the amount that PREPA legally owes bondholders, and that the claim is secured by PREPA’s net revenues, including future net revenues. The FOMB asked the First Circuit to reconsider its determination that bondholders’ security interest in future net revenues is perfected twice, once on June 26, 2024, and again on November 27, 2024. In both instances, the First Circuit upheld its determination, with the most recent decision published on December 31, 2024. Bondholders’ Administrative Expense Claim . In light of the decision by the First Circuit described above in Lien Challenge Adversary Proceeding and Appeal, in March 2025, the Federal District Court of Puerto Rico ordered the parties to propose an agreed proposal or competing proposals for a litigation schedule for resolving certain key issues related to PREPA bondholders’ claims, including determining whether the bondholders’ perfected lien described above includes collateral used for PREPA’s administrative expenses, prior to a further plan confirmation hearing. On March 13, 2025, the parties submitted competing proposals. At an Omnibus Hearing held on March 19, 2025, the Federal District Court of Puerto Rico indicated that it would allow the bondholders, including the Company, to litigate an administrative expense claim based on PREPA’s post-petition use of the bondholders’ collateral and that the parties could revisit the possibility of litigating other key issues at a later time. At an Omnibus Hearing held on October 22, 2025, the Federal District Court of Puerto Rico instructed the parties to submit a joint discovery schedule and status report for the administrative expense claim by November 24, 2025. FOMB Board In August 2025, the FOMB announced that the U.S. administration terminated six of its seven board members. On September 18, 2025, three of the terminated board members sued the U.S. administration for reinstatement, alleging that they had been unlawfully terminated without cause and that their offices are a form of property protected by due process. On October 3, 2025, the Federal District Court of Puerto Rico granted the plaintiffs’ request for a preliminary injunction. Mediation and PREPA Litigation Stay On July 10, 2024, the Federal District Court of Puerto Rico ordered the FOMB and bondholders to resume mediation and instituted a 60-day stay of all PREPA litigation, subsequently extending mediation and the litigation stay several times. Following the Omnibus Hearing held on March 19, 2025, the Federal District Court of Puerto Rico partially lifted the PREPA litigation stay and indicated that the PREPA litigation stay otherwise remains in place for the time being. The Federal District Court of Puerto Rico most recently extended the term of mediation through April 30, 2026. Plan of Adjustment, Disclosure Statement and Related Stayed Proceedings The FOMB filed an initial plan of adjustment and disclosure statement for PREPA with the Federal District Court of Puerto Rico on December 16, 2022. On November 17, 2023, the Federal District Court of Puerto Rico approved a supplemental disclosure statement (Supplemental Disclosure Statement) relating to the PREPA plan of adjustment filed by the FOMB (as amended or modified from time to time). On February 16, 2024, the FOMB filed with the Federal District Court of Puerto Rico the Modified Fourth Amended Title III Plan of Adjustment (Fourth FOMB PREPA Plan). The Supplemental Disclosure Statement and the Fourth FOMB PREPA Plan are based on the PREPA fiscal plan certified by the FOMB on June 23, 2023. The confirmation hearing for the Fourth FOMB PREPA Plan occurred in March 2024. At the end of the hearing, the Federal District Court of Puerto Rico stated that it was taking the confirmation of the Fourth FOMB PREPA Plan under advisement. As directed by the Federal District Court of Puerto Rico, the FOMB filed on March 28, 2025 its Fifth Amended Title III Plan of Adjustment and related Disclosure Statement for informational purposes of the parties. 26 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued The following proceedings involving the Company and relating to the default by PREPA remain stayed in the Federal District Court of Puerto Rico pending its determination on a plan of adjustment and disclosure statement: • The Company’s motion to compel the FOMB to certify the PREPA restructuring support agreement executed in May 2019 (PREPA RSA) for implementation under Title VI of PROMESA. • The Company’s motion to dismiss PREPA’s Title III Bankruptcy proceeding or, in the alternative, to lift the PROMESA automatic stay to allow for the appointment of a receiver. • Adversary complaint by certain fuel line lenders of PREPA against the Company, among other parties, including various PREPA bondholders and bond insurers, seeking, among other things, declarations that there is no valid lien securing the PREPA bonds unless and until such lenders are paid in full, as well as orders subordinating the PREPA bondholders’ lien and claims to such lenders’ claims, and declaring the PREPA RSA null and void. • The Company’s motion to intervene in a lawsuit by the retirement system for PREPA employees against, among others, the FOMB, PREPA, the Commonwealth, and the trustee for PREPA bondholders seeking, among other things, declarations that there is no valid lien securing the PREPA bonds other than on amounts in the sinking funds, and order subordinating the PREPA bondholders’ lien and claim to the PREPA employees’ claims. Non-Defaulting Puerto Rico Exposure As of September 30, 2025 and December 31, 2024, the Company had $ 76 million and $ 92 million, respectively, of remaining non-defaulting Puerto Rico net par outstanding related primarily to the Puerto Rico Municipal Finance Agency (MFA). The MFA exposures are secured by a lien on local tax revenues and remain current on debt service payments. U.S. RMBS Loss Projections The Company projects losses on its insured U.S. RMBS on a transaction-by-transaction basis by projecting the performance of the underlying pool of mortgages over time and then applying the structural features (e.g., payment priorities and tranching) of the RMBS and any expected representation and warranty recoveries/payables to the projected performance of the collateral over time. The resulting projected claim payments or reimbursements are then discounted using risk-free rates. The rate at which borrowers from a particular delinquency category (number of monthly payments behind) eventually default is referred to as the “liquidation rate.” The Company derives its liquidation rate assumptions from observed roll rates, which are the rates at which loans progress from one delinquency category to the next and eventually to default and liquidation. The Company applies liquidation rates to the mortgage loan collateral in each delinquency category and makes certain timing assumptions to project near-term mortgage collateral defaults from loans that are currently delinquent. Each quarter the Company reviews recent third party data and (if necessary) adjusts its liquidation rates based on its observations. Performing borrowers that eventually default will also need to progress through delinquency categories before any defaults occur. The Company projects how many of the currently performing loans will default and when they will default, by first converting the projected near term defaults of delinquent borrowers derived from liquidation rates into a vector of conditional default rates (CDR), then projecting how the CDR will develop over time. While the Company uses the liquidation rates to project defaults of non-performing loans (including current loans that were recently modified or delinquent), it projects defaults on presently current loans by applying a CDR curve. The start of that CDR curve is based on the defaults the Company projects will emerge from currently nonperforming, recently nonperforming and modified loans. The total amount of expected defaults from the non-performing loans is translated into a constant CDR (i.e., the CDR plateau), which, if applied for each of the next 36 months, results in the projection of the defaults that are expected to emerge from the various delinquency categories. The CDR thus calculated individually on the delinquent collateral pool for each RMBS is then used as the starting point for the CDR curve used to project defaults of the presently performing loans. In order to derive collateral pool losses from the collateral pool defaults it has projected, the Company applies a loss severity. The loss severity is the amount of loss the transaction experiences on a defaulted loan after the application of net proceeds from the disposal of the underlying property. The Company projects loss severities by sector and vintage based on its experience to date. The Company continues to update its evaluation of these loss severities as new information becomes available. 27 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued The Company incorporates a recovery assumption into its loss modeling to reflect observed trends in recoveries of deferred principal balances of modified first lien loans that had been previously written off. For transactions where the Company has detailed loan information, the Company assumes that a percentage of the deferred loan balances will eventually be recovered upon sale of the collateral or refinancing of the loans. When a second lien loan defaults, there is generally a low recovery. The Company assumed that it will generally recover 2 % of future defaulting collateral at the time of charge-off. Additional amounts of post charge-off recoveries are projected to come in evenly over the next five years in instances where the Company is able to obtain information on the lien status and the second lien is still intact. The Company evaluates its assumptions quarterly based on actual recoveries of charged-off loans observed from period to period and reasonable expectations of future recoveries. During third quarter 2025, due to observed trends and high levels of home equity, the Company updated its assumptions of such recoveries to reflect a base scenario, and a weighted-average, recovery of 60 %, up from 50 %, which resulted in a benefit in economic development of $ 26 million. The Company projects the overall future cash flow from a collateral pool by adjusting the payment stream from the principal and interest contractually due on the underlying mortgages for the collateral losses it projects as described above; assumed voluntary prepayments; and servicer advances. The Company then applies an individual model of the structure of the transaction to the projected future cash flow from that transaction’s collateral pool to project the Company’s future claims and claim reimbursements for that individual transaction. Finally, the projected claims and reimbursements are discounted using risk-free rates. The Company runs several sets of assumptions regarding mortgage collateral performance, or scenarios, which are probability weighted. Each period the Company reviews the assumptions it uses to make RMBS loss projections with consideration of updates on the performance of its insured transactions (including early-stage delinquencies, late-stage delinquencies and loss severity) as well as the residential property market and economy in general. To the extent it observes changes, it makes a judgment as to whether those changes are normal fluctuations or part of a more prolonged trend. Expected losses are also a function of the structure of the transaction, the interest rate environment and other factors. Net Economic Loss Development (Benefit) U.S. RMBS Third Quarter Nine Months 2025 2024 2025 2024 (in millions) First lien U.S. RMBS $ ( 2 ) $ ( 21 ) $ ( 4 ) $ ( 24 ) Second lien U.S. RMBS ( 29 ) ( 35 ) ( 36 ) ( 45 ) Total U.S. RMBS economic loss development (benefit) $ ( 31 ) $ ( 56 ) $ ( 40 ) $ ( 69 ) First Lien U.S. RMBS Loss Projections: Alt-A, Prime, Option ARM and Subprime The majority of projected losses in first lien U.S. RMBS transactions are expected to come from non-performing mortgage loans (those that are or have recently been two or more payments behind, have been modified, are in foreclosure or have been foreclosed upon). Collateral losses are projected to be offset by recoveries on deferred principal balances. In the most heavily weighted scenario (base scenario), the Company assumes the final CDR will be reached one year after the 36 -month CDR plateau period. The Company then assumes that loss severities begin returning to levels consistent with underwriting assumptions beginning after the initial 18 -month period, staying or trending, as applicable, to 40 % in the base scenario over 2.5 years. The following table shows the range as well as the average, weighted by outstanding net insured par, for key assumptions used in the calculation of expected loss to be paid (recovered) for individual transactions for vintage 2004 - 2008 first lien U.S. RMBS. 28 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Key Assumptions in Base Scenario Expected Loss Estimates First Lien U.S. RMBS As of September 30, 2025 As of December 31, 2024 Range Weighted Average Range Weighted Average Plateau CDR 0.0 % - 9.2 % 3.2 % 0.0 % - 8.8 % 3.4 % Final CDR 0.0 % - 0.5 % 0.2 % 0.0 % - 0.4 % 0.2 % Initial loss severity 40.0 % - 50.0 % 43.0 % 40.0 % - 50.0 % 43.1 % Future recovery for deferred principal balances 50 % 50 % Liquidation rates (1) 20 % - 50 % 20 % - 50 % ____________________ (1) The liquidation rates range from current but recently delinquent loans to foreclosed loans. Certain transactions benefit from excess spread (the amount by which the interest paid by the borrowers on the underlying loan exceeds the amount of interest owed on the insured obligations) when they are supported by large portions of fixed rate assets (either originally fixed or modified to be fixed) but have insured floating rate debt linked to the Secured Overnight Finance Rate (SOFR). An increase in projected SOFR decreases excess spread, while lower SOFR projections result in higher excess spread. The Company establishes its scenarios by increasing and decreasing the periods and levels of stress from those used in the base scenario. In the Company’s most stressful scenario where 20 % of deferred principal balances are assumed to be recovered, loss severities experience stress for nine years and the initial ramp-down of the CDR was assumed to occur over 16 months, expected loss to be paid would increase from current projections by approximately $ 33 million for all first lien U.S. RMBS transactions. In the Company’s least stressful scenario where 80 % of deferred principal balances are assumed to be recovered, the CDR plateau was six months shorter ( 30 months, effectively assuming that liquidation rates would improve) and the CDR recovery was more pronounced (including an initial ramp-down of the CDR over eight months ), expected loss to be paid would decrease from current projections by approximately $ 32 million for all first lien U.S. RMBS transactions. Second Lien U.S. RMBS Loss Projections Second lien U.S. RMBS transactions include both home equity lines of credit (HELOC) and closed end second lien mortgages. The Company believes the most important driver of its projected second lien U.S. RMBS losses is the performance of its HELOC transactions. The Company believes the primary variable affecting its expected losses in second lien U.S. RMBS transactions is the amount and timing of future losses or recoveries in the collateral pool supporting the transactions (including recoveries from previously charged-off loans). For the base scenario, the CDR plateau is held constant for 36 months. Once the plateau period ends, the CDR is assumed to trend down in uniform increments for one year to its final long-term steady state CDR ( 5 % of original plateau). The following table shows the range as well as the average, weighted by net par outstanding, for key assumptions used in the calculation of expected loss to be paid (recovered) for individual transactions for vintage 2004 - 2008 HELOCs. Key Assumptions in Base Scenario Expected Loss Estimates HELOCs As of September 30, 2025 As of December 31, 2024 Range Weighted Average Range Weighted Average Plateau CDR 0.1 % – 10.7 % 2.2 % 0.0 % – 5.6 % 2.2 % Final CDR 0.0 % – 0.5 % 0.1 % 0.0 % – 0.3 % 0.1 % Liquidation rates (1) 20 % – 55 % 20 % – 55 % Loss severity on future defaults 98 % 98 % Projected future recoveries on previously charged-off loans 60 % 50 % ____________________ (1) The liquidation rates range from current but recently delinquent loans to foreclosed loans. 29 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued The Company modeled scenarios with a longer period of elevated defaults and others with a shorter period of elevated defaults as well as various levels of assumed recoveries. In the Company’s most stressful scenario, assuming 40 % recoveries on charged-off loans, increasing the CDR plateau to 42 months, increasing the ramp-down by four months to 16 months (for a total stress period of 58 months) and using the ultimate prepayment rate of 15% would decrease the expected recovery by approximately $ 49 million for HELOC transactions. On the other hand, in the Company’s least stressful scenario, assuming 80 % recoveries on charged-off loans, reducing the CDR plateau to 30 months, decreasing the length of the CDR ramp-down to eight months (for a total stress period of 38 months) and lowering the ultimate prepayment rate to 10 % would increase the expected recovery by approximately $ 49 million for HELOC transactions. Recovery Litigation and Dispute Resolution In the ordinary course of their respective businesses, certain of AGL’s subsidiaries are involved in litigation or other dispute resolution with third parties to recover insurance losses paid or return benefits received in prior periods or prevent or reduce losses in the future. For example, the Company has asserted claims in a number of legal proceedings in connection with its exposure to Puerto Rico. See above for a discussion of the Company’s exposure to Puerto Rico and related recovery litigation being pursued by the Company. The impact, if any, of these and other proceedings on the amount of recoveries the Company ultimately receives and losses it pays in the future is uncertain, and the impact of any one or more of these proceedings during any quarter or year could be material to the Company’s financial statements. 5. Contracts Accounted for as Insurance The portfolio of outstanding exposures discussed in Note 3, Outstanding Exposure, and Note 4, Expected Loss to be Paid (Recovered), includes contracts that are accounted for as insurance contracts, derivatives and consolidated FG VIEs. Amounts presented in this note relate only to contracts accounted for as insurance, unless otherwise specified. See Note 6, Contracts Accounted for as Credit Derivatives, for amounts related to CDS and Note 8, Variable Interest Entities, for amounts related to consolidated FG VIEs. Premiums Net Earned Premiums Third Quarter Nine Months 2025 2024 2025 2024 (in millions) Financial guaranty insurance: Scheduled net earned premiums $ 77 $ 73 $ 228 $ 216 Accelerations from refundings and terminations 5 14 14 56 Accretion of discount on net premiums receivable 10 8 28 23 Financial guaranty insurance net earned premiums 92 95 270 295 Specialty net earned premiums 2 2 4 5 Net earned premiums $ 94 $ 97 $ 274 $ 300 30 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Gross Premium Receivable, Net of Commissions Payable on Assumed Business and Allowance for Credit Losses Roll Forward Nine Months 2025 2024 (in millions) Beginning of year $ 1,551 $ 1,468 Less: Specialty insurance premium receivable 1 1 Financial guaranty insurance premiums receivable 1,550 1,467 New business and supplemental premiums, net of commissions 214 278 Gross premiums received, net of commissions ( 265 ) ( 267 ) Adjustments: Changes in the expected term and debt service assumptions ( 23 ) ( 28 ) Accretion of discount, net of commissions on assumed business 26 19 Foreign exchange gain (loss) on remeasurement 81 43 Change in allowance for credit losses ( 1 ) — Financial guaranty insurance premium receivable 1,582 1,512 Specialty insurance premium receivable 1 1 September 30, $ 1,583 $ 1,513 Approximately 68 % and 69 % of gross premiums receivable, net of commissions payable, as of September 30, 2025 and December 31, 2024, respectively, are denominated in currencies other than the U.S. dollar, primarily the pound sterling and euro. The timing and cumulative amount of actual collections and net earned premiums may differ from those of expected collections and of expected net earned premiums in the table below due to factors such as foreign exchange rate fluctuations, counterparty collectability issues, accelerations, commutations, restructurings, changes in the consumer price indices, changes in expected lives and new business. Financial Guaranty Insurance Expected Future Premium Collections and Earnings As of September 30, 2025 Future Net Premiums to be Earned (2) Future Premiums to be Collected (1) Earnings of Deferred Premium Revenue Accretion of Discount Total (in millions) 2025 (October 1 - December 31) $ 60 $ 78 $ 10 $ 88 2026 157 294 37 331 2027 131 272 35 307 2028 125 258 33 291 2029 113 240 31 271 2030-2034 439 954 130 1,084 2035-2039 346 627 96 723 2040-2044 266 414 63 477 2045-2049 201 275 36 311 2050-2054 123 142 16 158 After 2054 121 104 12 116 Total $ 2,082 $ 3,658 $ 499 $ 4,157 ____________________ (1) Net of assumed commissions payable. (2) Net of reinsurance. 31 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Selected Information for Financial Guaranty Insurance Policies with Premiums Paid in Installments As of September 30, 2025 December 31, 2024 (dollars in millions) Premiums receivable, net of commissions payable $ 1,582 $ 1,550 Deferred premium revenue 1,855 1,901 Weighted-average risk-free rate used to discount premiums 2.6 % 2.5 % Weighted-average period of premiums receivable (in years) 12.0 12.3 Insurance Contracts’ Losses Reported in the Consolidated Financial Statements Loss reserves and salvage and subrogation recoverable are discounted at risk-free rates for financial guaranty insurance obligations that ranged from 1.92 % to 5.70 % with a weighted average of 4.03 % as of September 30, 2025 and 1.98 % to 5.22 % with a weighted average of 4.38 % as of December 31, 2024. The following table provides information on net reserve (salvage), which includes loss and LAE reserves and salvage and subrogation recoverable, both net of reinsurance. Net Reserve (Salvage) by Sector As of Sector September 30, 2025 December 31, 2024 (in millions) Public finance: U.S. public finance $ ( 67 ) $ ( 14 ) Non-U.S. public finance 21 5 Public finance ( 46 ) ( 9 ) Structured finance: U.S. RMBS ( 156 ) ( 151 ) Other structured finance 60 33 Structured finance ( 96 ) ( 118 ) Total $ ( 142 ) $ ( 127 ) The table below provides a reconciliation of net expected loss to be paid (recovered) for financial guaranty insurance contracts to net expected loss to be expensed. Expected loss to be paid (recovered) for financial guaranty insurance contracts differs from expected loss to be expensed due to: (i) the contra-paid, which represents the claim payments made and recoveries received that have not yet been recognized in the statements of operations; (ii) salvage and subrogation recoverable for transactions that are in a net recovery position where the Company has not yet received recoveries on claims previously paid (and therefore recognized in income but not yet received); and (iii) loss reserves that have already been established (and therefore expensed but not yet paid). Reconciliation of Net Expected Loss to be Paid (Recovered) to Net Expected Loss to be Expensed Financial Guaranty Insurance Contracts As of September 30, 2025 (in millions) Net expected loss to be paid (recovered) - financial guaranty insurance $ 91 Contra-paid, net 23 Salvage and subrogation recoverable, net 449 Loss and LAE reserve - financial guaranty insurance contracts, net of reinsurance ( 306 ) Net expected loss to be expensed (present value) $ 257 32 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued The following table provides a schedule of the expected timing of financial guaranty net expected losses to be expensed. The amount and timing of actual loss and LAE may differ from the estimates shown below due to factors such as accelerations, commutations, changes in expected lives and updates to loss estimates. This table excludes amounts related to FG VIEs, which are eliminated in consolidation. Net Expected Loss to be Expensed Financial Guaranty Insurance Contracts As of September 30, 2025 (in millions) 2025 (October 1 - December 31) $ 3 2026 14 2027 17 2028 20 2029 18 2030-2034 81 2035-2039 37 2040-2044 19 2045-2049 25 2050-2054 20 After 2054 3 Net expected loss to be expensed (present value) 257 Future expected accretion 27 Total expected future loss and LAE $ 284 The following table presents the loss and LAE (benefit) reported in the condensed consolidated statements of operations by sector for insurance contracts. Loss and LAE (Benefit) by Sector Third Quarter Nine Months Sector 2025 2024 2025 2024 (in millions) Public finance: U.S. public finance $ ( 5 ) $ ( 11 ) $ 46 $ ( 12 ) Non-U.S. public finance ( 2 ) — 18 — Public finance ( 7 ) ( 11 ) 64 ( 12 ) Structured finance: U.S. RMBS $ ( 25 ) $ ( 39 ) $ ( 25 ) $ ( 42 ) Other structured finance 2 ( 1 ) ( 1 ) — Structured finance ( 23 ) ( 40 ) ( 26 ) ( 42 ) Loss and LAE (benefit) $ ( 30 ) $ ( 51 ) $ 38 $ ( 54 ) 33 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued The following tables provide information on financial guaranty insurance contracts categorized as BIG. Financial Guaranty Insurance BIG Transaction Loss Summary As of September 30, 2025 Gross Net Total BIG BIG 1 BIG 2 BIG 3 Total BIG (dollars in millions) Number of risks (1) 92 10 95 197 197 Remaining weighted-average period (in years) 12.8 26.5 5.6 17.2 17.2 Outstanding exposure: Par $ 7,232 $ 2,893 $ 1,236 $ 11,361 $ 11,349 Interest 5,051 4,459 337 9,847 9,845 Total (2) $ 12,283 $ 7,352 $ 1,573 $ 21,208 $ 21,194 Expected cash outflows (inflows) $ 398 $ 2,378 $ 1,244 $ 4,020 $ 4,012 Potential recoveries (3) ( 659 ) ( 2,134 ) ( 1,111 ) ( 3,904 ) ( 3,894 ) Subtotal ( 261 ) 244 133 116 118 Discount 92 ( 107 ) ( 12 ) ( 27 ) ( 27 ) Expected losses to be paid (recovered) $ ( 169 ) $ 137 $ 121 $ 89 $ 91 Deferred premium revenue $ 331 $ 106 $ 108 $ 545 $ 545 Reserves (salvage) $ ( 249 ) $ 67 $ 36 $ ( 146 ) $ ( 143 ) 34 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Financial Guaranty Insurance BIG Transaction Loss Summary As of December 31, 2024 Gross Net Total BIG BIG 1 BIG 2 BIG 3 Total BIG (dollars in millions) Number of risks (1) 98 12 97 207 207 Remaining weighted-average period (in years) 18.6 8.8 6.1 16.6 16.6 Outstanding exposure: Par $ 8,080 $ 702 $ 1,382 $ 10,164 $ 10,150 Interest 7,546 371 421 8,338 8,335 Total (2) $ 15,626 $ 1,073 $ 1,803 $ 18,502 $ 18,485 Expected cash outflows (inflows) $ 4,016 $ 342 $ 1,307 $ 5,665 $ 5,656 Potential recoveries (3) ( 4,201 ) ( 293 ) ( 1,132 ) ( 5,626 ) ( 5,616 ) Subtotal ( 185 ) 49 175 39 40 Discount 43 29 ( 23 ) 49 49 Expected losses to be paid (recovered) $ ( 142 ) $ 78 $ 152 $ 88 $ 89 Deferred premium revenue $ 333 $ 49 $ 116 $ 498 $ 498 Reserves (salvage) $ ( 226 ) $ 35 $ 62 $ ( 129 ) $ ( 128 ) ____________________ (1) A risk represents the aggregate of the financial guaranty policies that share the same revenue source for purposes of making debt service payments. (2) Includes amounts related to FG VIEs. (3) Represents expected inflows from future payments by obligors pursuant to restructuring agreements, settlements, excess spread on any underlying collateral and other estimated recoveries. Potential recoveries also include recoveries on certain investment grade credits, related mainly to exposures that were previously BIG and for which claims have been paid in the past. 6. Contracts Accounted for as Credit Derivatives The Company’s credit derivatives primarily consist of insured CDS contracts. The Company does not enter into CDS contracts with the intent to trade these contracts and may not unilaterally terminate a CDS contract absent an event or default or termination event that entitles the Company to terminate the contract. The Company and its counterparties have negotiated the termination of certain contracts from time to time. Transactions are generally terminated for an amount that approximates the present value of future premiums or a negotiated amount, rather than fair value. The terms of the Company’s CDS contracts differ from more standardized credit derivative contracts sold by companies outside the financial guaranty industry. The non-standard terms generally include the absence of collateral support agreements or immediate settlement provisions, and the Company’s insured exposure benefits from relatively high attachment points or other protections. The Company’s credit derivatives are generally governed by International Swaps and Derivatives Association, Inc. documentation and have certain characteristics that differ from financial guaranty insurance contracts. For example, the Company’s control rights with respect to a reference obligation under a CDS may be more limited than when the Company issues a financial guaranty insurance contract. In addition, there are more circumstances under which the Company may be obligated to make payments. Similar to a financial guaranty insurance contract, the Company would be obligated to pay if the obligor failed to make a scheduled payment of principal or interest in full. In certain credit derivative transactions, the Company also specifically agreed to pay if the obligor were to become bankrupt or if the reference obligation were restructured. Furthermore, in certain credit derivative transactions, the Company may be required 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 non-defaulting or the non-affected party, which may be either the Company or the counterparty, depending upon the circumstances, may decide to terminate a credit derivative prior to 35 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued maturity. In that case, the Company may be required to make a termination payment to its swap counterparty upon such termination. Absent such an event of default or termination event, the Company may not unilaterally terminate a credit derivative contract; however, the Company on occasion has mutually agreed to terminate certain CDS with related counterparties. The components of the Company’s credit derivative net par outstanding by sector are presented in the table below. The estimated remaining weighted average life of credit derivatives was 8.9 years and 8.4 years as of September 30, 2025 and December 31, 2024, respectively. Credit Derivatives (1) As of September 30, 2025 As of December 31, 2024 Sector Net Par Outstanding Net Fair Value Asset (Liability) Net Par Outstanding Net Fair Value Asset (Liability) (in millions) U.S. public finance $ 997 $ ( 11 ) $ 1,025 $ ( 12 ) Non-U.S. public finance 1,645 ( 14 ) 2,044 ( 15 ) U.S. structured finance 143 ( 2 ) 150 ( 2 ) Non-U.S. structured finance 974 1 993 — Total $ 3,759 $ ( 26 ) $ 4,212 $ ( 29 ) ____________________ (1) See Note 4, Expected Loss to be Paid (Recovered), for expected loss to be paid on credit derivatives. Fair Value Gains (Losses) on Credit Derivatives Third Quarter Nine Months 2025 2024 2025 2024 (in millions) Realized gains (losses) and other settlements $ 2 $ 2 $ 107 $ 2 Net unrealized gains (losses) 3 1 3 17 Fair value gains (losses) on credit derivatives $ 5 $ 3 $ 110 $ 19 On November 28, 2011, LBIE sued AG Financial Products Inc. (AGFP), a subsidiary of AGL which, in the past, had provided credit protection to counterparties under CDS. Following defaults by LBIE under transaction documents governing CDS between LBIE and AGFP, AGFP terminated the CDS in compliance with the transaction documents and properly calculated that LBIE owed AGFP approximately $ 25 million in connection with the termination, whereas LBIE asserted in its complaint filed in the Supreme Court of the State of New York (the Court) that AGFP owed LBIE a termination payment of approximately $ 1.4 billion. Following a bench trial, on March 8, 2023, the Court rendered its decision and found in favor of AGFP. Following the exhaustion of LBIE’s appeals, the Company recognized a realized gain on credit derivatives in the first quarter of 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. The impact of changes in credit spreads will vary based upon the volume, tenor, interest rates and other market conditions at the time these fair values are determined. In addition, since each transaction has unique collateral and structural terms, the change in fair value of each transaction may vary considerably. The fair value of credit derivative contracts generally also reflects the Company’s own credit cost based on the price to purchase credit protection on AG. The Company determines its own credit risk primarily based on quoted CDS prices traded on AG at each balance sheet date. CDS Spread on AG (in basis points) As of September 30, 2025 As of December 31, 2024 As of September 30, 2024 As of December 31, 2023 Five-year CDS spread 70 75 65 66 One-year CDS spread 24 25 26 23 36 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Fair Value of Credit Derivative Assets (Liabilities) and Effect of AG Credit Spread As of September 30, 2025 December 31, 2024 (in millions) Fair value of credit derivatives before effect of AG credit spread $ ( 59 ) $ ( 64 ) Plus: Effect of AG credit spread 33 35 Net fair value of credit derivatives $ ( 26 ) $ ( 29 ) The fair value of CDS contracts as of September 30, 2025, before considering the benefit applicable to AG’s credit spread, is a direct result of the relatively wider credit spreads under current market conditions, sometimes related to downgrades, compared with those at the time of underwriting for certain underlying credits with longer tenor. 7. Investments The largest component of the investment portfolio is fixed-maturity securities, the majority of which are investment grade and managed by outside managers. The Company has established investment guidelines for these investment managers regarding credit quality, exposure to a particular sector and exposure to a particular obligor within a sector. Investment Portfolio Carrying Value As of September 30, 2025 December 31, 2024 (in millions) Fixed-maturity securities, available-for-sale $ 6,278 $ 6,369 Fixed-maturity securities, trading 136 147 Short-term investments 1,332 1,221 Other invested assets: Equity method investments: Ownership interest in Sound Point 414 418 Funds and other investments 587 496 Other 11 12 Total (1) $ 8,758 $ 8,663 ____________________ (1) In the investment portfolio, the aggregate carrying value of Sound Point managed investments was $ 581 million and $ 569 million as of September 30, 2025 and December 31, 2024, respectively, excluding the Company’s ownership interest in Sound Point and certain investments in funds that are accounted for as CIVs. As of September 30, 2025 and December 31, 2024, 8.8 % and 12.6 %, respectively, of available-for-sale fixed-maturity securities were either rated BIG or not rated, primarily consisting of Loss Mitigation Securities, collateralized loan obligation (CLO) equity tranches and liquidity bonds issued by a U.K. regulated utility. As of September 30, 2025 and December 31, 2024, the carrying value of Loss Mitigation Securities was $ 140 million and $ 479 million, respectively. In July 2025, the Company’s largest BIG exposure in the investment portfolio, which was obtained as a part of a loss mitigation strategy, with an aggregate carrying value of $ 408 million as of June 30, 2025 reached its final resolution after many years of negotiation and was paid down after liquidation of the trust assets. The Company received $ 459 million in connection with this resolution, including principal, accrued interest and other expected recoveries. This resolution did not have a significant effect on the condensed consolidated statements of operations. As of September 30, 2025 and December 31, 2024, the carrying value of CLO equity tranches was $ 242 million and $ 277 million, respectively. Fixed-maturity securities classified as trading securities primarily include contingent value instruments (CVIs) and are not rated. The investment portfolio includes $ 945 million in alternative investments primarily consisting of (i) CLO equity securities classified as available-for-sale fixed-maturity securities, and (ii) $ 598 million of investments across various asset classes that are reported in other invested assets. In addition, as of September 30, 2025 and December 31, 2024, $ 45 million and $ 33 million, respectively, of the Company’s total alternative investments was invested in a Sound Point managed fund which 37 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued was reported in “assets of CIVs,” “other liabilities” and “nonredeemable noncontrolling interests.” See Note 8, Variable Interest Entities. The Company’s alternative investment commitments as of September 30, 2025 include $ 563 million in unfunded commitments which together with its $ 945 million in funded commitments total $ 1.5 billion, including a $ 1 billion commitment to invest in Sound Point managed alternative investments, subject to certain conditions precedent. Capital allocated to alternative investments was committed to several funds pursuing various strategies, including private healthcare investing, asset-based/specialty finance and CLOs. See Note 1, Business and Basis of Presentation, for a description of the Company’s alternative investments agreement with Sound Point. Accrued investment income, which is reported in “other assets,” was $ 70 million as of September 30, 2025 and $ 64 million as of December 31, 2024. Available-for-Sale Fixed-Maturity Securities by Security Type As of September 30, 2025 Security Type Percent of Total (1) Amortized Cost Allowance for Credit Losses Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (dollars in millions) Obligations of state and political subdivisions 28 % $ 1,808 $ ( 13 ) $ 36 $ ( 76 ) $ 1,755 U.S. government and agencies 1 51 — 1 ( 4 ) 48 Corporate securities (2) 46 2,977 ( 7 ) 73 ( 120 ) 2,923 Mortgage-backed securities (3): RMBS 10 670 ( 24 ) 8 ( 51 ) 603 Commercial mortgage-backed securities (CMBS) 3 184 — 2 ( 1 ) 185 Asset-backed securities: CLOs 8 506 ( 10 ) 5 ( 29 ) 472 Other (4) 3 196 — 3 — 199 Non-U.S. government securities 1 100 — 2 ( 9 ) 93 Total available-for-sale fixed-maturity securities 100 % $ 6,492 $ ( 54 ) $ 130 $ ( 290 ) $ 6,278 38 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Available-for-Sale Fixed-Maturity Securities by Security Type As of December 31, 2024 Security Type Percent of Total (1) Amortized Cost Allowance for Credit Losses Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (dollars in millions) Obligations of state and political subdivisions 30 % $ 2,032 $ ( 14 ) $ 25 $ ( 103 ) $ 1,940 U.S. government and agencies 1 72 — 1 ( 6 ) 67 Corporate securities (2) 38 2,586 ( 7 ) 9 ( 206 ) 2,382 Mortgage-backed securities (3): RMBS 9 657 ( 21 ) 2 ( 71 ) 567 CMBS 3 189 — — ( 3 ) 186 Asset-backed securities: CLOs 9 615 ( 1 ) 6 ( 9 ) 611 Other (4) 9 593 ( 17 ) 1 ( 30 ) 547 Non-U.S. government securities 1 83 — — ( 14 ) 69 Total available-for-sale fixed-maturity securities 100 % $ 6,827 $ ( 60 ) $ 44 $ ( 442 ) $ 6,369 ____________________ (1) Percentages are based on amortized cost. (2) Corporate securities include securities issued by taxable universities and hospitals. (3) U.S. government-agency obligations represented 74 % and 68 % of mortgage-backed securities as of September 30, 2025 and December 31, 2024, respectively, based on fair value. (4) This category includes an investment in an affiliated entity with amortized cost of $ 48 million and $ 41 million, and fair value of $ 49 million and $ 42 million, as of September 30, 2025 and December 31, 2024, respectively. Gross Unrealized Loss by Length of Time for Available-for-Sale Fixed-Maturity Securities for Which a Credit Loss was Not Recorded As of September 30, 2025 Less than 12 months 12 months or more Total Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss (dollars in millions) Obligations of state and political subdivisions $ 193 $ ( 2 ) $ 822 $ ( 74 ) $ 1,015 $ ( 76 ) U.S. government and agencies 5 — 12 ( 4 ) 17 ( 4 ) Corporate securities 150 ( 1 ) 858 ( 93 ) 1,008 ( 94 ) Mortgage-backed securities: RMBS 20 — 131 ( 7 ) 151 ( 7 ) CMBS 36 — 59 ( 1 ) 95 ( 1 ) Asset-backed securities: CLOs 128 ( 8 ) 34 — 162 ( 8 ) Other 34 — 10 — 44 — Non-U.S. government securities 32 — 19 ( 9 ) 51 ( 9 ) Total $ 598 $ ( 11 ) $ 1,945 $ ( 188 ) $ 2,543 $ ( 199 ) Number of securities (1) 194 905 1,083 39 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Gross Unrealized Loss by Length of Time for Available-for-Sale Fixed-Maturity Securities for Which a Credit Loss was Not Recorded As of December 31, 2024 Less than 12 months 12 months or more Total Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss (dollars in millions) Obligations of state and political subdivisions $ 624 $ ( 7 ) $ 964 $ ( 96 ) $ 1,588 $ ( 103 ) U.S. government and agencies 5 — 28 ( 6 ) 33 ( 6 ) Corporate securities 762 ( 20 ) 1,046 ( 150 ) 1,808 ( 170 ) Mortgage-backed securities: RMBS 255 ( 4 ) 123 ( 10 ) 378 ( 14 ) CMBS 83 — 103 ( 3 ) 186 ( 3 ) Asset-backed securities: CLOs 151 ( 5 ) 107 ( 1 ) 258 ( 6 ) Other 60 ( 1 ) 16 — 76 ( 1 ) Non-U.S. government securities 35 ( 3 ) 30 ( 11 ) 65 ( 14 ) Total $ 1,975 $ ( 40 ) $ 2,417 $ ( 277 ) $ 4,392 $ ( 317 ) Number of securities (1) 569 1,065 1,591 ___________________ (1) The number of securities does not add across because lots consisting of the same securities have been purchased at different times and appear in both categories above (i.e., less than 12 months and 12 months or more). If a security appears in both categories, it is counted only once in the total column. The Company considered the credit quality, cash flows, interest rate movements, ability to hold a security to recovery and intent to sell a security in determining whether a security had a credit loss. The Company has determined that the unrealized losses recorded as of September 30, 2025 and December 31, 2024 were primarily related to higher interest rates rather than credit quality. As of September 30, 2025, the Company did not intend to and was not required to sell investments in an unrealized loss position prior to the expected recovery in value. As of September 30, 2025, of the securities in an unrealized loss position for which an allowance for credit loss was not recorded, 277 securities had unrealized losses in excess of 10% of their carrying value, whereas as of December 31, 2024, 438 securities had unrealized losses in excess of 10% of their carrying value. The total unrealized loss for these securities was $ 151 million as of September 30, 2025 and $ 223 million as of December 31, 2024. The amortized cost and estimated fair value of available-for-sale fixed-maturity securities by contractual maturity as of September 30, 2025 are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Distribution of Available-for-Sale Fixed-Maturity Securities by Contractual Maturity As of September 30, 2025 Amortized Cost Estimated Fair Value (in millions) Due within one year $ 214 $ 216 Due after one year through five years 1,475 1,485 Due after five years through 10 years 2,003 1,981 Due after 10 years 1,946 1,808 Mortgage-backed securities: RMBS 670 603 CMBS 184 185 Total $ 6,492 $ 6,278 40 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued 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 and $ 79 million as of September 30, 2025 and December 31, 2024, respectively. 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 $ 789 million and $ 1,135 million as of September 30, 2025 and December 31, 2024, respectively. Income from Investments The components of income derived from the investment portfolio are presented in the following tables. Income from Investments Third Quarter Nine Months 2025 2024 2025 2024 (in millions) Investment income: Fixed-maturity securities, available-for-sale (1) $ 81 $ 62 $ 232 $ 184 Short-term investments 14 21 39 66 Other invested assets 1 — 3 — Investment income 96 83 274 250 Investment expenses ( 2 ) ( 1 ) ( 4 ) ( 3 ) Net investment income $ 94 $ 82 $ 270 $ 247 Fair value gains (losses) on trading securities (2) $ 8 $ 9 $ 11 $ 52 Equity in earnings (losses) of investees: Ownership interest in Sound Point $ — $ 4 $ 12 $ 5 Funds and other investments 20 14 64 42 Equity in earnings (losses) of investees $ 20 $ 18 $ 76 $ 47 ____________________ (1) Amounts include $ 7 million of investment income on Loss Mitigation Securities for both third quarter 2025 and third quarter 2024, and $ 21 million for both nine months 2025 and nine months 2024. The increase in investment income from available-for-sale fixed-maturity securities in third quarter 2025 and nine months 2025 is primarily due to investment income on CLO equity tranches in the available-for-sale portfolio. 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 (OCI). The Company had previously held the CLO equity tranches in a Sound Point managed fund with changes in net asset value (NAV) reported in “equity in earnings (losses) of investees.” (2) Fair value gains on trading securities pertaining to securities still held as of September 30, 2025 were $ 7 million for third quarter 2025 and $ 9 million for nine months 2025. Fair value gains on trading securities pertaining to securities still held as of September 30, 2024 were $ 7 million for third quarter 2024 and $ 26 million for nine months 2024. A majority of the trading securities are Puerto Rico CVIs. In 2022, as a result of the resolution of certain defaulting Puerto Rico exposures, the Company received Puerto Rico CVIs, along with other consideration. The CVIs are intended to provide creditors with additional recoveries tied to the outperformance of the Puerto Rico 5.5% sales and use tax receipts against May 2020 certified fiscal plan projections, subject to annual and lifetime caps. As of September 30, 2025, the remaining CVIs had a fair value of $ 125 million. The Company may sell in the future any CVIs it continues to hold. Realized Investment Gains (Losses) The table below presents the components of net realized investment gains (losses). Realized gains and losses on sales of investments are determined using the specific identification method. 41 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Net Realized Investment Gains (Losses) Third Quarter Nine Months 2025 2024 2025 2024 (in millions) Gross realized gains on sales of available-for-sale securities $ 1 $ — $ 5 $ 2 Gross realized losses on sales of available-for-sale securities ( 1 ) ( 4 ) ( 10 ) ( 11 ) Net foreign currency gains (losses) 1 — — ( 2 ) Change in the allowance for credit losses and intent to sell ( 12 ) 3 ( 25 ) 11 Other net realized gains (losses) 1 1 ( 2 ) 2 Net realized investment gains (losses) $ ( 10 ) $ — $ ( 32 ) $ 2 The proceeds from sales of fixed-maturity securities classified as available-for-sale were $ 106 million in third quarter 2025, $ 87 million in third quarter 2024, $ 533 million in nine months 2025 and $ 575 million in nine months 2024. The following table presents the roll forward of the allowance for the credit losses on available-for-sale fixed-maturity securities. Roll Forward of Allowance for Credit Losses for Available-for-Sale Fixed-Maturity Securities Third Quarter Nine Months 2025 2024 2025 2024 (in millions) Balance, beginning of period $ 47 $ 69 $ 60 $ 77 Additions for securities for which credit losses were not previously recognized 1 2 11 2 Additions (reductions) for securities for which credit losses were previously recognized 11 ( 5 ) 13 ( 13 ) Write-offs charged against the allowance ( 5 ) — ( 30 ) — Balance, end of period $ 54 $ 66 $ 54 $ 66 Credit losses for third quarter 2025 and nine months 2025 were primarily associated with alternative investments. Credit losses for third quarter 2024 and nine months 2024 were primarily related to Loss Mitigation Securities. The Company did not purchase any securities with credit deterioration during the periods presented. 8. Variable Interest Entities FG VIEs The Company provides financial guaranties with respect to debt obligations of special purpose entities, including VIEs, but does not act as the servicer or collateral manager for any guaranteed VIE obligations. The transaction structure generally provides certain financial protections to the Company that can take several forms, the most common of which are overcollateralization, first loss protection (or subordination) and excess spread. In the case of overcollateralization (i.e., the principal amount of the securitized assets exceeds the principal amount of the structured finance obligations), the structure allows defaults of the securitized assets before a default is experienced on the structured finance obligation guaranteed by the Company. In the case of first loss, the Company’s financial guaranty insurance policy only covers a senior layer of losses experienced by multiple obligations issued by the VIEs. The first loss exposure with respect to the assets is either retained by the seller or sold off in the form of equity or mezzanine debt to other investors. In the case of excess spread, the financial assets contributed to VIEs generate interest income that is in excess of the interest payments on the debt issued by the VIE. Such excess spread is typically distributed through the transaction’s cash flow waterfall and may be used to create additional credit enhancement, applied to redeem debt issued by the VIE (thereby, creating additional overcollateralization), or distributed to equity or other investors in the transaction. 42 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued The Company is not primarily liable for the debt obligations issued by the VIEs it insures and would only be required to make payments on insured debt obligations in the event that the issuer defaults on any principal or interest due and only for the amount of the shortfall. The Company’s creditors do not have any rights with regard to the collateral supporting the insured debt issued by the VIEs. Proceeds from sales, maturities, prepayments and interest from the underlying collateral in the VIEs may only be used to pay debt service on the respective VIEs’ liabilities. As part of the terms of its financial guaranty contracts insuring the debt obligations of a VIE, the Company obtains certain protective rights that give it additional controls over the VIE. These protective rights are triggered by the occurrence of certain events, such as failure to be in compliance with a covenant due to poor deal performance or a deterioration in a servicer’s or collateral manager’s financial condition. Typically, at deal inception, the Company is not deemed to control the VIEs whose debt it insures; however, once a trigger event occurs, the Company’s control of the VIE typically increases. With respect to the debt obligations of VIEs that it insures, the Company continuously evaluates its power to direct the activities that most significantly impact the VIE’s economic performance and the circumstances where it is obligated to absorb VIE losses or is entitled to receive benefits that could potentially be significant to the VIE. Under GAAP, the Company is typically deemed to be the control party for a VIE when its protective rights give it the power to both terminate and replace the transaction’s servicer or collateral manager, which are characteristics specific to the Company’s financial guaranty contracts. If the protective rights that could make the Company the control party have not been triggered, then the VIE is not consolidated. If the Company is deemed to no longer have those protective rights, the VIE is deconsolidated. If the Company consolidates a VIE whose debt it insures as a result of its consolidation analysis, the Company refers to such consolidated VIE as an FG VIE. The FG VIEs’ liabilities that are insured by the Company are considered to be with recourse, because the Company guarantees the payment of principal and interest regardless of the performance of the related FG VIEs’ assets. The FG VIEs’ liabilities that are not insured by the Company are considered to be without recourse, because the payment of principal and interest of these liabilities is wholly dependent on the performance of the FG VIEs’ assets. The Company has elected the fair value option (FVO) for the assets and liabilities of all of the FG VIEs, which are all RMBS as of both September 30, 2025 and December 31, 2024. Upon initial adoption of the accounting guidance for VIEs in 2010, the Company elected to fair value its FG VIEs’ assets and liabilities as the carrying amount transition method was not practical. To allow for consistency in the accounting for the assets and liabilities of its consolidated FG VIEs, the Company elected the FVO. The change in fair value of FG VIEs’ assets and liabilities is reported in “fair value gains (losses) on FG VIEs” in the condensed consolidated statements of operations, except for the change in fair value attributable to the change in instrument-specific credit risk (ISCR) on the FG VIEs’ liabilities which is reported in OCI. Interest income and interest expense are derived from the trustee reports and are also included in “fair value gains (losses) on FG VIEs.” As of both September 30, 2025 and December 31, 2024, the Company consolidated 23 FG VIEs. During the second quarter of 2025, the Company consolidated one FG VIE when its protective rights were triggered that made it the control party. The Company subsequently irrevocably waived its control rights resulting in the deconsolidation of this FG VIE. Components of FG VIE Assets and Liabilities Net fair value gains and losses on FG VIEs are expected to reverse to zero by the maturity of the FG VIEs’ debt, except for net premiums received and net claims paid by the Company under its financial guaranty insurance contracts. The Company’s estimate of expected loss to be paid (recovered) for FG VIEs is included in Note 4, Expected Loss to be Paid (Recovered). The inception-to-date change in fair value of the FG VIEs’ liabilities with recourse measured at fair value under the FVO attributable to the ISCR is calculated by holding all current period assumptions constant for each security and isolating the effect of the change in the Company’s CDS spread from the most recent date of consolidation to the current period. In general, if the Company’s CDS spread tightens, more value will be assigned to the Company’s credit; however, if the Company’s CDS spread widens, less value is assigned to the Company’s credit. 43 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Selected Information for FG VIEs’ Assets and Liabilities Measured under the FVO As of September 30, 2025 December 31, 2024 (in millions) Excess of unpaid principal over fair value of: FG VIEs’ assets $ 253 $ 264 FG VIEs’ liabilities with recourse 32 38 FG VIEs’ liabilities without recourse 15 16 Unpaid principal balance for FG VIEs’ assets that were 90 days or more past due 27 27 Unpaid principal for FG VIEs’ liabilities with recourse (1) 182 193 ____________________ (1) FG VIEs’ liabilities with recourse will mature at various dates ranging from 2025 through 2038. The change in the ISCR of the FG VIEs’ assets for which the Company elected the FVO held as of September 30, 2025 that was reported in the condensed consolidated statements of operations for third quarter 2025 and nine months 2025 were gains of $ 3 million and $ 6 million, respectively. The change in the ISCR of the FG VIEs’ assets at FVO held as of September 30, 2024 were losses of $ 2 million and $ 4 million for third quarter 2024 and nine months 2024, respectively. The ISCR amount is determined by using expected cash flows at the original date of consolidation, discounted at the effective yield, less current expected cash flows discounted at that same original effective yield. CIVs CIVs consist of certain Sound Point funds for which the Company is the primary beneficiary or has a controlling interest. The Company consolidates investment vehicles that are VIEs when it is deemed to be the primary beneficiary based on its power to direct the most significant activities of each VIE and its level of economic interest in the entities. The assets and liabilities of the Company’s CIVs are held within separate legal entities. The assets of the CIVs are not available to creditors of the Company, other than creditors of the applicable CIVs. 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. As of September 30, 2025 and December 31, 2024, the Company consolidated one active CIV with assets of $ 136 million and $ 101 million, respectively, consisting primarily of investments with Sound Point affiliated entities. Noncontrolling Interest in CIVs Noncontrolling interest (NCI) represents the portion of the consolidated CIVs not owned by the Company and includes ownership interests of third parties and former employees. The NCI is nonredeemable and presented on the statement of shareholders’ equity. Non-Consolidated VIEs As described in Note 3, Outstanding Exposure, the Company monitors all policies in the insured portfolio. Of the approximately 16 thousand policies monitored as of September 30, 2025, approximately 14 thousand policies are not within the scope of FASB ASC 810, Consolidation , because these financial guaranties relate to the debt obligations of governmental organizations or financing entities established by a governmental organization. The majority of the remaining policies involve transactions where the Company is not deemed to currently have control over the FG VIEs’ most significant activities. As of September 30, 2025 and December 31, 2024, the Company identified 52 and 50 policies, respectively, that contain provisions and experienced events that may trigger consolidation. The Company holds variable interests in investment vehicles which are not consolidated, as the Company is not the primary beneficiary. As of September 30, 2025, the Company’s maximum exposure to losses relating to these VIEs was $ 816 million, which is limited to the carrying value of these assets. 44 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued 9. Fair Value Measurement The Company carries a significant portion of its assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., exit or transfer price). The price represents the price available in the principal market for the asset or liability. If there is no principal market, then the price is based on a hypothetical market that maximizes the value received for an asset or minimizes the amount paid for a liability (i.e., the most advantageous market). Fair value is based on quoted market prices, where available. If listed prices or quotes are not available, fair value is based on either (i) internally developed models that primarily use, as inputs, market-based or independently sourced market parameters (including, but not limited to, yield curves, interest rates and debt prices) or (ii) discounted cash flows using a third party’s proprietary pricing models. In addition to market information, when applicable, the models also incorporate transaction details, such as the instrument’s maturity and contractual features that reduce the Company’s credit exposure (e.g., collateral rights). Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments include amounts to reflect counterparty credit quality, the Company’s creditworthiness and constraints on liquidity. As markets and products develop and the pricing transparency for certain products changes, the Company may refine its methodologies and assumptions. During nine months 2025, no changes were made to the Company’s valuation models that had (or are expected to have) a material impact on the Company’s condensed consolidated balance sheets or statements of operations and comprehensive income. The Company’s valuation methods produce fair values that may not be indicative of net realizable value or future fair values. The use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a materially different estimate of fair value at the reporting date. The categorization within the fair value hierarchy is determined based on whether the inputs to valuation techniques used to measure fair value are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Company estimates of market assumptions. The fair value hierarchy prioritizes model inputs into three broad levels, with Level 1 being the highest and Level 3 the lowest. The categorization, of an asset or liability, within the hierarchy is based on the lowest level of significant input to its valuation. Level 1—Quoted prices for identical instruments in active markets. The Company generally defines an active market as a market in which trading occurs at significant volumes. Active markets generally are more liquid and have a lower bid-ask spread than an inactive market. Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and observable inputs other than quoted prices, such as interest rates or yield curves and other inputs derived from or corroborated by observable market inputs. Level 3—Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Financial instruments are considered Level 3 when their values are (i) determined using pricing models, discounted cash flow methodologies or similar techniques and (ii) at least one significant model assumption or input is unobservable. Level 3 financial instruments include those for which the determination of fair value requires significant management judgment or estimation. There were transfers of securities into Level 3 in the investment portfolio and CIVs due to changes in observability of pricing inputs, and in CIVs, in connection with the distribution of assets from a CIV, in third quarter 2024. There were no other transfers from or into Level 3 during the periods presented. Carried at Fair Value Fixed-Maturity Securities The fair value of fixed-maturity securities is generally based on prices received from third-party pricing services or alternative pricing sources that provide reasonable levels of price transparency. The pricing services prepare estimates of fair value using their pricing models, which take into account: benchmark yields, reported trades, broker/dealer quotes, issuer 45 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued spreads, two-sided markets, benchmark securities, bids, offers, reference data, industry and economic events and sector groupings. Additional valuation factors that can be taken into account are nominal spreads and liquidity adjustments. The pricing services evaluate each asset class based on relevant market and credit information, perceived market movements and sector news. In many cases, benchmark yields have proven to be more reliable indicators of the market for a security, as compared to reported trades for infrequently traded securities and distressed transactions. The extent of the use of each input is dependent on the asset class and the market conditions. The valuation of fixed-maturity securities is more subjective when markets are less liquid due to the lack of market-based inputs. As of September 30, 2025, the Company used models to price 154 securities. All Level 3 securities were priced with the assistance of independent third parties. The pricing is based on a discounted cash flow approach using the third party’s proprietary pricing models. The models use inputs such as projected prepayment speeds; severity assumptions; recovery lag assumptions; estimated default rates (determined based on an analysis of collateral attributes, historical collateral performance, borrower profiles and other features relevant to the evaluation of collateral credit quality); home price appreciation/depreciation rates based on macroeconomic forecasts; and recent trading activity. The yield used to discount the projected cash flows is determined by reviewing various attributes of the security including collateral type, weighted average life, sensitivity to losses, vintage and convexity, in conjunction with market data on comparable securities. Significant changes to any of these inputs could have materially changed the expected timing of cash flows within these securities which could have significantly affected the fair value of the securities. Short-Term Investments Short-term investments that are traded in active markets are classified as Level 1 as their value is based on quoted market prices. Securities such as discount notes are classified as Level 2 because these securities are typically not actively traded. Due to their approaching maturity, the cost of discount notes approximates fair value. Other Assets Committed Capital Securities AG has entered into put agreements with eight separate custodial trusts allowing it to issue an aggregate of $ 400 million of non-cumulative redeemable perpetual preferred securities to the trusts in exchange for cash. The arrangement entails eight custodial trusts (Woodbourne Capital Trust I, II, III and IV and Sutton Capital Trust I, II, III and IV), each of which issued $ 50 million face amount of CCS and invested the proceeds of that issuance in eligible assets that enable the trust to have the cash necessary to respond to AG’s exercise of a put option. The put option consists of a right that AG has, pursuant to separate put agreements that AG entered into with each of the trusts, to issue to each trust $ 50 million of non-cumulative redeemable perpetual preferred stock, in exchange for an equivalent amount of cash (i.e., an aggregate of $ 400 million). When AG exercises its put option, the relevant trust must liquidate the portfolio of high-quality, liquid assets that it currently maintains and use the liquidation proceeds to purchase AG preferred stock. The put agreements have no scheduled termination date or maturity but may be terminated upon the occurrence of certain specified events. None of the events that would give rise to a termination of the put agreements have occurred. The fair value of CCS, which is reported in “other assets” in the condensed consolidated balance sheets, represents the difference between the present value of the remaining expected put option premium payments under the put agreements and the estimated present value of the amounts that the Company would hypothetically have to pay as of the reporting date for a comparable security. The change in fair value of the CCS is reported in “fair value gains (losses) on committed capital securities” in the condensed consolidated statements of operations. The estimated current cost of the Company’s CCS as of the reporting date is based on several factors, including AG’s CDS spreads, the Company’s publicly traded debt and an estimation of the securities’ remaining term. The CCS are classified as Level 3. Supplemental Executive Retirement Plans The Company classified assets included in the Company’s various supplemental executive retirement plans as either Level 1 or Level 2. The fair value of these assets is based on the observable published daily values of the underlying mutual 46 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued funds included in the plans (Level 1) or based upon the NAV of the funds if a published daily value is not available (Level 2). The NAVs are based on observable information. The change in fair value of these assets is reported in “other operating expenses” in the condensed consolidated statements of operations. Contracts Accounted for as Credit Derivatives There is no established market where financial guaranty insured credit derivatives are actively traded; therefore, management has determined that the exit market for the Company’s credit derivatives is a hypothetical one based on its entry market. Due to the lack of quoted prices and other observable inputs for its instruments or for similar instruments, the Company determines the fair value of its credit derivative contracts primarily through internally developed, proprietary models that use both observable and unobservable market data inputs, and such contracts are therefore classified as Level 3 in the fair value hierarchy. There are multiple unobservable inputs deemed significant to the valuation model, most importantly the Company’s estimate of the value of the non-standard terms and conditions of its credit derivative contracts and how the Company’s own credit spread affects the pricing of its transactions. The fair value of the Company’s credit derivative contracts generally represents the difference between the present value of remaining premiums the Company expects to receive and the estimated present value of premiums that a financial guarantor of comparable credit-worthiness would hypothetically charge at the reporting date for the same protection. The fair value of the Company’s credit derivatives depends on a number of factors, including notional amount of the contract, expected term, credit spreads, changes in interest rates, the credit ratings of referenced entities, the Company’s own credit risk and remaining contractual cash flows. The expected remaining contractual premium cash flows are the most readily observable inputs since they are based on the credit derivatives’ contractual terms. Credit spreads capture the effect of recovery rates and performance of underlying assets of these contracts, among other factors. A credit derivative liability on protection sold is the result of contractual cash inflows on in-force transactions that are lower than what a hypothetical financial guarantor could receive if it sold protection on the same risk as of the reporting date. Consistent with previous years, market conditions as of September 30, 2025 were such that market prices of the Company’s CDS contracts were not available. Assumptions and Inputs The main inputs and assumptions to the measurement of fair value for CDS contracts are the gross spread, the allocation of gross spread among the bank profit, net spread and hedge cost and the weighted average life (which is based on debt service schedules). The primary sources of information used to determine gross spread and the fair value for CDS contracts include actual collateral credit spreads (if up-to-date and reliable market-based spreads are available), transactions priced or closed during a specific quarter within a specific asset class and specific rating and information provided by the counterparty of the credit derivative. Credit spreads may also be interpolated based upon market indices adjusted to reflect the non-standard terms of the Company’s CDS contracts, or extrapolated based upon transactions of similar asset classes, similar ratings and similar time to maturity. The Company’s own credit risk is factored into the determination of the current premium. Such credit risk is based on the quoted market price for credit protection bought on the Company as reflected by quoted market prices on CDS contracts referencing AG. The Company obtains the quoted price of CDS contracts traded on AG from market data sources published by third parties. The amount of premium a financial guaranty insurance market participant can demand (or “current premium”) is inversely related to the cost of credit protection on the insurance company as measured by market credit spreads assuming all other assumptions remain constant. This is because the buyers of credit protection typically hedge a portion of their risk to the financial guarantor, because the contractual terms of the Company’s contracts typically do not require the posting of collateral by the guarantor. The extent of the hedge depends on the types of instruments insured and current market conditions. In the Company’s valuation model, the current premium is not permitted to go below the minimum rate that the Company would charge to assume similar risks in the reporting period. This assumption can have the effect of limiting the amount of unrealized gains that are recognized on certain CDS contracts. The minimum premium had no effect on the fair value of CDS contracts as of both September 30, 2025 and December 31, 2024. 47 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued FG VIEs’ Assets and Liabilities FG VIEs’ assets and liabilities for which the Company elected the FVO are carried at fair value and classified as Level 3. The fair value of the residential mortgage loans in the FG VIEs’ assets is generally sensitive to changes in estimated prepayment speeds; estimated default rates (determined on the basis of an analysis of collateral attributes such as: historical collateral performance, borrower profiles and other features relevant to the evaluation of collateral credit quality); yields implied by market prices for similar securities; and, as applicable, house price depreciation/appreciation rates based on macroeconomic forecasts. Significant changes to some of these inputs could have materially changed the fair value of the FG VIEs’ assets and the implied collateral losses within these transactions. In general, the fair value of the FG VIEs’ assets is most sensitive to changes in the projected collateral losses, where an increase in collateral losses typically leads to a potential decrease in the fair value of FG VIEs’ assets, while a decrease in collateral losses typically leads to an increase in the fair value of FG VIEs’ assets. The prices of these assets and liabilities of the FG VIEs are generally determined with the assistance of an independent third party and based on a discounted cash flow approach. The third party pricing service utilizes an internal model to determine an appropriate yield at which to discount the cash flows of the security by factoring in collateral types, weighted-average lives and other structural attributes specific to the security being priced. The expected yield is further calibrated by utilizing algorithms designed to aggregate market color, received by the independent third party, on comparable bonds. The models used to price the FG VIEs’ liabilities generally apply the same inputs used in determining fair value of FG VIEs’ assets. For those liabilities insured by the Company, the benefit of the Company’s insurance policy guaranteeing the timely payment of debt service is also taken into account. The timing of expected losses within an insured transaction is a significant factor in determining the implied benefit of the Company’s insurance policy which guarantees the timely payment of principal and interest for the insured tranches of debt issued by the FG VIEs. In general, a longer time period until the Company’s expected loss payments typically leads to a decrease in the value of the Company’s insurance and a decrease in the fair value of the Company’s FG VIEs’ liabilities with recourse, while a shorter time period until the Company’s expected loss payments typically could lead to an increase in the value of the Company’s insurance and an increase in the fair value of the Company’s FG VIEs’ liabilities with recourse. Assets and Liabilities of CIVs Investments held by CIVs which are quoted on a national securities exchange are valued at their last reported sale price on the date of determination. Investments held by CIVs which are traded over-the-counter reflect third-party data and generally reflect the average of dealer offer and bid prices. The valuation methodology may include, but is not limited to: (i) performing price comparisons with similar investments; (ii) obtaining valuation-related information from issuers; (iii) calculating the present value of future cash flows; (iv) assessing other data related to the investment that may be an indication of value; (v) obtaining information provided by third parties; and/or (vi) evaluating information provided by the investment manager. Inputs may include dealer price quotations, yield curves, credit curves, forward/CDS/index spreads, prepayments rates, strike and expiry dates, volatility statistics and other factors. Significant changes to any of the inputs described above could have a material effect on the fair value of the CIVs’ assets and liabilities. Changes in the fair value of assets and liabilities of CIVs, interest income and interest expense are reported in “fair value gains (losses) on consolidated investment vehicles” in the condensed consolidated statements of operations. 48 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Amounts recorded at fair value in the Company’s financial statements are presented in the tables below. Fair Value Hierarchy of Financial Instruments Carried at Fair Value As of September 30, 2025 Fair Value Hierarchy Level 1 Level 2 Level 3 Total (in millions) Assets: Fixed-maturity securities, available-for-sale Obligations of state and political subdivisions $ — $ 1,745 $ 10 $ 1,755 U.S. government and agencies — 48 — 48 Corporate securities — 2,755 168 2,923 Mortgage-backed securities: RMBS — 458 145 603 CMBS — 185 — 185 Asset-backed securities — 150 521 671 Non-U.S. government securities — 93 — 93 Total fixed-maturity securities, available-for-sale — 5,434 844 6,278 Fixed-maturity securities, trading — 132 4 136 Short-term investments 1,329 3 — 1,332 Other invested assets (1) — — 4 4 FG VIEs’ assets — — 145 145 Assets of CIVs, equity securities — — 132 132 Other assets 78 64 17 159 Total assets carried at fair value $ 1,407 $ 5,633 $ 1,146 $ 8,186 Liabilities: FG VIEs’ liabilities (2) $ — $ — $ 159 $ 159 Other liabilities — — 31 31 Total liabilities carried at fair value $ — $ — $ 190 $ 190 49 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Fair Value Hierarchy of Financial Instruments Carried at Fair Value As of December 31, 2024 Fair Value Hierarchy Level 1 Level 2 Level 3 Total (in millions) Assets: Fixed-maturity securities, available-for sale Obligations of state and political subdivisions $ — $ 1,930 $ 10 $ 1,940 U.S. government and agencies — 67 — 67 Corporate securities — 2,382 — 2,382 Mortgage-backed securities: RMBS — 422 145 567 CMBS — 186 — 186 Asset-backed securities — 127 1,031 1,158 Non-U.S. government securities — 69 — 69 Total fixed-maturity securities, available-for-sale — 5,183 1,186 6,369 Fixed-maturity securities, trading — 142 5 147 Short-term investments 1,218 3 — 1,221 Other invested assets (1) — — 4 4 FG VIEs’ assets — — 147 147 Assets of CIVs, equity securities — — 99 99 Other assets 65 59 7 131 Total assets carried at fair value $ 1,283 $ 5,387 $ 1,448 $ 8,118 Liabilities: FG VIEs’ liabilities (2) $ — $ — $ 164 $ 164 Other liabilities — — 34 34 Total liabilities carried at fair value $ — $ — $ 198 $ 198 ___________________ (1) Other invested assets includes Level 3 mortgage loans that are recorded at fair value on a non-recurring basis. (2) FG VIEs’ liabilities include those with and without recourse. See Note 8, Variable Interest Entities. 50 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Changes in Level 3 Fair Value Measurements The tables below present a roll forward of the Company’s Level 3 financial instruments carried at fair value on a recurring basis during third quarter 2025, third quarter 2024, nine months 2025 and nine months 2024. Roll Forward of Level 3 Assets (Liabilities) at Fair Value on a Recurring Basis Third Quarter 2025 Fixed-Maturity Securities, Available-for-Sale Obligations of State and Political Subdivisions Corporate RMBS Asset- Backed Securities Fixed-Maturity Securities, Trading FG VIEs’ Assets Assets of CIVs, Equity Securities Other (7) (in millions) Fair value as of June 30, 2025 $ 10 $ 84 $ 142 $ 977 $ 4 $ 153 $ 121 $ 5 Total pre-tax realized and unrealized gains (losses) recorded in: Net income (loss) — 1 (1) 3 (1) 3 (1) 1 (10) 7 (2) 11 (4) 9 (3) Other comprehensive income (loss) — 10 6 ( 3 ) — — — 1 Purchases — 73 — 40 — — — — Sales — — — — — — — — Settlements — — ( 6 ) ( 496 ) ( 1 ) ( 6 ) — — Deconsolidations — — — — — ( 9 ) — — Fair value as of September 30, 2025 $ 10 $ 168 $ 145 $ 521 $ 4 $ 145 $ 132 $ 15 Change in unrealized gains (losses) related to financial instruments held as of September 30, 2025 included in: Earnings $ — $ 6 (2) $ 11 (4) $ 9 (3) OCI $ — $ 10 $ 6 $ ( 2 ) $ 1 Roll Forward of Level 3 Assets (Liabilities) at Fair Value on a Recurring Basis Third Quarter 2025 Credit Derivative Liability, net (5) FG VIEs’ Liabilities (8) (in millions) Fair value as of June 30, 2025 $ ( 29 ) $ ( 161 ) Total pre-tax realized and unrealized gains (losses) recorded in: Net income (loss) 5 (6) ( 4 ) (2) Other comprehensive income (loss) — 1 Settlements ( 2 ) 5 Fair value as of September 30, 2025 $ ( 26 ) $ ( 159 ) Change in unrealized gains (losses) related to financial instruments held as of September 30, 2025 included in: Earnings $ 3 (6) $ ( 4 ) (2) OCI $ 1 51 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Roll Forward of Level 3 Assets (Liabilities) at Fair Value on a Recurring Basis Third Quarter 2024 Fixed-Maturity Securities, Available-for-Sale Assets of CIVs Obligations of State and Political Subdivisions RMBS Asset- Backed Securities Fixed-Maturity Securities, Trading FG VIEs’ Assets Equity Securities Structured Products Other (7) (in millions) Fair value as of June 30, 2024 $ 7 $ 150 $ 795 $ — $ 160 $ 93 $ 225 $ 6 Total pre-tax realized and unrealized gains (losses) recorded in: Net income (loss) — 5 (1) 7 (1) — 2 (2) 9 (4) ( 5 ) (4) ( 4 ) (3) Other comprehensive income (loss) — 3 ( 3 ) — — — — 1 Purchases — — 19 — — — 25 1 Sales — — — — — ( 3 ) — — Settlements — ( 6 ) ( 31 ) ( 2 ) ( 6 ) — — — Reclassifications (9) — — — 8 — — ( 8 ) — Transfers out of Level 3 — — — — — ( 2 ) — — Fair value as of September 30, 2024 $ 7 $ 152 $ 787 $ 6 $ 156 $ 97 $ 237 $ 4 Change in unrealized gains (losses) related to financial instruments held as of September 30, 2024 included in: Earnings $ — $ — $ 9 (4) $ ( 1 ) (4) $ ( 4 ) (3) OCI $ — $ 3 $ ( 3 ) $ ( 1 ) Roll Forward of Level 3 Assets (Liabilities) at Fair Value on a Recurring Basis Third Quarter 2024 Credit Derivative Liability, net (5) FG VIEs’ Liabilities (8) (in millions) Fair value as of June 30, 2024 $ ( 34 ) $ ( 393 ) Total pre-tax realized and unrealized gains (losses) recorded in: Net income (loss) 3 (6) ( 3 ) (2) Other comprehensive income (loss) — ( 1 ) Issuances ( 2 ) — Settlements ( 1 ) 5 Fair value as of September 30, 2024 $ ( 34 ) $ ( 392 ) Change in unrealized gains (losses) related to financial instruments held as of September 30, 2024 included in: Earnings $ 1 (6) $ ( 4 ) (2) OCI $ ( 1 ) 52 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Roll Forward of Level 3 Assets (Liabilities) at Fair Value on a Recurring Basis Nine Months 2025 Fixed-Maturity Securities, Available-for-Sale Obligations of State and Political Subdivisions Corporate RMBS Asset- Backed Securities Fixed-Maturity Securities, Trading FG VIEs’ Assets Assets of CIVs, Equity Securities Other (7) (in millions) Fair value as of December 31, 2024 $ 10 $ — $ 145 $ 1,031 $ 5 $ 147 $ 99 $ 5 Total pre-tax realized and unrealized gains (losses) recorded in: Net income (loss) 2 (1) 1 (1) 7 (1) 21 (1) 1 (10) 14 (2) 33 (4) 10 (3) Other comprehensive income (loss) — 20 12 8 — — — — Purchases — 147 — 40 — — — — Sales — — — ( 12 ) — — — — Settlements ( 2 ) — ( 19 ) ( 567 ) ( 2 ) ( 16 ) — — Consolidations — — — — — 9 — — Deconsolidations — — — — — ( 9 ) — — Fair value as of September 30, 2025 $ 10 $ 168 $ 145 $ 521 $ 4 $ 145 $ 132 $ 15 Change in unrealized gains (losses) related to financial instruments held as of September 30, 2025 included in: Earnings $ — $ 11 (2) $ 33 (4) $ 10 (3) OCI $ — $ 20 $ 12 $ ( 20 ) $ — Roll Forward of Level 3 Assets (Liabilities) at Fair Value on a Recurring Basis Nine Months 2025 Credit Derivative Liability, net (5) FG VIEs’ Liabilities (8) (in millions) Fair value as of December 31, 2024 $ ( 29 ) $ ( 164 ) Total pre-tax realized and unrealized gains (losses) recorded in: Net income (loss) 110 (6) ( 9 ) (2) Other comprehensive income (loss) — 1 Settlements ( 107 ) 13 Fair value as of September 30, 2025 $ ( 26 ) $ ( 159 ) Change in unrealized gains (losses) related to financial instruments held as of September 30, 2025 included in: Earnings $ 3 (6) $ ( 8 ) (2) OCI $ 1 53 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Roll Forward of Level 3 Assets (Liabilities) at Fair Value on a Recurring Basis Nine Months 2024 Fixed-Maturity Securities, Available-for-Sale Assets of CIVs Obligations of State and Political Subdivisions RMBS Asset- Backed Securities Fixed-Maturity Securities, Trading FG VIEs’ Assets Equity Securities Structured Products Other (7) (in millions) Fair value as of December 31, 2023 $ 6 $ 154 $ 803 $ — $ 174 $ 80 $ 189 $ 14 Total pre-tax realized and unrealized gains (losses) recorded in: Net income (loss) — 12 (1) 24 (1) — ( 1 ) (2) 21 (4) ( 10 ) (4) ( 12 ) (3) Other comprehensive income (loss) 2 5 5 — 1 — — 1 Purchases — — 30 — — — 76 1 Sales — — — — — ( 5 ) ( 20 ) — Settlements ( 1 ) ( 19 ) ( 95 ) ( 2 ) ( 18 ) — — — Reclassifications (9) — — — 8 — — ( 8 ) — Transfers into Level 3 — — 20 — — 3 10 — Transfers out of Level 3 — — — — — ( 2 ) — — Fair value as of September 30, 2024 $ 7 $ 152 $ 787 $ 6 $ 156 $ 97 $ 237 $ 4 Change in unrealized gains (losses) related to financial instruments held as of September 30, 2024 included in: Earnings $ — $ ( 5 ) (2) $ 21 (4) $ ( 3 ) (4) $ ( 12 ) (3) OCI $ 2 $ 5 $ 3 $ 1 $ 1 54 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Roll Forward of Level 3 Assets (Liabilities) at Fair Value on a Recurring Basis Nine Months 2024 Credit Derivative Liability, net (5) FG VIEs’ Liabilities (8) (in millions) Fair value as of December 31, 2023 $ ( 50 ) $ ( 554 ) Total pre-tax realized and unrealized gains (losses) recorded in: Net income (loss) 19 (6) 6 (2) Other comprehensive income (loss) — ( 1 ) Issuances ( 2 ) — Settlements ( 1 ) 157 Fair value as of September 30, 2024 $ ( 34 ) $ ( 392 ) Change in unrealized gains (losses) related to financial instruments held as of September 30, 2024 included in: Earnings $ 9 (6) $ — OCI $ ( 1 ) ____________________ (1) Included in “net realized investment gains (losses)” and “net investment income.” (2) Reported in “fair value gains (losses) on FG VIEs.” (3) Reported in “fair value gains (losses) on CCS,” “net investment income” and “other income (loss).” (4) Reported in “fair value gains (losses) on CIVs.” (5) Represents the net position of credit derivatives. Credit derivative assets (reported in “other assets”) and credit derivative liabilities (reported in “other liabilities”) are shown as either assets or liabilities in the condensed consolidated balance sheets. (6) Reported in “fair value gains (losses) on credit derivatives.” (7) Includes CCS and other invested assets. (8) Includes FG VIEs’ liabilities with recourse and FG VIEs’ liabilities without recourse. (9) Represents securities transferred from one of the CIVs to the investment portfolio due to the distribution of assets of that CIV. (10) Reported in “fair value gains (losses) on trading securities.” 55 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Level 3 Fair Value Disclosures Quantitative Information About Level 3 Fair Value Inputs As of September 30, 2025 Financial Instrument Description Fair Value Assets (Liabilities) (in millions) Significant Unobservable Inputs Range Weighted Average (4) Investments (2): Fixed-maturity securities, available-for-sale (1): Obligations of state and political subdivisions $ 10 Yield 5.3 % - 15.0 % 6.7 % Corporate 168 Yield 5.3 % - 8.3 % 5.4 % RMBS 145 Conditional prepayment rate (CPR) 0.0 % - 17.9 % 3.9 % CDR 1.2 % - 18.6 % 5.4 % Loss severity 50.0 % - 125.0 % 79.9 % Yield 7.0 % - 10.0 % 8.4 % Asset-backed securities: CLOs 472 Discount margin 1.0 % - 2.9 % 1.8 % Yield 10.2 % - 23.5 % 17.8 % Others 49 Yield 9.7 % Fixed-maturity securities, trading (1) 4 Yield 4.2 % - 7.7 % 6.0 % FG VIEs’ assets (1) 145 CPR 1.1 % - 28.1 % 5.1 % CDR 1.2 % - 41.0 % 10.5 % Loss severity 45.0 % - 100.0 % 83.5 % Yield 6.3 % - 9.9 % 8.7 % Assets of CIVs - equity securities (3) 132 Discount rate 23.4 % Market multiple-price to book 1.00 x Market multiple-price to earnings 5.75 x Terminal growth rate 4.0 % Exit multiple-price to book 1.00 x Exit multiple-price to earnings 5.50 x Other assets (1) 12 Implied Yield 6.5 % - 7.0 % 6.7 % Term (years) 10 years Credit derivative liabilities, net (1) ( 26 ) Hedge cost (in basis points) (bps) 11.8 - 27.9 15.4 Bank profit (in bps) 55.0 - 257.7 130.4 Internal floor (in bps) 10.0 Internal credit rating AAA - CCC A Discount rates of future expected premium cash flows 3.2 % - 4.3 % 4.1 % FG VIEs’ liabilities (1) ( 159 ) CPR 1.1 % - 28.1 % 5.1 % CDR 1.2 % - 41.0 % 10.5 % Loss severity 45.0 % - 100.0 % 83.5 % Yield 5.2 % - 9.9 % 6.5 % ___________________ (1) Discounted cash flows are used as the primary valuation technique. (2) This amount excludes several investments reported in “other invested assets” with a fair value of $ 4 million. (3) The primary valuation technique uses the income and/or market approach. (4) Weighted average is calculated as a percentage of current par outstanding for all categories except for assets of CIVs and fixed-maturity securities, trading, for which it is calculated as a percentage of fair value. 56 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Quantitative Information About Level 3 Fair Value Inputs As of December 31, 2024 Financial Instrument Description Fair Value Assets (Liabilities) (in millions) Significant Unobservable Inputs Range Weighted Average (4) Investments (2): Fixed-maturity securities, available-for-sale (1): Obligations of state and political subdivisions $ 10 Yield 5.5 % - 22.0 % 7.5 % RMBS 145 CPR 1.8 % - 17.0 % 2.8 % CDR 1.8 % - 18.7 % 5.4 % Loss severity 50.0 % - 125.0 % 79.9 % Yield 7.7 % - 10.8 % 9.1 % Asset-backed securities: CLOs 611 Discount margin 0.8 % - 2.9 % 1.9 % Yield 12.5 % - 22.5 % 17.9 % Others 420 Yield 6.4 % - 9.1 % 6.7 % Fixed-maturity securities, trading (1) 5 Yield 19.8 % - 169.5 % 163.8 % FG VIEs’ assets (1) 147 CPR 2.2 % - 25.0 % 5.7 % CDR 1.3 % - 41.0 % 10.7 % Loss severity 45.0 % - 100.0 % 83.2 % Yield 6.8 % - 10.8 % 9.3 % Assets of CIVs - equity securities (3) 99 Discount rate 24.3 % Market multiple-price to book 1.05 x Market multiple-price to earnings 5.25 x Terminal growth rate 4.0 % Exit multiple-price to book 1.05 x Exit multiple-price to earnings 5.50 x Other assets (1) 2 Implied Yield 6.5 % - 7.0 % 6.8 % Term (years) 10 years Credit derivative liabilities, net (1) ( 29 ) Hedge cost (in bps) 12.8 - 30.1 16.8 Bank profit (in bps) 73.2 - 275.9 139.3 Internal floor (in bps) 10.0 - 85.5 29.7 Internal credit rating AAA - CCC A Discount rates of future expected premium cash flows 3.9 % 4.4 % 4.3 % FG VIEs’ liabilities (1) ( 164 ) CPR 2.2 % - 25.0 % 5.7 % CDR 1.3 % - 41.0 % 10.7 % Loss severity 45.0 % - 100.0 % 83.2 % Yield 5.5 % - 10.8 % 7.0 % ____________________ (1) Discounted cash flows are used as the primary valuation technique. (2) This amount excludes several investments reported in “other invested assets” with a fair value of $ 4 million. (3) The primary valuation technique uses the income and/or market approach. (4) Weighted average is calculated as a percentage of current par outstanding for all categories except for assets of CIVs, for which it is calculated as a percentage of fair value. 57 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Not Carried at Fair Value Financial Guaranty Insurance Contracts Fair value is based on management’s estimate of the consideration that would be paid to, or received from, a similarly rated financial guaranty insurance company to acquire the Company’s in-force book of financial guaranty insurance business. It is based upon the ratio of current trends in premium pricing to risk-based expected loss for investment grade portions of the portfolio and stressed loss pricing for BIG transactions. The Company classified the fair value of financial guaranty insurance contracts as Level 3. Long-Term Debt Long-term debt issued by the U.S. Holding Companies is valued by broker-dealers using independent third-party pricing sources and standard market conventions and classified as Level 2 in the fair value hierarchy. The market conventions utilize market quotations, market transactions for the Company’s comparable instruments, and to a lesser extent, similar instruments in the broader insurance industry. The carrying amount and estimated fair value of the Company’s financial instruments not carried at fair value are presented in the following table. Fair Value of Financial Instruments Not Carried at Fair Value As of September 30, 2025 As of December 31, 2024 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value (in millions) Assets (liabilities): Other assets (including other invested assets) $ 87 $ 88 $ 115 $ 116 Financial guaranty insurance contracts (1) ( 1,926 ) ( 846 ) ( 2,029 ) ( 1,136 ) Long-term debt ( 1,702 ) ( 1,622 ) ( 1,699 ) ( 1,579 ) Other liabilities ( 40 ) ( 40 ) ( 16 ) ( 16 ) ____________________ (1) Carrying amount includes the assets and liabilities related to financial guaranty insurance contract premiums, losses and salvage and subrogation and other recoverables net of reinsurance. 10. Income Taxes Overview AGL is a tax resident in the U.K. although it remains a Bermuda-based company and its administrative and head office functions are carried on in Bermuda. AGL’s subsidiaries are subject to income taxes imposed by the local tax authorities in the jurisdictions in which they operate and file applicable tax returns. In addition, AGRO, a Bermuda domiciled company, has elected under Section 953(d) of the Internal Revenue Service (IRS) to be taxed as a U.S. domestic corporation. In July of 2023, the U.K. government passed legislation to implement the Organization for Economic Co-Operation and Development’s Base Erosion and Profit Shifting Pillar Two income inclusion rule. This includes a multinational top-up tax which applies to large multinational corporations for accounting periods beginning on or after December 31, 2023. This applies to AGL and its subsidiaries, requiring a minimum effective rate of 15 % in all jurisdictions in which they operate. On December 27, 2023, the Bermuda government enacted a corporate income tax at the rate of 15 % which applies to the Bermuda Subsidiaries (collectively, AG Re, AGRO and Cedar Personnel Ltd.) for accounting periods starting on or after January 1, 2025. On July 4, 2025, the U.S. Congress passed budget reconciliation bill H.R. 1 referred to as the One Big Beautiful Bill Act (OBBBA). The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of 58 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing its impact on its consolidated financial statements but does not expect it to have a material impact. AGUS files a consolidated federal income tax return with all of its U.S. subsidiaries. Assured Guaranty Overseas US Holdings Inc. and its subsidiaries, AGRO and AG Intermediary Inc., file their own consolidated federal income tax return. Provision for Income Taxes The Company’s provision for income taxes for interim financial periods is not based on an estimated annual effective rate due in part to the variability in loss reserves, fair value of its credit derivatives and VIEs and foreign exchange gains and losses which prevent the Company from projecting a reliable estimated annual effective tax rate and pre-tax income for the full year 2025. A discrete calculation of the provision is calculated for each interim period. The Company’s overall effective tax rate fluctuates based on the distribution of income across jurisdictions. The effective tax rates reflect the proportion of income recognized by each of the Company’s operating subsidiaries with • U.S. subsidiaries taxed at the U.S. marginal corporate income tax rate of 21 %, • French subsidiary taxed at the French marginal corporate tax rate of 25 %, • Bermuda Subsidiaries taxed at the Bermuda marginal corporate tax rate of 15 % starting January 1, 2025, and 0 % for 2024, unless subject to U.S. tax by election, and • U.K. subsidiaries taxed at the U.K. marginal corporate tax rate of 25 %. The Company’s effective tax rate was 15.4 %, 19.9 %, 18.5 % and 19.2 % for third quarter 2025, third quarter 2024, nine months 2025 and nine months 2024, respectively. The effective tax rates are different from the expected tax provision (benefit) primarily due to a tax provision for U.S. state taxes, a tax benefit for U.S. tax-exempt interest, and foreign taxes. In addition, third quarter 2024 and nine months 2024 included the global minimum tax. Audits During nine months 2025, the IRS audit of AGUS’s 2018 and 2019 tax years closed with no impact to previously accrued taxes. As of September 30, 2025, AGUS had open tax years with the IRS for 2021 forward and is currently under audit for the 2021 tax year. As of September 30, 2025, Assured Guaranty Overseas US Holdings Inc. had open tax years with the IRS for 2021 forward and is not currently under audit with the IRS. In December 2023, His Majesty’s Revenue & Customs (HMRC) issued an inquiry into the Company’s 2021 U.K. tax returns. In October 2025, HMRC issued an inquiry into the Company’s 2022 and 2023 U.K. tax returns. As of September 30, 2025, the Company’s U.K. subsidiaries had open tax years with HMRC for 2021 forward. The Company’s French subsidiary is not currently under examination and has open tax years of 2021 forward. 11. Contingencies Legal Proceedings Lawsuits arise in the ordinary course of the Company’s business. It is the opinion of the Company’s management, based upon the information available, that the expected outcome of litigation against the Company, individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, although an adverse resolution of litigation against the Company in a fiscal quarter or year could have a material adverse effect on the Company’s results of operations or liquidity in that particular quarter or year. In addition, in the ordinary course of their respective businesses, certain of AGL’s insurance subsidiaries are involved in litigation with third parties to recover insurance losses paid in prior periods or prevent or reduce losses in the future. For example, the Company is involved in a number of legal actions in the Federal District Court of Puerto Rico to enforce or defend its rights with respect to the obligations of PREPA it insures. There are two recently active proceedings related to PREPA, while there are a number of other unresolved proceedings related to PREPA that remain stayed pending the Federal District Court of Puerto Rico’s determination on a plan of adjustment and disclosure statement. See Note 4, Expected Loss to be Paid (Recovered), Loss Estimation Process, Public Finance, Puerto Rico, for a description of such actions. The impact, if any, of 59 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued these and other proceedings on the amount of recoveries the Company receives and losses it pays in the future is uncertain, and the impact of any one or more of these proceedings during any quarter or year could be material to the Company’s results of operations in that particular quarter or year. The Company also receives subpoenas and interrogatories from regulators from time to time. 12. Shareholders’ Equity Other Comprehensive Income The following tables present the changes in each component of accumulated other comprehensive income (AOCI) and the effect of reclassifications out of AOCI into the respective lines in the condensed consolidated statements of operations. Changes in Accumulated Other Comprehensive Income (Loss) by Component Third Quarter 2025 Net Unrealized Gains (Losses) on Investments with: ISCR on FG VIEs’ Liabilities with Recourse Cumulative Translation Adjustment Cash Flow Hedge Total AOCI No Credit Impairment Credit Impairment (in millions) Balance, June 30, 2025 $ ( 98 ) $ ( 79 ) $ ( 18 ) $ ( 36 ) $ 4 $ ( 227 ) Other comprehensive income (loss) before reclassifications 38 — — 1 — 39 Less: Amounts reclassified from AOCI to: Net realized investment gains (losses) 1 ( 11 ) — — — ( 10 ) Fair value gains (losses) on FG VIEs — — ( 1 ) — — ( 1 ) Total before tax 1 ( 11 ) ( 1 ) — — ( 11 ) Tax (provision) benefit — 2 — — — 2 Total amount reclassified from AOCI, net of tax 1 ( 9 ) ( 1 ) — — ( 9 ) Other comprehensive income (loss) 37 9 1 1 — 48 Balance, September 30, 2025 $ ( 61 ) $ ( 70 ) $ ( 17 ) $ ( 35 ) $ 4 $ ( 179 ) 60 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Changes in Accumulated Other Comprehensive Income (Loss) by Component Third Quarter 2024 Net Unrealized Gains (Losses) on Investments with: ISCR on FG VIEs’ Liabilities with Recourse Cumulative Translation Adjustment Cash Flow Hedge Total AOCI No Credit Impairment Credit Impairment (in millions) Balance, June 30, 2024 $ ( 243 ) $ ( 96 ) $ ( 20 ) $ ( 38 ) $ 5 $ ( 392 ) Other comprehensive income (loss) before reclassifications 147 13 ( 2 ) — — 158 Less: Amounts reclassified from AOCI to: Net realized investment gains (losses) ( 4 ) 3 — — — ( 1 ) Fair value gains (losses) on FG VIEs — — ( 1 ) — — ( 1 ) Total before tax ( 4 ) 3 ( 1 ) — — ( 2 ) Tax (provision) benefit ( 1 ) — — — — ( 1 ) Total amount reclassified from AOCI, net of tax ( 5 ) 3 ( 1 ) — — ( 3 ) Other comprehensive income (loss) 152 10 ( 1 ) — — 161 Balance, September 30, 2024 $ ( 91 ) $ ( 86 ) $ ( 21 ) $ ( 38 ) $ 5 $ ( 231 ) Changes in Accumulated Other Comprehensive Income (Loss) by Component Nine Months 2025 Net Unrealized Gains (Losses) on Investments with: ISCR on FG VIEs’ Liabilities with Recourse Cumulative Translation Adjustment Cash Flow Hedge Total AOCI No Credit Impairment Credit Impairment (in millions) Balance, December 31, 2024 $ ( 235 ) $ ( 99 ) $ ( 18 ) $ ( 37 ) $ 4 $ ( 385 ) Other comprehensive income (loss) before reclassifications 169 10 ( 1 ) 2 — 180 Less: Amounts reclassified from AOCI to: Net realized investment gains (losses) ( 5 ) ( 24 ) — — — ( 29 ) Fair value gains (losses) on FG VIEs — — ( 2 ) — — ( 2 ) Total before tax ( 5 ) ( 24 ) ( 2 ) — — ( 31 ) Tax (provision) benefit — 5 — — — 5 Total amount reclassified from AOCI, net of tax ( 5 ) ( 19 ) ( 2 ) — — ( 26 ) Other comprehensive income (loss) 174 29 1 2 — 206 Balance, September 30, 2025 $ ( 61 ) $ ( 70 ) $ ( 17 ) $ ( 35 ) $ 4 $ ( 179 ) 61 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued Changes in Accumulated Other Comprehensive Income (Loss) by Component Nine Months 2024 Net Unrealized Gains (Losses) on Investments with: ISCR on FG VIEs’ Liabilities with Recourse Cumulative Translation Adjustment Cash Flow Hedge Total AOCI No Credit Impairment Credit Impairment (in millions) Balance, December 31, 2023 $ ( 202 ) $ ( 104 ) $ ( 20 ) $ ( 38 ) $ 5 $ ( 359 ) Other comprehensive income (loss) before reclassifications 101 27 ( 3 ) — — 125 Less: Amounts reclassified from AOCI to: Net realized investment gains (losses) ( 10 ) 11 — — — 1 Fair value gains (losses) on FG VIEs — — ( 2 ) — — ( 2 ) Total before tax ( 10 ) 11 ( 2 ) — — ( 1 ) Tax (provision) benefit — ( 2 ) — — — ( 2 ) Total amount reclassified from AOCI, net of tax ( 10 ) 9 ( 2 ) — — ( 3 ) Other comprehensive income (loss) 111 18 ( 1 ) — — 128 Balance, September 30, 2024 $ ( 91 ) $ ( 86 ) $ ( 21 ) $ ( 38 ) $ 5 $ ( 231 ) Share Repurchases The repurchase program may be modified, extended or terminated by AGL’s Board of Directors (the Board) at any time and does not have an expiration date. On August 6, 2025 and November 5, 2025, the Board authorized the repurchase of an additional $ 300 million and $ 100 million, respectively, of the Company’s common shares. As of November 5, 2025, the remaining amount the Company was authorized to purchase was $ 332 million of its common shares. The Company expects to repurchase shares 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. Share Repurchases Period Number of Shares Repurchased Total Payments (1) (in millions) Average Price Paid Per Share (1) 2024 (January 1 - March 31) 1,539,278 $ 129 $ 84.07 2024 (April 1 - June 30) 1,928,328 152 78.50 2024 (July 1- September 30) 1,658,441 131 78.87 2024 (October 1- December 31) 1,054,727 90 86.11 Total 2024 6,180,774 $ 502 $ 81.28 2025 (January 1 - March 31) 1,335,228 120 89.72 2025 (April 1 - June 30) 1,537,505 131 85.03 2025 (July 1 - September 30) 1,423,121 118 83.06 2025 (October 1 - November 5) 621,471 51 82.14 Total 2025 4,917,325 $ 420 $ 85.37 ____________________ (1) Excludes commissions and excise taxes. 62 Table of Contents Assured Guaranty Ltd. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued 13. Earnings Per Share Computation of Earnings Per Share Third Quarter Nine Months 2025 2024 2025 2024 (in millions, except per share amounts) Basic Earnings Per Share (EPS): Net income (loss) attributable to AGL $ 105 $ 171 $ 384 $ 358 Less: Distributed and undistributed income (loss) available to nonvested shareholders 1 2 2 3 Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, basic $ 104 $ 169 $ 382 $ 355 Basic shares 47.4 52.4 48.8 54.1 Basic EPS $ 2.20 $ 3.23 $ 7.82 $ 6.57 Diluted EPS: Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, basic $ 104 $ 169 $ 382 $ 355 Plus: Re-allocation of undistributed income (loss) available to nonvested shareholders of AGL and subsidiaries — — — — Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, diluted $ 104 $ 169 $ 382 $ 355 Basic shares 47.4 52.4 48.8 54.1 Dilutive securities: Restricted stock awards 0.6 1.0 0.6 1.1 Diluted shares 48.0 53.4 49.4 55.2 Diluted EPS $ 2.18 $ 3.17 $ 7.73 $ 6.44 Potentially dilutive securities excluded from computation of EPS because of antidilutive effect — — 0.1 0.1 63 Table of Contents