# ASSURED GUARANTY LTD (AGO) FY 2024 MD&A Verbatim Item 7 Management's Discussion and Analysis from ASSURED GUARANTY LTD's 10-K for fiscal year 2024. SEC filing source: https://www.sec.gov/Archives/edgar/data/1273813/000127381325000011/ago-20241231.htm Accession: 0001273813-25-000011 Filing date: 2025-02-28 Report date: 2024-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Company profile: /company/AGO/ All MD&A years: /company/AGO/mda/ Previous year: /company/AGO/mda/fy2023/ (FY 2023) Next year: /company/AGO/mda/fy2025/ (FY 2025) ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For a more detailed description of events, trends and uncertainties, as well as the capital, liquidity, credit, operational and market risks and the critical accounting policies and estimates affecting the Company, the following discussion and analysis of the Company’s financial condition and results of operations should be read in its entirety with the Company’s consolidated financial statements and accompanying notes which appear elsewhere in this Form 10-K. The following discussion and analysis of the Company’s financial condition and results of operations contains forward looking statements that involve risks and uncertainties. See “Forward Looking Statements” for more information. 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 comparison of 2023 results to 2022 results is included in the Company’s Annual 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. Overview Business The Company reports its results of operations in two distinct segments, Insurance and Asset Management, consistent with the manner in which the Company’s chief operating decision maker reviews the business to assess performance and allocate resources. The Company’s Corporate division and other activities (including financial guaranty VIEs (FG VIEs) and CIVs) are presented separately. In the Insurance segment, the Company provides credit protection products to the U.S. and non-U.S. public finance (including infrastructure) and structured finance markets. The Company participates in the asset management business through its ownership interest in Sound Point. See Item 1. Business, Asset Management, and Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation. The Corporate division primarily consists of the results of holding companies that have issued public equity or debt. The Other category in the segment tables below primarily includes the effect of consolidating FG VIEs and CIVs (FG VIE and CIV consolidation). See Item 8, Financial Statements and Supplementary Data, Note 2, Segment Information. Economic Environment Real gross domestic product (GDP) increased 2.8% in 2024, compared to an increase of 2.9% in 2023, according to the second estimate released by the U.S. Bureau of Economic Analysis (BEA). Additionally, the BEA reported real GDP increased at an annual rate of 2.3% in the fourth quarter of 2024. 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. 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. Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs rose 3.5% for the 12 months through December 2024, as compared to 4.2% for the 12 months through December 2023. The Company believes that higher inflation may put pressure on the budgets of obligors whose obligations it guarantees and make defaults more likely. In addition, consumer price inflation in the U.K. increases reported net par outstanding for certain U.K. exposures with approximately $23.2 billion of net par outstanding as of December 31, 2024, and also increases projected future installment premiums on the portion of such exposure that pays at least a portion of the premium on an installment basis over the term of the exposure. At its September 17-18, 2024 meeting, the Federal Open Market Committee (FOMC) decided to lower the federal funds rate, which was a reversal of the rate increases it had initiated in March 2022 to combat inflation. The federal funds rate is the rate at which banks lend to and borrow from each other, is the benchmark for most interest rates, and tends to influence mortgage rates. As the federal funds rate decreases, interest rates, including mortgage rates, tend to decrease. From September 2024 through December 2024, the FOMC lowered the federal funds rate from a target range of 5.25% to 5.50% to a range of 4.25% to 4.50%. At its January 28-29, 2025 meeting, the FOMC held the federal funds at a range of 4.25% to 4.50%, stating 69 that it seeks to achieve maximum employment and inflation at the rate of 2% over the longer run, and that the risks to achieving its employment and inflation goals are roughly in balance. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the FOMC has indicated it will carefully assess incoming data, the evolving outlook, and the balance of risks. These assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. The level and direction of change of interest rates and credit spreads impact the Company in numerous ways. On the one hand, lower interest rates may increase the fair value of fixed-maturity securities currently held in the Company’s investment portfolio, encourage municipal bond issuance and positively impact the finances of some of the obligors whose payments the Company insures. On the other hand, lower interest rates may decrease the base on which the Company charges up-front premium on most new U.S. municipal bond transactions and may also decrease amounts the Company can earn on fixed-maturity securities newly acquired for its investment portfolio. Lower interest rates also are often accompanied by narrower spreads, which may also decrease the level of premiums the Company can charge for those products. The 30-year AAA Municipal Market Data (MMD) rate is a measure of interest rates in the Company’s largest financial guaranty insurance market, U.S. public finance. The MMD rate averaged 3.68% for 2024, similar to the 3.65% rate in 2023 but higher than the 3.00% average for 2022. Meanwhile, the difference, or credit spread, between the 30-year BBB-rated general obligation relative to the 30-year AAA MMD averaged 90 basis points (bps) in 2024, which is narrower compared to the 101 bps average for 2023, but the same as the 90 bps average for 2022. The Company believes that wider spreads could permit it to increase its premium rates on new business. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.85% as of December 26, 2024, near the 30-year mortgage rate of 6.61% from one year ago. The Company believes that restricted housing inventory continues to influence home prices where demand outpaces supply. Higher housing prices may benefit distressed RMBS the Company insures. The National Association of Realtors reported that year-over-year existing-home sales increased 9.3% from December 2023 to December 2024, and that the median existing-home sales price also increased from December 2023 ($381,400) to December 2024 ($404,400), a 6.0% increase. Key Business Strategies The Company continually evaluates its business strategies and is currently pursuing key business strategies in four areas: (i) insurance; (ii) asset management, (iii) alternative investments; and (iv) capital management. Insurance The Company seeks to grow the insurance business through new business production in established sectors and jurisdictions and by entering into new markets and classes of business. The Company also furthers its insurance strategy by mitigating losses in its insured portfolio. Growth of the Insured Portfolio The Company seeks to grow its financial guaranty insurance portfolio through new business production in each of its markets: public finance (including infrastructure) and structured finance. The Company believes high-profile defaults by municipal obligors, such as Puerto Rico, Detroit, Michigan and Stockton, California as well as events such as the COVID-19 pandemic have led to increased awareness of the value of bond insurance and stimulated demand for the product. The Company believes there will be continued demand for its insurance in this market because, for those exposures that the Company guarantees, it undertakes the tasks of credit selection, analysis, negotiation of terms, surveillance and, if necessary, loss mitigation. The Company believes that its insurance: (i) encourages retail investors, who typically have fewer resources than the Company for analyzing municipal bonds, to purchase such bonds; (ii) enables institutional investors to operate more efficiently; and (iii) allows smaller, less well-known issuers to gain market access on a more cost-effective basis. The low interest rate environment and tight U.S. municipal credit spreads from when the financial crisis began in 2008 through early 2020 dampened demand for bond insurance compared with the levels before the financial crisis. After the onset of the COVID-19 pandemic in early 2020, credit spreads initially widened as a result of market concerns about the impact of the COVID-19 pandemic on some municipal credits, thereby improving demand for financial guaranty insurance even in a low interest rate environment, before narrowing again in 2022. The Company believes that, over time, wider credit spreads may improve demand for bond insurance. 70 In certain segments of the infrastructure and structured finance markets, the Company believes its financial guaranty product is competitive with other financing options. For example, certain investors may receive advantageous capital requirement treatment with the addition of the Company’s guaranty. The Company considers its involvement in both infrastructure and structured finance transactions to be beneficial because such transactions diversify both the Company’s business opportunities and its risk profile beyond U.S. public finance. The timing of new business production in the infrastructure and structured finance sectors is influenced by typically long lead times and therefore may vary from period to period. U.S. Municipal Market Data and Bond Insurance Penetration Rates (1) Based on Sale Date [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(dollars in billions)"],["Par:"],["New municipal bonds issued","$","495.9","","","$","362.8","","","$","359.7"],["Total insured","$","41.1","","","$","31.8","","","$","28.8"],["Insured by Assured Guaranty","$","24.0","","","$","19.5","","","$","17.0"],["Number of issues:"],["New municipal bonds issued","8,640","","","7,268","","","7,902"],["Total insured","1,680","","","1,397","","","1,420"],["Insured by Assured Guaranty","791","","","645","","","648"],["Bond insurance market penetration based on:"],["Par","8.3","%","","8.8","%","","8.0","%"],["Number of issues","19.4","%","","19.2","%","","18.0","%"],["Single A par sold","24.0","%","","31.1","%","","30.2","%"],["Single A transactions sold","64.1","%","","61.6","%","","59.0","%"],["$25 million and under par sold","23.8","%","","24.6","%","","21.9","%"],["$25 million and under transactions sold","24.6","%","","23.6","%","","21.4","%"]] [[/GREPCENT_TABLE]] ____________________ (1)    Source: The amounts in the table are those reported by London Stock Exchange Group. The table excludes private placements and Corporate-CUSIP transactions insured by Assured Guaranty, certain of which the Company also considers to be public finance business. The Company also considers opportunities to acquire financial guaranty portfolios, whether by acquiring financial guarantors that are no longer actively writing new business or their insured portfolios, generally through reinsurance or novations. These transactions enable the Company to improve its future earnings and deploy excess capital. Merger of the U.S. Insurance Subsidiaries On August 1, 2024, AGM merged with and into AG, with AG as the surviving company. Upon the merger all liabilities of AGM, including insurance policies issued or assumed by AGM, became obligations of AG. The Company believes that Assured Guaranty’s simplified organizational and capital structure following the merger will help it grow its business. The combined company, as compared with either AG or AGM before the merger, has a larger, more highly diversified insured portfolio, a larger investment portfolio and a larger capital base, creating a more efficient capital structure and greater claims-paying resources. In addition, the combined company, as compared with either AG or AGM before the merger, has larger regulatory single risk limits. Such limits are applicable to each individual financial guaranty insurer for obligations issued by a single entity and backed by a single revenue source. Since the combined company has greater policyholder’s surplus and contingency reserves, as compared to standalone AG or AGM before the merger, the dollar amounts for its single risk limits on obligations issued by a single entity and backed by a single revenue source are also greater. Prior to the merger, AG had been directly owned by AGUS. As a result of the merger, effective as of August 1, 2024, AG is directly owned by AGMH, a subsidiary of AGUS. 71 Loss Mitigation In an effort to avoid, reduce or recover losses and potential losses in its insurance portfolio, the Company employs a number of strategies. In the public finance area, the Company believes its experience and the resources it is prepared to deploy, as well as its ability to provide bond insurance or other solutions, result in more favorable outcomes in distressed public finance situations than would be the case without its participation. This has been illustrated by the Company’s role in negotiating various agreements in connection with the restructuring of obligations of the Commonwealth of Puerto Rico and various obligations of its related authorities and public corporations, as well as Detroit, Michigan and Stockton, California. The Company will also, where appropriate, participate in litigation to enforce or defend its rights. For example, the Company initiated a number of legal actions to enforce its rights with respect to obligations of the Commonwealth of Puerto Rico and various obligations of its related authorities and public corporations. In addition, the Company successfully defended claims brought by Lehman Brothers International (Europe) (in administration) (LBIE) and prevailed in its counterclaim against LBIE; following the exhaustion of LBIE’s appeals, the Company will recognize a gain in the first quarter of 2025 of approximately $103 million, which represents the full satisfaction of the judgment it was awarded and its claims for attorneys’ fees, expenses and interest in connection with this litigation. See, Item 8, Financial Statements and Supplementary Data, Note 17, Contingencies, Litigation, for additional information. The Company is, and for several years has been, working with the servicers of some of the U.S. RMBS transactions it insures to encourage the servicers to provide alternatives to distressed borrowers that will encourage them to continue making payments on their loans to help improve the performance of the related RMBS. For public finance credits, the Company’s surveillance function monitors and proactively engages with the distressed credits to offer assistance aimed to improve operations and financial performance, including access to external consultants and other industry experts. The Company may also purchase attractively priced obligations, including BIG obligations, that it has insured and for which it had expected losses to be paid, in order to mitigate the economic effect of insured losses (Loss Mitigation Securities). The fair value of Loss Mitigation Securities as of December 31, 2024 (excluding the value of the Company’s insurance) was $479 million. In some instances, the terms of the Company’s policy or the terms of certain workout orders and resolutions give it the option to pay principal on an accelerated basis on an obligation on which it has paid a claim, thereby reducing the amount of guaranteed interest due in the future. The Company has at times exercised this option, which uses cash but reduces projected future losses. The Company may also facilitate the issuance of refunding bonds, by either providing insurance on the refunding bonds or purchasing refunding bonds, or both. Refunding bonds may provide the issuer with payment relief. Asset Management Until July 1, 2023, the Company pursued its asset management strategy through AssuredIM. Upon the closing of the transaction with Sound Point (Sound Point Transaction) and the AHP Transaction, effective as of July 1, 2023, the Company participates in the asset management business through its ownership interest in Sound Point, and no longer directly manages investments for third parties. The Company’s ownership interest in Sound Point furthers its strategy of participating in a fee-based earnings stream independent of the risk-based premiums generated by its financial guaranty business. The Sound Point business was strengthened by the addition of AssuredIM’s AUM (excluding AUM relating to AHP). See Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation, for a description of the Sound Point Transaction and the AHP Transaction. Alternative Investments The Company seeks to maintain an investment portfolio that supports the requirements of its insurance subsidiaries, strategic initiatives and liquidity needs, while maximizing the income it earns from such investments. In support of that goal, the Company aims to diversify the types of investments in its portfolio. The Company expects its relationship with Sound Point to also enhance its alternative investment opportunities and the return on its investments. The Company has agreed to invest an aggregate amount of $1.5 billion in alternative investments, including $1 billion in Sound Point managed investments. 72 Capital Management The Company has developed strategies to efficiently manage capital within the Assured Guaranty group. From 2013 through February 27, 2025, the Company has repurchased 151 million common shares for approximately $5.4 billion, representing approximately 78% of the total shares outstanding at the beginning of the repurchase program in 2013. On May 2, 2024 and November 8, 2024, the AGL Board of Directors (the Board) authorized the repurchase of an additional $300 million and $250 million, respectively, of the Company’s common shares. Under this and previous authorizations, as of February 27, 2025, the remaining amount the Company was authorized to purchase was approximately $276 million of its common shares. Shares may be repurchased from time to time in the open market or in privately negotiated transactions. The timing, form and amount of the share repurchases under the program are at the discretion of management and will depend on a variety of factors, including funds available at the parent company, other potential uses for such funds, market conditions, the Company’s capital position, legal requirements and other factors. The repurchase program may be modified, extended or terminated by the Board at any time and it does not have an expiration date. See Item 8, Financial Statements and Supplementary Data, Note 18, Shareholders’ Equity, for additional information about the Company’s repurchases of its common shares. Summary of Share Repurchases [[GREPCENT_TABLE]] [["","Amount (1)","","Number of Shares","","Average price per share (1)"],["","(in millions, except per share data)"],["2013-2023","$","4,860","","","144.09","","","$","33.73"],["2024","502","","","6.18","","","81.28"],["2025 (through February 27, 2025)","76","","","0.83","","","91.53"],["Cumulative repurchases since the beginning of 2013","$","5,438","","","151.10","","","35.99"]] [[/GREPCENT_TABLE]] ____________________ (1)    Excludes commissions and excise taxes. As of December 31, 2024, the estimated accretive effect of the cumulative repurchases of common shares since the beginning of 2013 was approximately: $54.83 per share in shareholders’ equity attributable to AGL, $59.27 per share in adjusted operating shareholders’ equity, and $100.61 per share in adjusted book value. In May 2024, the NYDFS approved, and AGM implemented, the redemption of approximately $100 million of AGM’s shares of common stock from AGMH. In connection with the merger of AGM into AG, the MIA approved, and in the third quarter of 2024 AG implemented, the redemption of approximately $300 million of AG’s shares of common stock from AGMH in exchange for cash of $167 million and the remainder in alternative investments. The Company considers the appropriate mix of debt and equity in its capital structure. The Company may in the future choose to issue new debt or redeem or purchase its existing debt. See “— Liquidity and Capital Resources — AGL and its U.S. Holding Companies.” Executive Summary The primary drivers of volatility in the Company’s net income include: loss and loss adjustment expense (LAE), changes in fair value of credit derivatives, FG VIEs, CIVs, trading securities and CCS, as well as foreign exchange gains (losses), the level of refundings of insured obligations, changes in the value of the Company’s alternative investments, the effects of any large transactions, settlements, commutations and loss mitigation strategies, among other factors. Changes in laws and regulations, among other factors, may also have a significant effect on reported net income or loss in a given reporting period. 73 Financial Performance of Assured Guaranty Financial Results [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions, except per share amounts)"],["GAAP"],["Net income (loss) attributable to AGL","$","376","","","$","739","","","$","124"],["Net income (loss) attributable to AGL per diluted share","$","6.87","","","$","12.30","","","$","1.92"],["Weighted average diluted shares","54.3","","","59.6","","","63.9"],["Non-GAAP"],["Adjusted operating income (loss) (1)","$","389","","","$","648","","","$","267"],["Adjusted operating income per diluted share","$","7.10","","","$","10.78","","","$","4.14"],["Weighted average diluted shares","54.3","","","59.6","","","63.9"],["Components of total adjusted operating income (loss)"],["Insurance segment","$","525","","","$","621","","","$","413"],["Asset Management segment","5","","","3","","","(6)"],["Corporate division (2)","(135)","","","45","","","(134)"],["Other (3)","(6)","","","(21)","","","(6)"],["Adjusted operating income (loss)","$","389","","","$","648","","","$","267"],["Insurance Segment"],["Gross written premiums (GWP)","$","440","","","$","357","","","$","360"],["Present value of new business production (PVP) (1)","402","","","404","","","375"],["Gross par written","31,829","","","28,960","","","22,047"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","","As of December 31, 2024","","As of December 31, 2023"],["","","Amount","","Per Share","","Amount","","Per Share"],["","","(in millions, except per share amounts)"],["Shareholders\u2019 equity attributable to AGL","","$","5,495","","","$","108.80","","","$","5,713","","","$","101.63"],["Adjusted operating shareholders\u2019 equity (1)","","5,795","","","114.75","","","5,990","","","106.54"],["Adjusted book value (1)","","8,592","","","170.12","","","8,765","","","155.92"],["Common shares outstanding (4)","","50.5","","","","","56.2"]] [[/GREPCENT_TABLE]] ____________________ (1)    See “— Non-GAAP Financial Measures” for a definition of the financial measures that were not determined in accordance with accounting principles generally accepted in the United States of America (GAAP), a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure, if available, and for additional details. (2)    In 2023, the Corporate division results include the gain on the Sound Point Transaction and AHP Transaction. (3)    Relates to the effect of consolidating FG VIEs and CIVs. (4)    See “— Overview— Key Business Strategies – Capital Management” above for information on common share repurchases. 74 Consolidated Results of Operations Consolidated Results of Operations [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["Revenues:"],["Net earned premiums","$","403","","","$","344","","","$","494"],["Net investment income","340","","","365","","","269"],["Asset management fees","\u2014","","","53","","","93"],["Net realized investment gains (losses)","9","","","(14)","","","(56)"],["Fair value gains (losses) on credit derivatives","24","","","114","","","(11)"],["Fair value gains (losses) on CCS","(10)","","","(35)","","","24"],["Fair value gains (losses) on FG VIEs","(11)","","","8","","","22"],["Fair value gains (losses) on CIVs","69","","","88","","","17"],["Foreign exchange gains (losses) on remeasurement","(27)","","","53","","","(112)"],["Fair value gains (losses) on trading securities","52","","","74","","","(34)"],["Gain on sale of asset management subsidiaries","\u2014","","","262","","","\u2014"],["Other income (loss)","23","","","61","","","17"],["Total revenues","872","","","1,373","","","723"],["Expenses:"],["Loss and LAE (benefit)","(26)","","","162","","","16"],["Interest expense","91","","","90","","","81"],["Amortization of deferred acquisition cost (DAC)","20","","","13","","","14"],["Employee compensation, benefit and other operating expenses:"],["Asset management subsidiaries","6","","","91","","","140"],["Insurance and other subsidiaries","355","","","377","","","285"],["Total expenses","446","","","733","","","536"],["Income (loss) before income taxes and equity in earnings (losses) of investees","426","","","640","","","187"],["Equity in earnings (losses) of investees","62","","","28","","","(39)"],["Income (loss) before income taxes","488","","","668","","","148"],["Less: Provision (benefit) for income taxes","96","","","(93)","","","11"],["Net income (loss)","392","","","761","","","137"],["Less: Noncontrolling interests","16","","","22","","","13"],["Net income (loss) attributable to Assured Guaranty Ltd.","$","376","","","$","739","","","$","124"],["Effective tax rate","19.7","%","","(13.9)","%","","7.2","%"]] [[/GREPCENT_TABLE]] Net income attributable to AGL in 2024 was lower compared with 2023 primarily due to the following: •the gain associated with the Sound Point Transaction and AHP Transaction, net of transaction expenses, of $175 million (after-tax) in 2023, •the benefit related to Bermuda tax law changes of $189 million in 2023, •lower fair value gains on credit derivatives of $24 million in 2024 compared with $114 million in 2023, •foreign exchange remeasurement losses of $27 million in 2024, compared with gains of $53 million in 2023, and •lower other income due to the reversal of a previously recorded litigation accrual of $20 million in 2023. These decreases were partially offset by: •lower loss and LAE, which was a benefit of $26 million in 2024 compared with a loss of $162 million in 2023, 75 •a large refunded transaction which was the primary driver of the increase in net earned premiums to $403 million in 2024 from $344 million in 2023, and •higher equity earnings from the alternative investment portfolio, which was $62 million in 2024 compared with $28 million in 2023. The Company’s effective tax rate reflects the proportion of income recognized by each of the Company’s operating subsidiaries, with U.S. subsidiaries generally taxed at the U.S. marginal corporate income tax rate of 21%, U.K. subsidiaries taxed at the U.K. marginal corporate tax rate of 25% for periods starting April 1, 2023, and 19% for periods ending on or before March 31, 2023, and the French subsidiary taxed at the French marginal corporate tax rate of 25%, and Assured Guaranty Re Ltd. (AG Re) and Cedar Personnel Ltd. taxed at the Bermuda marginal corporate tax rate of 0%. Effective January 1, 2024, the U.K. adopted a global minimum tax rate of 15% under the Organization for Economic Co-Operation and Development’s Base Erosion and Profit Shifting Pillar Two rules. See Part I, Item 1, Business - Regulation, and Part II, Item 8, Financial Statements and Supplementary Data, Note 13, Income Taxes. Adjusted Operating Income Adjusted operating income in 2024 was $389 million, compared with $648 million in 2023. The decrease was primarily due to the gain associated with the Sound Point Transaction and AHP Transaction and the benefit attributable to Bermuda tax law changes in 2023, offset in part by a benefit in loss expense in 2024 compared with a loss expense in 2023 and higher net earned premiums in 2024. See “— Results of Operations — Reconciliation to GAAP” for the reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss). Book Value and Adjusted Book Value Shareholders’ equity attributable to AGL as of December 31, 2024 decreased compared with December 31, 2023, due to share repurchases of $508 million and dividends of $68 million, offset in part by net income. Adjusted operating shareholders’ equity and adjusted book value also decreased primarily due to share repurchases and dividends, partially offset by adjusted operating income of $389 million, and in the case of adjusted book value, the increase was also due to GWP of $440 million. See “— Non-GAAP Financial Measures” below for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity and adjusted book value. On a per share basis, shareholders’ equity attributable to AGL, adjusted operating shareholders’ equity and adjusted book value increased as of December 31, 2024 compared with December 31, 2023, due in part to the accretive effect of the share repurchase program. See “— Non-GAAP Financial Measures” for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity and adjusted book value. Other Matters Inflation By some key measures, consumer price inflation in the U.S. and the U.K. was higher in recent years than it has been in decades. In addition, government policies such as increased deficit spending or the imposition of tariffs on imported goods could increase inflationary pressures in the future. Consumer price inflation in the U.K. can impact the Company directly by increasing exposure for certain index-linked U.K. debt with par that accretes based on inflation, and also by increasing projected future installment premiums on the portion of such exposure that pays at least some of the premium on an installment basis over the term of the exposure. Consumer price inflation may also impact the Company indirectly to the extent it makes it more difficult for obligors to make their debt payments. See “— Overview — Economic Environment.” Russia’s Invasion of Ukraine Russia’s invasion of Ukraine has led to the imposition of economic sanctions by many western countries against Russia and certain Russian individuals, dislocation in global energy markets, massive refugee movements, and payment default by certain Russian credits. The economic sanctions imposed by western governments, along with decisions by private companies regarding their presence in Russia, continue to reduce western economic ties to Russia and to reshape global economic and political ties more generally, and the Company cannot predict all of the potential effects of the conflict on the world or on the Company. The Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, and have identified no material direct exposure to Ukraine or Russia. In fact, the Company’s direct 76 insurance exposure to eastern Europe generally is limited to approximately $214 million in net par outstanding as of December 31, 2024, comprised of $198 million net par exposure to the sovereign debt of Poland and $16 million net par exposure to a toll road in Hungary. The Company rates all such exposure investment grade. Middle East Conflict In light of events in the Middle East, the Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, for exposures to the Middle East. After review, the Company’s surveillance and treasury functions have identified no material direct exposure to such area. The Company’s direct insurance exposure to the Middle East is generally limited to approximately $110 million in net par outstanding as of December 31, 2024, comprised of funded commitments to subscription finance facilities; however, such exposure may increase to a total of approximately $165 million to the extent all unfunded commitments under the facilities are ultimately funded. The Company rates all such insurance exposure investment grade. January 2025 Los Angeles Wildfires In January 2025, a series of destructive wildfires affected Los Angeles, California. The Company’s surveillance function has reviewed the Company’s insurance portfolio for exposures located within Los Angeles County and has identified no material impact to its exposure located directly within the perimeter of the wildfires. Results of Operations Critical Accounting Estimates The preparation of financial statements in accordance with GAAP requires the application of accounting policies that often involve a significant degree of judgment and require the Company to make estimates and assumptions, based on available information, that affect the amounts of assets, liabilities, revenues and expenses reported in the consolidated financial statements. Estimates are inherently subject to change and actual results could differ from those estimates, and the differences may be material to the consolidated financial statements. Critical estimates and assumptions are periodically evaluated based on historical developments, market conditions, industry trends and other information that is reasonable under the circumstances. There can be no assurance that actual results will conform to estimates and assumptions and that reported results of operations will not be materially different in the future due to changes in these estimates and assumptions. Listed below are the accounting policies and estimates that the Company believes are most dependent on the application of judgment and assumptions. 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. In addition, see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, for further details regarding the sensitivity analyses. •Expected loss to be paid (recovered); •Fair value of certain assets and liabilities, primarily: ◦Investments (primarily Loss Mitigation Securities and alternative investments) ◦Assets and liabilities of FG VIEs ◦Credit derivatives; •Acquisition date fair value of the equity method ownership interest in Sound Point; •Impairments of equity method investments and financial instruments; and •Income tax assets and liabilities, including the recoverability of all deferred tax assets (liabilities) and in particular the Bermuda deferred tax asset recorded in 2023. Results of Operations by Segment The Company analyzes the operating performance of each segment using each segment’s adjusted operating income as described in Item 8, Financial Statements and Supplementary Data, Note 2, Segment Information. 77 Insurance Segment Results Insurance Segment Results [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["Segment revenues"],["Net earned premiums and credit derivative revenues","$","417","","","$","357","","","$","508"],["Net investment income","339","","","370","","","278"],["Fair value gains (losses) on trading securities","52","","","74","","","(34)"],["Foreign exchange gains (losses) on remeasurement","(1)","","","3","","","(5)"],["Other income (loss)","14","","","51","","","10"],["Total segment revenues","821","","","855","","","757"],["Segment expenses"],["Loss expense (benefit)","(18)","","","161","","","12"],["Interest expense","\u2014","","","\u2014","","","1"],["Amortization of DAC","20","","","13","","","14"],["Employee compensation and benefit expenses","170","","","154","","","148"],["Other operating expenses","117","","","107","","","84"],["Total segment expenses","289","","","435","","","259"],["Equity in earnings (losses) of investees","102","","","82","","","(51)"],["Segment adjusted operating income (loss) before income taxes","634","","","502","","","447"],["Less: Provision (benefit) for income taxes","109","","","(119)","","","34"],["Segment adjusted operating income (loss)","$","525","","","$","621","","","$","413"]] [[/GREPCENT_TABLE]] Net Earned Premiums and Credit Derivative Revenues Premiums are earned over the contractual lives, or in the case of insured obligations backed by homogeneous pools of assets, the remaining expected lives, of financial guaranty insurance contracts. The Company periodically estimates remaining expected lives of its insured obligations backed by homogeneous pools of assets and makes prospective adjustments for such changes in expected lives. Scheduled net earned premiums decrease each year unless replaced by a higher amount of new business, or books of business acquired in business combinations. See Item 8, Financial Statements and Supplementary Data, Note 5, Contracts Accounted for as Insurance, Premiums, for additional information. Net earned premiums due to accelerations are attributable to changes in the expected lives of insured obligations driven by: (i) refundings of insured obligations; or (ii) terminations of insured obligations either through negotiated agreements or the exercise of the Company’s contractual rights to make claim payments on an accelerated basis. Refundings occur in the public finance market when municipalities and other public finance issuers pay down insured obligations prior to their originally scheduled maturities. Refundings tend to increase when issuers can refinance their debt obligations at lower rates than they are currently paying. The premiums associated with the insured obligations of municipalities and other public finance issuers are generally received upfront when the obligations are issued and insured. When issuers pay down insured obligations, the Company is no longer on risk for payment defaults, and therefore accelerates the recognition of the remaining nonrefundable deferred premium revenue. The amortization of the Company’s outstanding book of business along with the previously high levels of refunding activity and the higher interest rate environment has led to a lower volume of refunding opportunities over the last several years. Terminations are generally negotiated agreements with beneficiaries resulting in the extinguishment of the Company’s insurance obligation. Terminations have been more common in the structured finance asset class, but may also occur in the public finance asset class. While each termination may have different terms, they all result in the expiration of the Company’s insurance risk, the acceleration of the recognition of the associated deferred premium revenue and the reduction of any remaining premiums receivable. 78 Insurance Segment Net Earned Premiums and Credit Derivative Revenues [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["Net earned premiums:"],["Financial guaranty insurance:"],["Public finance"],["Scheduled net earned premiums (1)","$","264","","","$","252","","","$","256"],["Refundings and terminations","69","","","29","","","179"],["Total public finance","333","","","281","","","435"],["Structured finance"],["Scheduled net earned premiums (1)","63","","","62","","","58"],["Accelerations","2","","","\u2014","","","\u2014"],["Total structured finance","65","","","62","","","58"],["Specialty insurance and reinsurance","8","","","4","","","4"],["Total net earned premiums","406","","","347","","","497"],["Credit derivative revenues","11","","","10","","","11"],["Total net earned premiums and credit derivative revenues","$","417","","","$","357","","","$","508"]] [[/GREPCENT_TABLE]] ____________________ (1)    Includes accretion of discount. Net earned premiums and credit derivative revenues increased in 2024 compared with 2023 primarily due to a large refunded transaction in the first quarter of 2024. As of December 31, 2024, $3.7 billion of net deferred premium revenue on financial guaranty insurance remained to be earned over the life of the insurance contracts. 79 New Business Production Gross Written Premiums and New Business Production [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["GWP"],["Public finance\u2014U.S.","$","259","","","$","211","","","$","248"],["Public finance\u2014non-U.S.","136","","","82","","","75"],["Structured finance\u2014U.S.","20","","","59","","","37"],["Structured finance\u2014non-U.S.","25","","","5","","","\u2014"],["Total GWP","$","440","","","$","357","","","$","360"],["PVP (1):"],["Public finance\u2014U.S.","$","270","","","$","212","","","$","257"],["Public finance\u2014non-U.S.","67","","","83","","","68"],["Structured finance\u2014U.S.","25","","","68","","","43"],["Structured finance\u2014non-U.S.","40","","","41","","","7"],["Total PVP","$","402","","","$","404","","","$","375"],["Gross Par Written (1):"],["Public finance\u2014U.S.","$","23,758","","","$","22,464","","","$","19,801"],["Public finance\u2014non-U.S.","2,673","","","1,544","","","624"],["Structured finance\u2014U.S.","1,476","","","1,886","","","1,077"],["Structured finance\u2014non-U.S.","3,922","","","3,066","","","545"],["Total gross par written","$","31,829","","","$","28,960","","","$","22,047"]] [[/GREPCENT_TABLE]] ____________________ (1)    PVP and Gross Par Written in the table above are based on “close date,” when the transaction settles. See “— Non-GAAP Financial Measures — PVP or Present Value of New Business Production.” PVP was discounted at 5.0%, 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. Financial guaranty insurance and reinsurance GWP includes: (i) amounts collected upfront on new business written; (ii) the present value of future contractual or expected premiums on new financial guaranty business written (discounted at risk-free rates); and (iii) the effects of changes in the estimated premium or lives of certain transactions in the in-force book of business. Specialty business GWP is recorded as premiums are due. Credit derivatives are accounted for at fair value and therefore not included in GWP. PVP and gross par written include the present value of future gross revenues and exposure, respectively, associated with a financial guaranty written by the Company that, under GAAP, is accounted for under Accounting Standards Codification (ASC) 460, Guarantees. The non-GAAP financial measure, PVP, includes upfront premiums and the present value of expected future installments on new business at the time of issuance, discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, for all contracts regardless of form or accounting model. See “— Non-GAAP Financial Measures” below. U.S. public finance GWP and PVP in 2024 were higher than GWP and PVP in 2023 primarily due to a large transportation revenue transaction. The Company’s direct par written represented 58% of the total U.S. primary municipal market insured par sold in 2024, compared with 61% in 2023, and the Company’s penetration of all municipal issuance was 4.8% in 2024 compared with 5.4% in 2023. Non-U.S. public finance GWP increased while PVP decreased in 2024 compared with 2023. GWP in 2024 includes the present value of additional future premiums on a large existing transaction, which is not captured in PVP. New business in 2024 primarily included secondary market guaranties of several U.K. regulated utility and airport transactions, as well as new and renewed liquidity guarantees in the infrastructure sector. 80 In 2024, structured finance GWP and PVP decreased compared with 2023. Structured finance GWP and PVP in 2024 were primarily attributable to insurance securitizations, bank balance sheet relief transactions, a guaranty of a diversified real estate portfolio and subscription finance transactions. Business activity in the non-U.S. public finance and structured finance markets often has long lead times and therefore may vary from period to period. Financial Strength Ratings Demand for the financial guaranties issued by the Company’s insurance subsidiaries may be impacted by changes in the credit ratings assigned to them by the rating agencies. The financial strength ratings (or similar ratings) assigned to AGL’s insurance subsidiaries, along with the date of the most recent rating action (or confirmation) by the rating agency assigning the rating, are shown in the table below. [[GREPCENT_TABLE]] [["","S&P","","KBRA","","Moody\u2019s","","A.M. Best Company, Inc."],["AG","AA (stable) (5/28/24)","","AA+ (stable) (10/18/24)","","A1 (stable) (7/10/24)","","\u2014"],["AG Re","AA (stable) (5/28/24)","","\u2014","","\u2014","","\u2014"],["AGRO","AA (stable) (5/28/24)","","\u2014","","\u2014","","A+ (stable) (7/19/24)"],["AGUK","AA (stable) (5/28/24)","","AA+ (stable) (10/18/24)","","A1 (stable) (7/10/24)","","\u2014"],["AGE","AA (stable) (5/28/24)","","AA+ (stable) (10/18/24)","","\u2014","","\u2014"]] [[/GREPCENT_TABLE]]     Ratings are subject to continuous rating agency review and revision or withdrawal at any time. In addition, the Company periodically assesses the value of each rating assigned to each of its companies, and as a result of such assessment may request that a rating agency add or drop a rating from certain of its companies. There can be no assurance that any of the rating agencies will not take negative action on the financial strength ratings (or similar ratings) of AGL’s insurance subsidiaries in the future or cease to rate one or more of AGL’s insurance subsidiaries, either voluntarily or at the request of that subsidiary. For a discussion of the effects of rating actions on the Company beyond potential effects on the demand for its insurance products, see “Item 1A. Risk Factors —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.” Income from Investments Net investment income is a function of the yield that the Company earns on available-for-sale fixed-maturity securities and short-term investments and the size of such portfolio. The investment yield on fixed-maturity securities is a function of market interest rates at the time of investment as well as the type, credit quality and maturity of the securities in this portfolio. CVIs issued by Puerto Rico and received as part of the 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. The fair value of remaining CVIs as of December 31, 2024 and December 31, 2023 was $123 million and $318 million, respectively. Equity method investments in the Insurance segment include investments that AG Asset Strategies LLC (AGAS) makes in certain alternative investments, primarily Sound Point and AHP funds. The income (loss) on such investments is reported in “equity in earnings (losses) of investees” and typically represents the Company’s share of earnings of its investees. As part of the August 5, 2024 AG stock redemption, certain alternative investments were distributed to AGMH, whose results are reported in the Corporate division. The carrying value of these transferred investments as of December 31, 2024 was $118 million. 81 Insurance Segment Income from Investments [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["Net investment income"],["Fixed-maturity securities, available-for-sale","$","263","","","$","297","","","$","260"],["Short-term investments","70","","","65","","","13"],["Intercompany loans","10","","","10","","","10"],["Other invested assets","1","","","3","","","1"],["Investment income","344","","","375","","","284"],["Investment expenses","(5)","","","(5)","","","(6)"],["Net investment income","$","339","","","$","370","","","$","278"],["Fair value gains (losses) on trading securities","$","52","","","$","74","","","$","(34)"],["Equity in earnings (losses) of investees"],["CLOs","$","47","","","$","50","","","$","(2)"],["Private healthcare investing","11","","","19","","","(11)"],["Asset-based/specialty finance","24","","","5","","","5"],["Middle market direct lending","2","","","\u2014","","","\u2014"],["Other","18","","","8","","","(43)"],["Equity in earnings (losses) of investees","$","102","","","$","82","","","$","(51)"]] [[/GREPCENT_TABLE]] Net investment income for 2024 decreased compared to 2023, primarily due to the lower income on Loss Mitigation Securities and lower average asset balances due in part to sale of new general obligation bonds and new bonds backed by toll revenues (together, New Recovery Bonds) received as part of the 2022 Puerto Rico Resolutions, partially offset by higher income related to the distribution of assets to alternative investments from CIVs. The overall pre-tax book yield of available-for-sale fixed-maturity securities and short-term investments was 4.57% as of December 31, 2024 and 4.09% as of December 31, 2023. Equity in earnings (losses) of investees for 2024 increased compared to 2023, primarily due to higher balances in the alternative investment portfolio and higher fair value gains on alternative investments. The Company has a consolidated CLO fund, that has been reported on a one-quarter lag with changes in net asset value (NAV) reported in “equity in earnings (losses) of investees”. In the fourth quarter of 2024, the Company transferred the underlying investments to its fixed-maturity securities, available-for-sale portfolio. Beginning in the fourth quarter of 2024, interest income from the transferred CLOs are reported in net investment income with changes in fair value reported in other comprehensive income. Other Income (Loss) The decrease in “other income (loss)” in 2024 compared with 2023 was primarily attributable to the reversal of a previously recorded litigation accrual of $20 million and commutation gains of $10 million in 2023. See Item 8, Financial Statements and Supplementary Data, Note 17, Contingencies, for additional information. Economic Loss Development (Benefit)      The insured portfolio includes policies accounted for under several different accounting models depending on the characteristics of the contract and the Company’s control rights. 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). For the GAAP accounting policies for measurement and recognition for each type of contract, see the notes listed below in Item 8, Financial Statements and Supplementary Data. 82 •Note 5 for contracts accounted for as insurance; •Note 6 for contracts accounted for as credit derivatives; •Note 8 for FG VIEs; and •Note 9 for fair value methodologies for credit derivatives and FG VIEs’ assets and liabilities. In order to efficiently evaluate and manage the economics of the entire insured portfolio, management compiles and analyzes expected loss information for all policies on a consistent basis. The discussion of losses that follows encompasses expected losses on all contracts in the insured portfolio regardless of accounting model, unless otherwise specified. Net expected loss to be paid (recovered) is equal to the present value of expected future cash outflows for loss and LAE payments, net of: (i) inflows for expected salvage, subrogation and other recoveries; (ii) excess spread on underlying collateral, as applicable; and (iii) amounts ceded to reinsurers. Assumptions used in the determination of the net expected loss to be paid (recovered) such as delinquency, severity, discount rates and expected time frames to recovery are consistent for each sector regardless of the accounting model used. Current risk-free rates are used to discount expected losses at the end of each reporting period. Therefore, changes in such rates from period to period affect economic loss development and loss and LAE. However, the effect of changes in discount rates is not indicative of actual credit impairment or improvement. The weighted average discount rates used to discount expected losses (recoveries) were 4.38%, 4.09% and 4.08% as of December 31, 2024, 2023 and 2022, respectively. The composition of economic loss development (benefit) by accounting model and by sector is presented in the tables that follow, and the drivers of economic loss development (benefit) are discussed below. Net Expected Loss to be Paid (Recovered) and Net Economic Loss Development (Benefit) by Accounting Model [[GREPCENT_TABLE]] [["","","Net Expected Loss to be Paid (Recovered)","","Net Economic Loss Development (Benefit)"],["","","As of December 31,","","Year Ended December 31,"],["Accounting Model","","2024","","2023","","2024","","2023","","2022"],["","","(in millions)"],["Insurance","","$","90","","","$","263","","","$","(1)","","","$","174","","","$","(112)"],["FG VIEs (1)","","16","","","240","","","(1)","","","(11)","","","(17)"],["Credit derivatives","","\u2014","","","2","","","(1)","","","1","","","4"],["Total","","$","106","","","$","505","","","$","(3)","","","$","164","","","$","(125)"],["Net exposure rated BIG (2)","","$","10,187","","","$","5,521"]] [[/GREPCENT_TABLE]] ____________________ (1)    In 2023, the net expected loss to be paid for FG VIEs primarily related to trusts established as part of the 2022 Puerto Rico Resolutions (Puerto Rico Trusts) and in 2024, the Company satisfied its remaining direct insured obligations and deconsolidated the remaining Puerto Rico Trusts. See Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered). (2)    The increase in BIG is primarily related to downgrades of certain U.K. regulated utility exposures. 83 Net Expected Loss to be Paid (Recovered) Roll Forward by Sector [[GREPCENT_TABLE]] [["","","Year Ended December 31, 2024"],["Sector","","Net Expected Loss to be Paid (Recovered) as of December 31, 2023","","Net Economic Loss Development (Benefit)","","Net (Paid) Recovered Losses (1)","","Net Expected Loss to be Paid (Recovered) as of December 31, 2024"],["","","(in millions)"],["Public finance:"],["U.S. public finance","","$","398","","","$","(9)","","","$","(371)","","","$","18"],["Non-U.S. public finance","","20","","","81","","","(3)","","","98"],["Public finance","","418","","","72","","","(374)","","","116"],["Structured finance:"],["U.S. RMBS","","43","","","(75)","","","(11)","","","(43)"],["Other structured finance","","44","","","\u2014","","","(11)","","","33"],["Structured finance","","87","","","(75)","","","(22)","","","(10)"],["Total","","$","505","","","$","(3)","","","$","(396)","","","$","106"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","","Year Ended December 31, 2023"],["Sector","","Net Expected Loss to be Paid (Recovered) as of December 31, 2022","","Net Economic Loss Development (Benefit)","","Net (Paid) Recovered Losses (1)","","Net Expected Loss to be Paid (Recovered) as of December 31, 2023"],["","","(in millions)"],["Public finance:"],["U.S. public finance","","$","403","","","$","201","","","$","(206)","","","$","398"],["Non-U.S. public finance","","9","","","11","","","\u2014","","","20"],["Public finance","","412","","","212","","","(206)","","","418"],["Structured finance:"],["U.S. RMBS","","66","","","(56)","","","33","","","43"],["Other structured finance","","44","","","8","","","(8)","","","44"],["Structured finance","","110","","","(48)","","","25","","","87"],["Total","","$","522","","","$","164","","","$","(181)","","","$","505"]] [[/GREPCENT_TABLE]] ____________________ (1)    Net of ceded paid losses, whether or not such amounts have been settled with reinsurers. Ceded paid losses are typically settled 45 days after the end of the reporting period. Such amounts are recorded as reinsurance recoverable on paid losses in “other assets.” Effect of changes in the risk-free rates included in economic loss development (benefit) was a loss of $4 million in 2024 and a loss of $3 million in 2023. 2024 Net Economic Loss Development Public Finance: The economic benefit of $9 million for U.S. public finance exposures was primarily attributable to certain healthcare exposures, partially offset by higher expected loss adjustment expenses related to certain Puerto Rico exposures. The economic loss development of $81 million for non-U.S. public finance exposures was primarily attributable to certain U.K. regulated utilities and healthcare exposures. U.S. RMBS: The net benefit attributable to U.S. RMBS of $75 million was mainly attributable to a $43 million benefit from higher assumed and realized recoveries for secured second lien charged-off loans and a $15 million benefit from higher assumed recoveries for first lien deferred principal balances. See Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), for additional information. 84 2023 Net Economic Loss Development Public Finance: The economic loss development on U.S. exposures in 2023 was $201 million, which was primarily attributable to PREPA and healthcare exposures, partially offset by higher projected recoveries in other municipal exposures. U.S. RMBS: The benefit attributable to U.S. RMBS of $56 million was primarily attributable to a $53 million benefit related to higher recoveries for secured second lien charged-off loans and a $13 million benefit related to improved performance in certain transactions, partially offset by $17 million of loss development related to the return of certain previously received funds. Insurance Segment Loss Expense 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 includes loss and LAE on financial guaranty insurance contracts and losses on credit derivatives without giving effect to eliminations related to the consolidation of FG VIEs. For financial guaranty insurance contracts, each transaction’s expected loss to be expensed is compared with the deferred premium revenue of that transaction. Expected loss to be expensed represents past or expected future net claim payments that have not yet been expensed. Such amounts will be expensed in future periods as deferred premium revenue amortizes into income on financial guaranty insurance policies. Expected loss to be expensed is the Company’s projection of incurred losses that will be recognized in future periods, excluding accretion of discount. When the expected loss to be expensed exceeds the deferred premium revenue, a loss is recognized in income for the amount of such excess. Therefore, the timing of loss recognition in income does not necessarily coincide with the timing of the actual credit impairment or improvement reported in net economic loss development. Transactions (particularly BIG transactions) acquired in business combinations or seasoned portfolios assumed from legacy financial guaranty insurers generally have the largest deferred premium revenue balances. To the extent that a BIG transaction has a large deferred premium revenue, the difference between economic development and loss and LAE may be significant. While expected loss to be paid (recovered) is an important measure that provides the present value of amounts that the Company expects to pay or recover in future periods regardless of accounting model, expected loss to be expensed is important because it presents the Company’s projection of net expected losses that will be recognized in the consolidated statement of operations in future periods as deferred premium revenue amortizes into income for financial guaranty insurance policies. For additional information on the expected timing of net expected losses to be expensed see Item 8, Financial Statements and Supplementary Data, Note 5, Contracts Accounted for as Insurance. The amount of Insurance segment loss expense, which includes losses on policies regardless of form, is a function of the amount of economic loss development discussed above and the deferred premium revenue amortization in a given period, on a contract-by-contract basis. The following table presents the Insurance segment loss expense (benefit). Insurance Segment Loss Expense (Benefit) [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["U.S. public finance","$","24","","","$","191","","","$","128"],["Non-U.S. public finance","4","","","\u2014","","","\u2014"],["Structured finance:"],["U.S. RMBS","(50)","","","(36)","","","(120)"],["Other structured finance","4","","","6","","","4"],["Structured finance","(46)","","","(30)","","","(116)"],["Total Insurance segment loss expense (benefit)","$","(18)","","","$","161","","","$","12"]] [[/GREPCENT_TABLE]] 85 Employee Compensation and Benefit Expenses and Other Operating Expenses The increase in employee compensation and benefit expenses in 2024 from 2023 was primarily attributable to an increase in headcount and other employee benefit costs. Other operating expenses increased in 2024 from 2023 primarily due to the write-off of $6 million of intangible assets attributable to insurance licenses in connection with AGM’s merger with and into AG. Provision (Benefit) for Income Taxes The tax provision in 2024 includes $13 million of global minimum tax for the Company’s Bermuda subsidiaries. The tax benefit in 2023 was primarily related to the $189 million benefit recognized in connection with the enactment of the 15% Bermuda corporate income tax in December 2023. The new Bermuda corporate income tax allows for a deferred tax asset associated with an ETA equal to the difference between the fair market value and the carrying value of assets and liabilities of each of the Company’s Bermuda insurance subsidiaries as of September 30, 2023. The ETA is expected to be utilized over 10 to 15 years, depending on the nature of the deferred tax asset component, beginning in 2025. This was partially offset by income tax expense in the Company’s other operating jurisdictions. The Company expects its Bermuda insurance subsidiaries to incur tax which will be offset by the realization of the deferred tax asset beginning in 2025. See Item 8, Financial Statements and Supplementary Data, Note 13, Income Taxes, for additional information. Asset Management Segment Results Asset Management Segment Results [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["Segment revenues","$","10","","","$","76","","","$","112"],["Segment expenses","6","","","78","","","119"],["Equity in earnings (losses) of investees","2","","","5","","","\u2014"],["Segment adjusted operating income (loss) before income taxes","6","","","3","","","(7)"],["Less: Provision (benefit) for income taxes","1","","","\u2014","","","(1)"],["Segment adjusted operating income (loss)","$","5","","","$","3","","","$","(6)"]] [[/GREPCENT_TABLE]] Results in the table above primarily represent (i) equity in earnings of Sound Point since the third quarter of 2023 (Sound Point results are reported on a one-quarter lag), net of the amortization of finite-lived intangible assets associated with the basis difference in Sound Point, and incentive fees, and (ii) the consolidated results of AssuredIM for 2022 and the first half of 2023, prior to the Sound Point Transaction and the AHP Transaction. See Item 8, Financial Statements and Supplementary Data, Note 7, Investments and Cash, for additional information. 86 Corporate Division Results Corporate Division Results [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["Revenues"],["Gain on sale of asset management subsidiaries","$","\u2014","","","$","262","","","$","\u2014"],["Other","17","","","13","","","4"],["Total revenues","17","","","275","","","4"],["Expenses"],["Interest expense","101","","","99","","","89"],["Employee compensation and benefit expenses","32","","","38","","","30"],["Other operating expenses","36","","","79","","","24"],["Total expenses","169","","","216","","","143"],["Equity in earnings (losses) of investees","5","","","\u2014","","","\u2014"],["Adjusted operating income (loss) before income taxes","(147)","","","59","","","(139)"],["Less: Provision (benefit) for income taxes","(12)","","","14","","","(5)"],["Adjusted operating income (loss)","$","(135)","","","$","45","","","$","(134)"]] [[/GREPCENT_TABLE]] The gain on sale of asset management subsidiaries relates to the Sound Point Transaction and AHP Transaction. See Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation. Corporate division interest expense primarily relates to debt issued by AGUS and AGMH (the U.S. Holding Companies), and also includes intersegment interest expense. See “— Liquidity and Capital Resources — AGL and its U.S. Holding Companies, Intercompany Loans Payable,” for additional information. Corporate division employee compensation and benefits expenses and other operating expenses are an allocation of expenses based on time studies and represent the costs incurred and time spent on holding company activities, capital management, corporate oversight and governance including Board of Director expenses, legal fees and other direct or allocated expense. The decrease in operating expenses in 2024 was primarily due to expenses related to the Sound Point Transaction and AHP Transaction and a higher charge for value added taxes in 2023. Transaction related expenses in the Corporate division for Sound Point and AHP in 2023 were $40 million, consisting primarily of $25 million advisory and consent fees and $8 million legal fees. Equity in earnings of investees in 2024 relates to certain alternative investments, which AG transferred to AGMH as part of the share redemption that occurred on August 5, 2024. The provision for income taxes in 2023 included a $19 million benefit attributable to a change in New York State tax law. Other (Effect of Consolidating FG VIEs and CIVs) The effect of consolidating FG VIEs and CIVs, intersegment eliminations and, prior to July 1, 2023, reclassifications of reimbursable fund expenses to revenue, are presented in “other.” See Item 8, Financial Statements and Supplementary Data, Note 2, Segment Information. As described in Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, the types of entities the Company consolidates when it is deemed to be the primary beneficiary primarily include: (i) FG VIEs; and (ii) CIVs. The Company eliminates the effects of intercompany transactions between its FG VIEs and CIVs and its insurance and asset management subsidiaries, as well as intercompany transactions between CIVs. Consolidating FG VIEs (as opposed to accounting for the related insurance contracts in the Insurance segment), has a significant gross-up effect on the consolidated financial statements, and includes: (i) the establishment of the FG VIEs’ assets and liabilities and related changes in fair value on the 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 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. The economic effect of AG’s ownership interests in CIVs is presented in the Insurance segment as “equity in earnings (losses) of investees,” while the effect of CIVs is presented as separate line items (“fair value gains (losses) on consolidated investment vehicles” and “noncontrolling interest”) on a consolidated basis. The table below reflects the effect of consolidating FG VIEs and CIVs on the consolidated statements of operations. The amounts represent: (i) the revenues and expenses of the FG VIEs and the CIVs; and (ii) the consolidation adjustments and eliminations between consolidated FG VIEs or CIVs and the operating and investment subsidiaries. Effect of Consolidating FG VIEs and CIVs on the Consolidated Statements of Operations Increase (Decrease) [[GREPCENT_TABLE]] [["","","Year Ended December 31,"],["","","2024","","2023","","2022"],["Effect on Financial Statement Line Item","","(in millions)"],["Fair value gains (losses) on FG VIEs (1)","","$","(11)","","","$","8","","","$","22"],["Fair value gains (losses) on CIVs","","69","","","88","","","17"],["Equity in earnings (losses) of investees (2)","","(47)","","","(59)","","","12"],["Other (3)","","(3)","","","(41)","","","(44)"],["Effect on income before tax","","8","","","(4)","","","7"],["Less: Tax provision (benefit)","","(2)","","","(5)","","","\u2014"],["Effect on net income (loss)","","10","","","1","","","7"],["Less: Effect on noncontrolling interests (4)","","16","","","22","","","13"],["Effect on net income (loss) attributable to AGL","","$","(6)","","","$","(21)","","","$","(6)"],["By Type of VIE"],["FG VIEs","","$","(10)","","","$","(4)","","","$","4"],["CIVs","","4","","","(17)","","","(10)"],["Effect on net income (loss) attributable to AGL","","$","(6)","","","$","(21)","","","$","(6)"]] [[/GREPCENT_TABLE]] ____________________ (1)    Changes in fair value of the FG VIEs’ assets and liabilities that are attributable to factors other than (i) changes in the Company’s own credit risk on the FG VIEs’ liabilities with recourse and (ii) unrealized gains and losses on available-for-sale fixed maturity securities. (2)    Represents the elimination of the equity in earnings (losses) of investees of AGAS and the other subsidiaries’ investments in certain alternative investments, primarily Sound Point funds (and prior to July 1, 2023, AssuredIM managed funds). (3)    Includes net earned premiums, net investment income, foreign exchange gains (losses) on remeasurement, other income (loss), loss and LAE (benefit), and for 2023 and 2022, other operating expenses and asset management fees. (4)    Represents the proportion of consolidated funds managed by Sound Point and prior to July 1, 2023, AssuredIM funds’ income that is not attributable to AGAS’ or any other subsidiaries’ ownership interest. 88 Reconciliation to GAAP Reconciliation of Net Income (Loss) Attributable to AGL to Adjusted Operating Income (Loss) [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["Net income (loss) attributable to AGL","$","376","","","$","739","","","$","124"],["Less pre-tax adjustments:"],["Realized gains (losses) on investments","9","","","(14)","","","(56)"],["Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives","14","","","106","","","(18)"],["Fair value gains (losses) on CCS","(10)","","","(35)","","","24"],["Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves","(26)","","","51","","","(110)"],["Total pre-tax adjustments","(13)","","","108","","","(160)"],["Less tax effect on pre-tax adjustments","\u2014","","","(17)","","","17"],["Adjusted operating income (loss)","$","389","","","$","648","","","$","267"],["Gain (loss) related to FG VIE and CIV consolidation (net of tax provision (benefit) of $(2), $(5) and $- included in adjusted operating income","$","(6)","","","$","(21)","","","$","(6)"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(per share amounts)"],["Net income (loss) attributable to AGL","$","6.87","","","$","12.30","","","$","1.92"],["Less pre-tax adjustments:"],["Realized gains (losses) on investments","0.16","","","(0.23)","","","(0.87)"],["Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives","0.27","","","1.75","","","(0.27)"],["Fair value gains (losses) on CCS","(0.19)","","","(0.57)","","","0.37"],["Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves","(0.47)","","","0.84","","","(1.72)"],["Total pre-tax adjustments","(0.23)","","","1.79","","","(2.49)"],["Less tax effect on pre-tax adjustments","\u2014","","","(0.27)","","","0.27"],["Adjusted operating income (loss)","$","7.10","","","$","10.78","","","$","4.14"],["Gain (loss) related to FG VIE and CIV consolidation included in adjusted operating income","$","(0.12)","","","$","(0.35)","","","$","(0.10)"]] [[/GREPCENT_TABLE]] 89 Net Realized Investment Gains (Losses) The table below presents the components of net realized investment gains (losses). Net Realized Investment Gains (Losses)  [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["Gross realized gains on sales of available-for-sale securities","$","3","","","$","21","","","$","3"],["Gross realized losses on sales of available-for-sale securities","(12)","","","(19)","","","(45)"],["Net foreign currency gains (losses)","(2)","","","(1)","","","(4)"],["Change in the allowance for credit losses and intent to sell (1)","18","","","(14)","","","(21)"],["Other net realized gains (losses)","2","","","(1)","","","11"],["Net realized investment gains (losses)","$","9","","","$","(14)","","","$","(56)"]] [[/GREPCENT_TABLE]] ____________________ (1)    Relates primarily to Loss Mitigation Securities. Sales of New Recovery Bonds received as part of the 2022 Puerto Rico Resolutions were the primary components of gross realized gains on sales in 2023 and gross realized losses on sales in 2022. Non-Credit Impairment-Related Unrealized Fair Value Gains (Losses) on Credit Derivatives Changes in the fair value of credit derivatives occur because of changes in the Company’s own credit rating and credit spreads, collateral credit spreads, notional amounts, credit ratings of the referenced entities, expected terms, realized gains (losses) and other settlements, interest rates and other market factors. The components of changes in fair value of credit derivatives related to credit derivative revenues and changes in expected losses are included in Insurance segment results. Non-credit impairment-related changes in unrealized fair value gains and losses on credit derivatives are not included in the Insurance segment measure of adjusted operating income because they do not represent actual claims or losses and are expected to reverse to zero as the exposure approaches its maturity date. Changes in the fair value of the Company’s credit derivatives that do not reflect actual or expected claims or credit losses have no impact on the Company’s statutory claims-paying resources, rating agency capital or regulatory capital positions. Unrealized gains (losses) on credit derivatives may fluctuate significantly in future periods. Except for underlying credit impairment, which is recognized as loss expense in the Insurance segment, the fair value adjustments on credit derivatives in the insured portfolio are non-economic adjustments that reverse to zero over the remaining term of that portfolio. See Item 8, Financial Statements and Supplementary Data, Note 9, Fair Value Measurement, for additional information. During 2024, non-credit impairment-related unrealized fair value gains of $14 million were generated primarily due to the termination of certain structured finance policies and generally lower collateral asset spreads. During 2023, non-credit impairment-related unrealized fair value gains of $106 million were generated primarily as a result of generally lower collateral asset spreads. Fair Value Gains (Losses) on CCS Fair value losses on CCS of $10 million in 2024 and $35 million in 2023 were primarily due to a tightening in market spreads. Fair value gains (losses) on CCS are heavily affected by, and in part fluctuate with, changes in market spreads and interest rates, credit spreads and other market factors and are not expected to result in an economic gain or loss. Foreign Exchange Gain (Loss) on Remeasurement Foreign exchange gains and losses of $26 million losses, $51 million gains and $110 million losses in 2024, 2023 and 2022, respectively, primarily relate to remeasurement of long-dated premiums receivable, for which the Company records the present value of future installment premiums, and are mainly due to changes in the exchange rate of the pound sterling and, to a lesser extent, the euro relative to the U.S. dollar. Approximately 69% and 70% of gross premiums receivable, net of commissions payable at December 31, 2024 and December 31, 2023, respectively, are denominated in currencies other than the U.S. dollar, primarily the pound sterling and euro. Premiums on European infrastructure and structured finance transactions typically are paid, in whole or in part, on an installment basis, whereas premiums on U.S. public finance transactions are often paid upfront. 90 The following table presents the foreign exchange rates as of the balance sheet dates. Foreign Exchange Rates U.S. Dollar Per Foreign Currency [[GREPCENT_TABLE]] [["","As of December 31,"],["","2024","","2023","","2022"],["Pound sterling","$1.252","","$1.273","","$1.208"],["Euro","$1.035","","$1.104","","$1.071"]] [[/GREPCENT_TABLE]] Non-GAAP Financial Measures The Company discloses both: (i) financial measures determined in accordance with GAAP; and (ii) financial measures not determined in accordance with GAAP (non-GAAP financial measures). Financial measures identified as non-GAAP should not be considered substitutes for GAAP financial measures. The primary limitation of non-GAAP financial measures is the potential lack of comparability to financial measures of other companies, whose definitions of non-GAAP financial measures may differ from those of the Company. The Company believes its presentation of non-GAAP financial measures provides information that is necessary for analysts to calculate their estimates of Assured Guaranty’s financial results in their research reports on Assured Guaranty and for investors, analysts and the financial news media to evaluate Assured Guaranty’s financial results. GAAP requires the Company to consolidate entities where it is deemed to be the primary beneficiary which include FG VIEs, which the Company does not own and where its exposure is limited to its obligation under the financial guaranty insurance contract, and CIVs in which certain subsidiaries invest. The Company discloses the effect of FG VIE and CIV consolidation that is embedded in each non-GAAP financial measure, as applicable. The Company believes this information may also be useful to analysts and investors evaluating Assured Guaranty’s financial results. In the case of both the consolidated FG VIEs and the CIVs, the economic effect on the Company of each of the consolidated FG VIEs and CIVs is reflected primarily in the results of the Insurance segment. Management of the Company and AGL’s Board of Directors use non-GAAP financial measures further adjusted to remove the effect of FG VIE and CIV consolidation (which the Company refers to as its core financial measures), as well as GAAP financial measures and other factors, to evaluate the Company’s results of operations, financial condition and progress towards long-term goals. The Company uses core financial measures in its decision-making process for and in its calculation of certain components of management compensation. The financial measures that the Company uses to help determine compensation are: (1) adjusted operating income, further adjusted to remove the effect of FG VIE and CIV consolidation; (2) adjusted operating shareholders’ equity, further adjusted to remove the effect of FG VIE and CIV consolidation; (3) adjusted book value per share, further adjusted to remove the effect of FG VIE and CIV consolidation; and (4) PVP. 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. Adjusted operating income, further adjusted for the effect of FG VIE and CIV consolidation, enables investors and analysts to evaluate the Company’s financial results in comparison with the consensus analyst estimates distributed publicly by financial databases. The following paragraphs define each non-GAAP financial measure disclosed by the Company and describe why it is useful. To the extent there is a directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure and the most directly comparable GAAP financial measure is presented below. Adjusted Operating Income Management believes that adjusted operating income is a useful measure because it clarifies the understanding of the operating results of the Company. Adjusted operating income is defined as net income (loss) attributable to AGL, as reported under GAAP, adjusted for the following: 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. The timing of realized gains and losses, which depends largely on market credit cycles, can vary considerably across periods. The timing of sales is largely subject to the Company’s discretion and influenced by market opportunities, as well as the Company’s tax and capital profile. 2)    Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives that are recognized in net income (loss) attributable to AGL, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments. Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, the Company’s credit spreads, and other market factors and are not expected to result in an economic gain or loss. 3)    Elimination of fair value gains (losses) on the Company’s CCS that are recognized in net income (loss) attributable to AGL. Such amounts are affected by changes in market interest rates, the Company’s credit spreads, price indications on the Company’s publicly traded debt and other market factors and are not expected to result in an economic gain or loss. 4)    Elimination of foreign exchange gains (losses) on remeasurement of net premium receivables and loss and LAE reserves that are recognized in net income (loss) attributable to AGL. Long-dated receivables and loss and LAE reserves represent the present value of future contractual or expected cash flows. Therefore, the current period’s foreign exchange remeasurement gains (losses) are not necessarily indicative of the total foreign exchange gains (losses) that the Company will ultimately recognize. 5)    The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments. See “— Results of Operations — Reconciliation to GAAP” for a reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss). Adjusted Operating Shareholders’ Equity and Adjusted Book Value      Management believes that adjusted operating shareholders’ equity is a useful measure because it excludes the fair value adjustments on investments, credit derivatives and CCS that are not expected to result in economic gain or loss. Adjusted operating shareholders’ equity 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. 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 amounts are affected by changes in market interest rates, the Company’s credit spreads, price indications on the Company’s publicly traded debt and other market factors and are not expected to result in an economic gain or loss. 3)    Elimination of unrealized gains (losses) on the Company’s investments that are recorded as a component of accumulated other comprehensive income (AOCI). The AOCI component of the fair value adjustment on the investment portfolio is not deemed economic because the Company generally holds these investments to maturity and therefore would not recognize an economic gain or loss.  4)     The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments. Management uses adjusted book value, further adjusted to remove the effect of FG VIE and CIV consolidation, to measure the intrinsic value of the Company, excluding franchise value. Adjusted book value per share, further adjusted for FG VIE and CIV consolidation (core adjusted book value), is one of the key financial measures used in determining the amount of 92 certain long-term compensation elements to management and employees and used by rating agencies and investors. Management believes that adjusted book value is a useful measure because it enables an evaluation of the Company’s in-force premiums and revenues net of expected losses. Adjusted book value is adjusted operating shareholders’ equity, as defined above, further adjusted for the following: 1)    Elimination of deferred acquisition costs, net. These amounts represent net deferred expenses that have already been paid or accrued and will be expensed in future accounting periods. 2)    Addition of the net present value of estimated net future revenue. See below. 3)    Addition of the deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed, net of reinsurance. This amount represents the present value of the expected future net earned premiums, net of the present value of expected losses to be expensed, 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.     The unearned premiums and revenues included in adjusted book value will be earned in future periods, but actual earnings may differ materially from the estimated amounts used in determining current adjusted book value due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults and other factors. Reconciliation of Shareholders’ Equity Attributable to AGL to Adjusted Operating Shareholders’ Equity and Adjusted Book Value [[GREPCENT_TABLE]] [["","As of December 31, 2024","","As of December 31, 2023"],["","Total","","Per Share","","Total","","Per Share"],["","(dollars in millions, except share amounts)"],["Shareholders\u2019 equity attributable to AGL","$","5,495","","","$","108.80","","","$","5,713","","","$","101.63"],["Less pre-tax adjustments:"],["Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives","49","","","0.96","","","34","","","0.61"],["Fair value gains (losses) on CCS","2","","","0.05","","","13","","","0.22"],["Unrealized gain (loss) on investment portfolio","(397)","","","(7.86)","","","(361)","","","(6.40)"],["Less taxes","46","","","0.90","","","37","","","0.66"],["Adjusted operating shareholders\u2019 equity","5,795","","","114.75","","","5,990","","","106.54"],["Pre-tax adjustments:"],["Less: Deferred acquisition costs","176","","","3.47","","","161","","","2.87"],["Plus: Net present value of estimated net future revenue","202","","","3.99","","","199","","","3.54"],["Plus: Net deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed","3,473","","","68.75","","","3,436","","","61.12"],["Plus taxes","(702)","","","(13.90)","","","(699)","","","(12.41)"],["Adjusted book value","$","8,592","","","$","170.12","","","$","8,765","","","$","155.92"],["Gain (loss) related to FG VIE and CIV consolidation included in:"],["Adjusted operating shareholders\u2019 equity (net of tax provision (benefit) of $0 and $1)","$","\u2014","","","$","0.01","","","$","5","","","$","0.07"],["Adjusted book value (net of tax provision (benefit) of $(2) and $0)","(6)","","","(0.13)","","","\u2014","","","\u2014"]] [[/GREPCENT_TABLE]] Net Present Value of Estimated Net Future Revenue Management believes that this amount is a useful measure because it enables an evaluation of the present value of estimated net future revenue for non-financial guaranty insurance contracts. This amount represents the net present value of 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. The discount rate is recalculated annually and updated as necessary. Net present value of estimated future revenue for an obligation may change from period to period due to a change in the discount rate or due to a change in estimated net future revenue for the obligation, which may change due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults or other factors that affect par outstanding or the ultimate maturity of an obligation. There is no corresponding GAAP financial measure. PVP or Present Value of New Business Production 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 in respect of contracts written in a specified period is defined as gross upfront and installment premiums received and the present value of gross estimated future installment premiums. Future installment premiums are discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than certain fixed-maturity securities such as Loss Mitigation Securities. The discount rate is recalculated annually and updated as necessary. Under GAAP, financial guaranty installment premiums are discounted at a risk-free rate. Additionally, under GAAP, management records future installment premiums on financial guaranty insurance contracts covering non-homogeneous pools of assets based on the contractual term of the transaction, whereas for PVP purposes, management records an estimate of the future installment premiums the Company expects to receive, which may be based upon a shorter period of time than the contractual term of the transaction. Actual installment premiums may differ from those estimated in the Company’s PVP calculation due to factors including, but not limited to, changes in foreign exchange rates, prepayment speeds, terminations, credit defaults, or other factors that affect par outstanding or the ultimate maturity of an obligation. Reconciliation of GWP to PVP [[GREPCENT_TABLE]] [["","Year Ended December 31, 2024"],["","Public Finance","","Structured Finance"],["","U.S.","","Non - U.S.","","U.S.","","Non - U.S.","","Total"],["","(in millions)"],["GWP","$","259","","","$","136","","","$","20","","","$","25","","","$","440"],["Less: Installment GWP and other GAAP adjustments (1)","143","","","115","","","17","","","25","","","300"],["Upfront GWP","116","","","21","","","3","","","\u2014","","","140"],["Plus: Installment premiums and other (2)","154","","","46","","","22","","","40","","","262"],["PVP","$","270","","","$","67","","","$","25","","","$","40","","","$","402"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","Year Ended December 31, 2023"],["","Public Finance","","Structured Finance"],["","U.S.","","Non - U.S.","","U.S.","","Non - U.S.","","Total"],["","(in millions)"],["GWP","$","211","","","$","82","","","$","59","","","$","5","","","$","357"],["Less: Installment GWP and other GAAP adjustments (1)","109","","","74","","","59","","","5","","","247"],["Upfront GWP","102","","","8","","","\u2014","","","\u2014","","","110"],["Plus: Installment premiums and other (2)","110","","","75","","","68","","","41","","","294"],["PVP","$","212","","","$","83","","","$","68","","","$","41","","","$","404"]] [[/GREPCENT_TABLE]] 94 [[GREPCENT_TABLE]] [["","Year Ended December 31, 2022"],["","Public Finance","","Structured Finance"],["","U.S.","","Non - U.S.","","U.S.","","Non - U.S.","","Total"],["","(in millions)"],["GWP","$","248","","","$","75","","","$","37","","","$","\u2014","","","$","360"],["Less: Installment GWP and other GAAP adjustments (1)","40","","","75","","","30","","","\u2014","","","145"],["Upfront GWP","208","","","\u2014","","","7","","","\u2014","","","215"],["Plus: Installment premiums and other (2)","49","","","68","","","36","","","7","","","160"],["PVP","$","257","","","$","68","","","$","43","","","$","7","","","$","375"]] [[/GREPCENT_TABLE]] _____________ (1)    Includes the present value of new business on installment policies discounted at the prescribed GAAP discount rates, and GWP adjustments on existing installment policies due to changes in assumptions and other GAAP adjustments. (2)    Includes the present value of future premiums and fees on new business paid in installments discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than certain fixed-maturity securities such as Loss Mitigation Securities. Includes the present value of future premiums and fees associated with other business written by the Company that, under GAAP, are accounted for under ASC 460, Guarantees. Insured Portfolio Financial Guaranty Exposure The following tables present information in respect of the financial guaranty insured portfolio to supplement the disclosures and discussion provided in Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure. The tables below show the Company’s ten largest U.S. public finance, U.S. structured finance and non-U.S. exposures by revenue source, excluding related authorities and public corporations, as of December 31, 2024. Ten Largest U.S. Public Finance Exposures by Revenue Source As of December 31, 2024 [[GREPCENT_TABLE]] [["","Net Par Outstanding","","Percent of Total U.S. Public Finance Net Par Outstanding","","Rating"],["","(dollars in millions)"],["New Jersey (State of)","$","2,362","","","1.2","%","","BBB"],["Pennsylvania (Commonwealth of)","2,132","","","1.1","","","BBB+"],["Lower Colorado River Authority","1,642","","","0.8","","","A"],["Metro Washington Airports Authority (Dulles Toll Road)","1,631","","","0.8","","","BBB+"],["JFK New Terminal One, New York","1,600","","","0.8","","","BBB-"],["Alameda Corridor Transportation Authority, California","1,373","","","0.7","","","BBB"],["North Texas Tollway Authority","1,355","","","0.7","","","A+"],["New York Power Authority","1,334","","","0.7","","","AA-"],["New York Metropolitan Transportation Authority","1,314","","","0.7","","","A-"],["Foothill/Eastern Transportation Corridor Agency, California","1,269","","","0.5","","","BBB+"],["Total of top ten U.S. public finance exposures","$","16,012","","","8.0","%"]] [[/GREPCENT_TABLE]] 95 Ten Largest U.S. Structured Finance Exposures As of December 31, 2024 [[GREPCENT_TABLE]] [["","Net Par Outstanding","","Percent of Total U.S. Structured Finance Net Par Outstanding","","Rating"],["","(dollars in millions)"],["Private US Insurance Securitization","$","1,196","","","14.1","%","","AA-"],["Private US Insurance Securitization","1,100","","","13.0","","","AA-"],["Private US Insurance Securitization","1,100","","","13.0","","","AA"],["Private US Insurance Securitization","414","","","4.9","","","AA-"],["Private US Insurance Securitization","398","","","4.7","","","AA-"],["Private Middle Market CLO","167","","","2.0","","","A"],["DB Master Finance LLC","165","","","2.0","","","BBB"],["Private Middle Market CLO","125","","","1.5","","","BBB"],["SLM Student Loan Trust 2007-A","123","","","1.5","","","AA"],["Private US Insurance Securitization","120","","","1.4","","","AA"],["Total of top ten U.S. structured finance exposures","$","4,908","","","58.1","%"]] [[/GREPCENT_TABLE]] Ten Largest Non-U.S. Exposures As of December 31, 2024 [[GREPCENT_TABLE]] [["","Country","","Net Par Outstanding","","Percent of Total Non-U.S. Net Par Outstanding","","Rating"],["","","","(dollars in millions)"],["Southern Water Services Limited","United Kingdom","","$","2,611","","","5.0","%","","BB"],["Thames Water Utilities Finance Plc","United Kingdom","","2,133","","","4.1","","","B"],["Southern Gas Networks PLC","United Kingdom","","2,082","","","4.0","","","BBB+"],["Dwr Cymru Financing Limited","United Kingdom","","1,838","","","3.5","","","A-"],["Anglian Water Services Financing PLC","United Kingdom","","1,746","","","3.4","","","A-"],["National Grid Gas PLC","United Kingdom","","1,657","","","3.2","","","A-"],["Yorkshire Water Services Finance Plc","United Kingdom","","1,243","","","2.4","","","BBB"],["Channel Link Enterprises Finance PLC","France, United Kingdom","","1,214","","","2.3","","","BBB"],["Quebec Province","Canada","","1,021","","","2.0","","","AA-"],["Capital Hospitals (Issuer) PLC","United Kingdom","","980","","","1.9","","","BBB-"],["Total of top ten non-U.S. exposures","","","$","16,525","","","31.8","%"]] [[/GREPCENT_TABLE]] Financial Guaranty Portfolio by Issue Size The Company seeks broad coverage of the market by insuring and reinsuring small and large issues alike. The following tables set forth the distribution of the Company’s portfolio by original size of the Company’s exposure. 96 Public Finance Portfolio by Issue Size As of December 31, 2024 [[GREPCENT_TABLE]] [["Original Par Amount Per Issue","","Number ofIssues","","Net ParOutstanding","","% of PublicFinanceNet ParOutstanding"],["","(dollars in millions)"],["Less than $10 million","9,725","","","$","30,434","","","12.2","%"],["$10 million through $50 million","3,688","","","64,488","","","25.8"],["$50 million through $100 million","666","","","39,195","","","15.7"],["$100 million through $200 million","365","","","44,094","","","17.6"],["$200 million or greater","237","","","72,164","","","28.7"],["Total","14,681","","$","250,375","","","100.0","%"]] [[/GREPCENT_TABLE]] Structured Finance Portfolio by Issue Size As of December 31, 2024 [[GREPCENT_TABLE]] [["Original Par Amount Per Issue","","Number ofIssues","","Net ParOutstanding","","% of StructuredFinanceNet ParOutstanding"],["","(dollars in millions)"],["Less than $10 million","91","","","$","99","","","0.9","%"],["$10 million through $50 million","120","","","876","","","7.8"],["$50 million through $100 million","53","","","1,485","","","13.3"],["$100 million through $200 million","52","","","2,345","","","21.0"],["$200 million or greater","84","","","6,372","","","57.0"],["Total","400","","$","11,177","","","100.0","%"]] [[/GREPCENT_TABLE]] Exposure to Puerto Rico All of the Company’s insured exposure to various authorities and public corporations of the Commonwealth of Puerto Rico (Puerto Rico or the Commonwealth) is rated BIG. Puerto Rico net par and net debt service outstanding as of December 31, 2024 were $637 million and $756 million respectively, compared with net par and net debt service outstanding as of December 31, 2023 of $1,105 million and $1,508 million, respectively. As of December 31, 2024, the Company’s only remaining outstanding insured Puerto Rico exposure subject to a payment default was PREPA, which had net par and debt service outstanding of $532 million and $629 million, respectively. As of December 31, 2023, PREPA net par and debt service outstanding were $624 million and $751 million, respectively. See “—Liquidity and Capital Resources—Insurance Subsidiaries, Financial Guaranty Policies” below and Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), for more information. The following table shows the scheduled amortization for PREPA. The Company guarantees payment of interest and principal when those amounts are scheduled to be paid and cannot be required to pay on an accelerated basis, although in certain circumstances it may elect to do so. When obligors default on their obligations, the Company is only required to pay the shortfall between the debt service due in any given period and the amount paid by the obligors. 97 Amortization Schedule of PREPA Net Par Outstanding and Net Debt Service Outstanding As of December 31, 2024 [[GREPCENT_TABLE]] [["","Scheduled Net Par Amortization","","Scheduled Net Debt Service Amortization"],["","(in millions)"],["2025 (January 1 - March 31)","$","\u2014","","","$","10"],["2025 (April 1 - June 30)","\u2014","","","3"],["2025 (July 1 - September 30)","68","","","78"],["2025 (October 1 - December 31)","\u2014","","","2"],["Subtotal 2025","68","","","93"],["2026","106","","","126"],["2027","106","","","122"],["2028","68","","","80"],["2029","39","","","47"],["2030-2034","141","","","157"],["2035-2037","4","","","4"],["Total","$","532","","","$","629"]] [[/GREPCENT_TABLE]] Liquidity and Capital Resources AGL and its U.S. Holding Companies AGL directly owns (i) AG Re, an insurance company domiciled in Bermuda; and (ii) AGUS, a U.S. holding company with public debt outstanding. AGUS directly owns AGMH, another U.S. holding company with public debt outstanding. As of August 1, 2024, AGMH directly owns AG, an insurance company domiciled in Maryland. Until August 1, 2024, AGMH directly owned AGM, an insurance company domiciled in New York. See “— Overview — Key Business Strategies — Merger of the U.S. Insurance Subsidiaries” above. AGUS and AGMH are collectively referred to as the U.S. Holding Companies. Sources and Uses of Funds The liquidity of AGL and its U.S. Holding Companies is largely dependent on dividends, stock redemptions and other distributions from their operating subsidiaries (see “— Insurance Subsidiaries — Distributions from Insurance Subsidiaries” below) and access to external financing. The operating liquidity requirements of AGL and the U.S. Holding Companies include: •principal and interest on debt issued by AGUS and AGMH; •dividends on AGL’s common shares; and •the payment of operating expenses. AGL and its U.S. Holding Companies may also require liquidity to: •make capital investments in their operating subsidiaries and in alternative investments; •fund acquisitions of new businesses; •purchase or redeem the Company’s outstanding debt; or •repurchase AGL’s common shares pursuant to AGL’s share repurchase authorization. In the ordinary course of business, the Company evaluates its liquidity needs and capital resources in light of holding company expenses and dividend policy, as well as rating agency considerations. The Company also subjects its cash flow projections and its assets to a stress test, maintaining a liquid asset balance of one and a half times its stressed operating company net cash flows. Management believes that AGL will have sufficient liquidity to satisfy its needs over the next twelve months. See “— Overview— Key Business Strategies, Capital Management” above for information on common share repurchases. 98 External Financing From time to time, AGL and its subsidiaries have sought external debt or equity financing in order to meet their obligations. External sources of financing may or may not be available to the Company and, if available, the cost of such financing may not be acceptable to the Company. Long-Term Debt Obligations The Company has outstanding long-term debt issued by the U.S. Holding Companies. See Item 8, Financial Statements and Supplementary Data, Note 11, Long-Term Debt and Credit Facilities, and Guarantor and U.S. Holding Companies’ Summarized Financial Information below. U.S. Holding Companies Long-Term Debt and Intercompany Loans [[GREPCENT_TABLE]] [["","","","","","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","","","$","350"],["3.15% Senior Notes","3.15%","","2031","","500","","","500"],["7% Senior Notes","6.40%","","2034","","200","","","200"],["3.6% Senior Notes","3.60%","","2051","","400","","","400"],["Series A Enhanced Junior Subordinated Debentures","3 month CME Term SOFR +2.64%","","2066","","150","","","150"],["AGUS long-term debt","","","","","1,600","","","1,600"],["AGUS - intercompany loans from:"],["AG/AGM (1)","3.50%","","2029","","250","","","250"],["AGRO","5.00%","","2028","","20","","","20"],["AGUS intercompany loans","","","","","270","","","270"],["Total AGUS long-term debt and intercompany loans","","","","","1,870","","","1,870"],["AGMH"],["Junior Subordinated Debentures (2)","6.40%","","2066","","300","","","300"],["Total AGMH long-term debt","","","","","300","","","300"],["AGMH\u2019s long-term debt purchased by AGUS (3)","","","","","(154)","","","(154)"],["U.S. Holding Company long-term debt","","","","","$","2,016","","","$","2,016"]] [[/GREPCENT_TABLE]]  ____________________ (1)    Effective August 1, 2024, AGM merged with and into AG, with AG as the surviving company. (2)    If the AGMH Junior Subordinated Debentures are outstanding after December 15, 2036, then the principal amount of the outstanding debentures will bear interest at One-Month Chicago Mercantile Exchange (CME) Term Secured Overnight Finance Rate (SOFR) plus 2.33%. (3)    Represents principal amount of Junior Subordinated Debentures issued by AGMH that has been purchased by AGUS. 99 Interest Paid on U.S. Holding Companies’ Long-Term Debt and Intercompany Loans [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["AGUS - long-term debt","$","79","","","$","68","","","$","68"],["AGUS - intercompany loans","10","","","10","","","10"],["Total AGUS","89","","","78","","","78"],["AGMH - long-term debt","19","","","19","","","19"],["AGMH\u2019s long-term debt purchased by AGUS","(10)","","","(10)","","","(10)"],["Total interest paid","$","98","","","$","87","","","$","87"]] [[/GREPCENT_TABLE]] On August 21, 2023, AGUS issued $350 million of 6.125% Senior Notes due 2028. On September 25, 2023, AGUS redeemed $330 million of 5% Senior Notes due 2024. See Item 8, Financial Statements and Supplementary Data, Note 11, Long-Term Debt and Credit Facilities. U.S. Holding Companies Expected Debt Service of Long-Term Debt As of December 31, 2024 [[GREPCENT_TABLE]] [["Year","","AGUS","","AGMH","","Eliminations (1)","","Total"],["","","(in millions)"],["2025","","$","136","","","$","19","","","$","(69)","","","$","86"],["2026","","134","","","19","","","(68)","","","85"],["2027","","131","","","19","","","(66)","","","84"],["2028","","493","","","19","","","(84)","","","428"],["2029","","106","","","19","","","(62)","","","63"],["2030-2049","","1,265","","","384","","","(197)","","","1,452"],["2050-2066","","718","","","626","","","(321)","","","1,023"],["Total","","$","2,983","","","$","1,105","","","$","(867)","","","$","3,221"]] [[/GREPCENT_TABLE]]  ____________________ (1)    Includes eliminations of intercompany loans payable and AGMH’s debt purchased by AGUS. From time to time, AGL and its subsidiaries have entered into intercompany loan facilities. For example, on October 25, 2013, AGL, as borrower, and AGUS, as lender, entered into a revolving credit facility pursuant to which AGL may, from time to time, borrow for general corporate purposes. Under the credit facility, AGUS committed to lend a principal amount not exceeding $225 million in the aggregate. The commitment under the revolving credit facility terminates on October 25, 2033 (the loan commitment termination date). The unpaid principal amount of each loan will bear semi-annual interest at a fixed rate equal to 100% of the then applicable interest rate as determined under Internal Revenue Code Section 1274(d). Accrued interest on all loans will be paid on the last day of each June and December and at maturity. AGL must repay unpaid principal amounts of the loans, if any, by the third anniversary of the loan commitment termination date. AGL has not drawn upon the credit facility. Intercompany Loans Payable On October 1, 2019, AG made a 10-year, 3.5% interest rate intercompany loan to AGUS, in the amount of $250 million, to fund the acquisition of BlueMountain Capital Management LLC (AssuredIM LLC, now known as Sound Point Luna LLC) and its associated entities, and the related capital contributions. Interest is payable annually in arrears on each anniversary of the note, and commenced on October 1, 2020. Interest accrues daily and is computed on a basis of a 360-day year from October 1, 2019 until the date on which the principal amount is paid in full. AGUS will pay 20% of the original principal amount of each note on the sixth, seventh, eighth and ninth anniversaries. The remaining 20% of the original principal amount and all accrued and unpaid interest will be paid on the maturity date. AGUS has the right to prepay the principal amount of the notes in whole or in part at any time, or from time to time, without payment of any premium or penalty. 100 Guarantor and U.S. Holding Companies’ Summarized Financial Information AGL fully and unconditionally guarantees the payment of the principal of, and interest on, the $1,450 million aggregate principal amount of notes issued by the U.S. Holding Companies, the $450 million aggregate principal amount of junior subordinated debentures issued by the U.S. Holding Companies and the intercompany loans. The following tables include summarized financial information for AGL and the U.S. Holding Companies, excluding their investments in subsidiaries. [[GREPCENT_TABLE]] [["","As of December 31, 2024"],["","AGL","","U.S. Holding Companies"],["","(in millions)"],["Assets, excluding investments in subsidiaries"],["Fixed-maturity securities (1)","$","14","","","$","4"],["Ownership Interest in Sound Point","\u2014","","","418"],["Other invested assets","\u2014","","","124"],["Short-term investments and cash","52","","","367"],["Receivables from affiliates (2)","67","","","\u2014"],["Dividends receivable from U.S. Holding Companies","150","","","\u2014"],["Other assets","2","","","42"],["Liabilities"],["Long-term debt","\u2014","","","1,699"],["Loans payable to affiliates","\u2014","","","270"],["Payable to affiliates (2)","14","","","14"],["Dividends payable to AGL","\u2014","","","150"],["Other liabilities","13","","","84"]] [[/GREPCENT_TABLE]] ____________________ (1)    As of December 31, 2024, weighted average durations of AGL’s and the U.S. Holding Companies’ fixed-maturity securities were 10.6 years and 3.5 years, respectively. (2)    Primarily represents receivables and payables with non-guarantor subsidiaries. [[GREPCENT_TABLE]] [["","Year Ended December 31, 2024"],["","AGL","","U.S. Holding Companies"],["","(in millions)"],["Revenues","$","2","","","$","13"],["Expenses"],["Interest expense","\u2014","","","101"],["Other expenses","42","","","14"],["Income (loss) before provision for income taxes and equity in earnings (losses) of investees","(40)","","","(102)"],["Net income (loss) excluding investments in subsidiaries","(40)","","","(85)"]] [[/GREPCENT_TABLE]] 101 The following table presents significant cash flow items for AGL and the U.S. Holding Companies (other than investment income, operating expenses and taxes) related to distributions from subsidiaries and outflows for debt service, dividends and other capital management activities. AGL and U.S. Holding Companies Selected Cash Flow Items [[GREPCENT_TABLE]] [["","Year Ended December 31, 2024"],["","AGL","","U.S. Holding Companies"],["","(in millions)"],["Dividends received from U.S. Holding Companies","$","540","","","$","\u2014"],["Dividends received from other subsidiaries","97","","","404"],["Distributions from equity method investees (1)","\u2014","","","37"],["Interest paid on intercompany loans","\u2014","","","(10)"],["Interest paid on long term debt","\u2014","","","(88)"],["Investments in subsidiaries","\u2014","","","(14)"],["Redemption of stock by insurance subsidiaries","\u2014","","","267"],["Dividends paid to AGL","\u2014","","","(540)"],["Dividends paid to AGL shareholders","(68)","","","\u2014"],["Repurchases of common shares (2)","(502)","","","\u2014"]] [[/GREPCENT_TABLE]] ____________________ (1)    Includes distributions from Sound Point and other alternative investments. (2)    See Item 8, Financial Statements and Supplementary Data, Note 18, Shareholders’ Equity, for additional information about share repurchases and authorizations. Generally, dividends paid by a U.S. company to a Bermuda holding company are subject to a 30% withholding tax. After AGL became tax resident in the U.K., it became subject to the tax rules applicable to companies resident in the U.K., including the benefits afforded by the U.K.’s tax treaties. The income tax treaty between the U.K. and the U.S. reduces or eliminates the U.S. withholding tax on certain U.S. sourced investment income (to 5% or 0%), including dividends from U.S. subsidiaries to U.K. resident persons entitled to the benefits of the treaty. Insurance Subsidiaries The Company has several insurance subsidiaries. AG is an insurance subsidiary domiciled in Maryland. As of August 1, 2024, AG owns: (i) AGUK, an insurance subsidiary domiciled in the U.K; and (ii) AGE, an insurance company domiciled in France. Until August 1, 2024, AGM was an insurance subsidiary of the Company domiciled in New York. See “— Overview — Key Business Strategies — Merger of the U.S. Insurance Subsidiaries” above. AGUK and AGE are collectively referred to as the European Insurance Subsidiaries. AG Re is an insurance company domiciled in Bermuda that owns AGRO, an insurance company that is also domiciled in Bermuda. Sources and Uses of Funds Liquidity of the insurance subsidiaries is primarily used to pay for: •operating expenses, •claims on the insured portfolio, •dividends or other distributions to parent, •reinsurance premiums, and •capital investments in their own subsidiaries and in alternative investments. Management believes that the insurance subsidiaries’ liquidity needs for the next twelve months can be met from current cash, short-term investments and operating cash flow, including premium collections and coupon payments as well as scheduled maturities and paydowns from their respective investment portfolios. The Company generally targets a balance of its most liquid assets including cash and short-term securities, U.S. Treasuries, agency RMBS and pre-refunded municipal bonds equal to 1.5 times its projected operating company cash flow needs over the next four quarters. As of December 31, 2024, the Company intended to hold and had the ability to hold securities in an unrealized loss position until the date of anticipated recovery of amortized cost. 102 Beyond the next twelve months, the ability of the operating subsidiaries to declare and pay dividends may be influenced by a variety of factors, including market conditions, general economic conditions and, in the case of the Company’s insurance subsidiaries, insurance regulations and rating agency capital requirements. Financial Guaranty Policies Insurance policies issued provide, in general, that payments of principal, interest and other amounts insured may not be accelerated by the holder of the obligation. Amounts paid by the Company therefore are typically in accordance with the obligation’s original payment schedule, unless the Company accelerates such payment schedule, at its sole option. Premiums received on financial guaranty contracts are paid either upfront or in installments over the life of the insured obligations. Payments made in settlement of the Company’s obligations arising from its insured portfolio may, and often do, vary significantly from year to year, depending primarily on the frequency and severity of payment defaults and whether the Company chooses to accelerate its payment obligations in order to mitigate future losses. For example, the Company made substantial claim payments in 2022 and 2024 in connection with the resolution of certain Puerto Rico credits. The Company is continuing its efforts to resolve the one remaining unresolved Puerto Rico insured exposure that is in payment default, PREPA. The Company had $532 million in insured net par outstanding of PREPA obligations as of December 31, 2024. For more information, see Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), and Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles. The terms of the Company’s credit default swaps (CDS) contracts generally are modified from standard CDS contract forms approved by International Swaps and Derivatives Association, Inc. such that the circumstances giving rise to the Company’s obligation to make loss payments are similar to those for its financial guaranty insurance contracts. The documentation for certain CDS was negotiated to require the Company to also pay if the obligor were to become bankrupt or if the reference obligation were restructured. Furthermore, some CDS documentation requires the Company to make a payment due to an event that is unrelated to the performance of the obligation referenced in the credit derivative. If events of default or termination events specified in the credit derivative documentation were to occur, the Company may be required to make a cash termination payment to its swap counterparty upon such termination. Any such payment would probably occur prior to the maturity of the reference obligation and be in an amount larger than the amount due for that period on a “pay-as-you-go” basis. The following table presents estimated probability weighted expected cash outflows under direct and assumed financial guaranty contracts, whether accounted for as insurance or credit derivatives, including claim payments under contracts in consolidated FG VIEs, as of December 31, 2024. This amount does not include amounts related to loss adjustment expenses. This amount is not reduced for cessions under reinsurance contracts or recoveries attributable to Loss Mitigation Securities. This amount includes any benefit anticipated from excess spread or other recoveries within the contracts but does not reflect any benefit for recoveries under breaches of representation and warranty. This amount also excludes estimated recoveries for past claims paid for policies in the public finance sector. See Item 8. Financial Statements and Supplementary Data, Note 5, Contracts Accounted for as Insurance. Estimated Expected Claim Payments (Undiscounted) [[GREPCENT_TABLE]] [["","As of December 31, 2024"],["","(in millions)"],["Less than 1 year","$","212"],["1-3 years","99"],["3-5 years","(25)"],["More than 5 years","785"],["Total","$","1,071"]] [[/GREPCENT_TABLE]] Ordinary Dividends From Insurance Subsidiaries to Holding Companies The Company anticipates that, for the next twelve months, amounts paid by AGL’s direct and indirect insurance subsidiaries as dividends or other distributions will be a major source of the holding companies’ liquidity. The insurance subsidiaries’ ability to pay dividends depends upon their financial condition, results of operations, cash requirements, other potential uses for such funds and compliance with rating agency requirements, and is also subject to restrictions contained in the 103 insurance laws and related regulations of their states of domicile. For more information, see Item 8, Financial Statements and Supplementary Data, Note 14, Insurance Company Regulatory Requirements. Dividend restrictions by insurance subsidiary are as follows: •The Company expects the amount of ordinary dividends available for distribution by AG in 2025 to be approximately $287 million. Such payments would be payable in the second half of 2025 because AG’s ordinary dividends were concentrated in the second half of 2024 following the August 1, 2024 merger of AGM with and into AG. Under Maryland’s insurance law, AG may make an ordinary dividend payment in 2025 only when such amount, together with other dividends and distributions paid in the prior 12 months, does not exceed its expected 2025 ordinary dividend capacity of $287 million (i.e., a 12-month look back of dividends and distributions). However, in order to enable AG to make payments over the course of the year, AG has put in place for 2025 a quarterly process with the MIA, pursuant to which AG will confirm that the MIA does not object to AG dividending $71.8 million (i.e., 25%) of the $287 million amount in each calendar quarter of 2025. Pursuant to this process, AG obtained the MIA’s non-objection to pay, and expects to pay, a $71.8 million dividend on March 7, 2025. See Part I, Item 1, Business - Regulation, and Part II, Item 7, Management’s Discussion and Analysis of Financial Conditions and Results of Operations – Overview – Key Business Strategies – Merger of the U.S. Insurance Subsidiaries. •The Company expects the amount of dividends available for distribution by AG Re in 2025 to be approximately $192 million. Based on applicable law and regulations, in 2025 AG Re has the capacity to declare and pay dividends in an aggregate amount up to 25% of the prior year statutory surplus (i.e., up to $272 million as of December 31, 2024); provided that such payment cannot exceed AG Re’s unencumbered assets ($192 million as of December 31, 2024) or its statutory surplus ($229 million as of December 31, 2024). Additionally, in 2025 AG Re can make capital distributions in an aggregate amount up to $129 million without the prior approval of the Authority. Ordinary Dividends From Insurance Subsidiaries to Holding Companies [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["Dividends paid by AG Re to AGL","97","","","53","","","\u2014"],["Dividends paid by AG to U.S. Holding Companies (1)","400","","","358","","","473"]] [[/GREPCENT_TABLE]] ___________________ (1)    Prior to the merger of AGM with and into AG, with AG as the surviving company, AG had been directly owned by AGUS. As a result of the merger, effective as of August 1, 2024, AG is directly owned by AGMH, a subsidiary of AGUS. Stock Redemptions by Insurance Subsidiaries In May 2024, NYDFS approved, and AGM implemented, the redemption of approximately $100 million of AGM’s shares of common stock from AGMH. In connection with the merger of AGM into AG, the MIA approved, and in third quarter of 2024 AG implemented, the redemption of approximately $300 million of AG’s shares of common stock from AGMH in exchange for cash of $167 million and the remainder in alternative investments. Committed Capital Securities AG is party to an arrangement that enables it to access, at its discretion, up to $400 million of capital, at any time, and has the right to use such capital for any purpose, including to pay claims. See Item 8, Financial Statements and Supplementary Data, Note 9, Fair Value Measurement. Investment Portfolio The Company’s principal objectives in managing its investment portfolio are to support the highest possible ratings for each operating company, manage investment risk within the context of the underlying portfolio of insurance risk, maintain sufficient liquidity to cover unexpected stress in the insurance portfolio and maximize after-tax net investment income. As of December 31, 2024, the Company had $7,590 million of available-for-sale fixed-maturity and short-term investments, of which 104 $5,452 million were managed by three investment managers who are required to, in accordance with the Company’s investment guidelines, maintain their portion of the Company’s investment portfolio with an overall credit quality rated at a minimum of A+/A1/A+ by S&P/Moody’s/Fitch Ratings Inc. In addition, $277 million of available-for-sale fixed-maturity securities were CLO equity tranches managed by Sound Point. Changes in interest rates affect the value of the Company’s fixed-maturity securities. As interest rates fall, the fair value of fixed-maturity securities generally increases, and as interest rates rise, the fair value of fixed-maturity securities generally decreases. The Company’s portfolio of fixed-maturity securities primarily consists of investment-grade, liquid instruments. Other invested assets include other alternative investments, which are generally less liquid. For more information about the investment portfolio and a detailed description of the Company’s valuation of investments, see Item 8, Financial Statements and Supplementary Data, Note 7, Investments and Cash, and Note 9, Fair Value Measurement. Investment Portfolio Carrying Value [[GREPCENT_TABLE]] [["","As of December 31,"],["","2024","","2023"],["","(in millions)"],["Fixed-maturity securities, available-for-sale","$","6,369","","","$","6,307"],["Fixed-maturity securities, trading (1)","147","","","318"],["Short-term investments","1,221","","","1,661"],["Other invested assets (2)","926","","","829"],["Total","$","8,663","","","$","9,115"]] [[/GREPCENT_TABLE]] ____________________ (1)    Includes primarily CVIs received under the 2022 Puerto Rico Resolutions, which are not rated. (2)    Excludes investments in Sound Point funds that are consolidated. See Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles. The Company’s available-for-sale fixed-maturity securities had a duration of 4.3 years as of December 31, 2024 and 3.9 years as of December 31, 2023, respectively. Available-for-Sale Fixed-Maturity Securities By Rating The following table summarizes the ratings distributions of the Company’s available-for-sale fixed-maturity securities as of December 31, 2024 and December 31, 2023. Ratings generally reflect the lower of Moody’s and S&P classifications, except for (i) Loss Mitigation Securities, which use Assured Guaranty’s internal ratings classifications, rated BIG, and (ii) CLO equity tranches, which are not rated. See Item 8, Financial Statements and Supplementary Data, Note 7, Investments and Cash, for additional information.  Distribution of Available-for-Sale Fixed-Maturity Securities by Rating [[GREPCENT_TABLE]] [["","","As of December 31,"],["Rating","","2024","","2023"],["AAA","","12.5","%","","13.3","%"],["AA","","35.0","","","38.2"],["A","","23.6","","","27.6"],["BBB","","16.3","","","11.7"],["BIG","","8.1","","","7.8"],["Not rated","","4.5","","","1.4"],["Total","","100.0","%","","100.0","%"]] [[/GREPCENT_TABLE]] Portfolio of Obligations of State and Political Subdivisions The Company’s fixed-maturity available-for-sale securities include issuances by a wide number of municipal authorities across the U.S. and its territories. The following table presents the components of the Company’s $1,940 million (fair value) of obligations of state and political subdivisions included in the Company’s available-for-sale fixed-maturity securities investment portfolio as of December 31, 2024. 105 Fair Value of Available-for-Sale Fixed-Maturity Securities Investment Portfolio of Obligations of State and Political Subdivisions As of December 31, 2024 (1) [[GREPCENT_TABLE]] [["State","","State General Obligation","","Local General Obligation","","Revenue Bonds","","Total Fair Value","","Amortized Cost"],["","","(in millions)"],["California","","$","45","","","$","55","","","$","245","","","$","345","","","$","355"],["Texas","","15","","","63","","","212","","","290","","","307"],["New York","","3","","","35","","","162","","","200","","","209"],["Massachusetts","","43","","","\u2014","","","60","","","103","","","107"],["Florida","","\u2014","","","1","","","101","","","102","","","108"],["Washington","","13","","","27","","","56","","","96","","","101"],["Illinois","","8","","","12","","","56","","","76","","","79"],["Colorado","","\u2014","","","20","","","38","","","58","","","60"],["Pennsylvania","","12","","","2","","","32","","","46","","","48"],["Arizona","","\u2014","","","\u2014","","","43","","","43","","","44"],["All others","","65","","","69","","","331","","","465","","","499"],["Total","","$","204","","","$","284","","","$","1,336","","","$","1,824","","","$","1,917"]] [[/GREPCENT_TABLE]] ____________________ (1)    Excludes $116 million as of December 31, 2024 of pre-refunded bonds, at fair value. The revenue bond portfolio primarily consists of essential service revenue bonds issued by transportation authorities, utilities and universities. Revenue Bonds Sources of Funds As of December 31, 2024 [[GREPCENT_TABLE]] [["Type","","Amortized Cost","","Fair Value"],["","","(in millions)"],["Tax revenue","","$","374","","","$","369"],["Transportation","","330","","","315"],["Utilities","","280","","","270"],["Education","","228","","","219"],["Healthcare","","107","","","101"],["All others","","78","","","62"],["Total","","$","1,397","","","$","1,336"]] [[/GREPCENT_TABLE]] Other Investments Other invested assets, which are generally less liquid than fixed-maturity securities, primarily consist of the ownership interest in Sound Point and alternative investments across a variety of strategies. The Insurance segment reports the Company’s percentage ownership of Sound Point funds and AHP funds as equity method investments with changes in NAV included in the Insurance segment adjusted operating income. As of December 31, 2024, one active fund in which the Company invests was accounted for as a CIV and the remaining are accounted as equity method investments in the Company’s consolidated financial statements. See “— Commitments” below. 106 Ownership Interest in Sound Point and Alternative Investments As of December 31, 2024 [[GREPCENT_TABLE]] [["","","Investments","","CIVs","","Consolidated"],["","","(in millions)"],["Fixed-maturity securities, available-for-sale (1)","","$","319","","","$","\u2014","","","$","319"],["Fixed-maturity securities, trading","","24","","","\u2014","","","24"],["Other invested assets:"],["Ownership interest in Sound Point","","418","","","\u2014","","","418"],["CLOs","","100","","","\u2014","","","100"],["Private healthcare investing","","153","","","\u2014","","","153"],["Asset-based/specialty finance","","142","","","(33)","","","109"],["Middle market direct lending","","11","","","\u2014","","","11"],["Other","","135","","","\u2014","","","135"],["Total","","$","1,302","","","$","(33)","","","$","1,269"]] [[/GREPCENT_TABLE]] ____________________ (1)     Include CLO equity tranches distributed from the CLO fund in the fourth quarter of 2024. Ownership Interest in Sound Point and Alternative Investments As of December 31, 2023 [[GREPCENT_TABLE]] [["","","Investments","","CIVs","","Consolidated"],["","","(in millions)"],["Fixed-maturity securities, available-for-sale","","$","34","","","$","\u2014","","","$","34"],["Other invested assets:"],["Sound Point","","429","","","\u2014","","","429"],["CLOs","","302","","","(223)","","","79"],["Private healthcare investing","","102","","","\u2014","","","102"],["Asset-based/specialty finance","","166","","","(82)","","","84"],["Middle market direct lending","","5","","","\u2014","","","5"],["Other","","130","","","\u2014","","","130"],["Total","","$","1,168","","","$","(305)","","","$","863"]] [[/GREPCENT_TABLE]] Income from Ownership Interest in Sound Point and Alternative Investments Year Ended December 31, 2024 [[GREPCENT_TABLE]] [["","","Investments","","CIVs","","Consolidated"],["","","(in millions)"],["Net investment income (1)","","$","15","","","$","\u2014","","","$","15"],["Fair value gains (losses) on trading securities","","2","","","\u2014","","","2"],["Equity in earnings of Sound Point","","6","","","\u2014","","","6"],["Equity in earnings (losses) of alternative investments:"],["CLOs","","47","","","(33)","","","14"],["Private healthcare investing","","11","","","\u2014","","","11"],["Asset-based/specialty finance","","24","","","(14)","","","10"],["Middle market direct lending","","2","","","\u2014","","","2"],["Other","","19","","","\u2014","","","19"],["Total","","$","126","","","$","(47)","","","$","79"]] [[/GREPCENT_TABLE]] ____________________ (1)    Includes CLO equity tranches distributed from the CLO fund in the fourth quarter of 2024. 107 Income from Ownership Interest in Sound Point and Alternative Investments Year Ended December 31, 2023 [[GREPCENT_TABLE]] [["","","Investments","","CIVs","","Consolidated"],["","","(in millions)"],["Net investment income","","$","1","","","$","\u2014","","","$","1"],["Equity in earnings of Sound Point","","5","","","\u2014","","","5"],["Equity in earnings (losses) of alternative investments:"],["CLOs","","50","","","(46)","","","4"],["Private healthcare investing","","19","","","(9)","","","10"],["Asset-based/specialty finance","","5","","","(4)","","","1"],["Other","","8","","","\u2014","","","8"],["Total","","$","88","","","$","(59)","","","$","29"]] [[/GREPCENT_TABLE]] Income from Alternative Investments Year Ended December 31, 2022 [[GREPCENT_TABLE]] [["","","Investments","","CIVs","","Consolidated"],["","","(in millions)"],["Equity in earnings (losses) of alternative investments:"],["CLOs","","$","(2)","","","$","2","","","$","\u2014"],["Private healthcare investing","","(11)","","","13","","","2"],["Asset-based/specialty finance","","5","","","(5)","","","\u2014"],["Other","","(43)","","","2","","","(41)"],["Total","","$","(51)","","","$","12","","","$","(39)"]] [[/GREPCENT_TABLE]] Beginning in the third quarter of 2023, the Company records an equity method ownership interest in Sound Point pursuant to the Sound Point Transaction described in Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation. Commitments The Company has agreed to invest an aggregate amount of $1.5 billion in alternative investments, including $1 billion in Sound Point managed investments. Unfunded commitments for alternative investments as of December 31, 2024 were $610 million. See Part II, Item 8, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation, for a description of the Sound Point Transaction. Restricted Assets Based on fair value, fixed-maturity securities, short-term investments and cash that are either held in trust for the benefit of third-party ceding insurers in accordance with statutory requirements, placed on deposit to fulfill state licensing requirements, or otherwise pledged or restricted, totaled $79 million and $234 million as of December 31, 2024 and December 31, 2023, respectively. The investment portfolio also contains securities that are held in trust by certain AGL subsidiaries or otherwise restricted for the benefit of other AGL subsidiaries in accordance with statutory and regulatory requirements with a fair value of $1,135 million and $1,154 million as of December 31, 2024 and December 31, 2023, respectively. Lease Obligations The Company has entered into several lease agreements for office space in Bermuda, New York, London, Paris, and other locations with various lease terms. See Item 8, Financial Statements and Supplementary Data, Note 16, Leases, for a table of minimum lease obligations. 108 FG VIEs and CIVs The Company manages its liquidity needs by evaluating cash flows without the effect of consolidating FG VIEs and CIVs; however, the Company’s consolidated financial statements include the effect of consolidating FG VIEs and CIVs. The primary sources and uses of cash at Assured Guaranty’s FG VIEs and CIVs are as follows: •FG VIEs. The primary sources of cash in FG VIEs are the collection of principal and interest on the collateral supporting the debt obligations, and the primary uses of cash are the payment of principal and interest due on the debt obligations. The insurance subsidiaries are not primarily liable for the debt obligations issued by the VIEs they insure and would only be required to make payments on those insured debt obligations in the event that the issuer of such debt obligations defaults on any principal or interest due and only for the amount of the shortfall. AGL’s and its insurance subsidiaries’ creditors do not have any rights with regard to the collateral supporting the debt issued by the FG VIEs. •CIVs. The primary sources and uses of cash in the CIVs include, using capital to make investments, generating cash income from investments, paying expenses, distributing cash flow to investors. The assets and liabilities of the Company’s CIVs are held within separate legal entities. The assets of the CIVs are not available to creditors of the Company, other than creditors of the applicable CIVs. In addition, creditors of the CIVs have no recourse against the assets of the Company, other than the assets of such applicable CIVs. Liquidity available at the Company’s CIVs is not available for corporate liquidity needs, except to the extent of the Company’s investment in the funds, subject to redemption provisions. See Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, for additional information. Consolidated Cash Flow Summary The summarized consolidated statements of cash flows in the table below present the cash flow effect for the aggregate of the Insurance and Asset Management businesses and holding companies, separately from the aggregate effect of consolidating FG VIEs and CIVs. In the third quarter 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, Financial Statements and Supplementary Data, Note 1, Business and Basis of Presentation, and Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, for additional information. 109 Summarized Consolidated Cash Flows [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in millions)"],["Net cash flows provided by (used in) operating activities, excluding FG VIEs and CIVs operating cash flows","$","(168)","","","$","(108)","","","$","(1,056)"],["FG VIEs and CIVs operating cash flows","215","","","569","","","(1,423)"],["Net cash flows provided by (used in) operating activities","47","","","461","","","(2,479)"],["Net cash flows provided by (used in) investing activities, excluding FG VIEs and CIVs investing cash flows","797","","","365","","","1,618"],["FG VIEs and CIVs investing cash flows","(17)","","","(79)","","","122"],["Net cash flows provided by (used in) investing activities","780","","","286","","","1,740"],["Net cash flows provided by (used in) financing activities, excluding FG VIEs and CIVs financing cash flows"],["Dividends paid","(68)","","","(67)","","","(64)"],["Repurchases of common shares","(502)","","","(199)","","","(500)"],["Issuance of long-term debt, net of issuance costs","\u2014","","","345","","","\u2014"],["Redemption of debt","\u2014","","","(330)","","","\u2014"],["Other","(28)","","","(19)","","","(8)"],["FG VIEs and CIVs financing cash flows","(385)","","","(400)","","","1,184"],["Net cash flows provided by (used in) financing activities (1)","(983)","","","(670)","","","612"],["Effect of exchange rate changes, excluding FG VIEs and CIVs","(2)","","","2","","","(3)"],["Effect of exchange rate changes for FG VIEs and CIVs","\u2014","","","\u2014","","","(5)"],["Effect of exchange rate changes","(2)","","","2","","","(8)"],["Increase (decrease) in cash and cash equivalents and restricted cash","(158)","","","79","","","(135)"],["Cash and cash equivalents and restricted cash at beginning of period","286","","","207","","","342"],["Cash and cash equivalents and restricted cash at the end of the period","$","128","","","$","286","","","$","207"]] [[/GREPCENT_TABLE]] ____________________ (1)     Claims paid on consolidated FG VIEs are presented in the consolidated statements of cash flows as a component of paydowns on FG VIEs’ liabilities in financing activities as opposed to operating activities. Cash flows from operating activities were inflows of $47 million in 2024 and $461 million in 2023. The decrease in cash inflows during 2024 was primarily due to a $457 million decrease in net cash flows from CIVs, most of which were deconsolidated in 2023 as a result of the Sound Point Transaction, an $86 million increase in tax payments, a $56 million increase in net claim payments, which were partially offset by a $93 million increase in premiums received, a $40 million increase in return on capital from equity method investees, and Sound Point Transaction and AHP Transaction expenses in 2023. Investing activities primarily consisted of net sales (purchases) of fixed-maturity securities and short-term investments, and paydowns on and sales of FG VIEs’ assets. The increase in investing cash inflows in 2024 compared with 2023 was mainly attributable to net purchases of short-term and fixed-maturity securities in 2023, higher sales of CVIs in 2024 and lower net sales of fixed-maturity securities in 2024. Investing inflows in both periods were used to fund claim payments and share repurchases. See Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), for additional information. Financing activities primarily consist of (i) AGL share repurchases and dividends, (ii) paydowns of FG VIEs’ liabilities, and (iii) until July 1, 2023, CLO issuances and CLO warehouse financing activities. In 2024, FG VIEs’ financing cash flows were $375 million, which primarily related to the paydown of Puerto Rico Trust liabilities. The CIVs’ financing cash flows in 2023 included repayments of CLO warehouse financing debt of $166 million and distributions from noncontrolling interests to CIVs. See Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles. 110 From January 1, 2025 through February 27, 2025, the Company repurchased an additional 829 thousand common shares. As of February 27, 2025, the Company was authorized to purchase approximately $276 million of its common shares. For more information about the Company’s share repurchases and authorizations, see Item 8, Financial Statements and Supplementary Data, Note 18, Shareholders’ Equity.