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What changed in ASSURED GUARANTY LTD's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ASSURED GUARANTY LTD's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+763 added−707 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-28)

Top changes in ASSURED GUARANTY LTD's 2025 10-K

763 paragraphs added · 707 removed · 577 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

197 edited+45 added−28 removed359 unchanged
Biggest changeThese agreements consist of: (i) a quota share reinsurance agreement whereby AG provides AGE with 90% proportional reinsurance for new business written by AGE since its authorization in January 2020; (ii) a second quota share reinsurance agreement between AGE and AG pursuant to which AG: a. reinsures approximately 70-100% of business that was transferred to AGE by AGUK effective October 1, 2020 pursuant to the Part VII of the Financial Services and Markets Act 2000 (FSMA) (Part VII Transfer) (i.e., the same reinsurance to AGE as AGUK received prior to such transfer); and b. provides 90% proportional reinsurance for certain business transferred to AGE pursuant to the Part VII Transfer that was not reinsured by AG (or its affiliates) when such business was part of AGUK’s insured portfolio; and 15 (iii) an excess of loss reinsurance agreement, similar to the excess of loss cover of AG’s Reinsurance Agreement with AGUK, pursuant to which AG is obligated, effectively, to ensure that AGE maintains capital resources equal to at least 110% of the most stringent amount of capital that AGE may be required to maintain as a condition of it maintaining its authorization to carry on a financial guarantee business in France.
Biggest changeThese agreements consist of: (i) a quota share reinsurance agreement pursuant to which AG provides AGE with 90% proportional reinsurance for new business written by AGE since its authorization in January 2020; (ii) a second quota share reinsurance agreement pursuant to which AG reinsures approximately 70-100% of certain pre-2020 business transferred 15 to AGE by AGUK; and (iii) an excess of loss reinsurance agreement, similar to the excess of loss cover of AG’s Reinsurance Agreement with AGUK, pursuant to which AG is obligated to pay AGE quarterly the amount (if any) necessary to ensure that AGE’s incurred and paid losses and LAE as of the quarter end do not cause AGE’s capital resources to fall below 110% of the greatest amount of capital that AGE may be required to maintain as a condition to carrying on a financial guarantee business in France.
(AGRO) in 2015. See Item 1A. Risk Factors, Strategic Risks, captioned “A downgrade of the financial strength or financial enhancement ratings of any of the Company’s insurance or reinsurance subsidiaries may adversely affect its business and prospects.” Market Demand and Competition Assured Guaranty is the market leader in the financial guaranty industry.
(AGRO) in 2015. See Item 1A. Risk Factors — Strategic Risks, captioned “A downgrade of the financial strength or financial enhancement ratings of any of the Company’s insurance or reinsurance subsidiaries may adversely affect its business prospects.” Market Demand and Competition Financial Guaranty Insurance Assured Guaranty is the market leader in the financial guaranty industry.
Regulation Overview The Company is a public company subject to SEC rules and regulations, and is also subject to insurance-related statutes, regulations and supervision by the U.S. states and territories and the non-U.S. jurisdictions in which it does business. The degree and type of regulation varies from one jurisdiction to another.
Regulation Overview The Company is a public company subject to SEC rules and regulations. It is also subject to insurance-related statutes, regulations and supervision by the U.S. states and territories and the non-U.S. jurisdictions in which it does business; the degree and type of regulation varies from one jurisdiction to another.
Insurance Holding Company Regulation AG is subject to the insurance holding company laws of Maryland, its domiciliary jurisdiction, as well as other jurisdictions where it is licensed to do insurance business. These laws generally require AG to register with MIA and annually to furnish financial and other information about the operations of companies within its holding company system.
Insurance Holding Company Regulation AG is subject to the insurance holding company laws of Maryland, its domiciliary jurisdiction, as well as other jurisdictions where it is licensed to do insurance business. These laws generally require AG to register with the MIA and annually to furnish financial and other information about the operations of companies within its holding company system.
In accordance with such laws and regulations, and with the approval of the MIA, AG ceased making quarterly contributions to its contingency reserves for both municipal and non-municipal business beginning in the fourth quarter of 2014, but AG resumed its quarterly contributions to its contingency reserves for municipal business in the third quarter of 2024 due to the merger on August 1, 2024 of AGM with and into AG, with AG surviving.
In accordance with such laws and regulations, and with the approval of the MIA, AG ceased making quarterly contributions to its contingency reserves for both municipal and non-municipal business beginning in the fourth quarter of 2014, but resumed its quarterly contributions to its contingency reserves for municipal business in the third quarter of 2024 due to the merger on August 1, 2024 of AGM with and into AG, with AG surviving.
In addition, the Company works to provide and support a respectful and inclusive environment that values the abilities of each employee, which the Company believes leads to enhanced engagement, maximizing individual performance, and improving retention. The Company believes education and awareness are critical components in promoting the Company's cultural values across the organization.
In addition, the Company works to provide and support a respectful and inclusive environment that values the abilities of each employee, which the Company believes leads to enhanced engagement, maximizing individual performance, and improving retention. Education and awareness are critical components in promoting the Company's cultural values across the organization.
Tax Matters United States Tax Reform The 2017 Tax Cuts and Jobs Act of 2017 (the TCJA) lowered the corporate U.S. tax rate to 21%, eliminated the alternative minimum tax, limited the deductibility of interest expense and required a one-time tax on a deemed repatriation of untaxed earnings of non-U.S. subsidiaries.
Tax Matters United States Tax Reform The Tax Cuts and Jobs Act of 2017 (the TCJA) lowered the corporate U.S. tax rate to 21%, eliminated the alternative minimum tax, limited the deductibility of interest expense and required a one-time tax on a deemed repatriation of untaxed earnings of non-U.S. subsidiaries.
The U.S. Department of the Treasury issued final and proposed regulations intended to clarify the application of the insurance income exception to the classification of a non-U.S. insurer as a PFIC and provide guidance on a range of issues relating to PFICs, and issued proposed regulations that would expand the scope of the RPII rules.
Department of the Treasury issued final and proposed regulations intended to clarify the application of the insurance income exception to the classification of a non-U.S. insurer as a PFIC and provide guidance on a range of issues relating to PFICs, and issued proposed regulations that would expand the scope of the RPII rules.
The CIT Act also contains a number of adjustments to an entity’s net income for tax purposes, including transitional adjustments such as the economic transition adjustment (ETA) which, broadly, permits certain deferred tax assets to be utilized against future liabilities as a result of a step-up in the tax basis of assets and liabilities as of September 30, 2023 for those entities that are (or will be) subject to the CIT Act but were Bermuda tax resident as of the step-up date.
The CIT Act also contains a number of adjustments to an entity’s net income for tax purposes, including transitional adjustments such as the economic transition adjustment (ETA) which, broadly, permits certain deferred tax assets to be utilized against future liabilities as a result of a step-up in the tax basis of certain assets and liabilities as of September 30, 2023 for those entities that are (or will be) subject to the CIT Act but were Bermuda tax resident as of the step-up date.
Treaty reduces or eliminates U.S. withholding tax on certain U.S.-sourced investment income, including dividends from U.S. companies to U.K. resident persons entitled to the benefit of the U.K. Treaty.
Treaty reduces or eliminates U.S. withholding tax on certain U.S.-sourced investment income, including dividends from U.S. companies to U.K. resident persons entitled to the benefit of the U.K.
The special RPII rules do not apply if: (i) at all times during the taxable year less than 20% of the voting power and less than 20% of the value of the stock of AGL (the 20% Ownership Exception) is owned (directly or indirectly through entities) by persons who are (directly or indirectly) insured under any policy of insurance or reinsurance issued by a Foreign Insurance Subsidiary or related persons to any such person; (ii) RPII, determined on a gross basis, is less than 20% of a Foreign Insurance Subsidiary’s gross insurance income for the taxable year (the 20% Gross Income Exception); 37 (iii) a Foreign Insurance Subsidiary elects to be taxed on its RPII as if the RPII were effectively connected with the conduct of a U.S. trade or business, and to waive all treaty benefits with respect to RPII and meet certain other requirements; or (iv) a Foreign Insurance Subsidiary elects to be treated as a U.S. corporation and waive all treaty benefits and meet certain other requirements.
The special RPII rules do not apply if: (i) at all times during the taxable year less than 20% of the voting power and less than 20% of the value of the stock of AGL (the 20% Ownership Exception) is owned (directly or indirectly through entities) by persons who are (directly or indirectly) insured under any policy of insurance or reinsurance issued by a Foreign Insurance Subsidiary or related persons to any such person; (ii) RPII, determined on a gross basis, is less than 20% of a Foreign Insurance Subsidiary’s gross insurance income for the taxable year (the 20% Gross Income Exception); (iii) a Foreign Insurance Subsidiary elects to be taxed on its RPII as if the RPII were effectively connected with the conduct of a U.S. trade or business, and to waive all treaty benefits with respect to RPII and meet certain other requirements; or (iv) a Foreign Insurance Subsidiary elects to be treated as a U.S. corporation and waive all treaty benefits and meet certain other requirements.
However, the Company believes it has competitive advantages over BAM due to: AG’s larger capital base; AG’s ability to insure larger transactions and issuances in more diverse bond sectors; BAM’s higher leverage ratios than those of AG; and AG’s strong financial strength 12 ratings from multiple rating agencies (in the case of AG, AA+ from Kroll Bond Rating Agency (KBRA), AA from S&P and A1 from Moody’s, compared with BAM’s AA solely from S&P).
However, the Company believes it has competitive advantages over BAM due to: AG’s larger capital base; AG’s ability to insure larger transactions and issuances in more diverse bond sectors; BAM’s higher leverage ratios than those of AG; and AG’s strong financial strength ratings from multiple rating agencies (in the case of AG, AA+ from Kroll Bond Rating Agency (KBRA), AA from S&P and A1 from Moody’s, compared with BAM’s AA solely from S&P).
If AG Re or another of the Company’s Bermuda subsidiaries is considered to be engaged in the conduct of an insurance business in the U.S. and is not entitled to the benefits of the Bermuda Treaty in general (because it fails to satisfy one of the limitations on treaty benefits discussed above), the Internal Revenue Code of 1986, 34 as amended (the Code), could subject a significant portion of AG Re’s or another of the Company’s Bermuda subsidiary’s investment income to U.S. income tax.
If AG Re or another of the Company’s Bermuda subsidiaries is considered to be engaged in the conduct of an insurance business in the U.S. and is not entitled to the benefits of the Bermuda Treaty in general (because it fails to satisfy one of the limitations on treaty benefits discussed above), the Internal Revenue Code of 1986, as amended (the Code), could subject a significant portion of AG Re’s or another of the Company’s Bermuda subsidiary’s investment income to U.S. income tax.
Each NAIC Jurisdiction has adopted laws and regulations allowing for the elimination of reinsurance collateral requirements for unauthorized reinsurers in qualifying non-U.S. jurisdictions that (i) meet specified requirements, such as minimum capital and surplus amounts and minimum solvency or capital ratios, and (ii) provide certain commitments to the ceding insurer’s domiciliary regulator, such as submission to jurisdiction and the filing of annual audited financial statements.
Each NAIC Jurisdiction has adopted laws and regulations allowing for the elimination of reinsurance collateral requirements for unauthorized reinsurers in qualifying non-U.S. jurisdictions that (i) meet specified requirements, such as minimum capital and surplus amounts and 26 minimum solvency or capital ratios, and (ii) provide certain commitments to the ceding insurer’s domiciliary regulator, such as submission to jurisdiction and the filing of annual audited financial statements.
The Company has imposed similar requirements, as applicable, on third parties with whom it shares personal information including through a rigorous vendor selection and management process. The Company engages its 21 personnel and strives to enhance data privacy and security awareness through Company training, which is mandatory for all employees globally on an annual basis. See Item 1C. Cybersecurity.
The Company has imposed similar requirements, as applicable, on third parties with whom it shares personal information including through a rigorous vendor selection and management process. The Company engages its personnel and strives to enhance data privacy and security awareness through Company training, which is mandatory for all employees globally on an annual basis. See Item 1C. Cybersecurity.
Persons own a majority of AGL’s common shares, only a portion of the current income inclusions, if any, under the CFC, RPII and PFIC rules and of dividends paid by AGL (including any gain from the sale of common shares that is treated as a dividend under section 1248 of the Code) will be treated as foreign source income for 40 purposes of computing a shareholder’s U.S. foreign tax credit limitations.
Persons own a majority of AGL’s common shares, only a portion of the current income inclusions, if any, under the CFC, RPII and PFIC rules and of dividends paid by AGL (including any gain from the sale of common shares that is treated as a dividend under section 1248 of the Code) will be treated as foreign source income for purposes of computing a shareholder’s U.S. foreign tax credit limitations.
In general, the penalty tax is 39 equivalent to an interest charge on taxes that are deemed due during the period the shareholder owned the common shares, computed by assuming that the excess distribution or gain (in the case of a sale) with respect to the common shares was taken in equal portion at the highest applicable tax rate on ordinary income throughout the shareholder's period of ownership.
In general, the penalty tax is equivalent to an interest charge on taxes that are deemed due during the period the shareholder owned the common shares, computed by assuming that the excess distribution or gain (in the case of a sale) with respect to the common shares was taken in equal portion at the highest applicable tax rate on ordinary income throughout the shareholder's period of ownership.
Human Capital Management The Company recognizes that its workforce, as a key driver of long-term performance, is among its most valued assets. Accordingly, the Company’s key human capital management objectives are to attract, hire, retain, develop, and support the highest quality employees, including talented and experienced business leaders who drive its corporate strategies and build long-term shareholder value.
Human Capital Management The Company recognizes that its workforce, as a key driver of long-term performance, is among its most valued assets. Accordingly, the Company’s principal human capital management objectives are to attract, hire, retain, develop, and support the highest quality employees, including talented and experienced business leaders who drive its corporate strategies and build long-term shareholder value.
AGE (together with AGUK, the European Insurance Subsidiaries) is a French incorporated company located in France and established in 2019 that has been authorized by the French insurance and banking supervisory authority, the Autorité de Contrôle Prudentiel et de Résolution (ACPR), to conduct financial guaranty business. AGE writes new business in the EEA. • Assured Guaranty Re Ltd.
AGE (together with AGUK, the European Insurance Subsidiaries) is a French incorporated company located in France and established in 2019 that has been authorized by the French insurance and banking supervisory authority, the Autorité de Contrôle Prudentiel et de Résolution (ACPR), to conduct financial guaranty business. AGE writes new business in the EEA. 14 • Assured Guaranty Re Ltd.
Data Protection The Company is subject to local, state, and national laws and regulations in the U.S., U.K., the European Union (EU), the other EEA countries that comply with data protection laws in the EU, and other non-U.S. jurisdictions that require financial institutions and other businesses to protect personal and other sensitive information and provide notice of their privacy and security practices relating to the collection, disclosure and other processing of personal information.
Data Protection The Company is subject to local, state, and national laws and regulations in the U.S., U.K., the European Union (EU), the other EEA countries that comply with data protection laws in the EU, and other non-U.S. jurisdictions that require financial institutions and other businesses to protect personal and other sensitive information and provide notice of their privacy and 21 security practices relating to the collection, disclosure and other processing of personal information.
For any taxable year in which AGL determines that neither the 20% Gross Income Exception nor the 20% Ownership Exception applies, AGL will provide to all U.S. Persons registered as shareholders of its shares a completed IRS Form 5471 or 38 the relevant information necessary to complete the form. Failure to file IRS Form 5471 may result in penalties.
For any taxable year in which AGL determines that neither the 20% Gross Income Exception nor the 20% Ownership Exception applies, AGL will provide to all U.S. Persons registered as shareholders of its shares a completed IRS Form 5471 or the relevant information necessary to complete the form. Failure to file IRS Form 5471 may result in penalties.
The internal audit function (Internal Audit) provides independent assurance around effective risk management design and control execution. On a quarterly basis, or more frequently when required, Internal Audit reports its findings directly to the Audit Committee of the Board and informs the Chief Executive Officer and other senior management of any material issues identified during their audits.
The internal audit function (Internal Audit) provides independent assurance around effective risk management design and control execution. On a quarterly basis, or more frequently when required, Internal Audit reports its findings directly to the Audit Committee of the AGL Board and informs the Chief Executive Officer and other senior management of any material issues identified during their audits.
Person that is a shareholder in a PFIC may also be subject to additional information reporting requirements, including the annual filing of IRS Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund . For the above purposes, passive income generally includes interest, dividends, annuities and other investment income.
Person that is a shareholder in a PFIC may also be subject to additional information reporting requirements, including the annual filing of IRS Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund . 40 For the above purposes, passive income generally includes interest, dividends, annuities and other investment income.
Ratings on exposures in sectors identified as 20 under the most stress or with the most potential volatility are reviewed every quarter, although the Company may also review a rating in response to developments impacting the credit when a ratings review is not scheduled. The review cycle and scope vary based upon transaction type and credit quality.
Ratings on exposures in sectors identified as under the most stress or with the most potential volatility are reviewed every quarter, although the Company may also review a rating in response to developments impacting the credit when a ratings review is not scheduled. The review cycle and scope vary based upon transaction type and credit quality.
The Company may guarantee new or existing facilities and on a single facility or portfolio basis. Assured Guaranty’s exposures are generally to facilities with characteristics that include a high-quality fund sponsor with 8 strong historical performance, a diverse LP base composed primarily of institutional LPs and experienced bank lenders.
The Company may guarantee new or existing facilities and on a single facility or portfolio basis. Assured Guaranty’s exposures are generally to facilities with characteristics that include a high-quality fund sponsor with strong historical performance, a diverse LP base composed primarily of institutional LPs and experienced bank lenders.
The Company is also exposed indirectly to climate trends and extreme weather events that might impair the performance of securities in its investment portfolio. The portfolio consists predominantly of fixed-maturity securities. Nevertheless, environmental issues, including regulatory changes, changes in supply or demand characteristics of fuels, and extreme weather events, may impact the value of certain securities.
The Company is also exposed indirectly to climate trends and extreme weather events that might impair the performance of securities in its investment portfolio, which consists predominantly of fixed-maturity securities. Nevertheless, environmental issues, including regulatory changes, changes in supply or demand characteristics of fuels, and extreme weather events, may impact the value of certain securities.
Additionally, such U.S. and non-U.S. persons should consider their possible obligations to annually report certain information with respect to the non-U.S. accounts with their U.S. federal income tax returns. Shareholders should consult their tax advisers with respect to these or any other reporting requirement which may apply with respect to their ownership of the Company’s shares. Tax-Exempt Shareholders.
Additionally, such U.S. and non-U.S. persons should consider their possible obligations to annually report certain information with respect to the non-U.S. accounts with their U.S. federal income tax returns. Shareholders should consult their tax advisers with respect to these or any other reporting requirement which may apply with respect to their ownership of the Company’s shares. 39 Tax-Exempt Shareholders.
(Moody’s) have applied other factors, some of which are subjective, such as the insurer's business strategy and 11 franchise value or the anticipated future demand for its product, to justify ratings for the Company’s insurance subsidiaries below the ratings implied by their own capital adequacy models.
(Moody’s) have applied other factors, some of which are subjective, such as the insurer's business strategy and franchise value or the anticipated future demand for its product, to justify ratings for the Company’s insurance subsidiaries below the ratings implied by their own capital adequacy models.
To the 16 extent not required to be reinvested by the Letter Agreement, all proceeds from Sound Point Investments received in accordance with their operative investment documents can be distributed to the AG. See Part II, Item 8, Financial Statements and Supplementary Data, Note 7, Investments and Cash.
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 Part II, Item 8. Financial Statements and Supplementary Data, Note 7. Investments and Cash.
In addition, the SEC 41 maintains an Internet site (at sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Company routinely posts important information for investors on its website (under assuredguaranty.com/company-statements and, more generally, under the Investor Information tab at assuredguaranty.com/investor-information and Businesses tab at assuredguaranty.com/businesses ).
In addition, the SEC maintains an Internet site (at sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Company routinely posts important information for investors on its website (under assuredguaranty.com/company-statements and, more generally, under the Investor Information tab at assuredguaranty.com/investor-information and Businesses tab at assuredguaranty.com/businesses ).
The ability to uplift credit ratings of underlying obligations is one attribute that makes the Company’s insurance products attractive in the market. An insurer’s financial strength rating itself is not specific to any particular policy or contract; a rating agency instead assigns a rating to the insured obligation.
The ability to uplift credit ratings of underlying obligations is one attribute that makes the Company’s insurance products attractive in the market. An insurer’s financial strength rating itself is not specific to any particular policy or contract; a rating agency instead assigns such rating to the insured 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.
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.
Taxation of AGL and Subsidiaries Bermuda On December 27, 2023, the Bermuda government enacted the Corporate Income Tax Act 2023 (the CIT Act), which imposes a corporate income tax at the rate of 15% to in-scope entities for accounting periods starting on or after January 1, 2025.
Taxation of AGL and Subsidiaries Bermuda On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (the CIT Act), which imposes a corporate income tax at the rate of 15% to in-scope entities for accounting periods starting on or after January 34 1, 2025.
The Company believes that issuers and investors in securities will continue to purchase financial guaranty insurance, especially if credit spreads widen. U.S. municipalities have budgetary requirements that are best met through financings in the fixed income capital markets.
The Company believes that issuers and investors in securities will continue to purchase financial guaranty insurance, especially if credit spreads widen. U.S. municipalities have budgetary requirements that are best met through financings in the 13 fixed income capital markets.
AG Re primarily underwrites financial guaranty reinsurance of certain affiliated companies and third-party primary insurers. AG Re is incorporated under the laws of Bermuda and is licensed as a Class 3B insurer under the Insurance Act 1978 and related regulations of Bermuda. • Assured Guaranty Re Overseas Ltd.
AG Re primarily underwrites financial guaranty reinsurance of certain affiliated companies and third-party primary insurers. AG Re is incorporated under the laws of Bermuda and is registered and licensed as a Class 3B insurer under the Insurance Act 1978 and related regulations of Bermuda. • Assured Guaranty Re Overseas Ltd.
In addition, the Company performs in-depth reviews annually of risk topics of interest to management and the Board. To the extent potentially significant business activities or operational initiatives are considered, the Chief Risk Officer analyzes the possible impact on the Company’s risk profile and capital adequacy.
In addition, the Company performs in-depth reviews annually of risk topics of interest to 20 management and the Board. To the extent potentially significant business activities or operational initiatives are considered, the Chief Risk Officer analyzes the possible impact on the Company’s risk profile and capital adequacy.
The Company continues to monitor regulatory developments and meet requirements applicable to its subsidiaries. To date, the costs associated with complying with regulatory reporting obligations have not had a material impact on the Company’s business, financial condition, and results of operations. Governance .
The Company continues to monitor regulatory developments and meet requirements applicable to its subsidiaries. To date, the costs associated with complying with regulatory reporting obligations have not had a material impact on the Company’s business, financial condition, and results of operations. 22 Governance .
Risk Factors, Risks Related to Applicable Law, Litigation and GAAP, captioned “Applicable insurance laws may make it difficult to effect a change of control of AGL.” Bermuda The Bermuda Monetary Authority (the Authority) regulates the Company’s operating insurance and reinsurance subsidiaries in Bermuda.
Risk Factors — Risks Related to Applicable Law, Litigation and GAAP, captioned “Applicable insurance laws may make it difficult to effect a change of control of AGL.” 27 Bermuda The Bermuda Monetary Authority (the Authority) regulates the Company’s operating insurance and reinsurance subsidiaries in Bermuda.
“Subpart F income” of a non-U.S. insurance corporation typically includes foreign personal holding company income (such as interest, dividends and other types of passive income), as well as insurance and reinsurance income (including underwriting and investment income). A non-U.S. corporation is considered a CFC if 10% U.S.
“Subpart F income” of a non-U.S. insurance corporation typically includes foreign personal holding company income (such as interest, dividends and other types of passive income), as well as insurance and reinsurance income 37 (including underwriting and investment income). A non-U.S. corporation is considered a CFC if 10% U.S.
Accordingly, investors should monitor the Company Statements, Investor Information and Businesses portions of the Company’s website as well as the Company’s social media account on LinkedIn, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.
Accordingly, investors should monitor the Company Statements, Investor Information and Businesses portions of the 42 Company’s website as well as the Company’s social media account on LinkedIn, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.
Similarly, the Letter Agreement provides that AG will reinvest all gains and dividends from Sound Point Investments for the first two years of Sound Point’s engagement, and reinvest half of all such gains and dividends thereafter until July 1, 2033 (the transactions contemplated under the Transaction Agreement and the Letter Agreement, the Sound Point Transaction).
Similarly, the Letter Agreement provides that AG reinvest all gains and dividends from Sound Point Investments for the first two years of Sound Point’s engagement, and reinvest half of all such gains and dividends thereafter until July 1, 2033 (the transactions contemplated under the Transaction Agreement and the Letter Agreement, the Sound Point Transaction).
These committees review and may revise internal ratings assigned to the insured transactions and review sector reports, monthly product line surveillance reports and compliance reports, and are responsible for assisting in the management of risk and oversight of their respective company’s risk management framework and processes.
These committees review and may revise internal ratings assigned to the insured transactions and 19 review sector reports, monthly product line surveillance reports and compliance reports, and are responsible for assisting in the management of risk and oversight of their respective company’s risk management framework and processes.
When an insurance subsidiary of the Company guarantees an obligation, the issuer or another party may request that one or more rating agencies providing financial strength ratings on such insurer assign that insurer’s financial strength rating to the specific obligation it guaranteed.
When an insurance subsidiary of the Company guarantees an obligation, the issuer or another party may request that one or more rating agencies providing financial strength ratings on such insurer assign that 11 insurer’s financial strength rating to the specific obligation it guaranteed.
Risk assessment and risk management encompass not only understanding the risks the Company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. The Board annually approves the 18 Company’s business plan, taking risk management into account.
Risk assessment and risk management encompass not only understanding the risks the Company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. The Board annually approves the Company’s business plan, taking risk management into account.
The Company has established several management committees to develop enterprise level risk management guidelines, and policies and procedures for the Company’s insurance and reinsurance subsidiaries that are tailored to their respective businesses, providing multiple levels of review, analysis and control.
The Company has established several management committees to develop enterprise level risk management guidelines, and policies and procedures for the Company’s insurance subsidiaries that are tailored to their respective businesses, providing multiple levels of review, analysis and control.
Investment team personnel are responsible for the evaluation and due diligence processes for proposed new investments, and submit recommended investment actions to management, the boards of directors of the insurance subsidiaries, or AG’s investment committee in accordance with the Company's investment procedures.
Investment Team personnel are responsible for the evaluation and due diligence processes for proposed new investments, and submit recommended investment actions to management, the boards of directors of the insurance subsidiaries, or AG’s investment committee in accordance with the Company's investment guidelines and procedures.
Furthermore, private funds advised by Sound Point rely on exemptions from various requirements of the Securities Act, the Exchange Act, the U.S. Investment Company Act of 1940, as 26 amended (the Investment Company Act), the Commodity Exchange Act and the U.S. Employee Retirement Income Security Act of 1974, as amended (ERISA).
Furthermore, private funds advised by Sound Point rely on exemptions from various requirements of the Securities Act, the Exchange Act, the U.S. Investment Company Act of 1940, as amended (the Investment Company Act), the Commodity Exchange Act and the U.S. Employee Retirement Income Security Act of 1974, as amended (ERISA).
AG has never been required to make any contributions to AGUK’s capital under the current Net Worth Agreement; however, AG may elect to make, from time to time and subject to MIA approval or non-disapproval, capital contributions to AGUK not required by the net worth maintenance agreement.
AG has never been required to make any contributions to AGUK’s capital under the current Net Worth Agreement; however, AG may elect to make, from time to time and subject to MIA approval or non-disapproval, capital contributions to AGUK not required by the Net Worth Agreement.
In approving or refusing the transaction, the ACPR takes into account various factors, including the reputation of the acquirer, the effect of the transaction on the business and the management of the company, the impact of the transaction on the financial strength of the company, or the ability of the company to continue to comply with applicable regulation.
In approving or refusing the transaction, the ACPR takes into account various factors, including the reputation of the acquirer, the effect of the transaction on the business and the management of the 32 company, the impact of the transaction on the financial strength of the company, or the ability of the company to continue to comply with applicable regulation.
Information returns may be filed with the IRS in connection with distributions on AGL’s common shares and the proceeds from a sale or other disposition of AGL’s common shares unless the holder of AGL’s common shares establishes an exemption from the information reporting rules.
Information returns may be filed with the IRS in connection with distributions on AGL’s common shares and the proceeds from a sale or other disposition of AGL’s common shares unless the holder of AGL’s common shares establishes an exemption from the 41 information reporting rules.
The reserve committees review the reserve methodology and assumptions for each major asset class 19 or significant below-investment-grade (BIG) transaction, as well as the loss projection scenarios used and the probability weights assigned to those scenarios.
The reserve committees review the reserve methodology and assumptions for each major asset class or significant below-investment-grade (BIG) transaction, as well as the loss projection scenarios used and the probability weights assigned to those scenarios.
The reserve committees establish reserves for their respective insurance subsidiaries, taking into consideration supporting information provided by surveillance and portfolio analytics personnel, and are responsible for approving changes to assumptions that have a significant impact on expected losses. • Assumptions Committees —The insurance subsidiaries have committees responsible for setting the assumptions, other than assumptions related to BIG exposures that use transaction-specific models within the scope of the reserve committees, used to calculate the Company’s probability of default and loss in various portfolio loss scenario and economic capital models.
The reserve committees establish reserves for their respective insurance subsidiaries, taking into consideration supporting information provided by surveillance and portfolio analytics personnel, and are responsible for approving changes to assumptions that have a significant impact on expected losses. • Assumptions Committees —The financial guaranty insurance subsidiaries have committees responsible for setting the assumptions, other than assumptions related to BIG exposures that use transaction-specific models within the scope of the reserve committees, used to calculate the Company’s probability of default and loss in various portfolio loss scenario and economic capital models.
In connection with the AHP Transaction, the Company agreed to remain a strategic investor in certain AHP managed funds, retained its portion of carried interest in certain AHP managed funds and received other consideration. Please see Item 1A.
In connection with the AHP Transaction, the Company agreed to remain a strategic investor in certain AHP managed funds, retained its portion of carried interest in certain AHP managed funds and received other consideration. See Item 1A.
Risk Factors, Strategic Risks, captioned “Competition in the Company’s industries may adversely affect its results of operations, business prospects and share price,” “Strategic transactions may not result in the benefits anticipated,” “The Company’s investments in Sound Point are subject to the risks of Sound Point’s business that may adversely affect the Company’s financial condition, results of operations, capital, business prospects and share price,” and “The Company’s interest in Sound Point is subject to the risks normally associated with a minority interest.” Asset Management Strategies The Company participates in the asset management business through its ownership interest in Sound Point.
Risk Factors, Strategic Risks, captioned “Competition in the Company’s industries may adversely affect its financial condition, results of operations, capital, business prospects and share price,” “Strategic transactions may not result in the benefits anticipated,” “The Company’s investments in Sound Point are subject to the risks of Sound Point’s business that may adversely affect the Company’s financial condition, results of operations, capital, business prospects and share price,” and “The Company’s interest in Sound Point is subject to the risks normally associated with a noncontrolling interest.” Asset Management Strategies The Company participates in the asset management business through its ownership interest in Sound Point.
The Foreign Insurance Subsidiaries intend to operate in a manner that is intended to ensure that each qualifies for either the 20% Gross Income Exception or 20% Ownership Exception. Computation of RPII.
The Foreign Insurance 38 Subsidiaries intend to operate in a manner that is intended to ensure that each qualifies for either the 20% Gross Income Exception or 20% Ownership Exception. Computation of RPII.
Minimum Solvency Margin and Enhanced Capital Requirements Under the Insurance Act, AG Re and AGRO must each ensure that the value of its general business statutory assets exceeds the amount of its general business statutory liabilities by an amount greater than a prescribed minimum solvency margin and each company’s applicable enhanced capital requirement, which is established by reference to either its Bermuda Solvency Capital Requirement (BSCR) model or an approved internal capital model.
Minimum Solvency Margin and Enhanced Capital Requirements Under the Insurance Act, AG Re, AGRO, and Assured Life Re must each ensure that the value of its general business statutory assets exceeds the amount of its general business statutory liabilities by an amount greater than a prescribed minimum solvency margin and each company’s applicable enhanced capital requirement, which is established by reference to either its Bermuda Solvency Capital Requirement (BSCR) model or an approved internal capital model.
Infrastructure Finance Obligations are obligations issued by a variety of entities engaged in the financing of non-U.S. infrastructure projects, such as roads, airports, ports, social infrastructure, student accommodations, stadiums, and other physical assets delivering essential services supported either by long-term concession arrangements or a regulatory regime. The majority of the Company’s non-U.S. infrastructure business is conducted in the U.K.
Infrastructure Finance Obligations are obligations issued by a variety of entities engaged in the financing of non-U.S. infrastructure projects, such as roads, airports, ports, social infrastructure, student accommodation, stadiums, and other physical assets delivering essential services supported either by long-term concession arrangements or a regulatory regime. The majority of the Company’s non-U.S. infrastructure business is conducted in the U.K.
Restrictions on Dividends and Distributions The Insurance Act limits the declaration and payment of dividends by AG Re and AGRO, including by prohibiting each company from declaring or paying any dividends during any financial year if it is in breach of its prescribed minimum solvency margin, minimum liquidity ratio or enhanced capital requirement, or if the declaration or payment of such dividends would cause such a breach.
Restrictions on Dividends and Distributions The Insurance Act limits the declaration and payment of dividends by AG Re, AGRO, and Assured Life Re, including by prohibiting each company from declaring or paying any dividends during any financial year if it is in breach of its prescribed minimum solvency margin, minimum liquidity ratio or enhanced capital requirement, or if the declaration or payment of such dividends would cause such a breach.
ITEM 1. BUSINESS Overview 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.
ITEM 1. BUSINESS Overview 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 U.S. and non-U.S. public finance (including infrastructure) and structured finance markets. Assured Guaranty also participates in the asset management business.
Maryland laws and regulations require regular, quarterly contributions to contingency reserves, but such laws and regulations permit the discontinuation of such quarterly contributions to an insurer's contingency reserves when such insurer’s aggregate contingency reserves for a particular line of business (i.e., municipal or non-municipal) exceed the sum of the insurer’s outstanding principal for each specified category of obligations within the particular line of business multiplied by the 24 specified contingency reserve factor for each such category.
Maryland insurance laws and regulations require regular, quarterly contributions to contingency reserves, but such laws and regulations permit the discontinuation of such quarterly contributions to an insurer's contingency reserves when the insurer’s aggregate contingency reserves for a particular line of business (i.e., municipal or non-municipal) exceed the sum of the insurer’s outstanding principal for each specified category of obligations within the particular line of business multiplied by the specified contingency reserve factor for each such category.
Risk Factors, Risks Related to Taxation captioned “AGL may, and AG Re and AGRO will, become subject to taxes in Bermuda, which may adversely affect the Company’s future results of operations and an investment in the Company” and “Assured Guaranty’s financial results may be affected by measures taken in response to the OECD BEPS project.” Taxation of Shareholders Bermuda Taxation Currently, there is no Bermuda capital gains tax, or withholding or other tax payable on principal, interest or dividends paid to the holders of the AGL common shares.
Risk Factors — Risks Related to Taxation captioned “AGL may become, and AG Re and AGRO are, subject to taxes in Bermuda, which may adversely affect the Company’s future results of operations and an investment in the Company” and “Assured Guaranty’s financial results may be affected by measures taken in response to the OECD BEPS project.” 36 Taxation of Shareholders Bermuda Taxation Currently, there is no Bermuda capital gains tax, or withholding or other tax payable on principal, interest or dividends paid to the holders of the AGL common shares.
The Company’s financial guaranty exposures generally are to the more senior tranches of these issues. Financial Products Business is the guarantee of certain business written by financial products companies owned by Dexia SA, which comprised guaranteed investment contracts (GICs), medium term notes (MTNs) and equity payment undertaking agreements associated with leveraged lease business.
The Company’s financial guaranty exposures generally are to the more senior tranches of these issues. Financial Products is the guarantee of certain business written by financial products companies owned by Dexia SA, which comprised guaranteed investment contracts, medium term notes and equity payment undertaking agreements associated with leveraged lease business.
Assured Guaranty has only one direct competitor for public finance financial guaranty business, Build America Mutual Assurance Company (BAM), a mutual insurance company that commenced business in 2012. The Company estimates that, of the new U.S. public finance bonds sold with insurance in 2024, the Company insured approximately 58% of the par, while BAM insured approximately 42%.
Assured Guaranty has only one direct competitor for public finance financial guaranty business, Build America Mutual Assurance Company (BAM), a mutual insurance company that commenced business in 2012. The Company estimates that, of the new U.S. public finance bonds sold with insurance in 2025, the Company insured approximately 58% of the par, while BAM insured approximately 42%.
The following is a description of the Company’s insurance subsidiaries: • Assured Guaranty Inc. AG is located in New York and domiciled in Maryland, was organized in 1985 and commenced operations in 1988. It provides financial guaranty insurance and reinsurance in the U.S., U.K., European Economic Area (EEA) and certain other countries.
The following is a description of the Company’s financial guaranty insurance subsidiaries: • Assured Guaranty Inc. AG is located in New York and domiciled in Maryland, was incorporated in 1985 and commenced operations in 1988. It provides financial guaranty insurance and reinsurance in the U.S., U.K., European Economic Area (EEA) and certain other countries.
Renewable Energy Bonds are obligations backed by revenue from renewable energy sources. 7 Other Public Finance Bonds include other debt issued, guaranteed or otherwise supported by U.S. national or local governmental authorities, as well as student loans, revenue bonds, and obligations of some not-for-profit organizations.
Renewable Energy Bonds are obligations backed by revenue from renewable energy sources. Other Public Finance Bonds include other debt issued, guaranteed or otherwise supported by U.S. national or local governmental authorities, as well as student loans, revenue bonds, housing revenue bonds, and obligations of some not-for-profit organizations.
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.
Through its financial guaranty insurance subsidiaries, the Company applies its credit underwriting judgment, risk management skills and capital markets experience primarily to offer financial guaranty insurance, including nonpayment insurance, that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments.
The types of U.S. and non-U.S. structured finance obligations the Company insures and reinsures include the following: Insurance Securitizations are transactions, including life insurance transactions, where obligations are secured by the future earnings from pools of various types of insurance/reinsurance policies and income produced by invested assets.
The types of U.S. and non-U.S. structured finance obligations the Company insures and reinsures include the following: Insurance Reserve Financings and Securitizations are transactions, including life insurance transactions, where obligations are secured by the future earnings from pools of various types of insurance/reinsurance policies and income produced by invested assets.
The U.S. also imposes an excise tax on insurance and reinsurance premiums paid to non-U.S. insurers with respect to risks of a U.S. person located wholly or partly within the U.S. or risks of a foreign person engaged in a trade or business in the U.S. which are located within the U.S.
Treaty. 35 The U.S. also imposes an excise tax on insurance and reinsurance premiums paid to non-U.S. insurers with respect to risks of a U.S. person located wholly or partly within the U.S. or risks of a foreign person engaged in a trade or business in the U.S. which are located within the U.S.
Risk Factors, Risks Related to Economic, Market and Political Conditions and Natural Phenomena captioned “The Company may be subjected to significant risks from large individual or correlated insurance exposures.” Underwriting Process The underwriting process for each insurance transaction involves underwriters, credit personnel and lawyers who analyze the structure of a potential transaction and the credit and legal issues pertinent to the particular line of business or asset class.
Risk Factors — Risks Related to Economic, Market and Political Conditions and Natural Phenomena captioned “The Company may be subjected to significant risks from large individual or correlated financial guaranty insurance exposures.” 9 Underwriting Process The underwriting process for each insurance transaction involves underwriters, credit personnel and lawyers who analyze the structure of a potential transaction and the credit and legal issues pertinent to the particular line of business or asset class.
Further, AG Re and AGRO are permitted to make capital distributions of up to 15% of its prior year statutory capital (as shown in its previous financial year statutory balance sheet). AG Re and AGRO must obtain the Authority’s prior approval before making capital distributions in excess of the 15% threshold.
Further, AG Re, AGRO, and Assured Life Re are permitted to make capital distributions of up to 15% of its prior year statutory capital (as shown in its previous financial year statutory balance sheet). AG Re, AGRO, and Assured Life Re must obtain the Authority’s prior approval before making capital distributions in excess of the 15% threshold.
All transactions in new asset classes or new jurisdictions, or otherwise outside the Company’s Board-approved risk appetite statement or its risk limits, must be approved by this committee. • Risk Management —Each insurance subsidiary has a committee responsible for conducting an in-depth review of the insured portfolios of the relevant subsidiaries, focusing on varying portions of the portfolio at each meeting.
All transactions in new asset classes or new jurisdictions, or otherwise outside the Company’s Board-approved risk appetite statement or its risk limits, must be approved by this committee. • Risk Management —Each financial guaranty insurance subsidiary has a committee responsible for conducting an in-depth review of the insured portfolios of the relevant subsidiary, focusing on varying portions of the portfolio at each meeting.
It focuses on management's assessment and management of credit risks as well as other risks, including, but not limited to, market, financial, legal, operational risks (including information technology, cybersecurity and data privacy risks), and risks relating to the Company's reputation and ethical standards.
It focuses on management of credit risks as well as other risks, including, but not limited to, market, financial, legal, operational risks (including information technology, cybersecurity and data privacy risks), and risks relating to the Company's reputation and ethical standards.
Dividends cannot exceed an insurer’s current outstanding statutory surplus. In accordance with the Insurance Act, AG Re and AGRO may declare or pay in any financial year dividends of up to 25% of its total statutory capital and surplus (as shown on its previous financial year’s statutory balance sheet) without seeking prior approval from the Authority.
Dividends cannot exceed an insurer’s current outstanding statutory surplus. In accordance with the Insurance Act, AG Re, AGRO, and Assured Life Re may declare or pay in any financial year dividends of up to 25% of its total statutory capital and surplus (as shown on its previous financial year’s statutory balance sheet) without seeking prior 28 approval from the Authority.
Asset Management Strategic Transactions Until July 1, 2023, the Company served as an investment adviser to primarily collateralized loan obligations (CLOs) and opportunity funds, through Assured Investment Management LLC (AssuredIM LLC) and its investment management affiliates (together with AssuredIM LLC, AssuredIM).
Asset Management Until July 1, 2023, the Company served as an investment adviser to primarily collateralized loan obligations (CLOs) and opportunity funds, through Assured Investment Management LLC (AssuredIM LLC) and its investment management affiliates (together with AssuredIM LLC, AssuredIM).
In carrying out its responsibilities, each of the risk management committees considers numerous factors that could impact their insured portfolios, including macroeconomic factors, long term trends and climate change. • Workout Committee —This committee receives reports from surveillance and workout personnel on transactions insured by the Company that might benefit from active loss mitigation or risk reduction and approves loss mitigation or risk reduction strategies for such transactions. • Reserve Committees —Each insurance subsidiary has a committee responsible for oversight of reserves for insured obligations.
In carrying out its responsibilities, each of the risk management committees considers numerous factors that could impact their insured portfolios, including macroeconomic factors, long term trends and climate-related financial risk. • Workout Committee —This committee receives reports from surveillance and workout personnel on transactions insured by the Company that might benefit from active loss mitigation or risk reduction and approves loss mitigation or risk reduction strategies for such transactions. • Reserve Committees —Each financial guaranty insurance subsidiary has a committee responsible for oversight of reserves for insured obligations.
The Company participates in the asset management business through its 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), as described in greater detail under Item 1. Business — Asset Management — Strategic Transactions.
The Company participates in the asset management business through its 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), as described in greater detail under Item 1. Business — Asset Management.
See “Minimum Solvency Margin and Enhanced Capital Requirements” above and “Minimum Liquidity Ratio” below. The Companies Act 1981 of Bermuda (Companies Act) also limits the declaration and payment of dividends and other distributions by Bermuda companies such as AGL and its Bermuda subsidiaries, which, in addition to AG Re and AGRO, also include Cedar Personnel Ltd. (collectively, the Bermuda Subsidiaries).
See “Minimum Solvency Margin and Enhanced Capital Requirements” above and “Minimum Liquidity Ratio” below. The Companies Act 1981 of Bermuda (Companies Act) also limits the declaration and payment of dividends and other distributions by Bermuda companies such as AGL and its Bermuda subsidiaries, which, in addition to AG Re, AGRO, and Assured Life Re, also include Cedar Personnel Ltd.
The Environmental and Social Responsibility Committee oversees the Company’s risk and opportunities related to environmental issues, such as climate change, as well as aspects of human capital management, including its strategies, policies and initiatives.
The Environmental and Social Responsibility Committee oversees the Company’s risk and opportunities related to environmental issues, such as climate-related financial risk, as well as aspects of human capital management, including its strategies, policies and initiatives.
The application of these additional factors make it uncertain whether a rating downgrade could generally be avoided by raising additional capital or otherwise improving capital adequacy under the rating agency’s model.
The application of these additional factors makes it uncertain whether a rating downgrade could generally be avoided by raising additional capital or otherwise improving capital adequacy under the rating agency’s model.
Under the terms of a CDS, the seller of credit protection agrees to make a specified payment to the buyer of credit protection if one or more specified credit events occurs with respect to a reference obligation or entity.
Under the terms of a CDS, the provider of credit protection agrees to make a specified payment to the buyer of credit protection if one or more specified credit events occurs with respect to a reference obligation or entity.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeStrategic Risks • Competition in the Company’s industries. • Strategic transactions not resulting in the benefits anticipated. • The Company’s investments in Sound Point. • Minority ownership interests and the inability to control the business, management or policies of such interests. • Alternative investments, including investments managed by Sound Point and exclusivity with Sound Point, may not result in the benefits anticipated, and may increase credit, interest rate, liquidity, reputational, and other risks. • A downgrade of the financial strength or financial enhancement ratings of any of the Company’s insurance or reinsurance subsidiaries. 42 Operational Risks • Fluctuations in foreign exchange rates. • Exposure to less predictable political, credit and legal risks by underwriting insurance in non-U.S. markets and/or covering new sectors or classes of business. • Loss of senior management and other key employees and delay or inability to develop or recruit suitable replacements. • A cyberattack, security breach or failure in the Company’s or a vendor's information technology system, or a data privacy breach of the Company’s or a vendor’s information technology system. • Evolving cybersecurity, privacy and data security regulations. • The exploration of artificial intelligence used in some of the Company’s business operations. • Errors in, overreliance on, or misuse of, models. • Reduction in the Company’s liquidity from significant claim payments. • A sudden need to raise additional capital as a result of insurance losses or as a result of changes in regulatory or rating agency capital requirements applicable to its insurance subsidiaries at a time when additional capital may not be available or may be available only on unfavorable terms. • Large insurance losses substantially increasing the Company’s insurance subsidiaries’ leverage ratios, and preventing them from writing new insurance. • Constraints on the Company’s holding companies' ability to meet their obligations. • Limitations on the ability of AGL and its subsidiaries to meet their liquidity needs.
Biggest changeOperational Risks • Fluctuations in foreign exchange rates. • Exposure to less predictable political, credit and legal risks by underwriting insurance in non-U.S. markets and/or covering new sectors or classes of business. 43 • Loss of senior management and other key employees and delay or inability to develop or recruit suitable replacements. • A cyberattack, security breach or failure in the Company’s or a vendor's information technology system, or a data privacy breach of the Company’s or a vendor’s information technology system. • Evolving cybersecurity, privacy and data security regulations. • The exploration of artificial intelligence used in some of the Company’s business operations. • Errors in, overreliance on, or misuse of, models. • Reduction in the Company’s liquidity from significant claim payments. • A sudden need to raise additional capital as a result of insurance losses or as a result of changes in regulatory or rating agency capital requirements applicable to its insurance subsidiaries at a time when additional capital may not be available or may be available only on unfavorable terms. • Large insurance losses substantially increasing the Company’s insurance subsidiaries’ leverage ratios, and preventing them from writing new insurance. • Constraints on the Company’s holding companies' ability to meet their obligations. • Limitations on the ability of AGL and its subsidiaries to meet their liquidity needs. • Losses arising from asset/liability mismatch in the Company’s annuity reinsurance business.
The total net expected loss the Company calculates related to such exposures is net of a credit for estimated recoveries on claims already paid, and recoveries significantly below those expected by the Company could also have a negative effect on the Company’s financial condition, results of operations, capital, liquidity, business prospects and share prices.
The total net expected loss the Company calculates related to such exposures is net of credit for estimated recoveries on claims already paid, and recoveries significantly below those expected by the Company could also have a negative effect on the Company’s financial condition, results of operations, capital, liquidity, business prospects and share prices.
A downgrade of the financial strength or financial enhancement ratings of any of the Company’s insurance or reinsurance subsidiaries may adversely affect its business prospects. The financial strength and financial enhancement ratings assigned by S&P, Moody’s, KBRA and A.M.
A downgrade of the financial strength or financial enhancement ratings of any of the Company’s insurance or reinsurance subsidiaries may adversely affect its business prospects. The financial strength and financial enhancement ratings assigned by S&P, Moody’s, KBRA, A.M.
In addition, in December 2023 the Bermuda government adopted legislation for a corporate income tax which would share many key concepts with the Model Rules and is intended to constitute a “covered tax” for the purposes of the Model Rules.
In addition, in December 2023 the Government of Bermuda adopted legislation for a corporate income tax which would share many key concepts with the Model Rules and is intended to constitute a “covered tax” for the purposes of the Model Rules.
The Company is required to consolidate certain VIEs, which generally consist of (1) entities to which it has provided financial guaranties and (2) funds and vehicles in which it invests, such as those managed by Sound Point (and, prior to July 1, 2023, AssuredIM), if it concludes that it is the primary beneficiary of that VIE.
The Company is required to consolidate certain VIEs, which generally consist of (1) entities to which it has provided financial guaranties and (2) funds and vehicles in which it invests, such as those managed by Sound Point (and, prior to July 1, 2023, AssuredIM), if it concludes that it is the primary beneficiary of such VIE.
In the U.S., debt ceiling and budget deficit concerns, which have increased the possibility of a U.S. government shutdown, payment defaults on the debt of the U.S. government or instruments issued, insured or guaranteed by related institutions, agencies or instrumentalities, and downgrades to their credit ratings, could weaken the U.S. dollar, global economy and banking system, cause market volatility, raise the cost of credit, reduce public investment, increase interest rates and inflation, negatively impact the Company’s insured and investment portfolios, and disrupt general economic conditions in ways that the Company is not able to predict, which could materially and adversely affect the Company’s business, financial condition and results of operations.
In the U.S., debt ceiling and budget deficit concerns, which have increased the possibility of a U.S. government shutdown, payment defaults on the debt of the U.S. government or instruments issued, insured or guaranteed by related institutions, agencies or instrumentalities, and downgrades to their credit ratings, could weaken the global economy and banking system, cause market volatility, raise the cost of credit, reduce public investment, increase interest rates and inflation, negatively impact the Company’s insured and investment portfolios, and disrupt general economic conditions in ways that the Company is not able to predict, which could materially and adversely affect the Company’s business, financial condition and results of operations.
Person that is treated as owning 10% or more of AGL’s shares may be required to include in income for U.S. federal income tax purposes its pro rata share of certain income of 55 AGL and its non-U.S. subsidiaries for a taxable year, even if such income is not distributed and may be subject to U.S. federal income tax on a portion of any gain upon a sale or other disposition of its shares at ordinary income tax rates.
Person that is treated as owning 10% or more of AGL’s shares may be required to include in income for U.S. federal income tax purposes its pro rata share of certain income of AGL and its non-U.S. subsidiaries for a taxable year, even if such income is not distributed and may be subject to U.S. federal income tax on a portion of any gain upon a sale or other disposition of its shares at ordinary income tax rates.
The Company cannot be certain if, when, or in what form any future regulations or pronouncements may be implemented or made, or whether such guidance will have a retroactive effect. See Item 1. Business — Tax Matters — United States Tax Reform. 56 An ownership change under Section 382 of the Code could have adverse U.S. federal tax consequences.
The Company cannot be certain if, when, or in what form any future regulations or pronouncements may be implemented or made, or whether such guidance will have a retroactive effect. See Item 1. Business — Tax Matters — United States Tax Reform. An ownership change under Section 382 of the Code could have adverse U.S. federal tax consequences.
If any arrangements between U.K. resident companies in the Assured Guaranty group and other members of the Assured Guaranty group (whether resident in or outside the U.K.) are found not to be on arm's length terms and as a result a U.K. tax advantage is being obtained, an adjustment will be required to compute U.K. taxable profits as if such arrangement were on arm's length terms.
If any arrangements between U.K. resident companies in the Assured Guaranty group and other members of the Assured Guaranty group (whether resident in or outside the U.K.) are found not to be on arm's length terms and as a result a U.K. tax advantage is being obtained, an adjustment will be required to compute U.K. taxable profits as if such arrangement 60 were on arm's length terms.
In addition, certain issuers of obligations insured or reinsured by the Company may rely on current federal, state and local tax laws (such as tariff regimes impacting imports and the transportation sector) and/or on legal and regulatory frameworks impacting their businesses (for example, the healthcare industry’s development around Medicaid, Medicare and the Affordable Care Act).
In addition, certain issuers of obligations insured or reinsured by the Company may rely on current federal, state and local tax laws (such as tariff regimes impacting imports and the transportation sector) and/or on legal and regulatory frameworks impacting their businesses (for example, the healthcare industry’s development around, and reliance on, Medicaid, Medicare and the Affordable Care Act).
Risks Related to Economic, Market and Political Conditions and Natural Phenomena • Developments in the global financial markets, political systems and economy generally. • Significant budget deficits and pension funding and revenue shortfalls of certain public finance obligors that issue obligations the Company insures. • Significant risks from large individual or correlated exposures. • Losses on obligations insured by the Company significantly in excess of those expected by the Company or recoveries significantly below those expected by the Company. • Higher U.S. debt-to-GDP ratio and/or downgrades to the U.S. government’s sovereign credit ratings, or to the credit ratings of instruments issued, insured or guaranteed by related institutions, agencies or instrumentalities. • Changes in attitudes toward debt repayment negatively impacting the Company’s insurance portfolio. • The impact of narrow credit spreads on the demand for financial guaranty insurance. • The effect of credit losses and interest rate changes on the Company’s investments. • Effects of global climate change on the Company’s insurance portfolio and investments.
Risks Related to Economic, Market and Political Conditions and Natural Phenomena • Developments in the global financial markets, political systems and economy generally. • Significant budget deficits and pension funding and revenue shortfalls of certain public finance obligors that issue obligations the Company insures. • Significant risks from large individual or correlated exposures. • Losses on obligations insured by the Company significantly in excess of those expected by the Company or recoveries significantly below those expected by the Company. • Higher U.S. debt-to-GDP ratio and/or downgrades to the U.S. government’s sovereign credit ratings, or to the credit ratings of instruments issued, insured or guaranteed by related institutions, agencies or instrumentalities. • Changes in attitudes toward debt repayment negatively impacting the Company’s insurance portfolio. • The impact of narrow credit spreads on the demand for financial guaranty insurance and annuity reinsurance. • The effect of credit losses and interest rate changes on the Company’s investments. • Effects of global climate change on the Company’s insurance portfolio and investments.
The Company is exposed to the risk that issuers of obligations that it insures or other counterparties may default on their financial obligations, whether as a result of insolvency, lack of liquidity, operational failure (whether related to cybersecurity incidents, mismanagement, fraud or otherwise) or other reasons, and the amount of insurance exposure the Company has to some risks is quite large.
The Company is exposed to the risk that issuers of obligations that it insures or other counterparties may default on their financial obligations, whether as a result of insolvency, lack of liquidity, operational failure (whether related to cybersecurity incidents, mismanagement, fraud or otherwise) or other reasons, and the amount of financial guaranty insurance exposure the Company has to some risks is quite large.
Each of AGL, AGUS and AGMH requires liquidity, either in the form of cash or in the ability to easily sell investments for cash, in order to meet its payment obligations, including, without limitation, its operating expenses, interest and principal payments on debt and dividends on common shares, to fund investments and commitments to alternative investments, and to make capital investments in operating subsidiaries.
Each of AGL, AGUS and AGMH requires liquidity, either in the form of cash or in the ability to easily sell investments for cash, in order to meet its payment obligations, including, without limitation, its operating expenses, interest and 56 principal payments on debt and dividends on common shares, to fund investments and commitments to alternative investments, and to make capital investments in operating subsidiaries.
If Sound Point is unable to successfully compete, it may result in decreased earnings for Sound Point and increased risk of investment losses in Sound Point funds, which could materially adversely impact the Company’s ownership interest in Sound Point and/or its investment in Sound Point funds and, ultimately, the Company’s financial condition, results of operations, capital, business prospects and share price.
If Sound Point is 49 unable to successfully compete, it may result in decreased earnings for Sound Point and increased risk of investment losses in Sound Point funds, which could materially adversely impact the Company’s ownership interest in Sound Point and/or its investment in Sound Point funds and, ultimately, the Company’s financial condition, results of operations, capital, business prospects and share price.
For a discussion of material litigation, see Part II, Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), and Note 17, Contingencies. 59 AGL’s ability to pay dividends and fund share repurchases and other activities may be constrained by certain insurance regulatory requirements and restrictions.
For a discussion of material litigation, see Part II, Item 8. Financial Statements and Supplementary Data, Note 4. Expected Loss to be Paid (Recovered), and Note 17. Contingencies. AGL’s ability to pay dividends and fund share repurchases and other activities may be constrained by certain insurance regulatory requirements and restrictions.
The asset management business is also subject to legal, regulatory, compliance, accounting, valuation and political risks that differ from those that may affect the Company’s insurance business. Sound Point operates in a highly regulated industry and, as a registered investment adviser, is subject to the provisions of the Investment Advisers Act of 1940, as amended.
The asset management business is also subject to legal, regulatory, compliance, accounting, valuation and political risks that differ from those that may affect the Company’s insurance business. Sound Point operates in a highly regulated industry and, as a registered investment adviser, is subject to the provisions of the Investment Advisers Act of 1940, as 50 amended.
In addition, like other global companies, the Company has an increasing challenge of attracting and retaining highly qualified personnel to assist in combating these security threats. The Company’s business operations rely on the continuous availability of its computer systems as well as those of certain third parties.
In addition, like other global companies, the Company has an increasing challenge of attracting and retaining highly qualified personnel to assist in combating these security threats. 54 The Company’s business operations rely on the continuous availability of its computer systems as well as those of certain third parties.
As discussed above, AGL’s insurance subsidiaries are subject to regulatory and rating agency 54 restrictions limiting their ability to declare and to pay dividends and make other payments to AGL. As further noted above, external financing may or may not be available to AGL or its subsidiaries in the future on satisfactory terms.
As discussed above, AGL’s insurance subsidiaries are subject to regulatory and rating agency restrictions limiting their ability to declare and to pay dividends and make other payments to AGL. As further noted above, external financing may or may not be available to AGL or its subsidiaries in the future on satisfactory terms.
Business — Tax Matters, — Taxation of Shareholders ─ United States Taxation ─ Classification of AGL or its Non-U.S. Subsidiaries as a CFC. U.S. Persons who hold shares may be subject to U.S. income taxation at ordinary income rates on their proportionate share of the Company’s RPII.
Business — Tax Matters, — Taxation of Shareholders ─ United States Taxation ─ Classification of AGL or its Non-U.S. Subsidiaries as a CFC. 58 U.S. Persons who hold shares may be subject to U.S. income taxation at ordinary income rates on their proportionate share of the Company’s RPII.
If the issuers of the obligations in the Company’s U.S. public finance insurance portfolio are reliant on financial assistance from the U.S. government in order to meet their obligations, and the U.S. government does not provide such assistance, the Company may experience credit losses or impairments on those obligations.
If the issuers of the obligations in the Company’s U.S. public finance financial guaranty insurance portfolio are reliant on financial assistance from the U.S. government in order to meet their obligations, and the U.S. government does not provide such assistance, the Company may experience credit losses or impairments on those obligations.
The Company carries a significant portion of its assets and liabilities at fair value. The approaches used by the Company to calculate the fair value of those assets and liabilities it carries at fair value are described under, Part II, Item 8, Financial Statements and Supplementary Data, Note 9, Fair Value Measurement.
The Company carries a significant portion of its assets and certain of its liabilities at fair value. The approaches used by the Company to calculate the fair value of those assets and liabilities it carries at fair value are described under Part II, Item 8. Financial Statements and Supplementary Data, Note 9. Fair Value Measurement.
If an ownership change occurred, the Company’s ability to use certain tax attributes, including certain built-in losses, credits, deductions or tax basis and/or the Company’s ability to continue to reflect the associated tax benefits as assets on AGL’s balance sheet, may be limited.
If an ownership change occurred, the Company’s ability to use certain tax attributes, including certain built-in 59 losses, credits, deductions or tax basis and/or the Company’s ability to continue to reflect the associated tax benefits as assets on AGL’s balance sheet, may be limited.
The financial guaranties issued by the Company’s insurance subsidiaries 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.
The financial guaranties issued by the Company’s insurance subsidiaries 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 47 has no right to cancel such financial guaranties.
This stress may manifest itself in any or all of the following: ratings downgrades of insured risks, which may require more capital in the Company’s insurance subsidiaries; a reduction in the value of the Company’s investments; and actual defaults and losses in its insurance portfolio and/or investments.
This stress may manifest itself in any or all of the following: ratings downgrades of insured risks, which may require more capital in the Company’s insurance subsidiaries; ratings downgrades of the Company’s insurance or reinsurance subsidiaries; a reduction in the value of the Company’s investments; and actual defaults and losses in its insurance portfolio and/or investments.
Conversely, if interest rates increase, the Company’s future results of operations could improve because of higher future reinvestment income from its new fixed rate investments, but its financial condition could be adversely affected since value of the fixed-rate investments generally would be reduced.
Conversely, if interest rates increase, the Company’s future results of operations could improve because of higher future reinvestment income from its new fixed rate investments, but its financial condition could be adversely affected because the value of the fixed-rate investments generally would be reduced.
Issuers, investors, underwriters, ceding companies and others consider the Company’s financial strength or financial enhancement ratings an important factor when deciding whether or not to utilize a financial guaranty or purchase reinsurance from one of the Company’s insurance or reinsurance subsidiaries.
Issuers, investors, underwriters, ceding companies and others consider the Company’s financial strength or financial enhancement ratings an important factor when deciding whether or not to utilize a financial guaranty or purchase reinsurance from one of the Company’s insurance or 51 reinsurance subsidiaries.
The determination of expected loss to be paid (recovered) is an inherently subjective process involving numerous estimates, probability weightings, assumptions and judgments by management, using both internal and external data sources with regard to frequency, severity of loss, economic projections, future interest rates, the perceived strength of legal protections, the perceived strength of the Company’s position in any ongoing legal proceedings, governmental actions, negotiations, delinquency and prepayment rates (with respect to RMBS), timing of cash flows and other factors that affect credit performance.
The determination of financial guaranty expected loss to be paid (recovered) is an inherently subjective process involving numerous estimates, probability weightings, assumptions and judgments by management, using both internal and external data sources with regard to frequency, severity of loss, economic projections, future interest rates, the perceived strength of legal protections, the perceived strength of the Company’s position in any ongoing legal proceedings, governmental actions, negotiations, delinquency and prepayment rates (with respect to RMBS), timing of cash flows and other factors that affect credit performance.
Moreover, the relevant provisions of the Code and AGL’s Bye-Laws may have the effect of 61 reducing the votes of certain shareholders who would not otherwise be subject to the limitation by virtue of their direct share ownership.
Moreover, the relevant provisions of the Code and AGL’s Bye-Laws may have the effect of reducing the votes of certain shareholders who would not otherwise be subject to the limitation by virtue of their direct share ownership.
In some instances where local governments were seeking to restructure their outstanding debt, pension and other obligations owed to workers were treated more favorably than senior bond debt owed to the capital markets.
In some instances where local governments were are seeking to restructure their outstanding debt, pension and other obligations owed to workers were treated more favorably than senior bond debt owed to the capital markets.
These risks include those described or referred to in this “Risk Factors” section as well as, among other things: (a) investor perceptions of the Company, its prospects and that of the financial guaranty and asset management industries and the markets in which the Company operates; (b) the Company’s operating and financial performance; (c) the Company’s access to financial and capital markets to raise additional capital, refinance its debt or obtain other financing; (d) Company’s ability to repay debt; (e) the Company’s dividend policy; (f) the amount of share repurchases authorized by the AGL’s Board; (g) future sales of equity or equity-related securities; (h) changes in earnings estimates or buy/sell recommendations by analysts; and (i) general financial, economic and other market conditions.
These risks include those described or referred to in this “Risk Factors” section as well as, among other things: (a) investor perceptions of the Company, its prospects and that of the financial guaranty, life and annuity reinsurance and asset management industries and the markets in which the Company operates; (b) the Company’s operating and financial performance; (c) the Company’s access to financial and capital markets to raise additional capital, refinance its debt or obtain other financing; (d) Company’s ability to repay debt; (e) the Company’s dividend policy; (f) the amount of share repurchases authorized by the AGL’s Board; (g) future sales of equity or equity-related securities; (h) changes in earnings estimates or buy/sell recommendations by analysts; and (i) general financial, economic and other market conditions.
Obligations supported by revenue streams, which may include both revenue and non-revenue bonds, such as those issued by healthcare facilities, toll road authorities, municipal utilities, airport authorities or mass transit, may be adversely affected by revenue declines resulting from reduced demand, changing demographics, evolving business practices including hybrid work models, telecommuting, and other alternative work arrangements, or other causes.
Obligations supported by revenue streams, which may include both revenue and non-revenue bonds, such as those issued by healthcare facilities, toll road authorities, municipal utilities, airport authorities or mass transit, may be adversely affected by revenue declines resulting from reduced demand, changing demographics, evolving business practices including hybrid work models, telecommuting and other alternative work arrangements, reduced governmental aid, or other causes.
If the Company’s actual losses exceed its current estimate, the Company’s financial condition, results of operations, capital, liquidity, business prospects, financial strength ratings, ability to raise additional capital and share price may all be adversely affected. The Company does not use traditional actuarial approaches to determine its estimates of expected losses to be paid (recovered).
If the Company’s actual losses exceed its current estimate, the Company’s financial condition, results of operations, capital, liquidity, business prospects, financial strength ratings, ability to raise additional capital and share price may all be adversely affected. The Company does not use traditional actuarial approaches for its financial guaranties to determine its estimates of expected losses to be paid (recovered).
In addition to the insurance, asset management and other regulations and laws specific to the industries in which the Company operates or invests, regulatory agencies in jurisdictions in which the Company’s businesses operate have broad administrative power over many aspects of the Company’s business, which may include ethical issues, money laundering, privacy, recordkeeping and marketing and sales practices.
In addition to the insurance, asset management and other regulations and laws specific to the industries in which the Company operates or 61 invests, regulatory agencies in jurisdictions in which the Company’s businesses operate have broad administrative power over many aspects of the Company’s business, which may include ethical issues, money laundering, cybersecurity, privacy, recordkeeping and marketing and sales practices.
Loss models and reserve assumptions may be impacted by changes to interest rates due both to discounting and transaction structures that include floating rates, which could impact the calculation of expected losses. Because such information changes over time, sometimes materially, the Company’s projection of losses and its related reserves may also change materially.
Financial guaranty loss models and reserve assumptions may be impacted by changes to interest rates due both to discounting and transaction structures that include floating rates, which could impact the calculation of expected losses. Because such information changes over time, sometimes materially, the Company’s projection of financial guaranty losses and its related reserves may also change materially.
The Company’s expected loss models and reserve assumptions take into account current and expected future trends, which contemplate the impact of current and possible developments in the performance of the exposure and any related legal proceedings. These factors, which are integral elements of the Company's reserve estimation methodology, are updated on a quarterly basis based on current information.
The Company’s financial guaranty expected loss models and reserve assumptions take into account current and expected future trends, which contemplate the impact of current and possible developments in the performance of the exposure and any related legal proceedings. These factors, which are integral elements of the Company's reserve estimation methodology, are updated on a quarterly basis based on current information.
Sound Point’s ability to increase and retain assets under management (AUM) is directly related to the performance of the assets it manages as measured against market averages and the performance of its competitors. Some of Sound Point’s competitors may have a lower cost of funds and access to funding and other resources that are not available to Sound Point.
Sound Point’s ability to increase and retain AUM is directly related to the performance of the assets it manages as measured against market averages and the performance of its competitors. Some of Sound Point’s competitors may have a lower cost of funds and access to funding and other resources that are not available to Sound Point.
The Company believes that AGL was not a PFIC for U.S. federal income tax purposes for taxable years through 2024 and, based on the application of certain PFIC look-through rules and the Company’s plan of operations for the current and future years, should not be a PFIC in the future. See Item 1.
The Company believes that AGL was not a PFIC for U.S. federal income tax purposes for taxable years through 2025 and, based on the application of certain PFIC look-through rules and the Company’s plan of operations for the current and future years, should not be a PFIC in the future. See Item 1.
Risks Related to Taxation • The impacts of changes in U.S. tax laws on the demand or profitability of financial guaranty insurance and the Company’s investments. • Certain of the Company’s non-U.S. subsidiaries may be subject to U.S. tax. • AGL may, and AG Re and AGRO will, become subject to taxes in Bermuda. • U.S.
Risks Related to Taxation • The impacts of changes in U.S. tax laws on the demand or profitability of financial guaranty insurance and the Company’s investments. • Certain of the Company’s non-U.S. subsidiaries may be subject to U.S. tax. • AGL may become, and AG Re and AGRO are, subject to taxes in Bermuda. • U.S.
The Company’s Asset Management segment currently consists of its ownership interest in Sound Point, which operates in highly competitive markets. Sound Point competes with many other firms in every aspect of the asset management industry, including raising funds, seeking investments, and hiring and retaining professionals.
The Company’s Asset Management segment primarily consists of its ownership interest in Sound Point, which operates in highly competitive markets. Sound Point competes with many other firms in every aspect of the asset management industry, including raising funds, seeking investments, and hiring and retaining professionals.
See “– Competition in the Company’s industries may adversely affect its results of operations, business prospects and share price.” Industry competition, volatility or declines in the markets in which Sound Point invests as an asset manager, or poor performance of its investments, may negatively affect its AUM and its asset management and performance fees, may deter future investment by third parties in Sound Point’s asset management products, and may result in an impairment to the Company’s ownership interest in Sound Point.
See “– Competition in the Company’s industries may adversely affect its financial condition, results of operations, capital, business prospects and share price.” Industry competition, volatility or declines in the markets in which Sound Point invests as an asset manager, or poor performance of its investments, may negatively affect its AUM and its asset management and performance fees, may deter future investment by third parties in Sound Point’s asset management products, and may result in an impairment to the Company’s ownership interest in Sound Point.
See Item 1. Business — Tax Matters — Taxation of AGL and Subsidiaries— United States. AGL may, and AG Re and AGRO will, become subject to taxes in Bermuda, which may adversely affect the Company’s future results of operations and an investment in the Company.
See Item 1. Business — Tax Matters — Taxation of AGL and Subsidiaries— United States. AGL may become, and AG Re and AGRO are, subject to taxes in Bermuda, which may adversely affect the Company’s future results of operations and an investment in the Company.
The Company seeks to reduce this risk by managing exposure to large single risks, as well as concentrations of correlated risks, through tracking its aggregate exposure to single risks in its various lines of insurance business and establishing underwriting criteria to manage risk aggregations.
The Company seeks to reduce this risk by managing exposure to large single risks, as well as concentrations of correlated risks, through tracking its aggregate exposure to single risks in its various lines of financial guaranty insurance business and establishing underwriting criteria to manage risk aggregations.
In the years after the financial crisis that began in 2008, many of the larger claims paid by the Company were with respect to insured U.S. RMBS securities and, beginning in 2016, certain insured Puerto Rico exposures.
In the years after the global financial crisis that began in 2008, many of the larger claims paid by the Company were with respect to insured U.S. RMBS securities and, beginning in 2016, certain insured Puerto 55 Rico exposures.
Substantially all of the assets and liabilities of the consolidated FG VIEs and CIVs are reported at fair value.
Substantially all of the assets and liabilities of 63 the consolidated FG VIEs and CIVs are reported at fair value.
In addition, if, pursuant to insurance laws and regulations, AGL’s insurance subsidiaries are not permitted to pay ordinary dividends or make other permitted payments to AGL at the times or in sufficient amounts AGL requires to fund its activities, and if AGL’s other operating subsidiaries were unable to provide such funds, AGL’s ability to pay dividends to shareholders or fund share repurchases or pursue other activities could be adversely affected.
In addition, if, pursuant to insurance laws and regulations, AGL’s insurance subsidiaries are not permitted to pay ordinary dividends or make other permitted payments to their holding companies at the times or in sufficient amounts AGL requires to fund its activities, and if AGL’s other operating subsidiaries were unable to provide such funds, AGL’s ability to pay dividends to shareholders or fund share repurchases or pursue other activities could be adversely affected.
Failure to raise additional capital if and as needed may result in the Company being unable to write new insurance business and may result in the ratings of the Company and its insurance subsidiaries being downgraded by one or more rating agency.
Failure to raise additional capital if and as needed may result in the Company being unable to write new insurance business and may result in the ratings of the Company and its insurance subsidiaries being downgraded by one or more rating agencies.
As a result, the Company’s current estimates of losses to be paid (recovered), including losses with respect to related legal proceedings, may be subject to considerable volatility and may not reflect the Company’s future ultimate losses paid (recovered).
As a result, the Company’s current estimates of financial guaranty losses to be paid (recovered), including losses with respect to related legal proceedings, may be subject to considerable volatility and may not reflect the Company’s future ultimate losses paid (recovered).
They also require liquidity to pay operating expenses, reinsurance premiums, dividends to AGUS or AGMH for debt service and dividends to AGL, fund investments and commitments to alternative investments, as well as, where appropriate, to make capital investments in their own subsidiaries. In addition, the Company may require substantial liquidity to fund any future acquisitions.
They also require liquidity to pay operating expenses, reinsurance premiums, dividends to AGUS or AGMH for debt service and dividends to AGL, fund investments and commitments to alternative investments, as well as, where appropriate, to make capital investments in their own subsidiaries. In addition, the Company may require substantial liquidity to fund any future strategic initiatives.
Changes in attitudes toward debt repayment could negatively impact the Company’s insurance portfolio. The likelihood of debt repayment is impacted by both the ability and the willingness of the obligor to repay their debt.
Changes in attitudes toward debt repayment could negatively impact the Company’s insurance portfolio. The likelihood of debt repayment is impacted by both the ability and the willingness of the obligor to repay its debt.
The Company’s interest in Sound Point is subject to the risks normally associated with a minority interest. Since the Company holds a minority interest in Sound Point, it is unable to control the business, management or policies of Sound Point.
The Company’s interest in Sound Point is subject to the risks normally associated with a noncontrolling interest. Since the Company holds a noncontrolling interest in Sound Point, it is unable to control the business, management or policies of Sound Point.
Strategic transactions may not result in the benefits anticipated. From time to time the Company evaluates potential mergers, acquisitions, divestitures and other strategic opportunities, including transactions involving legacy financial guaranty companies and financial guaranty portfolios, asset managers and other companies, and has executed a number of such transactions in the past.
Strategic transactions may not result in the benefits anticipated. From time to time the Company evaluates potential mergers, acquisitions, divestitures and other strategic opportunities, including transactions involving legacy financial guaranty companies and financial guaranty portfolios, asset managers, life and annuity reinsurers, and other companies, and has executed a number of such transactions in the past.
Best Company, Inc. to each of the Company’s insurance and reinsurance subsidiaries represent such rating agencies’ opinions of the insurer’s financial strength and ability to meet ongoing obligations to policyholders and cedants in accordance with the terms of the financial guaranties it has issued or the reinsurance agreements it has executed.
Best Company, Inc. and Fitch Ratings, Inc. to the Company’s insurance and reinsurance subsidiaries represent such rating agencies’ opinions of the insurer’s financial strength and ability to meet ongoing obligations to policyholders and cedants in accordance with the terms of the financial guaranties it has issued or the reinsurance agreements it has executed.
In January 2025, the Organization for Economic Cooperation and Development (OECD) issued Administrative Guidance on Article 9.1 of the Global Anti-Base Erosion Model Rules, which excludes certain deferred tax assets for purposes of computing a multinational enterprise group’s effective tax rate when they arose prior to the application of the global minimum tax as a result of certain governmental arrangements or following the introduction of a new corporate income tax.
In January 2025, the OECD issued Administrative Guidance on Article 9.1 of the Global Anti-Base Erosion Model Rules, which excludes certain deferred tax assets for purposes of computing a multinational enterprise group’s effective tax rate when they arose prior to the application of the global minimum tax as a result of certain governmental arrangements or following the introduction of a new corporate income tax.
The insurance subsidiaries’ ability to pay dividends and make other payments depends, among other things, upon their financial condition, results of operations, cash requirements and compliance with rating agency requirements, and is also subject to restrictions contained in the insurance laws and related regulations of their states of domicile.
The insurance subsidiaries’ ability to pay dividends and make other payments depends, among other things, upon their financial condition, results of operations, cash requirements and compliance with rating agency requirements, and is also subject to restrictions contained in the insurance laws and related regulations of their respective state/country of domicile.
In the United States, there are numerous federal, state and local cybersecurity, privacy and data security laws and regulations governing the collection, sharing, use, retention, disclosure, security, transfer, storage and other processing of personal information. These laws and regulations are increasing in complexity and number, change frequently and sometimes conflict.
In the U.S., there are numerous federal, state and local cybersecurity, privacy and data security laws and regulations governing the collection, sharing, use, retention, disclosure, security, transfer, storage and other processing of personal information. These laws and regulations are increasing in complexity and number, change frequently, and sometimes conflict.
Broadly, the Bermuda corporate income tax is intended to be treated as a covered tax for the purposes of Pillar Two (see below) and therefore no double taxation is expected to arise from these rules and the top-up taxes under Pillar Two in other jurisdictions. AGRe and AGRO will be subject to this tax beginning in 2025.
Broadly, the Bermuda corporate income tax is intended to be treated as a covered tax for the purposes of Pillar Two (see below) and therefore no double taxation is expected to arise from these rules and the top-up taxes under Pillar Two in other jurisdictions. AG Re and AGRO are subject to this tax beginning in 2025.
These obligations, which may not necessarily benefit from financial support from other tax revenues or governmental authorities, may experience increased losses if the revenue streams are insufficient to pay scheduled interest and principal payments and the obligors are unable or unwilling to increase utility rates or revenues, decrease costs, or obtain other additional financing.
These obligations, which may not necessarily benefit from financial support from other tax revenues or governmental authorities, may experience increased losses if the revenue streams are insufficient to pay scheduled debt service and the obligors are unable or unwilling to increase utility rates or revenues, decrease costs, or obtain other additional financing.
If current laws or regulations impacting issuers of obligations in the Company’s insurance portfolio are changed in a manner adversely impacting such issuers and/or governmental financial assistance supporting such issuers is reduced or eliminated, the Company may experience increased levels of losses or claims on its insured obligations.
If current laws or regulations or governmental policies impacting issuers of obligations in the Company’s insurance portfolio are changed in a manner adversely impacting such issuers (for example, nationalization of assets) and/or governmental financial assistance supporting such issuers is reduced or eliminated, the Company may experience increased levels of losses or claims on its insured obligations.
The Company may be subjected to significant risks from large individual or correlated insurance exposures.
The Company may be subjected to significant risks from large individual or correlated financial guaranty insurance exposures.
Some of the public finance obligors that have issued obligations insured or reinsured by the Company are experiencing significant budget, pension and revenue shortfalls, and difficulties in obtaining additional financing, that could result in increased credit losses or liquidity claims and increased rating agency capital charges on those insured obligations.
Public finance obligors that have issued obligations insured or reinsured by the Company are experiencing, or may in the future experience, significant budget deficits, and pension and revenue shortfalls, and difficulties in obtaining additional financing, that could result in increased credit losses or liquidity claims and increased rating agency capital charges on those insured obligations.
In particular, the U.K. enacted legislation in July 2023 and February 2024, and HMRC published guidance in respect of such legislation which broadly implement the OECD’s Model Rules for Pillar Two into U.K. domestic legislation of accounting periods starting on or after December 31 2023.
In particular, the U.K. enacted legislation in July 2023 and February 2024, and HMRC published guidance in respect of such legislation which broadly implement the OECD’s guidance into U.K. domestic legislation of accounting periods starting on or after December 31 2023.
The Company manages its business so that AGL and its non-U.S. subsidiaries (other than AGRO) operate in such a manner that none of them should be subject to U.S. federal tax (other than U.S. excise tax on insurance and reinsurance premium income attributable to insuring or reinsuring U.S. risks, and U.S. withholding tax on certain U.S. source investment income).
The Company manages its business so that AGL and its non-U.S. subsidiaries (except for its non-U.S. subsidiaries that elect to be taxed as a U.S. corporation) operate in such a manner that none of them should be subject to U.S. federal tax (other than U.S. excise tax on insurance and reinsurance premium income attributable to insuring or reinsuring U.S. risks, and U.S. withholding tax on certain U.S. source investment income).
Regulation – France – Restrictions on Dividend Payments.” As a result, absent relief from the relevant regulator(s), the Company’s insurance subsidiaries may be required to retain capital that is substantially in excess of what the Company believes is necessary to support its insurance businesses, reducing the Company’s ability to productively use or return to shareholders such excess capital.
As a result, absent relief from the relevant regulator(s), the Company’s insurance subsidiaries may be required to retain capital that is substantially in excess of what the Company believes is necessary to support its insurance businesses, reducing the Company’s ability to productively use or return to shareholders such excess capital.
The Company is beginning to explore the use of Artificial Intelligence technologies in its business, and its research into and continued deployment of such capabilities remain ongoing. Artificial Intelligence is still in its early stages, and the introduction and use of Artificial Intelligence technologies may result in unintended consequences or other new or expanded risks and liabilities.
The Company continues to explore the use of Artificial Intelligence technologies in its business, and its research into and continued deployment of such capabilities remain ongoing. The introduction and use of Artificial Intelligence technologies may result in unintended consequences or other new or expanded risks and liabilities.
The Company does not engage in active management, or hedging, of its foreign exchange rate risk. Therefore, fluctuation in exchange rates between the U.S. dollar and the pound sterling or the euro could adversely impact the Company’s financial position, results of operations and cash flows.
The Company does not engage in active management, or hedging, of foreign exchange rate risk in its financial guaranty business. Therefore, fluctuation in exchange rates between the U.S. dollar and the pound sterling or the euro could adversely impact the Company’s financial position, results of operations and cash flows. See Part II, Item 7A.
However the Company cannot be certain that the IRS will not contend successfully that AGL or any of its non-U.S. subsidiaries (other than AGRO) is/are engaged in a trade or business in the U.S., in which case each such company could be subject to U.S. corporate income and branch profits taxes on the portion of its earnings effectively connected to such U.S. business.
However the Company cannot be certain that the IRS will not contend successfully that AGL or any of its non-U.S. subsidiaries (except for its non-U.S. subsidiaries that elect to be taxed as a U.S. corporation) is/are engaged in a trade or business in the U.S., in which case each such company could be subject to U.S. corporate income and branch profits taxes on the portion of its earnings effectively connected to such U.S. business.
During a broad economic downturn or in the face of a significant natural or man-made event or disaster (such as the COVID-19 pandemic), a wider range of the Company’s insurance and investments could be exposed to stress at the same time.
During a broad economic downturn or in the face of a significant natural or man-made event 45 or disaster, a wider range of the Company’s insurance and investments could be exposed to stress at the same time.
If the issuers of the obligations in 45 the Company’s public finance insurance portfolio become unwilling to raise taxes, decrease spending or receive federal assistance in order to repay their debt, the Company may experience increased levels of losses on its public finance obligations, which could adversely affect its financial condition, results of operations, capital, liquidity, business prospects and share price.
If the issuers of the obligations in the Company’s public finance insurance portfolio become unwilling to raise taxes, decrease spending or receive federal assistance in order to repay their debt, the Company may experience increased levels of losses on its public finance obligations, which could adversely affect its financial condition, results of operations, capital, liquidity, business prospects and share price. 46 Narrow credit spreads could adversely affect demand for financial guaranty insurance and annuity reinsurance.
See Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk — Sensitivity to Foreign Exchange Rate Risk. The Company’s underwriting of insurance in non-U.S. markets and/or covering new sectors or classes of business may expose it to less predictable political, credit and legal risks.
Quantitative and Qualitative Disclosures About Market Risk — Sensitivity to Foreign Exchange Rate Risk. The Company’s underwriting of insurance in non-U.S. markets and/or covering new sectors or classes of business may expose it to less predictable political, credit and legal risks. The Company pursues new business opportunities in non-U.S. markets and/or covering new sectors or classes of business.
The ratings assigned by the rating agencies to the Company’s insurance subsidiaries are subject to review and may be lowered by a rating agency at any time and without notice to the Company. The rating agencies have changed their methodologies and criteria from time to time.
The ratings assigned by the rating agencies to the Company’s insurance subsidiaries are subject to review and may be lowered by a rating agency at any time and without notice to the Company.
Such strategic transactions related to entities or portfolios may involve some or all of the various risks commonly associated with such strategic transactions, including, among other things: (a) failure to adequately identify and value potential exposures and liabilities associated with a new entity or portfolio; (b) difficulty in estimating the value of a new entity or portfolio; (c) potential diversion of management’s time and attention; (d) exposure to asset quality issues of a new entity or portfolio; (e) difficulty and expense of integrating the operations, systems and personnel of a new entity; (f) difficulty integrating the culture of a new entity; (g) failure to identify legal risks associated with the strategic transaction with an entity or portfolio, and (h) in the case of acquisitions of a financial guaranty company or portfolio, concentration of insurance exposures, including insurance exposures which may exceed single risk limits, aggregate risk limits, BIG limits and/or non-U.S. dollar exposure limits, due to the addition of the target insurance portfolio.
Such transactions may involve some or all of the various risks commonly associated with such strategic transactions, including, among other things: (a) failure to adequately identify and value potential exposures and liabilities associated with a new entity or portfolio; (b) difficulty in estimating the value of a new entity or portfolio; (c) potential diversion of management’s time and attention; (d) exposure to asset quality issues of a new entity or portfolio; (e) difficulty and expense of integrating the operations, systems and personnel of a new entity; (f) difficulty integrating the culture of a new entity; (g) failure to identify legal risks associated with the strategic transaction with an entity or portfolio, (h) failure of a strategic transaction to perform as expected, (i) deployment of financial resources towards certain strategic initiatives may limit the Company’s ability to deploy capital for other strategic initiatives or other purposes, and (j) in the case of acquisitions of a financial guaranty company or portfolio, concentration of insurance exposures, including insurance exposures which may exceed single risk limits, aggregate risk limits, BIG limits and/or non-U.S. dollar exposure limits, due to the addition of the target insurance portfolio.
Changes in U.S. federal, state or local laws that materially adversely affect the tax treatment of municipal securities, including potential loss of tax-exemption, may impact the market for those securities and result in lower volume and demand for municipal obligations and also may adversely impact the value and liquidity of the Company’s investments, a significant portion of which is invested in tax-exempt instruments.
Risks Related to Taxation Changes in U.S. tax laws could reduce the demand or profitability of financial guaranty insurance, or negatively impact the Company’s investments. 57 Changes in U.S. federal, state or local laws that materially adversely affect the tax treatment of municipal securities, including potential loss of tax-exemption, may impact the market for those securities and result in lower volume and demand for municipal obligations and also may adversely impact the value and liquidity of the Company’s investments, a significant portion of which is invested in tax-exempt instruments.
Notwithstanding the above, on December 27, 2023 the Bermuda government enacted a corporate income tax which will apply for accounting periods starting on or after January 1, 2025.
Notwithstanding the above, on December 27, 2023 the Government of Bermuda enacted a corporate income tax which applies to accounting periods starting on or after January 1, 2025.
However, a change in the way in which Assured Guaranty operates or any further change in the CFC regime, resulting in an attribution to AGL of any of the income profits of AGL’s non-U.K. resident subsidiaries for U.K. corporation tax purposes, could adversely affect Assured Guaranty’s financial results of operations. 57 An adverse adjustment under U.K. transfer pricing legislation or the imposition of diverted profits tax could adversely impact Assured Guaranty’s tax liability.
However, a change in the way in which Assured Guaranty operates or any further change in the CFC regime, resulting in an attribution to AGL of any of the income profits of AGL’s non-U.K. resident subsidiaries for U.K. corporation tax purposes, could adversely affect Assured Guaranty’s financial results of operations.
Compliance with applicable laws and regulations is time consuming and personnel-intensive. If the Company fails to comply with applicable insurance or investment advisory laws and regulations it could be exposed to fines, the loss of insurance or investment advisory licenses, limitations on the right to originate new business and restrictions on its ability to pay dividends.
If the Company fails to comply with applicable laws or regulations it could be exposed to fines, the loss of licenses, including insurance licenses, limitations on the right to originate new business and restrictions on its ability to pay dividends.
For example, the default by the Commonwealth of Puerto Rico on much of its debt has resulted in both legislation (including the enactment of PROMESA) and litigation that is continuing to impact the Company’s rights as creditor, most directly in Puerto Rico but also elsewhere in the U.S. municipal market.
For example, the default by the Commonwealth of Puerto Rico on much of its debt has resulted in both legislation (including the enactment of PROMESA) and litigation that is continuing to impact the Company’s rights as creditor.
Credit spreads, which are based on the difference between interest rates on high-quality or “risk free” securities versus those on lower-rated securities, fluctuate due to a number of factors, and are sensitive to the absolute level of interest rates, current credit experience and investors’ risk appetite.
Demand for financial guaranty insurance generally fluctuates with changes in market credit spreads. Credit spreads, which are based on the difference between interest rates on high-quality or “risk free” securities versus those on lower-rated securities, fluctuate due to a number of factors, and are sensitive to the absolute level of interest rates, current credit experience and investors’ risk appetite.
The ordinary dividends that AGL’s insurance subsidiaries may pay without regulatory approval are subject to legal and regulatory limitations. See “– Regulatory – State Dividend Limitations,” “– Non-U.S. Regulation – Bermuda – Restrictions on Dividends and Distributions,” “– Non-U.S. Regulation – United Kingdom Insurance and Financial Services Regulation – Restrictions on Dividend Payments” and “– Non-U.S.
The ordinary dividends that AGL’s insurance subsidiaries may pay without regulatory approval are subject to legal and regulatory limitations. See Item 1. Business 62 – Regulation – State Dividend Limitations, Item 1. Business – Regulation – Non-U.S. Regulation – Bermuda – Restrictions on Dividends and Distributions, Item 1. Business – Regulation – Non-U.S.
The formula is applied repeatedly until the voting power of all 9.5% U.S. Shareholders has been reduced to less than 9.5%. For these purposes, “controlled shares” include, among other things, all shares of AGL that such U.S. Person is deemed to own directly, indirectly or constructively (within the meaning of section 958 of the Code).
The formula is applied repeatedly until the voting power of all 9.5% U.S. Shareholders has been reduced to less than 9.5%. For these purposes, “controlled shares” include, among other things, all shares of AGL that such U.S.
Issuers are less likely to use financial guaranties on their new issues when credit spreads are narrow, so (absent other factors) this results in decreased demand or premiums obtainable for financial guaranty insurance. Credit losses and changes in interest rates could adversely affect the Company’s investments.
Issuers are less likely to use financial guaranties on their new issues when credit spreads are narrow, so (absent other factors) this results in decreased demand or premiums obtainable for financial guaranty insurance.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company has procedures in place to respond to cybersecurity incidents, which include prompt meeting of the Cybersecurity Incident Disclosure Committee, a Company management committee, to assess cybersecurity incidents and determine materiality requiring disclosure on Form 8-K, notification of the Board of any material cybersecurity incidents, quarterly reporting by the Chief Information Security Officer of material and non-material incidents to the Risk Oversight Committee and management, and to the Audit Committee of such incidents related to the Company’s financial systems.
Biggest changeThe Company has procedures in place to respond to cybersecurity incidents, which include prompt meeting of the Cybersecurity Incident Disclosure Committee, a Company management committee, to assess cybersecurity incidents and determine materiality requiring disclosure on Form 8-K, notification to the Board of any material cybersecurity incidents, quarterly reporting by the Chief Information Security Officer of material and non-material incidents to the Risk Oversight Committee and management, and to the Audit Committee of such incidents related to the Company’s financial systems.
The Company maintains an Information Security Policy and Standards that details how material risks from cybersecurity threats are assessed, identified, and managed: • Risk assessment – a periodic risk assessment is performed by the Chief Information Security Officer using the National Institute of Standards and Technology cybersecurity framework and rates risks by criticality. 62 • Risk identification – vulnerabilities and risks are identified through functions performed by the Chief Information Security Officer which includes assessments using automated tools, monitoring activities, reviewing threat intelligence, and responding to incidents.
The Company maintains an Information Security Policy and Standards that details how material risks from cybersecurity threats are assessed, identified, and managed: • Risk assessment – a periodic risk assessment is performed by the Chief Information Security Officer using the National Institute of Standards and Technology cybersecurity framework and rates risks by criticality. • Risk identification – vulnerabilities and risks are identified through functions performed by the Chief Information Security Officer which includes assessments using automated tools, monitoring activities, reviewing threat intelligence, and responding to incidents.
Awareness and alertness are important components of the Company’s cybersecurity program; each year employees are required to take the cybersecurity training and the Company conducts regular exercises to educate employees about best practices and help them identify and avoid potential threats. The Company engages third-party consultants to conduct periodic penetration testing designed to identify potential security vulnerabilities.
Awareness and alertness are important components of the Company’s cybersecurity program; each year employees are required to take the cybersecurity training and the Company conducts regular exercises to educate employees about best practices and help them identify and avoid potential threats. 65 The Company engages third-party consultants to conduct periodic penetration testing designed to identify potential security vulnerabilities.
The Chief Information Security Officer has over 25 years of experience in information security and is a Certified Information Systems Security Professional (CISSP), Certified Information Security Manager (CISM), and Certified Information Systems Auditor (CISA). The 63 Chief Information Security Officer reports to the Board, its committees, and management on cybersecurity threats on a regular basis.
The Chief Information Security Officer has over 25 years of experience in information security and is a Certified Information Systems Security Professional (CISSP), Certified Information Security Manager (CISM), and Certified Information Systems Auditor (CISA). The Chief Information Security Officer reports to the Board, its committees, and management on cybersecurity threats on a regular basis.
As described above in Cybersecurity – Risk Management and Strategy, the Company’s Chief Technology Officer has management responsibility for overseeing a process designed to remediate cybersecurity risks, and reports to the Board, Risk Oversight Committee, Audit Committee and management at least semi-annually. The Chief Technology Officer reported to the Board, Risk Oversight Committee and Audit Committee four times in 2024.
As described above in Cybersecurity – Risk Management and Strategy, the Company’s Chief Technology Officer has management responsibility for overseeing a process designed to remediate cybersecurity risks, and reports to the Board, Risk Oversight Committee, Audit Committee and management at least semi-annually. The Chief Technology Officer reported to the Board, Risk Oversight Committee and Audit Committee four times in 2025.
The Company has appointed a Chief Information Security Officer, who is responsible for leading the assessment and management of cybersecurity risk. In 2024, the Chief Information Security Officer made an annual report on information technology and cybersecurity risks to the Board and made four quarterly reports to the Risk Oversight Committee and the Audit Committee.
The Company has appointed a Chief Information Security Officer, who is responsible for leading the assessment and management of cybersecurity risk. In 2025, the Chief Information Security Officer made an annual report on information technology and cybersecurity risks to the Board and made four quarterly reports to the Risk Oversight Committee and the Audit Committee.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company’s office properties are used by its Insurance segment and its Corporate division and include the following: • Hamilton, Bermuda: ◦ approximately 8,700 square feet of office space that serves as the principal executive office of AGL, and as the principal offices of AG Re and AGRO.
Biggest changeThe Company’s office properties are used by its Insurance segment and its Corporate division and include the following: 66 • Hamilton, Bermuda: ◦ approximately 8,700 square feet of office space that serves as the principal executive office of AGL, and as the principal offices of AG Re and AGRO.
As of December 31, 2024, approximately 24,000 square feet of this office space was subleased to another tenant. • London, U.K.: ◦ approximately 7,000 square feet of office space that serves as the principal office of AGUK.
As of December 31, 2025, approximately 24,000 square feet of this office space was subleased to another tenant. • London, U.K.: ◦ approximately 7,000 square feet of office space that serves as the principal office of AGUK.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeGana joined Assured Guaranty in 2005 as a Director in structured finance. Over the years, Mr. Gana has held a number of positions at Assured Guaranty, including Managing Director, Structured Finance at AG, Senior Managing Director of Workouts and Government & Corporate Affairs at AGM and AG, and chair of AGM's and AG’s Workout Committees. Mr.
Biggest changeGana has held a number of positions at Assured Guaranty, including Managing Director, Structured Finance at AG, Senior Managing Director of Workouts and Government & Corporate Affairs at AGM and AG, and chair of AGM's and AG’s Workout Committees. Prior to joining Assured Guaranty, Mr. Gana served as a Director of Global Commercial Asset Securitization for XLCA (now Syncora).
Frederico served in a number of executive positions with ACE Limited. Prior to joining ACE Limited, Mr. Frederico spent 13 years working for various subsidiaries of American International Group, Inc. Robert A. Bailenson has been Chief Operating Officer of AGL since January 1, 2024. Mr. Bailenson has been with Assured Guaranty and its predecessor companies since 1990.
Frederico served in a number of executive positions with ACE Limited. Prior to joining ACE Limited, Mr. Frederico spent 13 years working for various subsidiaries of American International Group, Inc. 67 Robert A. Bailenson has been Chief Operating Officer of AGL since January 1, 2024. Mr. Bailenson has been with Assured Guaranty and its predecessor companies since 1990.
Horn began her public finance career at Inova Health System, a nationally ranked integrated health care delivery system, and subsequently served as a senior manager for the national health care strategy practice at Ernst & Young. 66 PART II
Horn began her public finance career at Inova Health System, a nationally ranked integrated health care delivery system, and subsequently served as a senior manager for the national health care strategy practice at Ernst & Young. 68 PART II
Donnarumma was with Financial Guaranty Insurance Company from 1989 until 1993, where his responsibilities included underwriting domestic and international financial guaranty transactions. Prior to that, he served as a Director of Credit Risk Analysis at Fannie Mae from 1987 until 1989. Mr. Donnarumma was also an analyst with Moody’s Investors Services from 1985 until 1987. 65 Jorge A.
Donnarumma was with Financial Guaranty Insurance Company from 1989 until 1993, where his responsibilities included underwriting domestic and international financial guaranty transactions. Prior to that, he served as a Director of Credit Risk Analysis at Fannie Mae from 1987 until 1989. Mr. Donnarumma was also an analyst with Moody’s from 1985 until 1987. Jorge A.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 64 Information About The Company’s Executive Officers The table below sets forth the names, ages, positions and business experience of the executive officers of AGL as of February 27, 2025. Name Age Position(s) Dominic J. Frederico 72 President and Chief Executive Officer; Deputy Chairman Robert A. Bailenson 58 Chief Operating Officer Benjamin G.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. Information About The Company’s Executive Officers The table below sets forth the names, ages, positions and business experience of the executive officers of AGL as of February 26, 2026. Name Age Position(s) Dominic J. Frederico 73 President and Chief Executive Officer; Deputy Chairman Robert A. Bailenson 59 Chief Operating Officer Benjamin G.
Rosenblum 51 Chief Financial Officer Ling Chow 54 General Counsel and Secretary Stephen Donnarumma 62 Chief Credit Officer Jorge A. Gana 54 Chief Risk Officer Holly Horn 64 Chief Surveillance Officer Dominic J. Frederico has been a director of AGL since the Company’s 2004 initial public offering and the President and Chief Executive Officer of AGL since December 2003. Mr.
Rosenblum 52 Chief Financial Officer Ling Chow 55 General Counsel and Secretary Stephen Donnarumma 63 Chief Credit Officer Jorge A. Gana 55 Chief Risk Officer Holly Horn 65 Chief Surveillance Officer Dominic J. Frederico has been a director of AGL since the Company’s 2004 initial public offering and the President and Chief Executive Officer of AGL since December 2003. Mr.
Horn has been Chief Surveillance Officer of AGL and AG since January 2022. Prior to that, Ms. Horn served as AGM’s and AG’s Chief Surveillance Officer, Public Finance where she was responsible for ongoing surveillance, monitoring and loss mitigation of municipal risks insured by the Company across all sectors of the municipal market.
Horn served as AGM’s and AG’s Chief Surveillance Officer, Public Finance where she was responsible for ongoing surveillance, monitoring and loss mitigation of municipal risks insured by the Company across all sectors of the municipal market.
Gana has been Chief Risk Officer of AGL and Chair of the U.S. Risk Management and Portfolio Risk Management Committees since January 1, 2023. Mr. Gana also maintains primary responsibility for the environmental aspect of Assured Guaranty’s ESG efforts. Prior to that, Mr. Gana served as Deputy Chief Risk Officer of AGM and AG. Mr.
Gana has been Chief Risk Officer of AGL and Chair of the U.S. Risk Management and Portfolio Risk Management Committees since January 1, 2023. Prior to that, Mr. Gana served as Deputy Chief Risk Officer of AGM and AG. Mr. Gana joined Assured Guaranty in 2005 as a Director in structured finance. Over the years, Mr.
Gana worked at Natexis Banques Populaires (now Natixis) and at Banco Santander in global capacities dealing with credit and risk, managing investment portfolios, originating complex transactions, and issuing repackaged debt. Mr. Gana also worked for the Chile Economic Development Agency, New York Office, and as Editor of the Chile Economic Report until 1996. Holly L.
Prior to XLCA, Mr. Gana worked at Natexis Banques Populaires (now Natixis) and at Banco Santander in global capacities dealing with credit and risk, managing investment portfolios, originating complex transactions, and issuing repackaged debt. Holly L. Horn has been Chief Surveillance Officer of AGL and AG since January 2022. Prior to that, Ms.
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Gana continues to serve as a voting member of AG’s Credit and Workout Committees. Prior to joining Assured Guaranty, Mr. Gana served as a Director of Global Commercial Asset Securitization for XLCA (now Syncora). Prior to XLCA, Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe chart and table depict the value on December 31 of each year from 2019 through 2024 of a $100 investment made on December 31, 2019, with all dividends reinvested: Assured Guaranty S&P 500 Stock Index S&P 500 Financials Stock Index Russell Midcap Index - Financials 12/31/2019 $ 100.00 $ 100.00 $ 100.00 $ 100.00 12/31/2020 66.06 118.39 98.24 104.94 12/31/2021 107.25 152.34 132.50 142.56 12/31/2022 135.35 124.73 118.49 124.74 12/31/2023 165.83 157.48 132.83 141.07 12/31/2024 202.43 196.85 173.35 184.55 ___________________ Source: Calculated from total returns published by Bloomberg. 68
Biggest changeThe chart and table depict the value on December 31 of each year from 2020 through 2025 of a $100 investment made on December 31, 2020, with all dividends reinvested: Assured Guaranty S&P 500 Stock Index S&P 500 Financials Stock Index Russell Midcap Index - Financials 12/31/2020 $ 100.00 $ 100.00 $ 100.00 $ 100.00 12/31/2021 162.35 128.68 134.87 135.85 12/31/2022 204.89 105.36 120.61 118.86 12/31/2023 251.02 133.03 135.21 134.43 12/31/2024 306.43 166.28 176.45 175.86 12/31/2025 310.85 195.98 202.86 201.41 ___________________ Source: Calculated from total returns published by Bloomberg. 70
AGL paid quarterly cash dividends in the amount of $0.31 and $0.28 per common share in 2024 and 2023, respectively. For more information concerning AGL’s dividends, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources and Item 8, Financial Statements and Supplementary Data, Note 18, Shareholders’ Equity.
AGL paid quarterly cash dividends in the amount of $0.34 and $0.31 per common share in 2025 and 2024, respectively. For more information concerning AGL’s dividends, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources and Item 8. Financial Statements and Supplementary Data, Note 18. Shareholders’ Equity.
The following table reflects purchases of AGL common shares made by the Company during the fourth quarter of 2024.
The following table reflects purchases of AGL common shares made by the Company during the fourth quarter of 2025.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES AGL’s common shares are listed on the NYSE under the symbol “AGO.” On February 26, 2025, the approximate number of shareholders of record at the close of business on that date was 76.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES AGL’s common shares are listed on the NYSE under the symbol “AGO.” On February 25, 2026, the approximate number of shareholders of record at the close of business on that date was 79.
(3) Excludes commissions and excise taxes. 67 Performance Graph Set forth below are a line graph and a table comparing the dollar change in the cumulative total shareholder return on AGL’s common shares from December 31, 2019 through December 31, 2024 as compared to the cumulative total return of the S&P’s 500 Stock Index, the cumulative total return of the S&P’s 500 Financials Stock Index and the cumulative total return of the Russell Midcap Index - Financials.
(3) Excludes commissions. 69 Performance Graph Set forth below are a line graph and a table comparing the dollar change in the cumulative total shareholder return on AGL’s common shares from December 31, 2020 through December 31, 2025 as compared to the cumulative total return of the S&P’s 500 Stock Index, the cumulative total return of the S&P’s 500 Financials Stock Index and the cumulative total return of the Russell Midcap Index - Financials.
(2) After giving effect to repurchases since the Board first authorized the repurchase program on January 18, 2013, through February 27, 2025, the Company has repurchased a total of 151 million common shares for approximately $5.4 billion, excluding commissions, at an average price of $35.99 per share.
(2) After giving effect to repurchases since the Board first authorized the repurchase program on January 18, 2013, through February 25, 2026, the Company has repurchased a total of 157 million common shares for $5.9 billion, excluding commissions, at an average price of $37.73 per share.
Issuer’s Purchases of Equity Securities In 2024, the Company repurchased a total of 6,180,774 common shares for approximately $502 million at an average price of $81.28 per share. From time to time, the Board authorizes the repurchase of additional common shares under a program without an expiration date that it initiated on January 18, 2013.
Issuer’s Purchases of Equity Securities In 2025, the Company repurchased a total of 5,819,627 common shares for $500 million at an average price of $85.92 per share. From time to time, the Board authorizes the repurchase of additional common shares under a program without an expiration date that it initiated on January 18, 2013.
Most recently, on November 8, 2024, the Board authorized the repurchase of an additional $250 million of its common shares. As of February 27, 2025, the remaining amount the Company was authorized to purchase was approximately $276 million of its common shares.
Most recently, on November 5, 2025, the Board authorized the repurchase of an additional $100 million of its common shares. As of February 25, 2026, the remaining amount the Company was authorized to purchase was $204 million of its common shares.
Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program (2) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program(3) October 1 - October 31 601,575 $ 83.52 601,575 $ 142,267,634 November 1 - November 30 280,661 $ 89.30 280,579 $ 367,211,562 December 1 - December 31 172,573 $ 89.94 172,573 $ 351,689,856 Total 1,054,809 $ 86.11 1,054,727 ____________________ (1) The total number of shares purchased also includes shares purchased as a result of employees surrendering shares as payment for withholding taxes upon vesting of share awards.
Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program (2) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (3) October 1 - October 31 558,800 $ 82.25 558,800 $ 236,989,639 November 1 - November 30 502,229 $ 86.78 502,229 $ 293,408,392 December 1 - December 31 462,744 $ 90.22 462,744 $ 251,658,618 Total 1,523,773 $ 86.16 1,523,773 ____________________ (1) The total number of shares purchased also includes shares purchased as a result of employees surrendering shares as payment for withholding taxes upon vesting of share awards.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(4) See “— Overview— Key Business Strategies – Capital Management” above for information on common share repurchases. 74 Consolidated Results of Operations Consolidated Results of Operations Year Ended December 31, 2024 2023 2022 (in millions) Revenues: Net earned premiums $ 403 $ 344 $ 494 Net investment income 340 365 269 Asset management fees — 53 93 Net realized investment gains (losses) 9 (14) (56) Fair value gains (losses) on credit derivatives 24 114 (11) Fair value gains (losses) on CCS (10) (35) 24 Fair value gains (losses) on FG VIEs (11) 8 22 Fair value gains (losses) on CIVs 69 88 17 Foreign exchange gains (losses) on remeasurement (27) 53 (112) Fair value gains (losses) on trading securities 52 74 (34) Gain on sale of asset management subsidiaries — 262 — Other income (loss) 23 61 17 Total revenues 872 1,373 723 Expenses: Loss and LAE (benefit) (26) 162 16 Interest expense 91 90 81 Amortization of deferred acquisition cost (DAC) 20 13 14 Employee compensation, benefit and other operating expenses: Asset management subsidiaries 6 91 140 Insurance and other subsidiaries 355 377 285 Total expenses 446 733 536 Income (loss) before income taxes and equity in earnings (losses) of investees 426 640 187 Equity in earnings (losses) of investees 62 28 (39) Income (loss) before income taxes 488 668 148 Less: Provision (benefit) for income taxes 96 (93) 11 Net income (loss) 392 761 137 Less: Noncontrolling interests 16 22 13 Net income (loss) attributable to Assured Guaranty Ltd. $ 376 $ 739 $ 124 Effective tax rate 19.7 % (13.9) % 7.2 % Net income attributable to AGL in 2024 was lower compared with 2023 primarily due to the following: • the gain associated with the Sound Point Transaction and AHP Transaction, net of transaction expenses, of $175 million (after-tax) in 2023, • the benefit related to Bermuda tax law changes of $189 million in 2023, • lower fair value gains on credit derivatives of $24 million in 2024 compared with $114 million in 2023, • foreign exchange remeasurement losses of $27 million in 2024, compared with gains of $53 million in 2023, and • lower other income due to the reversal of a previously recorded litigation accrual of $20 million in 2023.
Biggest change(4) See “— Overview— Key Business Strategies — Capital Management” above for information on common share repurchases. 78 Consolidated Results of Operations Consolidated Results of Operations Year Ended December 31, 2025 2024 2023 (in millions) Revenues: Net earned premiums $ 380 $ 403 $ 344 Net investment income 359 340 365 Asset management fees — — 53 Net realized investment gains (losses) (40) 9 (14) Fair value gains (losses) on credit derivatives 121 24 114 Fair value gains (losses) on CCS 20 (10) (35) Fair value gains (losses) on FG VIEs 6 (11) 8 Fair value gains (losses) on CIVs 79 69 88 Foreign exchange gains (losses) on remeasurement 96 (27) 53 Fair value gains (losses) on trading securities 13 52 74 Gain on sale of asset management subsidiaries — — 262 Other income (loss) 76 23 61 Total revenues 1,110 872 1,373 Expenses: Loss and LAE (benefit) 56 (26) 162 Interest expense 89 91 90 Amortization of deferred acquisition costs (DAC) 22 20 13 Employee compensation and benefit expenses 209 202 251 Other operating expenses 174 159 217 Total expenses 550 446 733 Income (loss) before income taxes and equity in earnings (losses) of investees 560 426 640 Equity in earnings (losses) of investees 102 62 28 Income (loss) before income taxes 662 488 668 Less: Provision (benefit) for income taxes 119 96 (93) Net income (loss) 543 392 761 Less: Noncontrolling interest (NCI) 40 16 22 Net income (loss) attributable to Assured Guaranty Ltd. $ 503 $ 376 $ 739 Effective tax rate 17.9 % 19.7 % (13.9) % Net income attributable to AGL in 2025 was higher compared with 2024 primarily due to the following: • foreign exchange remeasurement gains of $96 million in 2025, compared with losses of $27 million in 2024, • a gain on credit derivatives related to the resolution of the LBIE litigation of $103 million in 2025, • higher other income due to a gain of $23 million recognized in connection with the sale in 2025 of a commercially leased building that was part of a loss mitigation strategy for a troubled insured exposure and $15 million associated with the workout and purchase of bonds issued by a U.K. regulated utility to which the Company has insured exposure and interest on late financial guaranty premiums, • higher equity in earnings of investees in 2025, primarily generated by the Company’s investments in Sound Point, healthcare funds and legacy alternative investments, and • fair value gains on committed capital securities in 2025, compared with losses in 2024. 79 These increases were partially offset by: • loss and LAE in 2025 of $56 million, compared with a benefit of $26 million in 2024, • net realized investment losses in 2025 primarily due to changes in the allowance for credit losses for alternative investments and Loss Mitigation Securities, • lower fair value gains on trading securities in 2025, and • lower net earned premiums in 2025, compared with 2024 due to lower refundings of financial guaranty insurance exposures.
Management of the Company and AGL’s Board of Directors use non-GAAP financial measures further adjusted to remove the effect of FG VIE and CIV consolidation (which the Company refers to as its core financial measures), as well as GAAP financial measures and other factors, to evaluate the Company’s results of operations, financial condition and progress towards long-term goals.
The Company’s management and AGL’s Board of Directors use non-GAAP financial measures further adjusted to remove the effect of FG VIE and CIV consolidation (which the Company refers to as its core financial measures), as well as GAAP financial measures and other factors, to evaluate the Company’s results of operations, financial condition and progress towards long-term goals.
PVP or Present Value of New Business Production Management believes that PVP is a useful measure because it enables the evaluation of the value of new business production in the Insurance segment by taking into account the value of estimated future installment premiums on all new contracts underwritten in a reporting period as well as additional installment premiums and fees on existing contracts (which may result from supplements or fees or from the issuer not calling an insured obligation the Company projected would be called), regardless of form, which management believes GAAP gross written premiums and changes in fair value of credit derivatives do not adequately measure.
PVP or Present Value of New Business Production The Company’s management believes that PVP is a useful measure because it enables the evaluation of the value of new business production in the Insurance segment by taking into account the value of estimated future installment premiums on all new contracts underwritten in a reporting period as well as additional installment premiums and fees on existing contracts (which may result from supplements or fees or from the issuer not calling an insured obligation the Company projected would be called), regardless of form, which management believes GAAP gross written premiums and changes in fair value of credit derivatives do not adequately measure.
The timing of sales is largely subject to the Company’s discretion and influenced by market opportunities, as well as the Company’s tax and capital profile. 2) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives that are recognized in net income (loss) attributable to AGL, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments.
The timing of sales is largely subject to the Company’s discretion and influenced by market opportunities, as well as the Company’s tax and capital profile. 2) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives that are recognized in net income (loss) attributable to AGL, which is the amount of fair value gains (losses) in excess of the present value of the expected estimated economic credit losses.
This amount represents the net present value of 93 estimated future revenue from these contracts (other than credit derivatives with net expected losses), net of reinsurance, ceding commissions and premium taxes. Future installment premiums are discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than Loss Mitigation Securities.
This amount represents the net present value of estimated future revenue from these contracts (other than credit derivatives with net expected losses), net of reinsurance, ceding commissions and premium taxes. Future installment premiums are discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than Loss Mitigation Securities.
Economic Loss Development (Benefit) The insured portfolio includes policies accounted for under several different accounting models depending on the characteristics of the contract and the Company’s control rights. For a discussion of methodologies and significant estimates for expected loss to be paid (recovered), see Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered).
Economic Loss Development (Benefit) The insured portfolio includes policies accounted for under several different accounting models depending on the characteristics of the contract and the Company’s control rights. For a discussion of methodologies and significant estimates for expected loss to be paid (recovered), see Item 8. Financial Statements and Supplementary Data, Note 4. Expected Loss to be 86 Paid (Recovered).
AGL’s and its insurance subsidiaries’ creditors do not have any rights with regard to the collateral supporting the debt issued by the FG VIEs. • CIVs. The primary sources and uses of cash in the CIVs include, using capital to make investments, generating cash income from investments, paying expenses, distributing cash flow to investors.
AGL’s and its 113 insurance subsidiaries’ creditors do not have any rights with regard to the collateral supporting the debt issued by the FG VIEs. • CIVs. The primary sources and uses of cash in the CIVs include using capital to make investments generating cash income from investments, paying expenses and distributing cash flow to investors.
The terms of the Company’s credit default swaps (CDS) contracts generally are modified from standard CDS contract forms approved by International Swaps and Derivatives Association, Inc. such that the circumstances giving rise to the Company’s obligation to make loss payments are similar to those for its financial guaranty insurance contracts.
The terms of the Company’s credit default swap (CDS) contracts generally are modified from standard CDS contract forms approved by International Swaps and Derivatives Association, Inc. such that the circumstances giving rise to the Company’s obligation to make loss payments are similar to those for its financial guaranty insurance contracts.
The economic sanctions imposed by western governments, along with decisions by private companies regarding their presence in Russia, continue to reduce western economic ties to Russia and to reshape global economic and political ties more generally, and the Company cannot predict all of the potential effects of the conflict on the world or on the Company.
The economic sanctions imposed by western governments, along with decisions by private companies regarding their presence in Russia, continue to reduce western economic ties to Russia and to reshape global 80 economic and political ties more generally, and the Company cannot predict all of the potential effects of the conflict on the world or the Company.
The financial strength ratings (or similar ratings) assigned to AGL’s insurance subsidiaries, along with the date of the most recent rating action (or confirmation) by the rating agency assigning the rating, are shown in the table below. S&P KBRA Moody’s A.M. Best Company, Inc.
The financial strength ratings (or similar ratings) assigned to AGL’s financial guaranty insurance subsidiaries, along with the date of the most recent rating action (or confirmation) by the rating agency assigning the rating, are shown in the table below. S&P KBRA Moody’s A.M. Best Company, Inc.
There can be no assurance that any of the rating agencies will not take negative action on the financial strength ratings (or similar ratings) of AGL’s insurance subsidiaries in the future or cease to rate one or more of AGL’s insurance subsidiaries, either voluntarily or at the request of that subsidiary.
There can be no assurance that any of the rating agencies will not take negative action on the financial strength ratings (or similar ratings) of AGL’s insurance 71 subsidiaries in the future or cease to rate one or more of AGL’s insurance subsidiaries, either voluntarily or at the request of that subsidiary.
Premiums on European infrastructure and structured finance transactions typically are paid, in whole or in part, on an installment basis, whereas premiums on U.S. public finance transactions are often paid upfront. 90 The following table presents the foreign exchange rates as of the balance sheet dates. Foreign Exchange Rates U.S.
Premiums on European infrastructure and structured finance transactions typically are paid, in whole or in part, on an installment basis, whereas premiums on U.S. public finance transactions are often paid upfront. The following table presents the foreign exchange rates as of the balance sheet dates. Foreign Exchange Rates U.S.
On the one hand, lower interest rates may increase the fair value of fixed-maturity securities currently held in the Company’s investment portfolio, encourage municipal bond issuance and positively impact the finances of some of the obligors whose payments the Company insures.
On the one hand, lower interest rates may increase the fair value of fixed-maturity securities currently held in the Company’s investment portfolio, encourage municipal and infrastructure bond issuance and positively impact the finances of some of the obligors whose payments the Company insures.
Adjusted operating income is defined as net income (loss) attributable to AGL, as reported under GAAP, adjusted for the following: 91 1) Elimination of realized gains (losses) on the Company’s investments that are recognized in net income (loss) attributable to AGL, except for gains and losses on securities classified as trading.
Adjusted operating income is defined as net income (loss) attributable to AGL, as reported under GAAP, adjusted for the following: 1) Elimination of realized gains (losses) on the Company’s investments that are recognized in net income (loss) attributable to AGL, except for gains and losses on securities classified as trading.
For example, the Company made substantial claim payments in 2022 and 2024 in connection with the resolution of certain Puerto Rico credits. The Company is continuing its efforts to resolve the one remaining unresolved Puerto Rico insured exposure that is in payment default, PREPA.
For example, the Company made substantial claim payments in 2022 and 2024 in connection with the resolution of certain defaulting Puerto Rico credits. The Company is continuing its efforts to resolve the one remaining unresolved Puerto Rico insured exposure that is in payment default, PREPA.
See “— Overview— Key Business Strategies, Capital Management” above for information on common share repurchases. 98 External Financing From time to time, AGL and its subsidiaries have sought external debt or equity financing in order to meet their obligations.
See “— Overview— Key Business Strategies, Capital Management” above for information on common share repurchases. External Financing From time to time, AGL and its subsidiaries have sought external debt or equity financing in order to meet their obligations.
To the extent there is a directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure and the most directly comparable GAAP financial measure is presented below. Adjusted Operating Income Management believes that adjusted operating income is a useful measure because it clarifies the understanding of the operating results of the Company.
To the extent there is a directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure and the most directly comparable GAAP financial measure is presented below. Adjusted Operating Income The Company’s management believes that adjusted operating income is a useful measure because it clarifies the understanding of the operating results of the Company.
On September 25, 2023, AGUS redeemed $330 million of 5% Senior Notes due 2024. See Item 8, Financial Statements and Supplementary Data, Note 11, Long-Term Debt and Credit Facilities. U.S.
On September 25, 2023, AGUS redeemed $330 million of 5% Senior Notes due 2024. See Item 8. Financial Statements and Supplementary Data, Note 11. Long-Term Debt and Credit Facilities. 103 U.S.
While expected loss to be paid (recovered) is an important measure that provides the present value of amounts that the Company expects to pay or recover in future periods regardless of accounting model, expected loss to be expensed is important because it presents the Company’s projection of net expected losses that will be recognized in the consolidated statement of operations in future periods as deferred premium revenue amortizes into income for financial guaranty insurance policies.
While expected loss to be paid (recovered) is an important measure that provides the present value of amounts that the Company expects to pay or recover in future periods regardless of accounting model, expected loss to be expensed is important because it presents the Company’s projection of net expected losses that will be recognized in the consolidated statements of operations in future periods as deferred premium revenue amortizes into income for financial guaranty insurance policies.
Insurance Segment Loss Expense The primary differences between net economic loss development and the amount reported as “loss and LAE (benefit)” in the consolidated statements of operations are that loss and LAE (benefit): (i) considers deferred premium revenue in the calculation of loss reserves for financial guaranty insurance contracts; (ii) eliminates loss and LAE related to FG VIEs; and (iii) does not include estimated losses on credit derivatives.
Insurance Segment Loss Expense The primary differences between net economic loss development and the amount reported as “loss and LAE (benefit)” in the consolidated statements of operations are that loss and LAE (benefit): (i) considers deferred premium revenue in the calculation of loss reserves for financial guaranty insurance contracts; (ii) eliminates loss and LAE related to FG VIEs; and (iii) does not include estimated losses or benefits on credit derivatives.
Consolidating FG VIEs (as opposed to accounting for the related insurance contracts in the Insurance segment), has a significant gross-up effect on the consolidated financial statements, and includes: (i) the establishment of the FG VIEs’ assets and liabilities and related changes in fair value on the consolidated financial statements; (ii) eliminating the premiums and 87 losses/recoveries associated with the financial guaranty insurance contracts between the insurance subsidiaries and the FG VIEs; and (iii) eliminating the investment balances associated with the insurance subsidiaries’ purchases of the debt obligations of the FG VIEs.
Consolidating FG VIEs (as opposed to accounting for the related insurance contracts in the Insurance segment), has a gross-up effect on the consolidated financial statements, and includes: (i) the establishment of the FG VIEs’ assets and liabilities and related changes in fair value on the consolidated financial statements; (ii) eliminating the premiums and losses/recoveries associated with the financial guaranty insurance contracts between the insurance subsidiaries and the FG VIEs; and (iii) eliminating the investment balances associated with the insurance subsidiaries’ purchases of the debt obligations of the FG VIEs.
Actual installment premiums may differ from those estimated in the Company’s PVP calculation due to factors including, but not limited to, changes in foreign exchange rates, prepayment speeds, terminations, credit defaults, or other factors that affect par outstanding or the ultimate maturity of an obligation. Reconciliation of GWP to PVP Year Ended December 31, 2024 Public Finance Structured Finance U.S.
Actual installment premiums may differ from those estimated in the Company’s PVP calculation due to factors including, but not limited to, changes in foreign exchange rates, prepayment speeds, terminations, credit defaults or other factors that affect par outstanding or the ultimate maturity of an obligation. Reconciliation of GWP to PVP Year Ended December 31, 2025 Public Finance Structured Finance U.S.
Holding Companies include: • principal and interest on debt issued by AGUS and AGMH; • dividends on AGL’s common shares; and • the payment of operating expenses. AGL and its U.S.
Holding Companies include: • principal and interest on debt issued by AGUS and AGMH; • dividends on AGL’s common shares; and • the payment of operating expenses. 101 AGL and its U.S.
The Company’s actual results could differ materially from those anticipated in these forward looking statements as a result of various factors, including those discussed below and elsewhere in this Form 10-K, particularly under the headings “Risk Factors” and “Forward Looking Statements.” Discussion related to the results of operations for the Company’s comparison of 2023 results to 2022 results have been omitted in this Form 10-K.
The Company’s actual results could differ materially from those anticipated in these forward looking statements as a result of various factors, including those discussed below and elsewhere in this Form 10-K, particularly under the headings “Risk Factors” and “Forward Looking Statements.” Discussion related to the results of operations for the Company’s comparison of 2024 results to 2023 results have been omitted in this Form 10-K.
The AOCI component of the fair value adjustment on the investment portfolio is not deemed economic because the Company generally holds these investments to maturity and therefore would not recognize an economic gain or loss. 4) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
The AOCI component of the fair value adjustment on the investment portfolio is not deemed economic because the Company generally holds these investments to maturity and therefore would not result in an economic gain or loss. 4) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
Financial Strength Ratings Demand for the financial guaranties issued by the Company’s insurance subsidiaries may be impacted by changes in the credit ratings assigned to them by the rating agencies.
Financial Strength Ratings Demand for the financial guaranties issued by the Company’s financial guaranty insurance subsidiaries may be impacted by changes in the credit ratings assigned to them by the rating agencies.
The table excludes private placements and Corporate-CUSIP transactions insured by Assured Guaranty, certain of which the Company also considers to be public finance business. The Company also considers opportunities to acquire financial guaranty portfolios, whether by acquiring financial guarantors that are no longer actively writing new business or their insured portfolios, generally through reinsurance or novations.
The table excludes private placements and Corporate-CUSIP transactions insured by Assured Guaranty, certain of which the Company also considers to be public finance business. In addition, the Company considers opportunities to acquire financial guaranty portfolios, whether by acquiring financial guarantors that are no longer actively writing new business or their insured portfolios, generally through reinsurance or novations.
The discount rate is recalculated annually and updated as necessary. Under GAAP, financial guaranty installment premiums are discounted at a risk-free rate.
The discount rate is recalculated annually and updated as necessary. Under GAAP, financial guaranty installment premiums are 97 discounted at a risk-free rate.
The Company also subjects its cash flow projections and its assets to a stress test, maintaining a liquid asset balance of one and a half times its stressed operating company net cash flows. Management believes that AGL will have sufficient liquidity to satisfy its needs over the next twelve months.
The Company also subjects its cash flow projections and its assets to a stress test, maintaining a liquid asset balance of one and a half times its stressed operating company net cash flows over the next four quarters. Management believes that AGL will have sufficient liquidity to satisfy its needs over the next twelve months.
The premiums associated with the insured obligations of municipalities and other public finance issuers are generally received upfront when the obligations are issued and insured. When issuers pay down insured obligations, the Company is no longer on risk for payment defaults, and therefore accelerates the recognition of the remaining nonrefundable deferred premium revenue.
The premiums associated with the insured obligations of municipalities and other public finance issuers are generally received upfront when the obligations are issued and insured. When issuers pay down insured obligations, the Company is no longer on risk for payment defaults, and therefore accelerates 82 the recognition of any remaining nonrefundable deferred premium revenue.
Other (Effect of Consolidating FG VIEs and CIVs) The effect of consolidating FG VIEs and CIVs, intersegment eliminations and, prior to July 1, 2023, reclassifications of reimbursable fund expenses to revenue, are presented in “other.” See Item 8, Financial Statements and Supplementary Data, Note 2, Segment Information.
Other (Effect of Consolidating FG VIEs and CIVs) The effect of consolidating FG VIEs and CIVs, intersegment eliminations and, prior to July 1, 2023, reclassifications of reimbursable fund expenses to revenue are presented in “other.” See Item 8. Financial Statements and Supplementary Data, Note 2. Segment Information. As described in Item 8. Financial Statements and Supplementary Data, Note 8.
Holding Companies.” Executive Summary The primary drivers of volatility in the Company’s net income include: loss and loss adjustment expense (LAE), changes in fair value of credit derivatives, FG VIEs, CIVs, trading securities and CCS, as well as foreign exchange gains (losses), the level of refundings of insured obligations, changes in the value of the Company’s alternative investments, the effects of any large transactions, settlements, commutations and loss mitigation strategies, among other factors.
Holding Companies.” Executive Summary The primary drivers of volatility in the Company’s net income include: loss and LAE, changes in fair value of certain alternative investments, credit derivatives, FG VIEs, CIVs, trading securities and CCS, as well as foreign exchange gains (losses), the level of refundings of insured obligations, the effects of any large transactions, settlements, commutations and loss mitigation strategies, among other factors.
Sources and Uses of Funds Liquidity of the insurance subsidiaries is primarily used to pay for: • operating expenses, • claims on the insured portfolio, • dividends or other distributions to parent, • reinsurance premiums, and • capital investments in their own subsidiaries and in alternative investments.
Sources and Uses of Funds Liquidity of the insurance subsidiaries is primarily used to pay for: • operating expenses, • claims on the insured portfolio, • dividends or other distributions to parent, • reinsurance premiums, • expansion of the insurance business, and • capital investments in their own subsidiaries and in alternative investments.
In addition, $277 million of available-for-sale fixed-maturity securities were CLO equity tranches managed by Sound Point. Changes in interest rates affect the value of the Company’s fixed-maturity securities. As interest rates fall, the fair value of fixed-maturity securities generally increases, and as interest rates rise, the fair value of fixed-maturity securities generally decreases.
In addition, $228 million of available-for-sale fixed-maturity securities were CLO equity tranches managed by Sound Point. Changes in interest rates affect the value of the Company’s fixed-maturity securities. As interest rates fall, the fair value of fixed-maturity securities generally increases, and, as interest rates rise, the fair value of fixed-maturity securities generally decreases.
The tables below show the Company’s ten largest U.S. public finance, U.S. structured finance and non-U.S. exposures by revenue source, excluding related authorities and public corporations, as of December 31, 2024. Ten Largest U.S. Public Finance Exposures by Revenue Source As of December 31, 2024 Net Par Outstanding Percent of Total U.S.
The tables below show the Company’s ten largest U.S. public finance, U.S. structured finance and non-U.S. exposures by revenue source, excluding related authorities and public corporations, as of December 31, 2025. Ten Largest U.S. Public Finance Exposures by Revenue Source As of December 31, 2025 Net Par Outstanding Percent of Total U.S.
At its September 17-18, 2024 meeting, the Federal Open Market Committee (FOMC) decided to lower the federal funds rate, which was a reversal of the rate increases it had initiated in March 2022 to combat inflation.
At its September 2024 meeting, the Federal Open Market Committee (FOMC) decided to lower the federal funds rate, which was a reversal of the rate increases it had initiated in March 2022 to combat inflation.
Holding Companies Long-Term Debt and Intercompany Loans As of December 31, 2024 2023 (in millions) Effective Interest Rate Final Maturity Principal Amount AGUS - long-term debt 6.125% Senior Notes 6.125% 2028 $ 350 $ 350 3.15% Senior Notes 3.15% 2031 500 500 7% Senior Notes 6.40% 2034 200 200 3.6% Senior Notes 3.60% 2051 400 400 Series A Enhanced Junior Subordinated Debentures 3 month CME Term SOFR +2.64% 2066 150 150 AGUS long-term debt 1,600 1,600 AGUS - intercompany loans from: AG/AGM (1) 3.50% 2029 250 250 AGRO 5.00% 2028 20 20 AGUS intercompany loans 270 270 Total AGUS long-term debt and intercompany loans 1,870 1,870 AGMH Junior Subordinated Debentures (2) 6.40% 2066 300 300 Total AGMH long-term debt 300 300 AGMH’s long-term debt purchased by AGUS (3) (154) (154) U.S.
Holding Companies Long-Term Debt and Intercompany Loans As of December 31, 2025 2024 (in millions) Effective Interest Rate Final Maturity Principal Amount AGUS - long-term debt 6.125% Senior Notes 6.125% 2028 $ 350 $ 350 3.15% Senior Notes 3.15% 2031 500 500 7% Senior Notes 6.40% 2034 200 200 3.6% Senior Notes 3.60% 2051 400 400 Series A Enhanced Junior Subordinated Debentures 3 month CME Term SOFR +2.64% 2066 150 150 AGUS long-term debt 1,600 1,600 AGUS - intercompany loans from: AG 3.50% 2029 200 250 AGRO 5.00% 2028 20 20 AGUS intercompany loans 220 270 Total AGUS long-term debt and intercompany loans 1,820 1,870 AGMH Junior Subordinated Debentures (1) 6.40% 2066 300 300 Total AGMH long-term debt 300 300 AGMH’s long-term debt purchased by AGUS (2) (154) (154) U.S.
Except for underlying credit impairment, which is recognized as loss expense in the Insurance segment, the fair value adjustments on credit derivatives in the insured portfolio are non-economic adjustments that reverse to zero over the remaining term of that portfolio. See Item 8, Financial Statements and Supplementary Data, Note 9, Fair Value Measurement, for additional information.
Except for underlying credit impairment, which is recognized as loss expense in the Insurance segment, the fair value adjustments on credit derivatives in the insured portfolio are non-economic adjustments that reverse to zero over the remaining term of that portfolio. See Item 8. Financial Statements and Supplementary Data, Note 9.
The Company periodically estimates remaining expected lives of its insured obligations backed by homogeneous pools of assets and makes prospective adjustments for such changes in expected lives. Scheduled net earned premiums decrease each year unless replaced by a higher amount of new business, or books of business acquired in business combinations.
The Company periodically estimates remaining expected lives of its insured obligations backed by homogeneous pools of assets and makes prospective adjustments for such changes in expected lives. Scheduled net earned premiums decrease each year unless replaced by a higher amount of new business, or books of business acquired in business combinations. See Item 8.
Committed Capital Securities AG is party to an arrangement that enables it to access, at its discretion, up to $400 million of capital, at any time, and has the right to use such capital for any purpose, including to pay claims. See Item 8, Financial Statements and Supplementary Data, Note 9, Fair Value Measurement.
Committed Capital Securities AG is party to an arrangement that enables it to access, at its discretion, up to $400 million of capital, at any time, and has the right to use such capital for any purpose, including to pay claims. See Item 8. Financial Statements and Supplementary Data, Note 9.
In the third quarter of 2023, as a result of the Sound Point Transaction and AHP Transaction, the Company deconsolidated all CLOs and CLO warehouses and certain funds. Therefore, beginning July 1, 2023, the Company’s cash flow statements no longer include all the operating, investing and financing cash flow activity of those deconsolidated CIVs.
In the third quarter of 2023, as a result of the Sound Point Transaction and AHP Transaction, the Company deconsolidated all CLOs and CLO warehouses and certain funds. Therefore, beginning July 1, 2023, the Company’s cash flow statements no longer include all the operating, investing and financing cash flow activity of those deconsolidated CIVs. See Item 8.
Holding Companies (other than investment income, operating expenses and taxes) related to distributions from subsidiaries and outflows for debt service, dividends and other capital management activities. AGL and U.S. Holding Companies Selected Cash Flow Items Year Ended December 31, 2024 AGL U.S. Holding Companies (in millions) Dividends received from U.S.
Holding Companies (other than investment income, operating expenses and taxes) related to distributions from subsidiaries and outflows for debt service, dividends and other capital management activities. 105 AGL and U.S. Holding Companies Selected Cash Flow Items Year Ended December 31, 2025 AGL U.S. Holding Companies (in millions) Dividends received from U.S.
Restricted Assets Based on fair value, fixed-maturity securities, short-term investments and cash that are either held in trust for the benefit of third-party ceding insurers in accordance with statutory requirements, placed on deposit to fulfill state licensing requirements, or otherwise pledged or restricted, totaled $79 million and $234 million as of December 31, 2024 and December 31, 2023, respectively.
Restricted Assets Based on fair value, fixed-maturity securities, short-term investments and cash that are either held in trust for the benefit of third-party ceding insurers in accordance with statutory requirements, placed on deposit to fulfill state licensing requirements, or otherwise pledged or restricted, totaled $77 million and $79 million as of December 31, 2025 and December 31, 2024, respectively.
Holding Companies may also require liquidity to: • make capital investments in their operating subsidiaries and in alternative investments; • fund acquisitions of new businesses; • purchase or redeem the Company’s outstanding debt; or • repurchase AGL’s common shares pursuant to AGL’s share repurchase authorization.
Holding Companies may also require liquidity to: • make capital investments in their operating subsidiaries and in alternative investments; • fund acquisitions of new businesses or expand insurance business; • purchase or redeem the Company’s outstanding debt; or • repurchase AGL’s common shares pursuant to AGL’s share repurchase authorization.
Liquidity available at the Company’s CIVs is not available for corporate liquidity needs, except to the extent of the Company’s investment in the funds, subject to redemption provisions. See Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, for additional information.
Liquidity available at the Company’s CIVs is not available for corporate liquidity needs, except to the extent of the Company’s investment in the funds, subject to redemption provisions. See Item 8. Financial Statements and Supplementary Data, Note 8. Variable Interest Entities, for additional information.
Management believes that many investors, analysts and financial news reporters use adjusted operating shareholders’ equity and/or adjusted book value, each further adjusted to remove the effect of FG VIE and CIV consolidation, as the principal financial measures for valuing AGL’s current share price or projected share price and also as the basis of their decision to recommend, buy or sell AGL’s common shares.
The Company’s management believes that many investors, analysts and financial news reporters use adjusted operating shareholders’ equity and/or ABV, each further adjusted to remove the effect of FG VIE and CIV consolidation, as the principal financial measures for valuing AGL’s current share price or projected share price and also as the basis of their decision to recommend, buy or sell AGL’s common shares.
Lower interest rates also are often accompanied by narrower spreads, which may also decrease the level of premiums the Company can charge for those products. The 30-year AAA Municipal Market Data (MMD) rate is a measure of interest rates in the Company’s largest financial guaranty insurance market, U.S. public finance.
Lower interest rates also are often accompanied by narrower credit spreads, which may also decrease the level of premiums the Company can charge for transactions. The 30-year AAA Municipal Market Data (MMD) rate is a measure of interest rates in the Company’s largest financial guaranty insurance market, U.S. public finance.
At the end of December 2024, the U.S. unemployment rate, seasonally adjusted, stood at 4.1%, higher than where it started the year at 3.8%. The Company believes a more robust economy makes it less likely that obligors whose obligations it guarantees will default. According to the U.S.
At the end of December 2025, the U.S. unemployment rate, seasonally adjusted, stood at 4.4%, higher than where it started the year at 4.1%. The Company believes a more robust economy makes it less likely that obligors whose obligations it guarantees will default. According to the U.S.
Consolidating CIVs (as opposed to accounting for them as equity method investments) has a significant effect on assets, liabilities and cash flows, and includes: (i) the establishment of the assets and liabilities of the CIVs, and related changes in fair value; (ii) eliminating the asset management fees earned by AssuredIM from the CIVs (prior to July 1, 2023); (iii) eliminating the equity method investments of the insurance subsidiaries, and related equity in earnings (losses) of investees; and (iv) establishing noncontrolling interest (NCI) for amounts not owned by the Company.
Consolidating investment vehicles in which the Company invests (as opposed to accounting for them as equity method investments) has a significant effect on assets, liabilities and cash flows, and includes: (i) the establishment of the assets and liabilities of the CIVs, and related changes in fair value; (ii) eliminating the asset management fees earned by AssuredIM from the CIVs (prior to July 1, 2023); (iii) eliminating the equity method investments of the insurance subsidiaries, and related equity in earnings (losses) of investees; and (iv) establishing NCI for amounts not owned by the Company.
There can be no assurance that actual results will conform to estimates and assumptions and that reported results of operations will not be materially different in the future due to changes in these estimates and assumptions. Listed below are the accounting policies and estimates that the Company believes are most dependent on the application of judgment and assumptions.
There can be no assurance that actual results will conform to estimates and assumptions and that reported results of operations will not be materially different in the future due to changes in these estimates and assumptions. Listed below are the accounting estimates that the Company believes are most dependent on the application of judgment and assumptions. See Item 8.
In some instances, the terms of the Company’s policy or the terms of certain workout orders and resolutions give it the option to pay principal on an accelerated basis on an obligation on which it has paid a claim, thereby reducing the amount of guaranteed interest due in the future.
In some instances, the terms of the Company’s financial guaranty policies or the terms of certain workout orders and resolutions give it the option to pay principal on an accelerated basis on an obligation on which it has paid a claim, thereby reducing the amount of guaranteed interest due in the future.
Corporate division employee compensation and benefits expenses and other operating expenses are an allocation of expenses based on time studies and represent the costs incurred and time spent on holding company activities, capital management, corporate oversight and governance including Board of Director expenses, legal fees and other direct or allocated expense.
Corporate division employee compensation and benefits expenses and other operating expenses are an allocation of expenses based on time studies and represent the costs incurred and time spent on holding company activities, capital 90 management, corporate oversight and governance including the Board’s expenses, legal fees and other direct or allocated expense.
Holding Companies’ Long-Term Debt and Intercompany Loans Year Ended December 31, 2024 2023 2022 (in millions) AGUS - long-term debt $ 79 $ 68 $ 68 AGUS - intercompany loans 10 10 10 Total AGUS 89 78 78 AGMH - long-term debt 19 19 19 AGMH’s long-term debt purchased by AGUS (10) (10) (10) Total interest paid $ 98 $ 87 $ 87 On August 21, 2023, AGUS issued $350 million of 6.125% Senior Notes due 2028.
Holding Companies’ Long-Term Debt and Intercompany Loans Year Ended December 31, 2025 2024 2023 (in millions) AGUS - long-term debt $ 76 $ 79 $ 68 AGUS - intercompany loans 10 10 10 Total AGUS 86 89 78 AGMH - long-term debt 19 19 19 AGMH’s long-term debt purchased by AGUS (10) (10) (10) Total interest paid $ 95 $ 98 $ 87 On August 21, 2023, AGUS issued $350 million of 6.125% Senior Notes due 2028.
This amount represents the present value of the expected future net earned premiums, net of the present value of expected losses to be expensed, which are not reflected in GAAP equity. 4) 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.
This amount represents the present value of the expected future net earned premiums, net of the present value of expected losses to be expensed. 4) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
Therefore, changes in such rates from period to period affect economic loss development and loss and LAE. However, the effect of changes in discount rates is not indicative of actual credit impairment or improvement. The weighted average discount rates used to discount expected losses (recoveries) were 4.38%, 4.09% and 4.08% as of December 31, 2024, 2023 and 2022, respectively.
Therefore, changes in such rates from period to period affect economic loss development and loss and LAE. However, the effect of changes in discount rates is not indicative of actual credit impairment or improvement. The weighted average discount rates used to discount expected losses (recoveries) were 3.92%, 4.38% and 4.09% as of December 31, 2025, 2024 and 2023, respectively.
(2) Excludes investments in Sound Point funds that are consolidated. See Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles. The Company’s available-for-sale fixed-maturity securities had a duration of 4.3 years as of December 31, 2024 and 3.9 years as of December 31, 2023, respectively.
(2) Excludes investments in Sound Point funds that are consolidated. See Item 8. Financial Statements and Supplementary Data, Note 8. Variable Interest Entities. The Company’s available-for-sale fixed-maturity securities had a duration of 4.9 years as of December 31, 2025 and 4.3 years as of December 31, 2024, respectively.
See “— Non-GAAP Financial Measures — PVP or Present Value of New Business Production.” PVP was discounted at 5.0%, 4.0% and 2.5% in 2024, 2023 and 2022, respectively. GWP relates to insurance and reinsurance contracts for both financial guaranty and specialty business.
See “— Non-GAAP Financial Measures — PVP or Present Value of New Business Production.” PVP was discounted at 5.0% in both 2025 and 2024 and 4.0% in 2023. GWP relates to insurance and reinsurance contracts for both financial guaranty and specialty business.
Additionally, in 2025 AG Re can make capital distributions in an aggregate amount up to $129 million without the prior approval of the Authority. Ordinary Dividends From Insurance Subsidiaries to Holding Companies Year Ended December 31, 2024 2023 2022 (in millions) Dividends paid by AG Re to AGL 97 53 — Dividends paid by AG to U.S.
Additionally, in 2026 AG Re can make capital distributions in an aggregate amount up to $129 million without the prior approval of the Authority. Ordinary Dividends From Insurance Company Subsidiaries to Holding Companies Year Ended December 31, 2025 2024 2023 (in millions) Dividends by AG Re to AGL 80 97 53 Dividends by AG to U.S.
In the Insurance segment, the Company provides credit protection products to the U.S. and non-U.S. public finance (including infrastructure) and structured finance markets. The Company participates in the asset management business through its ownership interest in Sound Point. See Item 1. Business, Asset Management, and Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation.
In the Insurance segment, the Company provides credit protection products to the U.S. and non-U.S. public finance (including infrastructure) and structured finance markets. The Company participates in the asset management business through its ownership interest in Sound Point. See Part I, Item 1. Business – Asset Management, and Item 8. Financial Statements and Supplementary Data, Note 1.
Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, credit spreads and other market factors and are not expected to result in an economic gain or loss. 2) Elimination of fair value gains (losses) on the Company’s CCS.
Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, credit spreads and other market factors and are not expected to result in an economic gain or loss. 2) Elimination of fair value gains (losses) on the Company’s CCS that are reported on the consolidated balance sheet.
The following tables include summarized financial information for AGL and the U.S. Holding Companies, excluding their investments in subsidiaries. As of December 31, 2024 AGL U.S.
The following tables include summarized financial information for AGL and the U.S. Holding Companies, excluding their investments in subsidiaries. 104 As of December 31, 2025 AGL U.S.
CVIs issued by Puerto Rico and received as part of the 2022 Puerto Rico Resolutions are classified as trading with changes in fair value reported in “fair value gains (losses) on trading securities” in the consolidated statements of operations.
CVIs issued by Puerto Rico and received as part of the resolution of defaulting Puerto Rico exposures in 2022 are classified as trading with changes in fair value reported in “fair value gains (losses) on trading securities” in the consolidated statements of operations.
Bureau of Labor Statistics, the inflation rate in the U.S. before seasonal adjustment for the 12-month period ending December 2024, as measured by the Consumer Price Index for All Urban Consumers, was 2.9%, as compared to 3.4% for the 12-month period ending December 2023. According to the U.K.
Bureau of Labor Statistics, the inflation rate in the U.S. before seasonal adjustment for the 12-month period ending December 2025, as measured by the Consumer Price Index for All Urban Consumers, was 2.7%, as compared to 2.9% for the 12-month period ending December 2024. According to the U.K.
Structured Finance Exposures As of December 31, 2024 Net Par Outstanding Percent of Total U.S.
Structured Finance Exposures As of December 31, 2025 Net Par Outstanding Percent of Total U.S.
Exposures As of December 31, 2024 Country Net Par Outstanding Percent of Total Non-U.S.
Exposures As of December 31, 2025 Country Net Par Outstanding Percent of Total Non-U.S.
See Part I, Item 1, Business - Regulation, and Part II, Item 8, Financial Statements and Supplementary Data, Note 13, Income Taxes. Adjusted Operating Income Adjusted operating income in 2024 was $389 million, compared with $648 million in 2023.
See Part I, Item 1. Business – Regulation, and Part II, Item 8. Financial Statements and Supplementary Data, Note 13. Income Taxes. Adjusted Operating Income Adjusted operating income in 2025 was $445 million, compared with $389 million in 2024.
The Company’s comparison of 2023 results to 2022 results is included in the Company’s A nnual Report on Form 10-K for the fiscal year ended December 31, 2023 , under Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The Company’s comparison of 2024 results to 2023 results is included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 , under Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
On the other hand, lower interest rates may decrease the base on which the Company charges up-front premium on most new U.S. municipal bond transactions and may also decrease amounts the Company can earn on fixed-maturity securities newly acquired for its investment portfolio.
On the other hand, lower interest rates may decrease the base on which the Company charges up-front premium on most new municipal and infrastructure bond transactions and may also decrease amounts the Company can earn on securities newly acquired for its investment portfolio.
See Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation, for the Company’s significant accounting policies which includes a reference to the applicable note where further details regarding the significant estimates and assumptions are provided.
Financial Statements and Supplementary Data, Note 1. Business and Basis of Presentation, for the Company’s list of significant accounting policies which includes a reference to the applicable note where further details regarding the significant estimates and assumptions are provided. In addition, see Item 7A.
The Corporate division primarily consists of the results of holding companies that have issued public equity or debt. The Other category in the segment tables below primarily includes the effect of consolidating FG VIEs and CIVs (FG VIE and CIV consolidation). See Item 8, Financial Statements and Supplementary Data, Note 2, Segment Information.
Business and Basis of Presentation. The Corporate division primarily consists of the results of holding companies that have issued public equity or debt. The Other category primarily includes the effect of consolidating FG VIEs and CIVs (FG VIE and CIV consolidation). See Item 8. Financial Statements and Supplementary Data, Note 2. Segment Information.
The insurance subsidiaries’ ability to pay dividends depends upon their financial condition, results of operations, cash requirements, other potential uses for such funds and compliance with rating agency requirements, and is also subject to restrictions contained in the 103 insurance laws and related regulations of their states of domicile.
The insurance subsidiaries’ ability to pay dividends depends upon their financial condition, results of operations, cash requirements, other potential uses for such funds and compliance with rating agency requirements, and is also subject to restrictions contained in the insurance laws and related regulations of their states of domicile. For more information, see Item 8.
(2) Represents the elimination of the equity in earnings (losses) of investees of AGAS and the other subsidiaries’ investments in certain alternative investments, primarily Sound Point funds (and prior to July 1, 2023, AssuredIM managed funds).
(2) Represents the elimination of the equity in earnings (losses) of investees of the Company’s investments in certain alternative investments, primarily Sound Point funds (and prior to July 1, 2023, AssuredIM managed funds).
In addition, the Company successfully defended claims brought by Lehman Brothers International (Europe) (in administration) (LBIE) and prevailed in its counterclaim against LBIE; following the exhaustion of LBIE’s appeals, the Company will recognize a gain in the first quarter of 2025 of approximately $103 million, which represents the full satisfaction of the judgment it was awarded and its claims for attorneys’ fees, expenses and interest in connection with this litigation.
In addition, the Company successfully defended claims brought by Lehman Brothers International (Europe) (in administration) (LBIE) and prevailed in its counterclaim against LBIE; following the exhaustion of LBIE’s appeals, the Company recognized a realized gain on credit derivatives in 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.
Dollar Per Foreign Currency As of December 31, 2024 2023 2022 Pound sterling $1.252 $1.273 $1.208 Euro $1.035 $1.104 $1.071 Non-GAAP Financial Measures The Company discloses both: (i) financial measures determined in accordance with GAAP; and (ii) financial measures not determined in accordance with GAAP (non-GAAP financial measures).
Dollar Per Foreign Currency As of December 31, 2025 2024 2023 Pound sterling $1.348 $1.252 $1.273 Euro $1.175 $1.035 $1.104 Non-GAAP Financial Measures The Company discloses both: (i) financial measures determined in accordance with GAAP; and (ii) financial measures not determined in accordance with GAAP (non-GAAP financial measures).
Based on applicable law and regulations, in 2025 AG Re has the capacity to declare and pay dividends in an aggregate amount up to 25% of the prior year statutory surplus (i.e., up to $272 million as of December 31, 2024); provided that such payment cannot exceed AG Re’s unencumbered assets ($192 million as of December 31, 2024) or its statutory surplus ($229 million as of December 31, 2024).
Based on applicable law and regulations, in 2026 AG Re has the capacity to declare and pay dividends in an aggregate amount up to 25% of the prior year statutory surplus (i.e., up to $292 million as of December 31, 2025); provided that such payment cannot exceed AG Re’s unencumbered assets ($213 million as of December 31, 2025) or its statutory surplus ($312 million as of December 31, 2025).
Adjusted operating shareholders’ equity is defined as shareholders’ equity attributable to AGL, as reported under GAAP, adjusted for the following: 1) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments.
Adjusted operating shareholders’ equity is defined as shareholders’ equity attributable to AGL, as reported under GAAP, adjusted for the following: 1) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives that are reported on the consolidated balance sheet, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses.
See Item 8, Financial Statements and Supplementary Data, Note 5, Contracts Accounted for as Insurance, Premiums, for additional information.
Financial Statements and Supplementary Data, Note 5. Contracts Accounted for as Insurance, Premiums, for additional information.
From September 2024 through December 2024, the FOMC lowered the federal funds rate from a target range of 5.25% to 5.50% to a range of 4.25% to 4.50%.
From September 2024 through December 2025, the FOMC lowered the federal funds rate from a target range of 5.25% to 5.50% to a range of 3.50% to 3.75%.
Meanwhile, the difference, or credit spread, between the 30-year BBB-rated general obligation relative to the 30-year AAA MMD averaged 90 basis points (bps) in 2024, which is narrower compared to the 101 bps average for 2023, but the same as the 90 bps average for 2022.
Meanwhile, the difference, or credit spread, between the 30-year BBB rated general obligation relative to the 30-year AAA MMD averaged 89 basis points (bps) in 2025, which is narrower compared to the 90 bps average for 2024 and compared to the 101 bps average for 2023.
In addition, consumer price inflation in the U.K. increases reported net par outstanding for certain U.K. exposures with approximately $23.2 billion of net par outstanding as of December 31, 2024, and also increases projected future installment premiums on the portion of such exposure that pays at least a portion of the premium on an installment basis over the term of the exposure.
In addition, consumer price inflation in the U.K. affects reported net par outstanding for certain U.K. exposures with $24.5 billion of net par outstanding as of December 31, 2025, and also affects projected future installment premiums on the portion of such exposure that pays at least a portion of the premium on an installment basis over the term of the exposure.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

21 edited+2 added−14 removed17 unchanged
Biggest changeIncrease (Decrease) in Carrying Value of Fixed-Maturity Securities and Short-Term Investments and Premiums Receivable from Changes in Foreign Exchange Rates Fixed-Maturity Securities and Short-Term Investments Premium Receivable, net of Reinsurance and Commissions Payable As of December 31, As of December 31, 2024 2023 2024 2023 (in millions) Decrease of 30% $ (207) $ (227) $ (319) $ (305) Decrease of 20% (138) (151) (213) (204) Decrease of 10% (69) (76) (106) (102) Increase of 10% 69 76 106 102 Increase of 20% 138 151 213 204 Increase of 30% 207 227 319 305 See Part II, Item 8, Financial Statements and Supplementary Data, Note 7, Investments and Cash, and Note 5, Contracts Accounted for as Insurance, for additional information.
Biggest changeChanges in premiums receivable attributable to changes in foreign exchange rates are reported in the consolidated statements of operations. 116 Increase (Decrease) in Carrying Value of Fixed-Maturity Securities and Short-Term Investments and Premiums Receivable from Changes in Foreign Exchange Rates Fixed-Maturity Securities and Short-Term Investments Premium Receivable, net of Reinsurance and Commissions Payable As of December 31, As of December 31, 2025 2024 2025 2024 (in millions) Decrease of 30% $ (237) $ (207) $ (320) $ (319) Decrease of 20% (158) (138) (213) (213) Decrease of 10% (79) (69) (107) (106) Increase of 10% 79 69 107 106 Increase of 20% 158 138 213 213 Increase of 30% 237 207 320 319 See Item 8, Financial Statements and Supplementary Data, Note 7.
The Company is primarily affected by market risk in the following areas. • New business production is sensitive to changes in interest rates and credit spreads. • Expected loss to be paid (recovered) is sensitive to changes in interest rates. • The fair value of the investment portfolio is primarily driven by changes in interest rates and also affected by changes in credit spreads. • The fair value of the investment portfolio contains non-U.S. dollar denominated securities whose value also fluctuates based on changes in foreign exchange rates.
The Company is primarily affected by market risk in the following areas. • New business production is sensitive to changes in interest rates and credit spreads. • Expected loss to be paid (recovered) is sensitive to changes in interest rates. • The fair value of the investment portfolio is primarily driven by changes in interest rates and also affected by changes in credit spreads. • The investment portfolio contains non-U.S. dollar denominated securities whose value also fluctuates based on changes in foreign exchange rates.
The fair value of the FG VIEs’ liabilities also fluctuates based on changes in the Company’s credit spread. Sensitivity of New Business Production to Changes in Interest Rates and Credit Spreads Fluctuations in interest rates and credit spreads also affect the demand for the Company’s product.
The fair value of the FG VIEs’ liabilities also fluctuates based on changes in the Company’s credit spread. Sensitivity of New Business Production to Changes in Interest Rates and Credit Spreads Fluctuations in interest rates and credit spreads affect the demand for the Company’s product.
The carrying value of premiums receivable includes foreign denominated receivables whose values fluctuate based on changes in foreign exchange rates. • The fair value of credit derivatives within the financial guaranty portfolio of insured obligations is sensitive to changes in credit spreads of the underlying obligations and the Company’s own credit spreads. • The fair value of the assets and liabilities of consolidated FG VIEs may fluctuate based on changes in prepayments, spreads, default rates, interest rates and house prices.
Premiums receivable includes foreign denominated receivables whose values fluctuate based on changes in foreign exchange rates. • The fair value of credit derivatives within the financial guaranty portfolio of insured obligations is sensitive to changes in credit spreads of the underlying obligations and the Company’s own credit spreads. • The fair value of the assets and liabilities of consolidated FG VIEs may fluctuate based on changes in prepayments, spreads, default rates, interest rates and house prices.
When interest rates are lower or when the market is otherwise relatively less risk averse, the spread between insured and uninsured obligations typically narrows and, as a result, financial guaranty insurance typically provides lower cost savings to issuers than it would during periods of relatively wider spreads.
When interest rates are lower or when the market is less risk averse, the spread between insured and uninsured obligations typically narrows and, as a result, financial guaranty insurance typically provides lower cost savings to issuers than it would during periods of relatively wider spreads.
The models to price the FG VIEs’ liabilities used, where appropriate, the same inputs used in determining fair value of FG VIEs’ assets and, for those liabilities insured by the Company, the benefit from the Company's insurance policy guaranteeing the timely payment of principal and interest, taking into account the Company’s own credit risk.
The models that price the FG VIEs’ liabilities used, where appropriate, the same inputs used in determining fair value of FG VIEs’ assets and, for those liabilities insured by the Company, the benefit from the Company's insurance policy guaranteeing the timely payment of principal and interest, taking into account the Company’s own credit risk.
The Company has foreign denominated securities in its investment portfolio as well as foreign denominated premium receivables. The Company’s material exposure is to changes in U.S. dollar/pound sterling and U.S. dollar/euro exchange rates. Securities denominated in currencies other than U.S. dollar were 8.9% and 9.1% of the fixed-maturity securities and short-term investments as of December 31, 2024 and 2023, respectively.
The Company has foreign denominated securities in its investment portfolio as well as foreign denominated premium receivables. The Company’s material exposure is to changes in U.S. dollar/pound sterling and U.S. dollar/euro exchange rates. Securities denominated in currencies other than U.S. dollar were 12.1% and 8.9% of the fixed-maturity securities and short-term investments as of December 31, 2025 and 2024, respectively.
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 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.
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 or a decrease in recoveries typically leads to a decrease in the fair value of FG VIEs’ assets, while a decrease in collateral losses or an increase in recoveries typically leads to an increase in the fair value of FG VIEs’ assets.
The fair value of credit derivative contracts also reflects the change in the Company’s own credit cost, based on the price to purchase credit protection on AG. Historically, the price of CDS traded on AG typically moved directionally the same as general market spreads, although this may not always be the case.
The fair value of credit derivative contracts also reflects the change in the Company’s own credit cost, based on the price to purchase credit protection on AG. Historically, the price of CDS traded on AG typically moved directionally the same as general market spreads, although this is not always the case.
See Part II, Item 8, Financial Statements and Supplementary Data, Note 7, Investments and Cash, for additional information. 112 Sensitivity to Foreign Exchange Rate Risk Foreign exchange risk is the risk that a financial instrument’s value will change due to a change in the foreign currency exchange rates.
See Item 8, Financial Statements and Supplementary Data, Note 7. Investments and Cash, for additional information. Sensitivity to Foreign Exchange Rate Risk Foreign exchange risk is the risk that a financial instrument’s value will change due to a change in the foreign currency exchange rates.
Significant changes to some of these inputs could materially change the fair value of the FG VIEs’ assets and the implied collateral losses within the transaction.
Significant changes to some of these inputs could materially change the fair value of the FG VIEs’ assets and the implied collateral losses or recoveries within the transaction.
The minimum premium assumption had no effect on the fair 113 value of CDS contracts as of December 31, 2024 or December 31, 2023. The percentage of transactions that price using the minimum premium fluctuates due to changes in AG’s credit spreads.
The minimum premium assumption had no effect on the fair value of CDS contracts as of December 31, 2025 or December 31, 2024. The percentage of transactions that price using the minimum premium fluctuates due to changes in AG’s credit spreads.
The quoted price of five-year CDS contracts traded on AG at December 31, 2024 and December 31, 2023 was 75 bps and 66 bps, respectively. 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.
The quoted price of five-year CDS contracts traded on AG as of December 31, 2025 and December 31, 2024 was 69 bps and 75 bps, respectively. 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.
Changes in fair value of available-for-sale investments attributable to changes in foreign exchange rates are recorded in other comprehensive income. Approximately 69% and 70% of installment premiums at December 31, 2024 and December 31, 2023, respectively, are denominated in currencies other than the U.S. dollar, primarily the pound sterling and euro.
Changes in fair value of available-for-sale investments attributable to changes in foreign exchange rates are recorded in other comprehensive income. Approximately 68% and 69% of installment premiums as of December 31, 2025 and December 31, 2024, respectively, are denominated in currencies other than the U.S. dollar, primarily the pound sterling and euro.
Increase (Decrease) in Fair Value (Pre-Tax) of Fixed-Maturity Securities and Short-Term Investments from Changes in Interest Rates (1) As of December 31, 2024 2023 (in millions) Decrease of 300 bps $ 875 $ 804 Decrease of 200 bps 572 547 Decrease of 100 bps 281 267 Increase of 100 bps (275) (261) Increase of 200 bps (546) (520) Increase of 300 bps (804) (774) ____________________ (1) Sensitivity analysis assumes a floor of zero for interest rates.
Increase (Decrease) in Fair Value (Pre-Tax) of Fixed-Maturity Securities and Short-Term Investments from Changes in Interest Rates (1) As of December 31, 2025 2024 (in millions) Decrease of 300 bps $ 1,006 $ 875 Decrease of 200 bps 648 572 Decrease of 100 bps 321 281 Increase of 100 bps (317) (275) Increase of 200 bps (625) (546) Increase of 300 bps (916) (804) ____________________ (1) Sensitivity analysis assumes a floor of zero for interest rates.
The following table summarizes the estimated change in fair values on the net balance of the Company’s credit derivative positions assuming an immediate shift in the net spreads assumed by the Company. The net spread includes the spread of the underlying collateral and the credit spreads on AG.
The following table summarizes the estimated change in fair value on the net balance of the Company’s credit derivative positions assuming an immediate shift in the net spreads assumed by the Company.
Sensitivity of Credit Derivatives to Changes in Credit Spreads Fair value gains and losses on credit derivatives are sensitive to changes in credit spreads of the underlying obligations and the Company’s own credit spread. Market liquidity could also impact valuations of the underlying obligations.
Investments and Cash, and Note 5. Contracts Accounted for as Insurance, for additional information. Sensitivity of Credit Derivatives to Changes in Credit Spreads Fair value gains and losses on credit derivatives are sensitive to changes in credit spreads of the underlying obligations and the Company’s own credit spread. Market liquidity could also impact valuations of the underlying obligations.
Effect of Changes in Credit Spread on Credit Derivatives As of December 31, 2024 As of December 31, 2023 Credit Spreads Estimated Net Fair Value (Pre-Tax) Estimated Change in Gain/(Loss) (Pre-Tax) Estimated Net Fair Value (Pre-Tax) Estimated Change in Gain/(Loss) (Pre-Tax) (in millions) Increase of 25 bps $ (92) $ (63) $ (115) $ (65) Base Scenario (29) — (50) — Decrease of 25 bps (14) 15 (29) 21 All transactions priced at floor (12) 17 (12) 38 See Part II, Item 8, Financial Statements and Supplementary Data, Note 6, Contracts Accounted for as Credit Derivatives, for additional information.
The net spread includes the spread of the underlying collateral and the credit spreads on AG. 117 Effect of Changes in Credit Spread on Credit Derivatives As of December 31, 2025 As of December 31, 2024 Credit Spreads Estimated Net Fair Value (Pre-Tax) Estimated Change in Gain/(Loss) (Pre-Tax) Estimated Net Fair Value (Pre-Tax) Estimated Change in Gain/(Loss) (Pre-Tax) (in millions) Increase of 25 bps $ (72) $ (57) $ (92) $ (63) Base Scenario (15) — (29) — Decrease of 25 bps (6) 9 (14) 15 All transactions priced at floor (5) 10 (12) 17 See Item 8, Financial Statements and Supplementary Data, Note 6.
See Part II, Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, for additional information. 114
See Item 8, Financial Statements and Supplementary Data, Note 8. Variable Interest Entities, for additional information. 118
See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Results of Operations — Insurance Segment — New Business Production, for additional information.
See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Results of Operations — Insurance Segment — New Business Production, for additional information. 115 Sensitivity of Expected Loss to be Paid (Recovered) to Interest Rates Changes in interest rates or future interest rate expectations can affect the Company's expected loss to be paid or recovered.
There are several RMBS transactions in the Company’s insured portfolio which benefit from excess spread either by using it to cover losses in a particular period or to reimburse past claims under the Company’s policies. As of December 31, 2024, the Company projects that the maximum potential excess spread at risk in the U.S. RMBS transactions is approximately $4 million.
The effect of changes in discount rates on expected losses to be paid were losses of $7 million in 2025, $4 million in 2024 and $3 million in 2023. As of December 31, 2025, the Company projects that the maximum potential excess spread at risk in the U.S. RMBS transactions is approximately $1 million.
Removed
Sensitivity of Expected Loss to be Paid (Recovered) to Interest Rates Expected losses to be paid (recovered), and therefore loss reserves and loss and LAE, are sensitive to changes in interest rates in several ways.
Added
Higher interest rates can decrease the present value of future expected cash flows (whether recoveries or losses), reduce excess spread recoveries in transactions with mismatches between collateral and liability interest rates and reduce the value of fixed maturity bonds that may be part of the Company's recoveries. Lower interest rates would generally have the opposite effect.
Removed
First, expected losses to be paid are discounted at the end of each reporting period at the risk-free rate, such that an increase in discount rates has the effect of reducing net expected loss to be paid or reducing net expected recoverables.
Added
Contracts Accounted for as Credit Derivatives, for additional information.
Removed
The effect of changes in discount rates on expected losses to be paid was a loss of $4 million in 2024, a loss of $3 million in 2023 and a gain of $115 million in 2022. The gain related to changes in discount rates was highest in 2022 as interest rates rose from historically low levels during 2022.
Removed
Some of the Company’s expected losses to be paid (recovered) relate to insured obligations with variable interest rates. Fluctuations in interest rates impact the performance of insured transactions where there are differences between the interest rates on the underlying collateral and the interest rates on the insured securities.
Removed
For example, a rise in interest rates could increase the amount of losses the Company projects for certain RMBS and student loan transactions.
Removed
The impact of fluctuations in interest rates on such transactions varies, depending on, among other things, the interest rates on the underlying collateral and insured securities, the relative amounts of underlying collateral and liabilities, the structure of the transaction and the sensitivity to interest rates of the behavior of the underlying borrowers and the value of the underlying assets. 111 In the case of RMBS, fluctuations in interest rates impact the amount of periodic excess spread, which is created when a trust’s underlying collateral produce interest that exceeds the amount required to pay interest on the insured notes.
Removed
Since RMBS excess spread is determined by the relationship between interest rates on the underlying collateral and of the trust’s certificates, it can be affected by unmatched moves in either of these interest rates.
Removed
For example, modifications to underlying mortgage rates (e.g., rate reductions for troubled borrowers) can reduce excess spread when an upswing in short-term rates that increases the trust’s certificate interest rate is not met with equal increases to the interest rates on the underlying mortgages.
Removed
These potential reductions in excess spread are often mitigated by an interest rate cap, which goes into effect once the collateral rate falls below the stated certificate rate. Interest due on most of the RMBS transactions the Company insures is capped at the collateral rate.
Removed
The Company is not obligated to pay additional claims when the collateral interest rate drops below the trust's certificate stated interest rate, rather this just causes the Company to lose the benefit of potential positive excess spread.
Removed
Additionally, faster than expected prepayments can decrease the dollar amount of excess spread and therefore reduce the cash flow available to cover losses or reimburse past claims. Interest rates can also have indirect effects on the underlying performance or value of collateral backing an obligation.
Removed
Higher interest rates can lead to slower prepayments of debt, and can cause market prices of financed assets to decline. Conversely, lower interest rates can lead to faster prepayment and higher potential recovery values.
Removed
In addition, the value of expected recoveries that are in the form of bonds or other securities (which are sensitive to changes in interest rates) also affects the net expected loss to be paid (recovered). See Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure and Note 4, Expected Loss to be Paid (Recovered).
Removed
Changes in premiums receivable attributable to changes in foreign exchange rates are reported in the consolidated statement of operations.

Other AGO 10-K year-over-year comparisons