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 2024 results to 2023 results have been omitted in this Form 10-K. The Company’s comparison of 2024 results to 2023 results is included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 , under Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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 Part I, 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 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.
Financial Strength Ratings
Demand for the financial guaranties issued by the Company’s financial guaranty insurance subsidiaries may be impacted by changes in the credit ratings assigned to them by the rating agencies. The financial strength ratings (or similar ratings) assigned to AGL’s financial guaranty insurance subsidiaries, along with the date of the most recent rating action (or confirmation) by the rating agency assigning the rating, are shown in the table below.
KBRA
Moody’s
A.M. Best Company,
Inc.
AA (stable) (6/30/25)
AA+ (stable) (8/4/25)
A1 (stable) (7/10/24)
AA (stable) (6/30/25)
AGRO
AA (stable) (6/30/25)
A+ (stable) (7/19/25)
AGUK
AA (stable) (6/30/25)
AA+ (stable) (8/4/25)
A1 (stable) (7/10/24)
AGE
AA (stable) (6/30/25)
AA+ (stable) (8/4/25)
In addition, the Company’s life and annuity reinsurance subsidiary, Assured Life Re, is rated BBB (Outlook Positive) (1/28/26) by Fitch Ratings, Inc.
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 Part I, Item 1A. Risk Factors – Strategic Risks captioned “A downgrade of the financial strength or financial enhancement ratings of any of the Company’s insurance or reinsurance subsidiaries may adversely affect its business prospects.”
Economic Environment
On April 2, 2025, the U.S. administration announced a “reciprocal tariff” strategy under the authority of the International Emergency Economic Powers Act (IEEPA) entailing extensive global tariff increases, with the objective of rectifying trade practices that contribute to large and persistent annual U.S. goods trade deficits. The announcement of global tariffs disrupted international trade, sent shocks through the global economy, and heightened volatility in the financial markets. The U.S. subsequently postponed newly announced reciprocal tariffs, which took effect on August 7, 2025. On August 29, 2025, the U.S. Court of Appeals for the Federal Circuit ruled that the U.S. administration had exceeded its authority under the IEEPA but permitted the tariffs to remain in effect to provide time for the government to appeal. The U.S. Supreme Court granted certiorari on September 9, 2025, and heard oral arguments on the case on November 5, 2025; on February 20, 2026 the U.S. Supreme Court held that the IEEPA does not authorize the President of the United States to impose tariffs. The U.S. administration has indicated that tariffs found to be illegal by the U.S. Supreme Court will be replaced with alternative import taxes as uncertainty remains. U.S. tariffs can add to inflation, and the Company believes that ongoing uncertainty may increase volatility in U.S. equities and other risk assets, curb corporate capital and consumer spending and raise the risk of recession. Market volatility and the risk of recession may impact the Company in different ways. The Company believes that a recession may make it more likely that obligors whose obligations it guarantees will default. However, market volatility may also cause credit spreads to widen as investors seek security, which tends to create new business opportunities for the Company.
Real gross domestic product (GDP) increased 2.2% in 2025, compared to an increase of 2.8% in 2024, according to the advance estimate released by the U.S. Bureau of Economic Analysis (BEA). Additionally, the BEA reported real GDP increased at an annual rate of 1.4% in the fourth quarter of 2025. At the end of December 2025, the U.S. unemployment rate, seasonally adjusted, stood at 4.4%, higher than where it started the year at 4.1%. The Company believes a more robust economy makes it less likely that obligors whose obligations it guarantees will default.
According to the U.S. Bureau of Labor Statistics, the inflation rate in the U.S. before seasonal adjustment for the 12-month period ending December 2025, as measured by the Consumer Price Index for All Urban Consumers, was 2.7%, as compared to 2.9% for the 12-month period ending December 2024. According to the U.K. Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs rose 3.6% for the 12 months through December 2025, as compared to 3.5% for the 12 months through December 2024. Generally, inflation reduces the real value of money over time. For obligors whose payments the Company insures, inflation can mean that the real value of their fixed debt payments decreases, potentially making it relatively easier for obligors to service these fixed-rate debts and less likely for them to default. However, if inflation increases operating expenses and revenues or incomes do not keep pace, obligors may find it more difficult to make their payment obligations, even if nominal debt payments remain unchanged. Higher inflation can also lead to tighter monetary policies, which are actions taken by sovereign central banks to reduce the amount of money circulating in the economy, including raising interest rates, which can make refinancing or servicing debt more difficult. In addition, consumer price inflation in the U.K. affects reported net par outstanding for certain U.K. exposures with $24.5 billion of net par outstanding as of December 31, 2025, and also affects projected future installment premiums on the portion of such exposure that pays at least a portion of the premium on an installment basis over the term of the exposure.
At its September 2024 meeting, the Federal Open Market Committee (FOMC) decided to lower the federal funds rate, which was a reversal of the rate increases it had initiated in March 2022 to combat inflation. 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 2025, the FOMC lowered the federal funds rate from a target range of 5.25% to 5.50% to a range of 3.50% to 3.75%. Most recently, at its January 2026 meeting, the FOMC held the federal funds rate at a target range of 3.50% to 3.75%, stating that it is strongly committed to supporting maximum employment and returning inflation to its 2% objective. 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.
From 2022 through February 2026, the Bank of England’s Monetary Policy Committee (MPC) took actions similar to those of the FOMC to combat inflation and spur economic growth. In 2022, the MPC raised the Bank of England base rate (Bank Rate) from historic lows in response to surging inflation, increasing the rate multiple times into 2023 as inflation remained high above MPC’s 2% target. By the end of 2023, the MPC signaled a pause in further increases as inflation began to decline and economic growth slowed. During 2024, as inflationary pressures eased further and the U.K. economy showed signs of stagnation or mild recession, the MPC kept the rate unchanged for most of the year, before beginning to decrease the Bank Rate in August 2024. In 2025 and early 2026, with inflation being closer to the MPC’s target level and economic growth slowed, the MPC further lowered the Bank Rate several times, standing at 3.75% as of February 5, 2026, aiming to support economic growth while maintaining price stability.
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 and infrastructure 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 municipal and infrastructure bond transactions and may also decrease amounts the Company can earn on securities newly acquired for its investment portfolio. Lower interest rates also are often accompanied by narrower credit spreads, which may also decrease the level of premiums the Company can charge for transactions.
The 30-year AAA Municipal Market Data (MMD) rate is a measure of interest rates in the Company’s largest financial guaranty insurance market, U.S. public finance. The MMD rate averaged 4.30% for 2025, higher than the 3.68% average rate in 2024 and higher than the 3.65% average rate for 2023. Meanwhile, the difference, or credit spread, between the 30-year BBB rated general obligation relative to the 30-year AAA MMD averaged 89 basis points (bps) in 2025, which is narrower compared to the 90 bps average for 2024 and compared to the 101 bps average for 2023. The Company believes that wider spreads could permit it to increase its premium rates on new business.
According to Freddie Mac, the 30-year fixed-rate mortgage rate averaged 6.15% for the week ending December 31, 2025, lower than the 30-year mortgage rate average of 6.85% from one year ago. The National Association of Realtors reported that there was a 1.4% increase in year-over-year existing-home sales from December 2024 to December 2025, and that the median existing-home sales price increased 0.4% from December 2024 ($403,700) to December 2025 ($405,400). Higher housing prices may benefit distressed RMBS the Company insures.
Key Business Strategies
The Company continually evaluates its business strategies and is currently pursuing key business strategies in four areas: (i) growth of its insurance and asset management businesses; (ii) loss mitigation; (iii) enhancement of investment returns through alternative investments; and (iv) capital management.
Insurance and Asset Management Growth
The Company seeks to grow its core financial guaranty insurance business through new business production in established sectors and jurisdictions and by entering into new markets, lines and classes of business. In addition, the Company seeks to leverage its core credit competencies by expanding its business into revenue streams independent of its financial guaranty insurance business, such as annuity reinsurance through its life and annuity reinsurance platform and its asset management business, with the objective of bolstering net income growth and predictability and generating high-return business opportunities.
Financial Guaranty Insurance Portfolio
The Company seeks to grow its financial guaranty insurance portfolio through new business production in each of its markets: public finance (including infrastructure) and structured finance. The Company believes high-profile defaults by municipal obligors, such as Puerto Rico, Detroit, Michigan and Stockton, California as well as events such as the COVID-19 pandemic have led to increased awareness of the value of bond insurance and stimulated demand for the product. The Company believes there will be continued demand for its insurance in this market because, for those exposures that the Company guarantees, it undertakes the tasks of credit selection, analysis, negotiation of terms, surveillance and, if necessary, loss mitigation. The Company believes that its insurance: (i) encourages retail investors, who typically have fewer resources than the Company for analyzing municipal bonds, to purchase such bonds; (ii) enables institutional investors to operate more efficiently; and (iii) allows smaller, less well-known issuers to gain market access on a more cost-effective basis.
The low interest rate environment and tight U.S. municipal credit spreads from when the financial crisis began in 2008 through early 2020 dampened demand for bond insurance compared with the levels before the financial crisis. After the onset of the COVID-19 pandemic in early 2020, credit spreads initially widened as a result of market concerns about the impact of the COVID-19 pandemic on some municipal credits, thereby improving demand for financial guaranty insurance even in a low interest rate environment, before narrowing again in 2022. The Company believes that, over time, wider credit spreads may improve demand for bond insurance.
In certain segments of the non-U.S. infrastructure and global structured finance markets, the Company believes its financial guaranty product is competitive with other financing options. In the infrastructure market, the Company’s financial guaranty can enhance the insured obligation’s rating, lower the cost of long-term funding and enhance the liquidity and transferability of debt obligations. Certain investors may receive advantageous capital requirement treatment with the addition of the Company’s financial 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 production may vary from period to period.
U.S. Municipal Market Data and Bond Insurance Penetration Rates (1)
Based on Sale Date
Year Ended December 31,
(dollars in billions)
Par:
New municipal bonds issued
Total insured
Insured by Assured Guaranty
Number of issues:
New municipal bonds issued
Total insured
Insured by Assured Guaranty
Bond insurance market penetration based on:
Par
Number of issues
Single A par sold
Single A transactions sold
$25 million and under par sold
$25 million and under transactions sold
(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.
In addition, the Company considers opportunities to acquire financial guaranty portfolios, whether by acquiring financial guarantors that are no longer actively writing new business or their insured portfolios, generally through reinsurance or novations. These transactions enable the Company to improve its future earnings and deploy excess capital.
The Company seeks to expand its financial guaranty business geographically by entering new markets; in 2024, the Company opened new offices in Australia and Singapore. The Company has recently undertaken, and continues to undertake, several initiatives to broaden its insurance lines and classes of business, and improve the efficiency of its secondary market execution. For example, the Company has enhanced its structured finance new business production by developing fund finance into a flow business line. In addition, the Company is pursuing nonpayment insurance business strategies through internal and/or external growth opportunities.
Life and Annuity Reinsurance
On January 21, 2026, the Company purchased all of the outstanding share capital in Warwick Company (UK) Limited (which is the 100% indirect owner of Assured Life Reinsurance Ltd. (Assured Life Re, f/k/a Warwick Re Limited), for a purchase price of $158 million, subject to certain post-closing adjustments (Assured Life Re Acquisition). Assured Life Re is a Class E long-term (life) reinsurance company incorporated and registered in Bermuda and is rated BBB (Outlook Positive) (1/28/26) by Fitch Ratings, Inc. Assured Life Re focuses on annuity reinsurance including U.K. bulk purchase annuity (pension risk transfers) and U.S. multi-year guaranteed annuity transactions. The Company believes that the acquisition of the Assured Life Re platform will provide it with life and annuity business opportunities that complement its financial guaranty and asset management businesses, are consistent with its risk profile and benefit from its core competencies, including credit enhancement. The Assured Life Re Acquisition represents the Company’s first platform dedicated solely to the life and annuity reinsurance business.
See Part I, Item 1A. Risk Factors – Strategic Risks, captioned “The Assured Life Re Acquisition may negatively impact the Company, including how it is perceived by its investors, regulators, rating agencies or obligors it insures, as well as Assured Life Re’s business relationships,” “Entering the life and annuity reinsurance business may present integration risks and other risks specific to the life and annuity reinsurance business that could have a negative effect on the Company’s business, results of operations or financial condition,” “Strategic transactions may not result in the benefits anticipated” and “The Company makes assumptions when pricing its life and annuity reinsurance products relating to longevity, mortality, policy lapses, withdrawals, surrenders, investment returns and expenses, and significant deviations in experience could negatively affect the Company’s financial condition and results of operations.”
The Company continues to investigate additional opportunities in the life and annuity reinsurance business and in other businesses in line with its risk profile and that would benefit from its core competencies.
Asset Management
The Company participates in the asset management business through its ownership interest in Sound Point, and does not directly manage investments for third parties. The Company’s ownership interest in Sound Point furthers its growth strategy of participating in a diversifying fee-based earnings stream independent of the risk-based premiums generated by its financial guaranty business. In addition to its ownership interest in Sound Point, the Company also has in place a letter agreement (Letter Agreement) with Sound Point relating to the Company’s alternative investments portfolio which supports other key strategic initiatives. See “Enhancement of Investment Returns Through Alternative Investments” below. See Item 8. Financial Statements and Supplementary Data, Note 1. Business and Basis of Presentation and Note 7. Investments and Cash, for a description of the Company’s participation in the asset management business through its ownership interest in Sound Point.
Loss Mitigation
In an effort to avoid, reduce or recover losses and potential losses in its insurance portfolio, the Company employs a number of strategies.
In the public finance area, the Company believes its experience and the resources it is prepared to deploy, as well as its ability to provide bond insurance or other solutions, result in more favorable outcomes in distressed public finance situations than would be the case without its participation. This has been illustrated by the Company’s role in negotiating various agreements in connection with the restructuring of obligations of the Commonwealth of Puerto Rico and various obligations of its related authorities and public corporations, as well as Detroit, Michigan and Stockton, California. For public finance credits, 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 also, from time to time and where appropriate, participates in litigation to enforce or defend its rights. For example, the Company initiated a number of legal actions to enforce its rights with respect to obligations of the Commonwealth of Puerto Rico and various obligations of its related authorities and public corporations. In addition, the Company successfully defended claims brought by Lehman Brothers International (Europe) (in administration) (LBIE) and prevailed in its counterclaim against LBIE; following the exhaustion of LBIE’s appeals, the Company recognized a realized gain on credit derivatives in the first quarter of 2025 of $103 million, which represents the full satisfaction of the judgment it was awarded and its claims for attorneys’ fees, expenses and interest in connection with this litigation. See, Item 8. Financial Statements and Supplementary Data, Note 17. Contingencies, Litigation, for additional information.
The Company may also purchase Loss Mitigation Securities in order to mitigate the economic effect of insured losses. The fair value of Loss Mitigation Securities as of December 31, 2025 (excluding the value of the Company’s insurance) was $140 million.
In July 2025, the Company’s largest BIG exposure in the investment portfolio, which was obtained as part of a loss mitigation strategy, with an aggregate carrying value of $408 million as of June 30, 2025, reached its final resolution after many years of negotiation and was paid down after liquidation of the trust assets. The Company received $459 million in connection with this resolution, including principal, accrued interest and other expected recoveries. This resolution did not have a significant effect on the consolidated statements of operations. Also, in connection with the sale in October 2025 of a commercially leased building that was part of a loss mitigation strategy for a troubled insured exposure, the Company recognized a pre-tax gain of $23 million in the fourth quarter of 2025, and realized a positive inception-to-date internal rate of return on the insured exposure.
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.
In some instances, the terms of the Company’s financial guaranty policies or the terms of certain workout orders and resolutions give it the option to pay principal on an accelerated basis on an obligation on which it has paid a claim, thereby reducing the amount of guaranteed interest due in the future. 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.
Enhancement of Investment Returns Through Alternative Investments
The Company seeks to maintain an investment portfolio that supports the requirements of its insurance subsidiaries, strategic initiatives and liquidity needs, while maximizing the income it earns from such investments. In support of that goal, the Company aims to diversify the types of investments in its portfolio. The Company expects its relationship with Sound Point to enhance its alternative investment opportunities and the return on its investments. The Company has agreed to invest an aggregate amount of $1.5 billion in alternative investments, which includes $1 billion in Sound Point managed investments, subject to certain conditions precedent. See Item 8. Financial Statements and Supplementary Data, Note 7. Investments and Cash, for a description of the alternative investments agreement with Sound Point.
Capital Management
The Company’s capital management strategy is designed to efficiently allocate and utilize capital across the Assured Guaranty group in order to optimize outcomes for rating agency assessments, regulatory compliance and the Company’s own strategic initiatives and risk management requirements. The Company believes this disciplined approach to capital management supports the long-term stability and strength of Assured Guaranty, enabling it to advance its financial guaranty, asset management and annuity reinsurance businesses, and other corporate strategies. Assured Guaranty seeks to enhance financial flexibility and resiliency by proactively managing its capital and aligning resources with its business objectives and stakeholder interests.
From 2013 through February 25, 2026, the Company has repurchased 157 million common shares for $5.9 billion, representing 81% of the total shares outstanding at the beginning of the repurchase program in 2013. On August 6, 2025 and November 5, 2025, the Board authorized the repurchase of an additional $300 million and $100 million, respectively, of the Company’s common shares. As of February 25, 2026, the remaining amount the Company was authorized to purchase was $204 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
Amount (1)
Number of Shares
Average price per share (1)
(in millions, except per share data)
2026 (through February 25, 2026)
Cumulative repurchases since the beginning of 2013
(1) Excludes commissions.
As of December 31, 2025, the estimated accretive effect of the cumulative repurchases of common shares since the beginning of 2013 was approximately: $68.77 per share in shareholders’ equity attributable to AGL, $69.94 per share in adjusted operating shareholders’ equity and $116.18 per share in adjusted book value (ABV).
Over the last several years, the Company has received approval from its insurance regulators to redeem a portion of its insurance subsidiaries’ stock and pay extraordinary dividends from its insurance subsidiaries. Most recently, in the third quarter of 2025, after receiving approval from the MIA, AG redeemed $250 million of its common stock from AGMH in exchange for $213 million in cash and $37 million 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 LAE, changes in fair value of certain alternative investments, credit derivatives, FG VIEs, CIVs, trading securities and CCS, as well as foreign exchange gains (losses), the level of refundings of insured obligations, the effects of any large transactions, settlements, commutations and loss mitigation strategies, among other factors. Changes in laws and regulations, among other factors, may also have a significant effect on reported net income or loss in a given reporting period.
Financial Performance of Assured Guaranty
Financial Results
Year Ended December 31,
(in millions, except per share amounts)
GAAP
Net income (loss) attributable to AGL
Net income (loss) attributable to AGL per diluted share
Weighted average diluted shares
Non-GAAP (1)
Adjusted operating income (loss)
Adjusted operating income per diluted share
Weighted average diluted shares
Components of total adjusted operating income (loss)
Insurance segment
Asset Management segment
Corporate division (2)
Other (3)
Adjusted operating income (loss)
Insurance Segment
Gross written premiums (GWP)
Present value of new business production (PVP) (1)
Gross par written
As of December 31, 2025
As of December 31, 2024
Amount
Per Share
Amount
Per Share
(in millions, except per share amounts)
Shareholders’ equity attributable to AGL
Adjusted operating shareholders’ equity (1)
ABV (1)
Common shares outstanding (4)
(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.
Consolidated Results of Operations
Consolidated Results of Operations
Year Ended December 31,
(in millions)
Revenues:
Net earned premiums
Net investment income
Asset management fees
Net realized investment gains (losses)
Fair value gains (losses) on credit derivatives
Fair value gains (losses) on CCS
Fair value gains (losses) on FG VIEs
Fair value gains (losses) on CIVs
Foreign exchange gains (losses) on remeasurement
Fair value gains (losses) on trading securities
Gain on sale of asset management subsidiaries
Other income (loss)
Total revenues
Expenses:
Loss and LAE (benefit)
Interest expense
Amortization of deferred acquisition costs (DAC)
Employee compensation and benefit expenses
Other operating expenses
Total expenses
Income (loss) before income taxes and equity in earnings (losses) of investees
Equity in earnings (losses) of investees
Income (loss) before income taxes
Less: Provision (benefit) for income taxes
Net income (loss)
Less: Noncontrolling interest (NCI)
Net income (loss) attributable to Assured Guaranty Ltd.
Effective tax rate
Net income attributable to AGL in 2025 was higher compared with 2024 primarily due to the following:
• foreign exchange remeasurement gains of $96 million in 2025, compared with losses of $27 million in 2024,
• a gain on credit derivatives related to the resolution of the LBIE litigation of $103 million in 2025,
• higher other income due to a gain of $23 million recognized in connection with the sale in 2025 of a commercially leased building that was part of a loss mitigation strategy for a troubled insured exposure and $15 million associated with the workout and purchase of bonds issued by a U.K. regulated utility to which the Company has insured exposure and interest on late financial guaranty premiums,
• higher equity in earnings of investees in 2025, primarily generated by the Company’s investments in Sound Point, healthcare funds and legacy alternative investments, and
• fair value gains on committed capital securities in 2025, compared with losses in 2024.
These increases were partially offset by:
• loss and LAE in 2025 of $56 million, compared with a benefit of $26 million in 2024,
• net realized investment losses in 2025 primarily due to changes in the allowance for credit losses for alternative investments and Loss Mitigation Securities,
• lower fair value gains on trading securities in 2025, and
• lower net earned premiums in 2025, compared with 2024 due to lower refundings of financial guaranty insurance exposures.
The Company’s effective tax rate reflects the proportion of income recognized by each of the Company’s operating subsidiaries in the jurisdiction in which they are taxed, with U.S. subsidiaries and foreign subsidiaries that have made an election to be a U.S. taxpayer 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 AG Re and Cedar Personnel Ltd. taxed at the Bermuda marginal corporate tax rate of 15% starting January 1, 2025 and 0% for 2024 and 2023. See Part I, Item 1. Business – Regulation, and Part II, Item 8. Financial Statements and Supplementary Data, Note 13. Income Taxes.
Adjusted Operating Income
Adjusted operating income in 2025 was $445 million, compared with $389 million in 2024. The increase was primarily due to the gain related to the resolution of the LBIE litigation in 2025, higher equity in earnings of investees and the gain recognized in connection with the sale of a commercially leased building that was part of a loss mitigation strategy for a troubled insured exposure, offset in part by a higher loss expense in public finance sectors, lower fair value gains on the trading portfolio and lower earned premiums on refundings of financial guaranty insurance contracts in 2025. See “— Results of Operations — Reconciliation to GAAP” for the reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).
Book Value and ABV
Shareholders’ equity attributable to AGL as of December 31, 2025 increased compared with December 31, 2024, primarily due to net income and unrealized gains on the investment portfolio, partially offset by share repurchases and dividends. Adjusted operating shareholders’ equity and ABV decreased primarily due to share repurchases and dividends, partially offset by adjusted operating income and GWP. See “— Non-GAAP Financial Measures” below for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity and ABV.
On a per share basis, shareholders’ equity attributable to AGL, adjusted operating shareholders’ equity and ABV increased as of December 31, 2025 compared with December 31, 2024, due, in part, to the accretive effect of the share repurchase program. See “— Non-GAAP Financial Measures” for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity and ABV.
Other Matters
Inflation
By some key measures, consumer price inflation in the U.S. and the U.K. was higher in recent years than it has been in decades. In addition, government policies such as increased deficit spending or the imposition of tariffs on imported goods could increase inflationary pressures in the future. Consumer price inflation in the U.K. can impact the Company directly by increasing exposure for certain index-linked U.K. debt with par that accretes based on inflation, and also by increasing projected future installment premiums on the portion of such exposure that pays at least some of the premium on an installment basis over the term of the exposure. Consumer price inflation may also impact the Company indirectly to the extent it makes it more difficult for obligors to make their debt payments. 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 the Company.
The Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, and have identified no material direct exposure to Ukraine or Russia. In fact, the Company’s direct insurance exposure to Eastern Europe generally is limited to $198 million in net par outstanding as of December 31, 2025, comprising of the sovereign debt of Poland. The Company rates this exposure investment grade.
Middle East Conflict
In light of events in the Middle East that began on October 7, 2023, 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 funded and unfunded commitments to fund finance facilities. When fund finance facilities are launched, they obtain aggregate commitments across numerous investors in the fund. For certain facilities guaranteed by the Company, a small minority of investors are domiciled in the Middle East, which are generally sovereign wealth funds and pensions. Fund finance facilities guaranteed by the Company are always overcollateralized with uncalled capital commitments exceeding borrowings, and defaults of Middle East investors alone cannot cause a loss. Such facilities have additional mitigants, including the ability to call on performing investors to cover the obligations of defaulting investors and rights to sell defaulting positions to other investors at a discount. The Company rates all such insurance exposure investment grade.
January 2025 Los Angeles Wildfires
In January 2025, a series of destructive wildfires affected Los Angeles, California. The Company’s surveillance function has reviewed the Company’s insurance portfolio for exposures located within Los Angeles County and currently has not identified any material impact on the ability of such exposures to pay their obligations.
2026 U.S. Operation in Venezuela
On January 3, 2026, the U.S. executed an operation within Venezuela apprehending President Nicholas Maduro and his wife Cilia Flores who were taken to New York City and indicted in the U.S. Southern District Court of New York on several charges related to narcoterrorism. In light of this development, the Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, and have identified no direct exposure to Venezuela. The Company’s direct insurance exposure to South America is generally limited to $128 million in net par outstanding as of December 31, 2025, comprising of infrastructure finance in Colombia and Chile. The Company rates these exposures investment grade.
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 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 list of significant accounting policies which includes a reference to the applicable note where further details regarding the significant estimates and assumptions are provided. In addition, see Item 7A. Quantitative and Qualitative Disclosures About Market Risk, for further details regarding sensitivity analyses.
• Expected loss to be paid (recovered);
• Fair value of certain assets and liabilities, primarily:
• Investments (primarily alternative investments)
• Assets and liabilities of FG VIEs;
• Impairments of equity method investments and credit allowances for 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.
Insurance Segment Results
Insurance Segment Results
Year Ended December 31,
(in millions)
Segment revenues
Net earned premiums and credit derivative revenues
Net investment income
Foreign exchange gains (losses) on remeasurement
Fair value gains (losses) on trading securities
Other income (loss)
Total segment revenues
Segment expenses
Loss expense (benefit)
Amortization of DAC
Employee compensation and benefit expenses
Other operating expenses
Total segment expenses
Equity in earnings (losses) of investees
Segment adjusted operating income (loss) before income taxes
Less: Provision (benefit) for income taxes
Segment adjusted operating income (loss)
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 any remaining nonrefundable deferred premium revenue. The amortization of the Company’s outstanding book of business along with the previously high levels of refunding activity and the higher interest rate environment has led to a lower volume of refunding opportunities over the last several years.
Terminations are generally negotiated agreements with beneficiaries resulting in the extinguishment of the Company’s insurance obligation. Terminations have historically been more common in the structured finance sector, but may also occur in the public finance sector. While each termination may have different terms, they all result in the expiration of the Company’s insurance risk, the acceleration of the recognition of the associated deferred premium revenue and the reduction of any remaining premiums receivable.
Insurance Segment
Net Earned Premiums and Credit Derivative Revenues
Year Ended December 31,
(in millions)
Net earned premiums:
Financial guaranty insurance:
Public finance
Scheduled net earned premiums (1)
Refundings and terminations
Total public finance
Structured finance
Scheduled net earned premiums (1)
Accelerations
Total structured finance
Specialty insurance and reinsurance
Total net earned premiums
Credit derivative revenues
Total net earned premiums and credit derivative revenues
(1) Includes accretion of discount.
Net earned premiums and credit derivative revenues increased in 2025 compared with 2024 primarily due to credit derivative revenues related to the resolution of the LBIE litigation (see Item 8. Financial Statements and Supplementary Data, Note 6. Contracts Accounted for as Credit Derivatives) and earnings on large transactions and supplemental premiums written in 2024, partially offset by lower financial guaranty insurance refundings and terminations. As of December 31, 2025, $3.6 billion of net deferred premium revenue remained to be earned over the life of the financial guaranty insurance contracts.
New Business Production
Gross Written Premiums and New Business Production
Year Ended December 31,
(in millions)
GWP
Public finance—U.S.
Public finance—non-U.S.
Structured finance—U.S.
Structured finance—non-U.S.
Total GWP
PVP (1):
Public finance—U.S.
Public finance—non-U.S.
Structured finance—U.S.
Structured finance—non-U.S.
Total PVP
Gross Par Written (1):
Public finance—U.S.
Public finance—non-U.S.
Structured finance—U.S.
Structured finance—non-U.S.
Total gross par written
(1) PVP and Gross Par Written in the table above are based on “close date,” when the transaction settles. See “— Non-GAAP Financial Measures — PVP or Present Value of New Business Production.” PVP was discounted at 5.0% in both 2025 and 2024 and 4.0% in 2023.
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 include transactions closed in both the primary and secondary markets. Secondary market GWP and PVP each increased to $44 million in 2025 from $8 million in 2024. The Company’s par written in the secondary market represented 7.3% of U.S. public finance par written in 2025, compared with 2.5% in 2024.
U.S. public finance GWP and PVP in the primary market were higher in 2024 primarily due to a large transportation revenue transaction that was written in 2024. U.S. public finance GWP and PVP in 2025 included transportation revenue and infrastructure transactions. The Company’s primary par written represented 58% of the total U.S. primary municipal market insured par sold in both 2025 and in 2024, and the Company’s penetration of all municipal issuance was 4.4% in 2025 compared with 4.8% in 2024.
GWP for non-U.S. public finance in 2025 were negative primarily due to the early repayment of several U.K. sub-sovereign credits. GWP for non-U.S. public finance in 2024 included a change in the present value of future premiums on a large existing transaction, which was not a result of new business production and therefore excluded from PVP. Non-U.S. public finance PVP in 2025 was lower than PVP in 2024, primarily due to a lower volume of large transactions in 2025. Non-U.S. public finance PVP in 2025 included several primary infrastructure finance transactions in the European Union and secondary transactions in the U.K.
U.S. and non U.S. structured finance GWP and PVP in 2025 were primarily attributable to fund finance facilities, insurance securitizations, the upsize of a transaction providing protection on a core lending portfolio for an Australian bank, and consumer receivable 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.
Income from Investments
Net investment income is a function of the yield that the Company earns on available-for-sale fixed-maturity securities and short-term investments and the size of such portfolio. The investment yield on fixed-maturity securities is a function of market interest rates at the time of investment as well as the type, credit quality and maturity of the securities in this portfolio.
CVIs issued by Puerto Rico and received as part of the resolution of defaulting Puerto Rico exposures in 2022 are classified as trading with changes in fair value reported in “fair value gains (losses) on trading securities” in the consolidated statements of operations. The fair value of remaining CVIs as of December 31, 2025 and December 31, 2024 was $114 million and $123 million, respectively.
Equity method investments in the Insurance segment include certain alternative investments. The income (loss) on such investments is reported in “equity in earnings (losses) of investees” and typically represents the Company’s share of earnings of its investees. As part of stock redemptions that occurred in 2025 and 2024, certain alternative investments were distributed to AGMH, whose results are reported in the Corporate division.
Insurance Segment
Income from Investments (1)
Year Ended December 31,
(in millions)
Net investment income
Fixed-maturity securities, available-for-sale
Short-term investments
Intercompany loans
Other invested assets
Investment income
Investment expenses
Net investment income
Fair value gains (losses) on trading securities
Equity in earnings (losses) of investees
CLOs
Private healthcare investing
Asset-based/specialty finance
Private minority stakes in alternative asset manager
Commercial real estate finance
Other
Equity in earnings (losses) of investees
(1) Foreign exchange gains on remeasurement of certain investments were $5 million for 2025 and $1 million for 2023.
Net investment income for 2025 increased compared to 2024, primarily due to investment income on CLO equity tranches in the available-for-sale portfolio. Certain CLO equity tranche investments were reclassified to the available-for-sale fixed-maturity portfolio in the fourth quarter of 2024, with interest income now reported in “net investment income,” and changes in fair value reported in “other comprehensive income.” The Company had previously held the CLO equity tranches in a Sound Point managed fund with changes in net asset value (NAV) reported in “equity in earnings (losses) of investees.” Short-term investment income declined as a result of lower short-term interest rates and lower short-term average investment balances. The overall pre-tax book yield of available-for-sale fixed-maturity securities and short-term investments was 4.76% as of December 31, 2025 and 4.57% as of December 31, 2024.
Equity in earnings (losses) of investees for 2025 decreased compared to 2024, primarily due to the reclassification of certain CLO equity tranches to the available-for-sale portfolio, as described above. In addition, equity in earnings (losses) of investees in 2024 included $18 million related to certain alternative investments reported in “private minority stakes in alternative asset manager” and “other” in the table above that AG transferred to AGMH as part of a stock redemption in 2024. These decreases were partially offset by an increase in the NAV of a asset based/specialty finance and private healthcare funds in 2025.
Other Income (Loss)
The increase in “other income (loss)” in 2025 compared with 2024 was primarily attributable to a gain of $23 million recognized in connection with the sale in 2025 of a commercially leased building that was part of a loss mitigation strategy for a troubled insured exposure and $15 million associated with the workout and purchase of bonds issued by a U.K. regulated utility to which the Company has insured exposure and interest on late financial guaranty premiums.
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.
• 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 3.92%, 4.38% and 4.09% as of December 31, 2025, 2024 and 2023, respectively.
The composition of economic loss development (benefit) by accounting model and by sector is presented in the tables that follow, and the drivers of economic loss development (benefit) are discussed below.
Net Expected Loss to be Paid (Recovered) and Net Economic Loss Development (Benefit)
by Accounting Model
Net Expected Loss to be Paid (Recovered)
Net Economic Loss Development (Benefit)
As of December 31,
Year Ended December 31,
Accounting Model
(in millions)
Insurance
FG VIEs
Credit derivatives
Total
(in billions)
Net exposure rated BIG
(1) Includes $63 million of recoveries related to the resolution of the LBIE litigation.
Net Expected Loss to be Paid (Recovered)
Roll Forward by Sector
Year Ended December 31, 2025
Sector
Net Expected Loss to be Paid (Recovered) as of December 31, 2024
Net Economic Loss
Development (Benefit)
Net
(Paid)
Recovered
Losses (1)
Net Expected Loss to be Paid (Recovered) as of December 31, 2025
(in millions)
Public finance:
U.S. public finance
Non-U.S. public finance
Public finance
Structured finance:
U.S. RMBS
Other structured finance
Structured finance
Total
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
Non-U.S. public finance
Public finance
Structured finance:
U.S. RMBS
Other structured finance
Structured finance
Total
(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.”
The effects of changes in the risk-free rates included in economic loss development (benefit) were losses of $7 million and $4 million in 2025 and 2024, respectively.
2025 Net Economic Loss Development
Public Finance: The economic loss development of $64 million for U.S. public finance exposures was primarily attributable to PREPA and certain healthcare exposures. The economic loss development of $33 million for non-U.S. public finance exposures was primarily attributable to certain U.K. student accommodation and U.K. regulated utility exposures.
U.S. RMBS: The economic benefit attributable to U.S. RMBS of $43 million was mainly attributable to a $33 million benefit from higher assumed and realized recoveries for secured second lien charged-off loans.
Other Structured Finance: The benefit attributable to other structured finance of $63 million was primarily attributable to recoveries related to the resolution of the LBIE litigation (see Item 8. Financial Statements and Supplementary Data, Note 6. Contracts Accounted for as Credit Derivatives).
See Item 8. Financial Statements and Supplementary Data, Note 4. Expected Loss to be Paid (Recovered), for additional information.
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.
Insurance Segment Loss Expense
The primary differences between net economic loss development and the amount reported as “loss and LAE (benefit)” in the consolidated statements of operations are that loss and LAE (benefit): (i) considers deferred premium revenue in the calculation of loss reserves for financial guaranty insurance contracts; (ii) eliminates loss and LAE related to FG VIEs; and (iii) does not include estimated losses or benefits on credit derivatives.
For financial guaranty insurance contracts, each transaction’s expected loss to be expensed is compared with the deferred premium revenue of that transaction. Expected loss to be expensed represents past or expected future net claim payments that have not yet been expensed. Such amounts will be expensed in future periods as deferred premium revenue amortizes into income on financial guaranty insurance policies. Expected loss to be expensed is the Company’s projection of incurred losses that will be recognized in future periods, excluding accretion of discount. When the expected loss to be expensed exceeds the deferred premium revenue, a loss is recognized in income for the amount of such excess. Therefore, the timing of loss recognition in income does not necessarily coincide with the timing of the actual credit impairment or improvement reported in net economic loss development. Transactions acquired in business combinations or seasoned portfolios assumed from legacy financial guaranty insurers (particularly BIG transactions) generally have large 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 statements 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)
Year Ended December 31,
(in millions)
U.S. public finance
Non-U.S. public finance
Structured finance:
U.S. RMBS
Other structured finance (1)
Structured finance
Total Insurance segment loss expense (benefit)
(1) 2025 includes $63 million of recoveries in connection with the resolution of the LBIE litigation. See Item 8. Financial Statements and Supplementary Data, Note 6. Contracts Accounted for as Credit Derivatives.
Employee Compensation and Benefit Expenses
The increase in employee compensation and benefit expenses to $182 million 2025 from $170 million in 2024 was primarily attributable to higher long-term compensation expenses, increase in headcount and other employee benefit costs.
Asset Management Segment Results
Asset Management Segment Results
Year Ended December 31,
(in millions)
Segment revenues
Less: Segment expenses
Equity in earnings (losses) of investees
Segment adjusted operating income (loss) before income taxes
Less: Provision (benefit) for income taxes
Segment adjusted operating income (loss)
Results in the table above primarily represent (i) equity in earnings (losses) 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, (ii) an impairment loss of $3 million in 2024 for a small financial services advisory firm, and (iii) other asset management related income.
Corporate Division Results
Corporate Division Results
Year Ended December 31,
(in millions)
Revenues
Gain on sale of asset management subsidiaries
Other
Total revenues
Expenses
Interest expense
Employee compensation and benefit expenses
Other operating expenses
Total expenses
Equity in earnings (losses) of investees
Adjusted operating income (loss) before income taxes
Less: Provision (benefit) for income taxes
Adjusted operating income (loss)
Corporate division interest expense primarily relates to debt issued by the AGUS and AGMH (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.
Equity in earnings of investees in 2025 and 2024 relates to certain alternative investments, that AG transferred to AGMH as part of stock redemptions in 2024 and 2025. See “— Liquidity and Capital Resources—Insurance Subsidiaries—Stock Redemptions by Insurance Subsidiaries” below. The carrying value of these transferred investments as of December 31, 2025 was $184 million.
Corporate division employee compensation and benefits expenses and other operating expenses are an allocation of expenses based on time studies and represent the costs incurred and time spent on holding company activities, capital
management, corporate oversight and governance including the Board’s expenses, legal fees and other direct or allocated expense.
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. Variable Interest Entities, 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 gross-up effect on the consolidated financial statements, and includes: (i) the establishment of the FG VIEs’ assets and liabilities and related changes in fair value on the consolidated financial statements; (ii) eliminating the premiums and losses/recoveries associated with the financial guaranty insurance contracts between the insurance subsidiaries and the FG VIEs; and (iii) eliminating the investment balances associated with the insurance subsidiaries’ purchases of the debt obligations of the FG VIEs.
Consolidating investment vehicles in which the Company invests (as opposed to accounting for them as equity method investments) has a significant effect on assets, liabilities and cash flows, and includes: (i) the establishment of the assets and liabilities of the CIVs, and related changes in fair value; (ii) eliminating the asset management fees earned by AssuredIM from the CIVs (prior to July 1, 2023); (iii) eliminating the equity method investments of the insurance subsidiaries, and related equity in earnings (losses) of investees; and (iv) establishing NCI for amounts not owned by the Company. 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)
Year Ended December 31,
Effect on Financial Statement Line Item
(in millions)
Fair value gains (losses) on FG VIEs (1)
Fair value gains (losses) on CIVs
Equity in earnings (losses) of investees (2)
Other (3)
Effect on income before tax
Less: Tax provision (benefit)
Effect on net income (loss)
Less: Effect on NCI (4)
Effect on net income (loss) attributable to AGL
By Type of VIE
FG VIEs
CIVs
Effect on net income (loss) attributable to AGL
(1) Changes in fair value of the FG VIEs’ assets and liabilities reported in the statements of operations 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 the Company’s 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, 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 the Company’s ownership interest.
Reconciliation to GAAP
Reconciliation of Net Income (Loss) Attributable to AGL
to Adjusted Operating Income (Loss)
Year Ended December 31,
(in millions)
Net income (loss) attributable to AGL
Less pre-tax adjustments:
Realized gains (losses) on investments
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives
Fair value gains (losses) on CCS
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves
Total pre-tax adjustments
Less tax effect on pre-tax adjustments
Adjusted operating income (loss)
Gain (loss) related to FG VIE and CIV consolidation (net of tax provision (benefit) of $2, $(2) and $(5)) included in adjusted operating income
Year Ended December 31,
(per diluted share amounts)
Net income (loss) attributable to AGL
Less pre-tax adjustments:
Realized gains (losses) on investments
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives
Fair value gains (losses) on CCS
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves
Total pre-tax adjustments
Less tax effect on pre-tax adjustments
Adjusted operating income (loss)
Gain (loss) related to FG VIE and CIV consolidation included in adjusted operating income
Net Realized Investment Gains (Losses)
The table below presents the components of net realized investment gains (losses).
Net Realized Investment Gains (Losses)
Year Ended December 31,
(in millions)
Gross realized gains on sales of available-for-sale securities
Gross realized losses on sales of available-for-sale securities
Net foreign currency gains (losses)
Change in the allowance for credit losses and intent to sell
Other net realized gains (losses)
Net realized investment gains (losses)
The change in the allowance for credit losses for 2025 was primarily associated with CLO equity tranches and Loss Mitigation Securities. The change in the allowance for credit losses for 2024 was primarily related to Loss Mitigation Securities.
Non-Credit Impairment-Related Unrealized Fair Value Gains (Losses) on Credit Derivatives
Changes in the fair value of credit derivatives occur because of changes in the Company’s own credit rating and credit spreads, collateral credit spreads, notional amounts, credit ratings of the referenced entities, expected terms, realized gains (losses) and other settlements, interest rates and other market factors. The components of changes in fair value of credit derivatives related to credit derivative revenues and changes in expected losses are included in Insurance segment results. Non-credit impairment-related changes in unrealized fair value gains and losses on credit derivatives are not included in the Insurance segment measure of adjusted operating income because they do not represent actual claims or losses and are expected to reverse to zero as the exposure approaches its maturity date. Changes in the fair value of the Company’s credit derivatives that do not reflect actual or expected claims or credit losses have no impact on the Company’s statutory claims-paying resources, rating agency capital or regulatory capital positions. Unrealized gains (losses) on credit derivatives may fluctuate significantly in future periods. Except for underlying credit impairment, which is recognized as loss expense in the Insurance segment, the fair value adjustments on credit derivatives in the insured portfolio are non-economic adjustments that reverse to zero over the remaining term of that portfolio. See Item 8. Financial Statements and Supplementary Data, Note 9. Fair Value Measurement, for additional information.
During 2025, non-credit impairment-related unrealized fair value gains of $6 million were primarily due to generally lower collateral asset spreads. 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.
Fair Value Gains (Losses) on CCS
Fair value gains on CCS of $20 million in 2025 were primarily due to changes in the rate environment and market view on liquidity of floating rate instruments. Fair value losses on CCS of $10 million in 2024 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 credit spreads and interest rates, and other market factors and are not expected to result in an economic gain or loss. See Item 8. Financial Statements and Supplementary Data, Note 9. Fair Value Measurement.
Foreign Exchange Gains (Losses) on Remeasurement
Foreign exchange gains of premiums receivable and loss and LAE reserves of $85 million, losses of $26 million and gains of $51 million in 2025, 2024 and 2023, respectively, primarily relate to remeasurement of long-dated premiums receivable, for which the Company records the present value of future installment premiums. Foreign exchange gains and losses 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 68% and 69% of gross premiums receivable, net of commissions payable as of December 31, 2025 and December 31, 2024, respectively, are denominated in currencies other than the U.S. dollar. Premiums on European infrastructure and structured finance transactions typically are paid, in whole or in part, on an installment basis, whereas premiums on U.S. public finance transactions are often paid upfront.
The following table presents the foreign exchange rates as of the balance sheet dates.
Foreign Exchange Rates
U.S. Dollar Per Foreign Currency
As of December 31,
Pound sterling
Euro
Non-GAAP Financial Measures
The Company discloses both: (i) financial measures determined in accordance with GAAP; and (ii) financial measures not determined in accordance with GAAP (non-GAAP financial measures). Financial measures identified as non-GAAP should not be considered substitutes for GAAP financial measures. The primary limitation of non-GAAP financial measures is the potential lack of comparability to financial measures of other companies, whose definitions of non-GAAP financial measures may differ from those of the Company.
The Company believes its presentation of non-GAAP financial measures provides information that is necessary for analysts to calculate their estimates of Assured Guaranty’s financial results in their research reports on Assured Guaranty and for investors, analysts and the financial news media to evaluate Assured Guaranty’s financial results.
GAAP requires the Company to consolidate entities where it is deemed to be the primary beneficiary which include FG VIEs, which the Company does not own and where its exposure is limited to its obligation under the financial guaranty insurance contract, and CIVs in which certain subsidiaries invest.
The Company discloses the effect of FG VIE and CIV consolidation that is embedded in each non-GAAP financial measure, as applicable. The Company believes this information may also be useful to analysts and investors evaluating Assured Guaranty’s financial results. In the case of both the consolidated FG VIEs and the CIVs, the economic effect on the Company of each of the consolidated FG VIEs and CIVs is reflected primarily in the results of the Insurance segment.
The Company’s management and AGL’s Board of Directors use non-GAAP financial measures further adjusted to remove the effect of FG VIE and CIV consolidation (which the Company refers to as its core financial measures), as well as GAAP financial measures and other factors, to evaluate the Company’s results of operations, financial condition and progress towards long-term goals. The Company uses core financial measures in its decision-making process for and in its calculation of certain components of management compensation. The financial measures that the Company uses to help determine
compensation are: (i) adjusted operating income per share, further adjusted to remove the effect of FG VIE and CIV consolidation (core operating income per share); (ii) adjusted operating shareholders’ equity per share, further adjusted to remove the effect of FG VIE and CIV consolidation (core operating shareholders’ equity per share); (iii) ABV per share, further adjusted to remove the effect of FG VIE and CIV consolidation (core ABV per share); (iv) core operating return on equity, which is calculated as core operating income divided by the average of core operating shareholders’ equity at the beginning and end of the period; and (v) PVP.
The Company’s management believes that many investors, analysts and financial news reporters use adjusted operating shareholders’ equity and/or ABV, each further adjusted to remove the effect of FG VIE and CIV consolidation, as the principal financial measures for valuing AGL’s current share price or projected share price and also as the basis of their decision to recommend, buy or sell AGL’s common shares.
Adjusted operating income, further adjusted for the effect of FG VIE and CIV consolidation, enables investors and analysts to evaluate the Company’s financial results in comparison with the consensus analyst estimates distributed publicly by financial databases.
The following paragraphs define each non-GAAP financial measure disclosed by the Company and describe why it is useful. To the extent there is a directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure and the most directly comparable GAAP financial measure is presented below.
Adjusted Operating Income
The Company’s management believes that adjusted operating income is a useful measure because it clarifies the understanding of the operating results of the Company. Adjusted operating income is defined as net income (loss) attributable to AGL, as reported under GAAP, adjusted for the following:
1) Elimination of realized gains (losses) on the Company’s investments that are recognized in net income (loss) attributable to AGL, except for gains and losses on securities classified as trading. The timing of realized gains and losses, which depends largely on market credit cycles, can vary considerably across periods. The timing of sales is largely subject to the Company’s discretion and influenced by market opportunities, as well as the Company’s tax and capital profile.
2) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives that are recognized in net income (loss) attributable to AGL, which is the amount of fair value gains (losses) in excess of the present value of the expected estimated economic credit losses. Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, the Company’s credit spreads, and other market factors and are not expected to result in an economic gain or loss.
3) Elimination of fair value gains (losses) on the Company’s CCS that are recognized in net income (loss) attributable to AGL. Such amounts are affected by changes in market interest rates, the Company’s credit spreads, price indications on the Company’s publicly traded debt and other market factors and are not expected to result in an economic gain or loss.
4) Elimination of foreign exchange gains (losses) on remeasurement of net premium receivables and loss and LAE reserves that are recognized in net income (loss) attributable to AGL. Long-dated receivables and loss and LAE reserves represent the present value of future contractual or expected cash flows. Therefore, the current period’s foreign exchange remeasurement gains (losses) are not necessarily indicative of the total foreign exchange gains (losses) that the Company will ultimately recognize.
5) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
Adjusted operating income per share is calculated by dividing adjusted operating income by the weighted average diluted shares. The method for calculating weighted average diluted shares is in accordance with GAAP. See “— Results of Operations — Reconciliation to GAAP” for a reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).
Adjusted Operating Shareholders’ Equity and ABV
The Company’s management believes that adjusted operating shareholders’ equity is a useful measure because it excludes the fair value adjustments on investments, credit derivatives and CCS that are not expected to result in economic gain or loss. The Company’s management uses ABV, further adjusted to remove the effect of FG VIE and CIV consolidation, to measure the intrinsic value of the Company, excluding franchise value. The Company’s management believes that ABV is a useful measure because it enables an evaluation of the Company’s in-force premiums and revenues net of expected losses.
Adjusted operating shareholders’ equity per share and ABV per share, each further adjusted for FG VIE and CIV consolidation (core operating shareholders’ equity per share and core ABV per share, respectively), are two of the key financial measures used in determining the amount of certain long-term compensation elements to management and employees and used by rating agencies and investors.
Adjusted operating shareholders’ equity is defined as shareholders’ equity attributable to AGL, as reported under GAAP, adjusted for the following:
1) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives that are reported on the consolidated balance sheet, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses. Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, credit spreads and other market factors and are not expected to result in an economic gain or loss.
2) Elimination of fair value gains (losses) on the Company’s CCS that are reported on the consolidated balance sheet. Such amounts are affected by changes in market interest rates, the Company’s credit spreads, price indications on the Company’s publicly traded debt and other market factors and are not expected to result in an economic gain or loss.
3) Elimination of unrealized gains (losses) on the Company’s investments that are recorded as a component of accumulated other comprehensive income (AOCI). The AOCI component of the fair value adjustment on the investment portfolio is not deemed economic because the Company generally holds these investments to maturity and therefore would not result in an economic gain or loss.
4) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
ABV is adjusted operating shareholders’ equity, as defined above, further adjusted for the following:
1) Elimination of deferred acquisition costs, net. These amounts represent net deferred expenses that have already been paid or accrued and will be expensed in future accounting periods.
2) Addition of the net present value of estimated net future revenue. See below.
3) Addition of the deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed, net of reinsurance. This amount represents the present value of the expected future net earned premiums, net of the present value of expected losses to be expensed.
4) The tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
Shares outstanding as of the end of the reporting period are used to calculate adjusted operating shareholders’ equity per share and ABV per share.
The unearned premiums and revenues included in ABV will be earned in future periods, but actual earnings may differ materially from the estimated amounts used in determining current ABV due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults and other factors.
Reconciliation of Shareholders’ Equity Attributable to AGL
to Adjusted Operating Shareholders’ Equity and ABV
As of December 31, 2025
As of December 31, 2024
Total
Per Share
Total
Per Share
(dollars in millions, except share amounts)
Shareholders’ equity attributable to AGL
Less pre-tax adjustments:
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives
Fair value gains (losses) on CCS
Unrealized gain (loss) on investment portfolio
Less taxes
Adjusted operating shareholders’ equity
Pre-tax adjustments:
Less: Deferred acquisition costs
Plus: Net present value of estimated net future revenue
Plus: Net deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed
Plus taxes
ABV
Gain (loss) related to FG VIE and CIV consolidation included in:
Adjusted operating shareholders’ equity (net of tax provision (benefit) of $2 and $0)
ABV (net of tax provision (benefit) of $1 and $(2))
Net Present Value of Estimated Net Future Revenue
The Company’s management believes that this amount is a useful measure because it enables an evaluation of the present value of estimated net future revenue for non-financial guaranty insurance contracts. This amount represents the net present value of estimated future revenue from these contracts (other than credit derivatives with net expected losses), net of reinsurance, ceding commissions and premium taxes.
Future installment premiums are discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than Loss Mitigation Securities. The discount rate is recalculated annually and updated as necessary. Net present value of estimated future revenue for an obligation may change from period to period due to a change in the discount rate or due to a change in estimated net future revenue for the obligation, which may change due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults or other factors that affect par outstanding or the ultimate maturity of an obligation. There is no corresponding GAAP financial measure.
PVP or Present Value of New Business Production
The Company’s management believes that PVP is a useful measure because it enables the evaluation of the value of new business production in the Insurance segment by taking into account the value of estimated future installment premiums on all new contracts underwritten in a reporting period as well as additional installment premiums and fees on existing contracts (which may result from supplements or fees or from the issuer not calling an insured obligation the Company projected would be called), regardless of form, which management believes GAAP 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
Year Ended December 31, 2025
Public Finance
Structured Finance
Non - U.S.
Non - U.S.
Total
(in millions)
GWP
Less: Installment GWP and other GAAP adjustments (1)
Upfront GWP
Plus: Installment premiums and other (2)
PVP
Year Ended December 31, 2024
Public Finance
Structured Finance
Non - U.S.
Non - U.S.
Total
(in millions)
GWP
Less: Installment GWP and other GAAP adjustments (1)
Upfront GWP
Plus: Installment premiums and other (2)
PVP
Year Ended December 31, 2023
Public Finance
Structured Finance
Non - U.S.
Non - U.S.
Total
(in millions)
GWP
Less: Installment GWP and other GAAP adjustments (1)
Upfront GWP
Plus: Installment premiums and other (2)
PVP
(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. Unless otherwise noted, ratings on Assured Guaranty’s insured portfolio are Assured Guaranty’s internal ratings. Internal credit
ratings are expressed on a rating scale similar to that used by the rating agencies and generally reflect an approach similar to that employed by the rating agencies, except that Assured Guaranty’s internal credit ratings focus on future performance, rather than lifetime performance.
The tables below show the Company’s ten largest U.S. public finance, U.S. structured finance and non-U.S. exposures by revenue source, excluding related authorities and public corporations, as of December 31, 2025.
Ten Largest U.S. Public Finance Exposures by Revenue Source
As of December 31, 2025
Net Par Outstanding
Percent of Total U.S. Public Finance Net Par Outstanding
Rating
(dollars in millions)
JFK New Terminal One, New York
BBB-
Pennsylvania (Commonwealth of)
BBB
Metro Washington Airports Authority (Dulles Toll Road)
BBB+
New Jersey (State of)
BBB
Alameda Corridor Transportation Authority, California
BBB
Lower Colorado River Authority
New York Power Authority
New York Metropolitan Transportation Authority
Foothill/Eastern Transportation Corridor Agency, California
BBB+
CommonSpirit Health, Illinois
Total of top ten U.S. public finance exposures
Ten Largest U.S. Structured Finance Exposures
As of December 31, 2025
Net Par Outstanding
Percent of Total U.S. Structured Finance Net Par Outstanding
Rating
(dollars in millions)
Private US Insurance Reserve Financing
Private US Insurance Reserve Financing
Private US Insurance Reserve Financing
Private US Insurance Reserve Financing
Private US Insurance Reserve Financing
Private Middle Market CLO
Private US Insurance Securitization
Private Middle Market CLO
BBB+
Private US Insurance Securitization
Private Fund Finance Transaction
Total of top ten U.S. structured finance exposures
Ten Largest Non-U.S. Exposures
As of December 31, 2025
Country
Net Par Outstanding
Percent of Total Non-U.S. Net Par Outstanding
Rating
(dollars in millions)
Southern Water Services Limited
United Kingdom
BBB-
Thames Water Utilities Finance PLC
United Kingdom
Dwr Cymru Financing Limited
United Kingdom
Anglian Water Services Financing PLC
United Kingdom
National Grid Gas PLC
United Kingdom
Yorkshire Water Services Finance Plc
United Kingdom
BBB
Channel Link Enterprises Finance PLC
France, United Kingdom
BBB
Severn Trent Water Utilities Finance Plc
United Kingdom
BBB+
Capital Hospitals (Issuer) PLC
United Kingdom
BBB-
United Utilities Water PLC
United Kingdom
BBB+
Total of top ten non-U.S. exposures
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.
Public Finance Portfolio by Issue Size
As of December 31, 2025
Original Par Amount Per Issue
Number of
Issues
Net Par
Outstanding
% of Public
Finance
Net Par
Outstanding
(dollars in billions)
Less than $10 million
$10 million through $50 million
$50 million through $100 million
$100 million through $200 million
$200 million or greater
Total
Structured Finance Portfolio by Issue Size
As of December 31, 2025
Original Par Amount Per Issue
Number of
Issues
Net Par
Outstanding
% of Structured
Finance
Net Par
Outstanding
(dollars in billions)
Less than $10 million
$10 million through $50 million
$50 million through $100 million
$100 million through $200 million
$200 million or greater
Total
Exposure to Puerto Rico
All of the Company’s insured exposure to various authorities and public corporations of the Commonwealth of Puerto Rico (Puerto Rico or the Commonwealth) is rated BIG. The Company’s Puerto Rico net par and net debt service outstanding as of December 31, 2025 were $553 million and $643 million, respectively, compared with net par and net debt service outstanding as of December 31, 2024 of $637 million and $756 million, respectively.
As of December 31, 2025, the Company’s only remaining outstanding unresolved insured Puerto Rico exposure subject to a payment default was PREPA, to which the Company had net par and debt service outstanding of $464 million and $537 million, respectively. As of December 31, 2024, PREPA net par and debt service outstanding were $532 million and $629 million, respectively. See “—Liquidity and Capital Resources—Insurance Subsidiaries, Financial Guaranty Policies” below and Item 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.
Amortization Schedule of PREPA
Net Par Outstanding and Net Debt Service Outstanding
As of December 31, 2025
Scheduled Net Par Amortization
Scheduled Net Debt Service Amortization
(in millions)
2026 (January 1 - March 31)
2026 (April 1 - June 30)
2026 (July 1 - September 30)
2026 (October 1 - December 31)
Subtotal 2026
Total
Liquidity and Capital Resources
AGL and its U.S. Holding Companies
AGL directly owns (i) AG Re, an insurance company domiciled in Bermuda; and (ii) AGUS, a U.S. holding company with public debt outstanding. AGUS directly owns AGMH, a U.S. holding company with public debt outstanding. AGMH directly owns AG, an insurance company domiciled in Maryland. AGUS and AGMH are collectively referred to as the U.S. Holding Companies.
Sources and Uses of Funds
The liquidity of AGL and its U.S. Holding Companies is largely dependent on dividends, stock redemptions and other distributions from their operating subsidiaries (see “— Insurance Subsidiaries — Ordinary Dividends From Insurance Subsidiaries to Holding Companies” 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 or expand insurance business;
• purchase or redeem the Company’s outstanding debt; or
• repurchase AGL’s common shares pursuant to AGL’s share repurchase authorization.
In the ordinary course of business, the Company evaluates its liquidity needs and capital resources in light of holding company expenses and dividend policy, as well as rating agency considerations. The Company also subjects its cash flow projections and its assets to a stress test, maintaining a liquid asset balance of one and a half times its stressed operating company net cash flows over the next four quarters. Management believes that AGL will have sufficient liquidity to satisfy its needs over the next twelve months. See “— Overview— Key Business Strategies, Capital Management” above for information on common share repurchases.
External Financing
From time to time, AGL and its subsidiaries have sought external debt or equity financing in order to meet their obligations. External sources of financing may or may not be available to the Company and, if available, the cost of such financing may not be acceptable to the Company.
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
As of December 31,
(in millions)
Effective Interest Rate
Final Maturity
Principal Amount
AGUS - long-term debt
6.125% Senior Notes
3.15% Senior Notes
7% Senior Notes
3.6% Senior Notes
Series A Enhanced Junior Subordinated Debentures
3 month CME Term SOFR +2.64%
AGUS long-term debt
AGUS - intercompany loans from:
AGRO
AGUS intercompany loans
Total AGUS long-term debt and intercompany loans
AGMH
Junior Subordinated Debentures (1)
Total AGMH long-term debt
AGMH’s long-term debt purchased by AGUS (2)
U.S. Holding Company long-term debt
(1) If the AGMH Junior Subordinated Debentures are outstanding after December 15, 2036, then the principal amount of the outstanding debentures will bear interest at One-Month Chicago Mercantile Exchange (CME) Term Secured Overnight Finance Rate (SOFR) plus 2.33%.
(2) Represents principal amount of Junior Subordinated Debentures issued by AGMH that has been purchased by AGUS.
Interest Paid on U.S. Holding Companies’ Long-Term Debt and Intercompany Loans
Year Ended December 31,
(in millions)
AGUS - long-term debt
AGUS - intercompany loans
Total AGUS
AGMH - long-term debt
AGMH’s long-term debt purchased by AGUS
Total interest paid
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, 2025
Year
AGUS
AGMH
Eliminations (1)
Total
(in millions)
Total
(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, and capital contributions to, BlueMountain Capital Management LLC and its associated entities, which were subsequently contributed to Sound Point or sold. 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. During 2025, AGUS repaid $50 million in outstanding principal as well as accrued and unpaid interest. As of December 31, 2025, $200 million remained outstanding.
Guarantor and U.S. Holding Companies’ Summarized Financial Information
AGL fully and unconditionally guarantees the payment of the principal of, and interest on, the $1,450 million aggregate principal amount of notes issued by the U.S. Holding Companies, the $450 million aggregate principal amount of junior subordinated debentures issued by the U.S. Holding Companies and the intercompany loans. The following tables include summarized financial information for AGL and the U.S. Holding Companies, excluding their investments in subsidiaries.
As of December 31, 2025
AGL
U.S. Holding Companies
(in millions)
Assets, excluding investments in subsidiaries
Fixed-maturity securities (1)
Ownership interest in Sound Point
Other invested assets
Short-term investments and cash
Receivables from affiliates (2)
Other assets
Liabilities
Long-term debt
Loans payable to affiliates
Payable to affiliates (2)
Other liabilities
(1) As of December 31, 2025, weighted average durations of AGL’s and the U.S. Holding Companies’ fixed-maturity securities were 10.9 years and 1.5 years, respectively.
(2) Primarily represents receivables and payables with non-guarantor subsidiaries.
Year Ended December 31, 2025
AGL
U.S. Holding Companies
(in millions)
Revenues
Expenses
Interest expense
Other expenses
Income (loss) before provision for income taxes and equity in earnings (losses) of investees
Equity in earnings (losses) of investees
Net income (loss) excluding investments in subsidiaries
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
Year Ended December 31, 2025
AGL
U.S. Holding Companies
(in millions)
Dividends received from U.S. Holding Companies
Dividends received from other subsidiaries
Distributions from equity method investees (1)
Interest paid on intercompany loans
Interest paid on long term debt
Investments in subsidiaries
Redemption of stock by insurance subsidiaries
Dividends paid to AGL
Repayment of intercompany loans
Dividends paid to AGL shareholders
Repurchases of common shares (2)
(1) Includes distributions from Sound Point of $18 million 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 financial guaranty 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. 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.
The Company conducts its life and annuity reinsurance business through Assured Life Re, an insurance company domiciled in Bermuda which was acquired by the Company on January 21, 2026.
Sources and Uses of Funds
Liquidity of the insurance subsidiaries is primarily used to pay for:
• operating expenses,
• claims on the insured portfolio,
• dividends or other distributions to parent,
• reinsurance premiums,
• expansion of the insurance business, and
• capital investments in their own subsidiaries and in alternative investments.
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, 2025, the
Company intended to hold and had the ability to hold securities in an unrealized loss position until the date of anticipated recovery of amortized cost.
Beyond the next twelve months, the ability of the operating subsidiaries to declare and pay dividends may be influenced by a variety of factors, including market conditions, general economic conditions and, in the case of the Company’s insurance subsidiaries, insurance regulations and rating agency capital requirements.
Financial Guaranty Policies
Insurance policies issued provide, in general, that payments of principal, interest and other amounts insured may not be accelerated by the holder of the obligation. Amounts paid by the Company therefore are typically in accordance with the obligation’s original payment schedule, unless the Company accelerates such payment schedule, at its sole option. Premiums received on financial guaranty contracts are paid either upfront or in installments over the life of the insured obligations.
Payments made in settlement of the Company’s obligations arising from its insured portfolio may, and often do, vary significantly from year to year, depending primarily on the frequency and severity of payment defaults and whether the Company chooses to accelerate its payment obligations in order to mitigate future losses. For example, the Company made substantial claim payments in 2022 and 2024 in connection with the resolution of certain defaulting Puerto Rico credits. The Company is continuing its efforts to resolve the one remaining unresolved Puerto Rico insured exposure that is in payment default, PREPA. The Company had $464 million in insured net par outstanding of PREPA obligations as of December 31, 2025. For more information, see Item 8. Financial Statements and Supplementary Data, and Note 4. Expected Loss to be Paid (Recovered).
The terms of the Company’s credit default swap (CDS) contracts generally are modified from standard CDS contract forms approved by International Swaps and Derivatives Association, Inc. such that the circumstances giving rise to the Company’s obligation to make loss payments are similar to those for its financial guaranty insurance contracts. The documentation for certain CDS was negotiated to require the Company to also pay if the obligor were to become bankrupt or if the reference obligation were restructured. Furthermore, some CDS documentation requires the Company to make a payment due to an event that is unrelated to the performance of the obligation referenced in the credit derivative. If events of default or termination events specified in the credit derivative documentation were to occur, the Company may be required to make a cash termination payment to its swap counterparty upon such termination. Any such payment would probably occur prior to the maturity of the reference obligation and be in an amount larger than the amount due for that period on a “pay-as-you-go” basis.
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, 2025. This amount is not reduced for cessions under reinsurance contracts. See Item 8. Financial Statements and Supplementary Data, Note 5. Contracts Accounted for as Insurance.
Estimated Expected Claim Payments
(Undiscounted)
As of December 31, 2025
(in millions)
Less than 1 year
1-3 years
3-5 years
More than 5 years
Total
Ordinary Dividends From Insurance Subsidiaries to Holding Companies
The Company anticipates that, for the next twelve months, amounts paid by AGL’s direct and indirect insurance subsidiaries as dividends or other distributions will be a major source of the holding companies’ liquidity. The insurance subsidiaries’ ability to pay dividends depends upon their financial condition, results of operations, cash requirements, other potential uses for such funds and compliance with rating agency requirements, and is also subject to restrictions contained in the insurance laws and related regulations of their states of domicile. For more information, see Item 8. Financial Statements and Supplementary Data, Note 14. Insurance Company Regulatory Requirements.
Dividend restrictions by insurance subsidiary are as follows:
• Under Maryland’s insurance law, AG may, with prior notice to the Commissioner of its domiciliary regulator, the MIA, pay an ordinary dividend in an amount that, together with all dividends and distributions paid in the prior 12 months, does not exceed the lesser of 10% of its policyholders’ surplus (as of the prior December 31) or 100% of its adjusted net investment income during that period. “Adjusted net investment income” means the sum of (x) AG’s net investment income during the 12-month period ending December 31 of the preceding year (excluding realized capital gains and pro rata distributions of its own securities), and (y) AG’s net investment income (excluding realized capital gains) from the three calendar years prior to the preceding calendar year that has not already been paid out as dividends. The maximum amount available during 2026 for AG to distribute as ordinary dividends is approximately $245 million of which approximately $29 million is available for distribution in the first quarter of 2026.
• The Company expects the amount of dividends available for distribution by AG Re in 2026 to be approximately $213 million. Based on applicable law and regulations, in 2026 AG Re has the capacity to declare and pay dividends in an aggregate amount up to 25% of the prior year statutory surplus (i.e., up to $292 million as of December 31, 2025); provided that such payment cannot exceed AG Re’s unencumbered assets ($213 million as of December 31, 2025) or its statutory surplus ($312 million as of December 31, 2025). Additionally, in 2026 AG Re can make capital distributions in an aggregate amount up to $129 million without the prior approval of the Authority.
Ordinary Dividends
From Insurance Company Subsidiaries
to Holding Companies
Year Ended December 31,
(in millions)
Dividends by AG Re to AGL
Dividends by AG to U.S. Holding Companies (1)
(1) Prior to a reorganization of the Company’s U.S. corporate structure, AG had been directly owned by AGUS. As a result of the reorganization, effective as of August 1, 2024, AG is directly owned by AGMH, a subsidiary of AGUS.
Stock Redemptions by Insurance Subsidiaries
In the third quarter of 2025, after receiving approval from the MIA, AG redeemed $250 million of its common stock from AGMH in exchange for $213 million in cash and $37 million in alternative investments.
Assumed Reinsurance
Some of the Company’s insurance subsidiaries (Assuming Subsidiaries) assumed financial guaranty insurance from legacy financial guarantors. The agreements under which the Assuming Subsidiaries assumed such business are generally subject to termination at the option of the ceding company (i) if the Assuming Subsidiary fails to meet certain financial and regulatory criteria; (ii) if the Assuming Subsidiary fails to maintain a specified minimum financial strength rating; or (iii) upon certain changes of control of the Assuming Subsidiary. Upon termination due to one of the above events, the Assuming Subsidiary typically would be required to return to the ceding company unearned premiums (net of ceding commissions) and loss reserves, calculated on a U.S. statutory basis, attributable to the assumed exposure on insured obligations (plus in certain cases, an additional required amount), after which the Assuming Subsidiary would be released from liability with respect to such business. As of December 31, 2025, if each legacy financial guarantor ceding business to an Assuming Subsidiary had a right to recapture such business, and chose to exercise such right, the aggregate amounts those subsidiaries could be required to pay to all such ceding companies would be approximately $243 million. In addition, beneficiaries of financial guaranties issued by the Company’s insurance subsidiaries may have the right to cancel the credit protection provided by them, which would result in the loss of future premium earnings and the reversal of any fair value gains recorded by the Company.
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.
Federal Home Loan Bank Membership
In the fourth quarter of 2025, AG became a member of the Federal Home Loan Bank of New York (FHLBNY), thereby gaining access to collateralized FHLBNY borrowings as an additional source of liquidity. The Board has authorized a maximum borrowing capacity of $300 million. As of December 31, 2025, the Company had not borrowed any funds or pledged any collateral under the FHLBNY program.
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, 2025, the Company had $6,369 million of available-for-sale fixed-maturity securities, of which $5,640 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, $228 million of available-for-sale fixed-maturity securities were CLO equity tranches managed by Sound Point.
Changes in interest rates affect the value of the Company’s fixed-maturity securities. As interest rates fall, the fair value of fixed-maturity securities generally increases, and, as interest rates rise, the fair value of fixed-maturity securities generally decreases. The 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
As of December 31,
(in millions)
Fixed-maturity securities, available-for-sale
Fixed-maturity securities, trading (1)
Short-term investments
Other invested assets (2)
Total
(1) Includes primarily CVIs received as part of resolutions of Puerto Rico exposures in 2022, which are not rated.
(2) Excludes investments in Sound Point funds that are consolidated. See Item 8. Financial Statements and Supplementary Data, Note 8. Variable Interest Entities.
The Company’s available-for-sale fixed-maturity securities had a duration of 4.9 years as of December 31, 2025 and 4.3 years as of December 31, 2024, respectively.
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, 2025 and December 31, 2024. Ratings generally reflect the lower of Moody’s and S&P classifications, except for (i) Loss Mitigation Securities rated BIG and (ii) CLO equity tranches, which are not rated. See Item 8. Financial Statements and Supplementary Data, Note 7. Investments and Cash, for additional information.
Distribution of Available-for-Sale Fixed-Maturity Securities by Rating
As of December 31,
Rating
AAA
BBB
BIG
Not rated
Total
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 $1,769 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, 2025.
Fair Value of Available-for-Sale Fixed-Maturity Securities Investment Portfolio
of Obligations of State and Political Subdivisions
As of December 31, 2025 (1)
State
General
Obligation
Revenue Bonds
Total Fair
Value
Amortized
Cost
(in millions)
California
Texas
New York
Florida
Washington
Massachusetts
Illinois
Colorado
Pennsylvania
Georgia
All others
Total
(1) Excludes $56 million as of December 31, 2025 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, 2025
Type
Amortized
Cost
Fair Value
(in millions)
Transportation
Tax revenue
Education
Utilities
Healthcare
All others
Total
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. See “— Commitments” below.
Sound Point and Alternative Investments
As of December 31, 2025 (1)
As of December 31, 2024
Investments
CIVs
Consolidated
Investments
CIVs
Consolidated
(in millions)
Fixed-maturity securities, available-for-sale
Fixed-maturity securities, trading
Other invested assets:
Ownership interest in Sound Point
CLOs
Private healthcare investing
Asset-based/specialty finance
Private minority stakes in alternative asset manager
Commercial real estate finance
Other
Subtotal
Assets of CIVs, net of non-redeemable NCI
(1) The alternative investments, which do not include the Company’s ownership interest in Sound Point, had an inception-to-date annualized internal rate of return of 13%.
Effect of Ownership Interest in Sound Point and Alternative Investments
on Consolidated Statements of Operations (1)
Year Ended December 31, 2025
Investments
CIVs
Consolidated
(in millions)
Net investment income (2)
Net realized investment gains (losses)
Fair value gains (losses) on trading securities
Equity in earnings (losses) of investees:
Ownership interest in Sound Point
Alternative investments:
CLOs
Private healthcare investing
Asset-based/specialty finance
Private minority stakes in alternative asset manager
Commercial real estate finance
Other
Equity in earnings (losses) of investees
Subtotal
Fair value gains (losses) on CIVs, net of NCI
(1) Foreign exchange gains on remeasurement of alternative investments were $1 million for 2025.
(2) Includes CLO equity tranches distributed from a CLO fund in the fourth quarter of 2024.
Effect of Ownership Interest in Sound Point and Alternative Investments
on Consolidated Statements of Operations
Year Ended December 31, 2024
Investments
CIVs
Consolidated
(in millions)
Net investment income (1)
Net realized investment gains (losses)
Fair value gains (losses) on trading securities
Equity in earnings (losses) of investees:
Ownership interest in Sound Point
Alternative investments:
CLOs
Private healthcare investing
Asset-based/specialty finance
Private minority stakes in alternative asset manager
Other
Equity in earnings (losses) of investees
Subtotal
Fair value gains (losses) on CIVs, net of NCI
(1) Includes CLO equity tranches distributed from the CLO fund in the fourth quarter of 2024.
Effect of Ownership Interest in Sound Point and Alternative Investments
on Consolidated Statements of Operations
Year Ended December 31, 2023
Investments
CIVs
Consolidated
(in millions)
Net investment income
Net realized investment gains (losses)
Fair value gains (losses) on trading securities
Equity in earnings (losses) of investees:
Ownership interest in Sound Point
Alternative investments:
CLOs
Private healthcare investing
Asset-based/specialty finance
Private minority stakes in alternative asset manager
Other
Equity in earnings (losses) of investees
Subtotal
Fair value gains (losses) on CIVs, net of noncontrolling interests
Commitments
The Company has agreed to invest an aggregate amount of $1.5 billion in alternative investments, which includes $1 billion in Sound Point managed investments, subject to certain conditions precedent. Unfunded commitments for alternative investments as of December 31, 2025 were $490 million. See Item 8. Financial Statements and Supplementary Data, Note 7. Investments and Cash, for a description of the alternative investments agreement with Sound Point.
Restricted Assets
Based on fair value, fixed-maturity securities, short-term investments and cash that are either held in trust for the benefit of third-party ceding insurers in accordance with statutory requirements, placed on deposit to fulfill state licensing requirements, or otherwise pledged or restricted, totaled $77 million and $79 million as of December 31, 2025 and December 31, 2024, respectively. In addition, the total collateral funded into a reinsurance trust or a similar account by certain AGL subsidiaries or is otherwise restricted for the benefit of other AGL subsidiaries in accordance with statutory and regulatory requirements had a fair value of $813 million and $1,135 million as of December 31, 2025 and December 31, 2024, respectively.
Lease Obligations
The Company has entered into several lease agreements for office space in Bermuda, New York, London, Paris, and other locations with various lease terms. See Item 8. Financial Statements and Supplementary Data, Note 16. Leases, for a table of minimum lease obligations.
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 and distributing cash flow to investors. The assets and liabilities of the Company’s CIVs are held within separate legal entities. The assets of the CIVs are not available to creditors of the Company, other than creditors of the applicable CIVs. 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. Variable Interest Entities, 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 segments and Corporate division, 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. Variable Interest Entities, for additional information.
Summarized Consolidated Cash Flows
Year Ended December 31,
(in millions)
Net cash flows provided by (used in) operating activities, excluding FG VIEs and CIVs operating cash flows
FG VIEs and CIVs operating cash flows
Net cash flows provided by (used in) operating activities
Net cash flows provided by (used in) investing activities, excluding FG VIEs and CIVs investing cash flows
FG VIEs and CIVs investing cash flows
Net cash flows provided by (used in) investing activities
Net cash flows provided by (used in) financing activities, excluding FG VIEs and CIVs financing cash flows
Dividends paid
Repurchases of common shares
Issuance of long-term debt, net of issuance costs
Redemption of debt
Other
FG VIEs and CIVs financing cash flows
Net cash flows provided by (used in) financing activities (1)
Effect of exchange rate changes
Increase (decrease) in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of period
Cash and cash equivalents and restricted cash at the end of the period
(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 $259 million in 2025 and $47 million in 2024. The 2025 cash flow from operations includes the receipt of $103 million in satisfaction of the judgment the Company was awarded and its recoveries in connection with the resolution of the LBIE litigation. In addition, 2025 cash flows from operations were higher than in 2024 due to a $114 million decrease in net claim payments.
Investing activities primarily consisted of net sales (purchases) of fixed-maturity securities and short-term investments and paydowns on, and sales of, FG VIEs’ assets. The decrease in investing cash inflows compared with the prior year is primarily due to the need for liquidity to fund higher claim payments in 2024. In addition, increased operating cash flows in 2025, due in part to the cash inflow related to the resolution of the LBIE litigation, reduced the need to liquidate investments. 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, and (ii) paydowns of FG VIEs’ liabilities. In 2024, FG VIEs’ financing cash flows were $375 million, which primarily related to the paydown of Puerto Rico Trust liabilities.
From January 1, 2026 through February 25, 2026, the Company repurchased an additional 546 thousand common shares. As of February 25, 2026, the Company was authorized to purchase $204 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.
