AGO 10-K & 10-Q changes, risk factors and insider trading

•The impact of narrow credit spreads on the demand for financial guaranty insurance.insurance and annuity reinsurance.

•Strategic transactions not resulting in the benefits anticipated.anticipated or subjecting the Company to negative consequences.

•AGL may,may become, and AG Re and AGRO will, becomeare, subject to taxes in Bermuda.

In recent years, global financial markets, political systems and the economy generally have been impacted by changes in inflation and interest rates, governmental policies such as tariffs, and geopolitical eventsevents, suchincluding asregional and global military conflicts and strategic competition and trade confrontations between the U.S. and China, Russia’s invasion of Ukraine, conflict in the Middle East, and events in Southeast Asia, including tensions between China and Taiwan and provocative actions taken by North Korea,confrontations, and could be impacted by other natural and man-made events in the future, such as trade protectionism through tariffs.future.

Some of the publicPublic finance obligors that have issued obligations insured or reinsured by the Company are experiencingexperiencing, or may in the future experience, significant budget,budget deficits, and pension and revenue shortfalls, and difficulties in obtaining additional financing, that could result in increased credit losses or liquidity claims and increased rating agency capital charges on those insured obligations.

Certain territorial or local governments, including ones that have issued obligations insured or reinsured by the Company, have sought protection from creditors under Chapter 9 of the U.S. Bankruptcy Code, or, in the case of Puerto Rico, the similar provisions of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), as a means of restructuring their outstanding debt. In some instances where local governments were are seeking to restructure their outstanding debt, pension and other obligations owed to workers were treated more favorably than senior bond debt owed to the capital markets. If the issuers of the obligations in the Company’s public finance portfolio do not have sufficient funds to cover their expenses and are unable or unwilling to raise taxes, decrease spending, or receive federal assistance, the Company may experience increased levels of losses or liquidity claims on its insured public finance obligations.

Obligations supported by revenue streams, which may include both revenue and non-revenue bonds, such as those issued by healthcare facilities, toll road authorities, municipal utilities, airport authorities or mass transit, may be adversely affected by revenue declines resulting from reduced demand, changing demographics, evolving business practices including hybrid work models, telecommuting,telecommuting and other alternative work arrangements, reduced governmental aid, or other causes. These obligations may also be adversely affected by increased costs resulting from operational strain, high financing costs and other capital constraints. These obligations, which may not necessarily benefit from financial support from other tax revenues or governmental authorities, may experience increased losses if the revenue streams are insufficient to pay scheduled interestdebt and principal paymentsservice and the obligors are unable or unwilling to increase utility rates or revenues, decrease costs, or obtain other additional financing.

The Company may be subjected to significant risks from large individual or correlated financial guaranty insurance exposures.

The Company is exposed to the risk that issuers of obligations that it insures or other counterparties may default on their financial obligations, whether as a result of insolvency, lack of liquidity, operational failure (whether related to cybersecurity incidents, mismanagement, fraud or otherwise) or other reasons, and the amount of financial guaranty insurance exposure the Company has to some risks is quite large. The Company seeks to reduce this risk by managing exposure to large single risks, as well as concentrations of correlated risks, through tracking its aggregate exposure to single risks in its various lines of financial guaranty insurance business and establishing underwriting criteria to manage risk aggregations. However, in certain cases, the Company’s ultimate exposure to a single risk may exceed its underwriting guidelines (caused by, for example, bond accretion exceeding the risk limitation, acquisitions, reassumptions or other strategic exceptions). Additionally, certain lines of business written by the Company have short durations of less than one year and a systemic event could cause the Company to have losses in excess of available liquidity. Should the Company's risk assessments prove inaccurate and/or should the applicable limits prove inadequate, the Company could be exposed to larger than anticipated losses, and could be required by the rating agencies to hold additional capital against insured exposures whether or not the insured obligations are downgraded by the rating agencies.agencies, and external financing may or may not be available to the Company in the future on satisfactory terms.

The Company is exposed to correlation risk across its insured exposures and in its investment portfolio. During periods of strong macroeconomic performance, stress in an individual transaction generally occurs for idiosyncratic reasons or as a result of issues in a single sector. During a broad economic downturn or in the face of a significant natural or man-made event or disaster (such as the COVID-19 pandemic),disaster, a wider range of the Company’s insurance and investments could be exposed to stress at the same time. This stress may manifest itself in any or all of the following: ratings downgrades of insured risks, which may require more capital in the Company’s insurance subsidiaries; ratings downgrades of the Company’s insurance or reinsurance subsidiaries; a reduction in the value of the Company’s investments; and actual defaults and losses in its insurance portfolio and/or investments.

Losses on insured exposures significantly in excess of those expected by the Company could have a negative effect on the Company’s financial condition, results of operations, capital, business prospects and share price. Certain issuers have defaulted on their debt service payments, and the Company has paid claims on them. The total net expected loss the Company calculates related to such exposures is net of a credit for estimated recoveries on claims already paid, and recoveries significantly below those expected by the Company could also have a negative effect on the Company’s financial condition, results of operations, capital, liquidity, business prospects and share prices. Additional information about the Company’s exposure and legal actions related to that exposure may be found in Part II, Item 8,8. Financial Statements and Supplementary Data, Note 4,4. Expected Loss to be Paid (Recovered).

In the U.S., debt ceiling and budget deficit concerns, which have increased the possibility of a U.S. government shutdown, payment defaults on the debt of the U.S. government or instruments issued, insured or guaranteed by related institutions, agencies or instrumentalities, and downgrades to their credit ratings, could weaken the U.S. dollar, global economy and banking system, cause market volatility, raise the cost of credit, reduce public investment, increase interest rates and inflation, negatively impact the Company’s insured and investment portfolios, and disrupt general economic conditions in ways that the Company is not able to predict, which could materially and adversely affect the Company’s business, financial condition and results of operations. While rating agencies currently permit sub-sovereign and corporate credits in the U.S. to be rated higher than sovereign credits, in the event that the U.S. government is downgraded and if the rating agencies no longer permit sub-sovereign and/or corporate credit ratings to be higher than the U.S. government, the resulting downgrades could result in a material adverse impact to the Company’s credit ratings and its insurance and investment portfolios.

The Company may be exposed to a higher risk of default of U.S. public finance obligations in connection with a U.S. government default. While the Company historically has experienced low levels of defaults in its U.S. public finance insured portfolio, from time-to-time state and local governments that issue some of the obligations the Company insures have reported budget shortfalls that have required them to raise taxes and/or cut spending in order to satisfy their obligations. While there has been support provided byHistorically the U.S. federal government designedhas to provideprovided aid to state and local governments,governments; however, certain state and local governments remain under financial stress. If the issuers of the obligations in the Company’s U.S. public finance financial guaranty insurance portfolio are reliant on financial assistance from the U.S. government in order to meet their obligations, and the U.S. government does not provide such assistance, the Company may experience credit losses or impairments on those obligations.

The likelihood of debt repayment is impacted by both the ability and the willingness of the obligor to repay theirits debt. Debtors generally understand that debt repayment is not only a legal obligation but is also appropriate, and that a failure to repay their debt will impede their access to debt in the future. To the extent societal attitudes toward the repayment of debt by struggling obligors softens and such obligors believe there to be less of a penalty for nonpayment due to legal rulings or debt relief programs that may absolve them of the repayment obligation or otherwise, some struggling debtors may be more likely to default and, if they default, less likely to agree to repayment plans they view as burdensome. If the issuers of the obligations in the Company’s public finance insurance portfolio become unwilling to raise taxes, decrease spending or receive federal assistance in order to repay their debt, the Company may experience increased levels of losses on its public finance obligations, which could adversely affect its financial condition, results of operations, capital, liquidity, business prospects and share price.

Narrow credit spreads could adversely affect demand for financial guaranty insurance.insurance and annuity reinsurance.

Demand for financial guaranty insurance generally fluctuates with changes in market credit spreads. Credit spreads, which are based on the difference between interest rates on high-quality or “risk free” securities versus those on lower-rated securities, fluctuate due to a number of factors, and are sensitive to the absolute level of interest rates, current credit experience and investors’ risk appetite. When the bond market is less volatile or is relatively less risk averse, the credit spread between high-quality or insured obligations versus lower-rated obligations typically narrows. As a result, financial guaranty insurance typically provides lower interest cost savings to issuers than it would during periods of relatively wider credit spreads. Issuers are less likely to use financial guaranties on their new issues when credit spreads are narrow, so (absent other factors) this results in decreased demand or premiums obtainable for financial guaranty insurance. Similarly, demand for annuity insurance and reinsurance products can be a function of the size of credit spreads, with wider credit spreads generally providing purchasers of annuity financial products more opportunities for higher returns.

The Company’s results of operations are affected by the performance of its investments, which primarily consist of fixed-maturity securities and short-term investments. As of December 31, 2024, fixed-maturity securities and short-term investments held by the Company had a fair value of approximately $7.7 billion. Credit losses on the Company’s investments adversely affect the Company’s financial condition and results of operations by reducing net income and shareholders’ equity. Alternative investments, including the Company’s equity method investment in Sound Point funds and its ownership interest in Sound Point, Loss Mitigation Securities and CVIs may be more susceptible to credit losses than most of the rest of the Company’s fixed-maturity portfolio.

The impact of changes in interest rates may also adversely affect both the Company’s financial condition and results of operations. For example, if interest rates decline, the value of the Company’s existing fixed-rate investments would generally be expected to increase, resulting in an unrealized gain on investments and improving the Company’s financial condition. At the same time, funds reinvested in new fixed rate investments will have a lower expected yield, reducing the Company’s future investment income compared to the amount it would have earned if interest rates had not declined. Conversely, if interest rates increase, the Company’s future results of operations could improve because of higher future reinvestment income from its new fixed rate investments, but its financial condition could be adversely affected sincebecause the value of the fixed-rate investments generally would be reduced. Regarding the Company’s existing floating rate investments, as interest rates decline or increase, income from such investments will generally decrease or increase, respectively, while the value of such investments may or may not experience a material gain or loss commensurate with changes in prevailing interest rates.

Estimates of expected financial guaranty insurance losses to be paid (recovered), including losses with respect to related legal proceedings, are subject to uncertainties and actual amounts may be different, causing the Company to reserve either too little or too much for future losses.

The Company does not use traditional actuarial approaches for its financial guaranties to determine its estimates of expected losses to be paid (recovered). The determination of financial guaranty expected loss to be paid (recovered) is an inherently subjective process involving numerous estimates, probability weightings, assumptions and judgments by management, using both internal and external data sources with regard to frequency, severity of loss, economic projections, future interest rates, the perceived strength of legal protections, the perceived strength of the Company’s position in any ongoing legal proceedings, governmental actions, negotiations, delinquency and prepayment rates (with respect to RMBS), timing of cash flows and other factors that affect credit performance. Actual losses will ultimately depend on future events, legal rulings, and/or transaction performance and may be influenced by many interrelated factors that are difficult to predict. As a result, the Company’s current estimates of financial guaranty losses to be paid (recovered), including losses with respect to related legal proceedings, may be subject to considerable volatility and may not reflect the Company’s future ultimate losses paid (recovered).

The Company’s financial guaranty expected loss models and reserve assumptions take into account current and expected future trends, which contemplate the impact of current and possible developments in the performance of the exposure and any related legal proceedings. These factors, which are integral elements of the Company's reserve estimation methodology, are updated on a quarterly basis based on current information. Also, in some instances, the Company may not be able to reasonably estimate the amount or range of loss that could result from an unfavorable outcome of a legal proceeding based on the information available at the stage of the legal proceeding or its estimate may prove to be materially different than the actual results. LossFinancial guaranty loss models and reserve assumptions may be impacted by changes to interest rates due both to discounting and transaction structures that include floating rates, which could impact the calculation of expected losses. Because such information changes over time, sometimes materially, the Company’s projection of financial guaranty losses and its related reserves may also change materially.

The Company carries a significant portion of its assets and certain of its liabilities at fair value. The approaches used by the Company to calculate the fair value of those assets and liabilities it carries at fair value are described under,under Part II, Item 8,8. Financial Statements and Supplementary Data, Note 9,9. Fair Value Measurement. The determination of fair values is made at a specific point in time, based on available market information and judgments about the assets and liabilities being valued, including estimates of timing and amounts of cash flows and the creditworthiness of the issuer or counterparty. The use of different methodologies and assumptions may have a material effect on estimated fair value amounts.

During periods of market disruption, including periods of rapidly changing credit spreads or illiquidity, it may be difficult to value certain of the Company’s assets and liabilities, particularly if trading becomes less frequent or market data becomes less observable. An increase in the amount of the Company’s alternative investments in its investment portfolio may increase the amount of the Company’s assets subject to this risk. During such periods, more assets and liabilities may fall to the Level 3 valuation level, which describes model derived valuations in which one or more significant inputs or significant value drivers are unobservable, thereby resulting in values that may not be indicative of net realizable value or reflective of future fair values. Rapidly changing credit and equity market conditions could materially impact the valuation of assets and liabilities as reported within the financial statements, and period-to-period changes in value could vary significantly.

Competition in the Company’s industries may adversely affect its financial condition, results of operations, capital, business prospects and share price.

As described in greater detail under Item 1. Business — Insurance — Market Demand and Competition and Item 1. Business — Asset Management — Market Demand and Competition, the Company can face competition in its insurancefinancial business,guaranty eitherinsurance, life and annuity reinsurance and asset management businesses from other financial guaranty insurance companies or from current or newcompanies, providers of other credit enhancement, such as nonpayment insurance, letters of credit or creditother derivatives,asset or in terms of alternative structures, including uninsured offerings,managers which could have an adverse effect on the Company’s insurancefinancial business.condition, results of operations, capital, business prospects and share price.

The Company’s Asset Management segment currentlyprimarily consists of its ownership interest in Sound Point, which operates in highly competitive markets. Sound Point competes with many other firms in every aspect of the asset management industry, including raising funds, seeking investments, and hiring and retaining professionals. Sound Point’s ability to increase and retain assets under management (AUM) is directly related to the performance of the assets it manages as measured against market averages and the performance of its competitors. Some of Sound Point’s competitors may have a lower cost of funds and access to funding and other resources that are not available to Sound Point. In addition, some of Sound Point’s competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than Sound Point does. Furthermore, Sound Point may lose investment opportunities if it does not match its competitors’ pricing, terms and structure. The loss of such investment opportunities may limit Sound Point’s ability to grow or cause it to have to shrink the size of its AUM, which could decrease its earnings. If Sound Point matches its competitors’ pricing, terms and structure, it may experience decreased earnings and increased risk of investment losses. If Sound Point is unable to successfully compete, it may result in decreased earnings for Sound Point and increased risk of investment losses in Sound Point funds, which could materially adversely impact the Company’s ownership interest in Sound Point and/or its investment in Sound Point funds and, ultimately, the Company’s financial condition, results of operations, capital, business prospects and share price.

From time to time the Company evaluates potential mergers, acquisitions, divestitures and other strategic opportunities, including transactions involving legacy financial guaranty companies and financial guaranty portfolios, asset managersmanagers, life and annuity reinsurers, and other companies, and has executed a number of such transactions in the past. Such strategic transactions related to entities or portfolios may involve some or all of the various risks commonly associated with such strategic transactions, including, among other things: (a) failure to adequately identify and value potential exposures and liabilities associated with a new entity or portfolio; (b) difficulty in estimating the value of a new entity or portfolio; (c) potential diversion of management’s time and attention; (d) exposure to asset quality issues of a new entity or portfolio; (e) difficulty and expense of integrating the operations, systems and personnel of a new entity; (f) difficulty integrating the culture of a new entity; (g) failure to identify legal risks associated with the strategic transaction with an entity or portfolio, (h) failure of a strategic transaction to perform as expected, (i) deployment of financial resources towards certain strategic initiatives may limit the Company’s ability to deploy capital for other strategic initiatives or other purposes, and (hj) in the case of acquisitions of a financial guaranty company or portfolio, concentration of insurance exposures, including insurance exposures which may exceed single risk limits, aggregate risk limits, BIG limits and/or non-U.S. dollar exposure limits, due to the addition of the target insurance portfolio. Such strategic transactions related to entities or portfolios may also have unintended consequences on ratings assigned by the rating agencies to the Company or its insurance subsidiaries or on the applicability of laws and regulations to the Company’s existing businesses. These or other factors may cause any past or future strategic transactions relating to financial services entities or portfolios not to result in the benefits to the Company that the Company anticipated when the transaction was agreed. Past or future transactions may also subject the Company to non-monetary consequences that may or may not have been anticipated or fully mitigated at the time of the transaction.

Since July 1, 2023, the Company participates in the asset management business through its ownership interest in Sound Point, which is subject to the risks of Sound Point’s business. See Item 1. Business — Asset Management. The Company had a carrying value for its ownership interest in Sound Point as of December 31, 2024 of $418 million. External factors, such as changes in inflation, interest rates, credit markets or segments thereof, geopolitical risk, developments in the global financial markets, general macroeconomic factors, and industry conditions, as well as the financial performance of Sound Point relative to the Company’s expectations at the time of the Sound Point Transaction, could result in an impairment, which could adversely affect the Company’s financial condition, results of operations and share price.

Asset management services are primarily a fee-based business, and Sound Point’s asset management and performance fees are based on the amount of its AUM as well as the performance of those assets. Sound Point’s business operates in highly competitive markets with many other firms in every aspect of the asset management industry. See “– Competition in the Company’s industries may adversely affect its financial condition, results of operations, capital, business prospects and share price.” Industry competition, volatility or declines in the markets in which Sound Point invests as an asset manager, or poor performance of its investments, may negatively affect its AUM and its asset management and performance fees, may deter future investment by third parties in Sound Point’s asset management products, and may result in an impairment to the Company’s ownership interest in Sound Point.

The Company’s interest in Sound Point is subject to the risks normally associated with a minoritynoncontrolling interest.

Since the Company holds a minoritynoncontrolling interest in Sound Point, it is unable to control the business, management or policies of Sound Point. For example, the Company is not be able to control the timing or amount of distributions from Sound Point and is not involved on a day-to-day basis with Sound Point’s operations or its decision-making or its adoption and implementation of policies and procedures with respect to its investment, reporting, internal control, legal, compliance or risk functions. In most cases, the Company will be bound by the decisions made by the Managing Partner and Chief Investment Officer, other members of management and the Board of Managers of Sound Point. In the event that the Managing Partner and Chief Investment Officer, other members of management and the Board of Managers of Sound Point have interests, objectives and incentives that differ from those of the Company, there can be no assurance that the decisions they make will be aligned with the interests of the Company. Decisions made by the Managing Partner and Chief Investment Officer, other members of management and the Board of Managers of Sound Point not in the Company’s interest could have a material adverse effect on the Company’s interest in Sound Point and/or its investments in Sound Point funds, other vehicles and separately managed accounts.

The Company is using Sound Point’s investment knowledge and experience to expand the categories and types of its alternative investments by: (a) allocating $1 billion of capital in Sound Point managed funds, other vehicles and separately managed accounts; (b) redeploying return of capital, gains and dividends from Sound Point managed funds, other vehicles and separately managed accounts in future Sound Point managed funds, other vehicles and separately managed accounts; and (c) having Sound Point serve as AG’s sole alternative credit manager. This expansion of categories and types of investments, allocations to Sound Point and exclusivity arrangement with Sound Point may increase the credit, interest rate and liquidity risk in the Company’s investments and expose the Company to reputational or other risks.

The financial strength and financial enhancement ratings assigned by S&P, Moody’s, KBRA andKBRA, A.M. Best Company, Inc. and Fitch Ratings, Inc. to each of the Company’s insurance and reinsurance subsidiaries represent such rating agencies’ opinions of the insurer’s financial strength and ability to meet ongoing obligations to policyholders and cedants in accordance with the terms of the financial guaranties it has issued or the reinsurance agreements it has executed. Issuers, investors, underwriters, ceding companies and others consider the Company’s financial strength or financial enhancement ratings an important factor when deciding whether or not to utilize a financial guaranty or purchase reinsurance from one of the Company’s insurance or reinsurance subsidiaries. A downgrade by a rating agency of the financial strength or financial enhancement ratings of one or more of the Company’s insurance subsidiaries could impair the Company’s financial condition, results of operation, capital, liquidity, business prospects and/or share price. The ratings assigned by the rating agencies to the Company’s insurance subsidiaries are subject to review and may be lowered by a rating agency at any time and without notice to the Company. In the event of a downgrade by a rating agency of the financial strength or financial enhancement ratings of one or more of the Company’s subsidiaries, certain beneficiaries may have the right to cancel their credit protection and certain ceding companies may have a right to cancel policies ceded to the Company’s insurance subsidiaries and recapture premium, in each case resulting in the loss of future premium earnings and the reversal of any fair value gains recorded by the Company. See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity — Insurance Subsidiaries —Assumed Reinsurance. In addition, any such downgrade may result in the loss of future premium if potential policyholders would receive less benefit from a financial guaranty issued by a lower rated insurance company. Any such downgrade, resulting loss of premium earnings and reversal of fair value gains may impair the Company’s financial condition, results of operation, capital, liquidity, business prospects and/or share price.

The Company does not engage in active management, or hedging, of its foreign exchange rate risk.risk in its financial guaranty business. Therefore, fluctuation in exchange rates between the U.S. dollar and the pound sterling or the euro could adversely impact the Company’s financial position, results of operations and cash flows. See Part II, Item 7A,7A. Quantitative and Qualitative Disclosures About Market Risk — Sensitivity to Foreign Exchange Rate Risk.

The underwriting of insurance in new sectors or classes of business may subject the Company to additional credit risk because theits underwriting history and loss experience for such exposures is minimal or nonexistent which could adversely affect the Company’s results of operations. In addition, the underwriting of insurance in new sectors or classes of business may present novel legal issues or political challenges beyond the Company’s control.

The Company and its subsidiaries are subject to numerous cybersecurity, data privacy and protection laws and regulations in a number of jurisdictions, particularly with regard to personally identifiable information, including the EU General Data Protection Regulation, the UK Data Protection Act 2018, and the Bermuda Personal Information Protection Act 2016. In the United States,U.S., there are numerous federal, state and local cybersecurity, privacy and data security laws and regulations governing the collection, sharing, use, retention, disclosure, security, transfer, storage and other processing of personal information. These laws and regulations are increasing in complexity and number, change frequentlyfrequently, and sometimes conflict. The Company’s compliance efforts are further complicated by the fact that these cybersecurity, privacy and data security laws and regulations around the world may be subject to uncertain or inconsistent interpretations and enforcement. The Company’s failure to comply with these requirements could result in penalties and fines, regulatory enforcement actions, reputational harm and/or criminal prosecution in one or more jurisdictions, which could require significant effort from its management and technical personnel to remedy, increase the Company’s costs of doing business, and ultimately have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company is beginningcontinues to explore the use of Artificial Intelligence in some of its business operations, and challenges with properly managing the use of Artificial Intelligence, compliance with new laws and regulations applicable to Artificial Intelligence, difficulties implementing Artificial Intelligence technologies efficiently and effectively, and challenges to the Company’s competitive position from faster or more effective use of Artificial Intelligence by competitors or other third-parties, could adversely affect the Company’s business.

The Company is beginningcontinues to explore the use of Artificial Intelligence technologies in its business, and its research into and continued deployment of such capabilities remain ongoing. Artificial Intelligence is still in its early stages, and theThe introduction and use of Artificial Intelligence technologies may result in unintended consequences or other new or expanded risks and liabilities. If the content, analyses or recommendations that Artificial Intelligence applications assist in producing are, or are alleged to be, deficient, inaccurate or biased, such as due to limitations in Artificial Intelligence algorithms, insufficient or biased base data or flawed training methodologies, the Company’s business, financial condition, results of operations and reputation may be adversely affected. In addition, the use of Artificial Intelligence carries inherent risks related to data privacy and security, such as unintended or inadvertent transmission of proprietary or sensitive information, including personal data. There is uncertainty in the legal and regulatory landscape for Artificial Intelligence, which is not fully developed and rapidly evolving, and any laws, regulations or industry standards adopted in response to the emergence of Artificial Intelligence may be burdensome, could entail significant costs, and may restrict or impede the Company’s ability to successfully develop, adopt and deploy Artificial Intelligence technologies efficiently and effectively. Additionally, the Company’s competitors or other third parties may incorporate Artificial Intelligence into their products and services more quickly or more successfully, which could cause the Company to experience competitive disadvantages that adversely affect its results of operations.

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,Business – Asset Management, and Item 8,8. Financial Statements and Supplementary Data, Note 1,1. Business and Basis of Presentation.

The Corporate division primarily consists of the results of holding companies that have issued public equity or debt. The Other category in the segment tables below primarily includes the effect of consolidating FG VIEs and CIVs (FG VIE and CIV consolidation). See Item 8,8. Financial Statements and Supplementary Data, Note 2,2. Segment Information.

Real gross domestic product (GDP) increased 2.8%2.2% in 2024,2025, compared to an increase of 2.9%2.8% in 2023,2024, according to the secondadvance estimate released by the U.S. Bureau of Economic Analysis (BEA). Additionally, the BEA reported real GDP increased at an annual rate of 2.3%1.4% in the fourth quarter of 2024.2025. At the end of December 2024,2025, the U.S. unemployment rate, seasonally adjusted, stood at 4.1%,4.4%, higher than where it started the year at 3.8%.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 2024,2025, as measured by the Consumer Price Index for All Urban Consumers, was 2.9%,2.7%, as compared to 3.4%2.9% for the 12-month period ending December 2023.2024. 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 2024,2024. asGenerally, comparedinflation to 4.2% forreduces the 12real months through December 2023. The Company believes that higher inflation may put pressure on the budgetsvalue of money over time. For obligors whose obligationspayments the Company insures, inflation can mean that the real value of their fixed debt payments decreases, potentially making it guaranteesrelatively easier for obligors to service these fixed-rate debts and makeless defaultslikely for them to default. However, if inflation increases operating expenses and revenues or incomes do not keep pace, obligors may find it more likely.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. increasesaffects reported net par outstanding for certain U.K. exposures with approximately $23.2$24.5 billion of net par outstanding as of December 31, 2024,2025, and also increasesaffects projected future installment premiums on the portion of such exposure that pays at least a portion of the premium on an installment basis over the term of the exposure.

At its September 17-18, 2024 meeting, the Federal Open Market Committee (FOMC) decided to lower the federal funds rate, which was a reversal of the rate increases it had initiated in March 2022 to combat inflation. The federal funds rate is the rate at which banks lend to and borrow from each other, is the benchmark for most interest rates, and tends to influence mortgage rates. As the federal funds rate decreases, interest rates, including mortgage rates, tend to decrease. From September 2024 through December 2024,2025, the FOMC lowered the federal funds rate from a target range of 5.25% to 5.50% to a range of 4.25%3.50% to 4.50%.3.75%. AtMost recently, at its January 28-29, 20252026 meeting, the FOMC held the federal funds rate at a target range of 4.25%3.50% to 4.50%,3.75%, stating that it seeksis strongly committed to achievesupporting maximum employment and returning inflation atto the rate ofits 2% over the longer run, and that the risks to achieving its employment and inflation goals are roughly in balance.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.

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 U.S.municipal municipaland infrastructure bond transactions and may also decrease amounts the Company can earn on fixed-maturity securities newly acquired for its investment portfolio. Lower interest rates also are often accompanied by narrower credit spreads, which may also decrease the level of premiums the Company can charge for those products.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 3.68%4.30% for 2024, similar to the 3.65% rate in 2023 but2025, higher than the 3.00%3.68% average rate in 2024 and higher than the 3.65% average rate for 2022.2023. Meanwhile, the difference, or credit spread, between the 30-year BBB-ratedBBB rated general obligation relative to the 30-year AAA MMD averaged 9089 basis points (bps) in 2024,2025, which is narrower compared to the 90 bps average for 2024 and compared to the 101 bps average for 2023, but the same as the 90 bps average for 2022.2023. The Company believes that wider spreads could permit it to increase its premium rates on new business.

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) assetloss management,mitigation; (iii) enhancement of investment returns through alternative investments; and (iv) capital management.

The Company seeks to grow theits core financial guaranty insurance business through new business production in established sectors and jurisdictions and by entering into new marketsmarkets, lines and classes of business. TheIn addition, the Company alsoseeks furthersto leverage its insurancecore strategycredit competencies by mitigating losses inexpanding its insuredbusiness portfolio.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.

GrowthFinancial ofGuaranty the InsuredInsurance Portfolio

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. ForIn example,the certaininfrastructure 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.

TheIn addition, the Company also considers opportunities to acquire financial guaranty portfolios, whether by acquiring financial guarantors that are no longer actively writing new business or their insured portfolios, generally through reinsurance or novations. These transactions enable the Company to improve its future earnings and deploy excess capital.

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. TheFor Companypublic willfinance also,credits, wherethe appropriate,Company’s participatesurveillance infunction litigationmonitors and proactively engages with the distressed credits to enforceoffer orassistance defend its rights. For example, the Company initiated a number of legal actionsaimed to enforceimprove itsoperations rightsand withfinancial respectperformance, including access to obligationsexternal of the Commonwealth of Puerto Ricoconsultants and variousother obligationsindustry of its related authorities and public corporations. In addition, the Company successfully defended claims brought by Lehman Brothers International (Europe) (in administration) (LBIE) and prevailed in its counterclaim against LBIE; following the exhaustion of LBIE’s appeals, the Company will recognize a gain in the first quarter of 2025 of approximately $103 million, which represents the full satisfaction of the judgment it was awarded and its claims for attorneys’ fees, expenses and interest in connection with this litigation. See, Item 8, Financial Statements and Supplementary Data, Note 17, Contingencies, Litigation, for additional information.experts.

The Company may also purchase attractivelyLoss pricedMitigation obligations, including BIG obligations, that it has insured and for which it had expected losses to be paid,Securities in order to mitigate the economic effect of insured losses (Loss Mitigation Securities).losses. The fair value of Loss Mitigation Securities as of December 31, 20242025 (excluding the value of the Company’s insurance) was $479$140 million.

In some instances, the terms of the Company’s policyfinancial 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 also enhance its alternative investment opportunities and the return on its investments. The Company has agreed to invest an aggregate amount of $1.5 billion in alternative investments, includingwhich includes $1 billion in Sound Point managed investments.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.

From 2013 through February 27,25, 2025,2026, the Company has repurchased 151157 million common shares for approximately $5.4$5.9 billion, representing approximately 78%81% of the total shares outstanding at the beginning of the repurchase program in 2013. On MayAugust 2,6, 20242025 and November 8,5, 2024,2025, the AGL Board of Directors (the Board) authorized the repurchase of an additional $300 million and $250$100 million, respectively, of the Company’s common shares. Under this and previous authorizations, asAs of February 27,25, 2025,2026, the remaining amount the Company was authorized to purchase was approximately $276$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 8,8. Financial Statements and Supplementary Data, Note 18,18. Shareholders’ Equity, for additional information about the Company’s repurchases of its common shares.

(1) Excludes commissions and excise taxes.commissions.

As of December 31, 2024,2025, the estimated accretive effect of the cumulative repurchases of common shares since the beginning of 2013 was approximately: $54.83$68.77 per share in shareholders’ equity attributable to AGL, $59.27$69.94 per share in adjusted operating shareholders’ equity,equity and $100.61$116.18 per share in adjusted book value.value (ABV).

In May 2024,Over the NYDFSlast approved,several years, the Company has received approval from its insurance regulators to redeem a portion of its insurance subsidiaries’ stock and AGMpay implemented,extraordinary the redemption of approximately $100 million of AGM’s shares of common stockdividends from AGMH.its Ininsurance connectionsubsidiaries. withMost the merger of AGM into AG, the MIA approved, andrecently, in the third quarter of 20242025, after receiving approval from the MIA, AG implemented,redeemed the redemption of approximately $300$250 million of AG’s shares ofits common stock from AGMH in exchange for cash of $167$213 million in cash and the$37 remaindermillion in alternative investments.

The primary drivers of volatility in the Company’s net income include: loss and loss adjustment expense (LAE),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, changes in the value of the Company’s alternative investments, the effects of any large transactions, settlements, commutations and loss mitigation strategies, among other factors. Changes in laws and regulations, among other factors, may also have a significant effect on reported net income or loss in a given reporting period.

(4) See “— Overview— Key Business Strategies –— Capital Management” above for information on common share repurchases.

Net income attributable to AGL in 20242025 was lowerhigher compared with 20232024 primarily due to the following:

•lowerforeign lossexchange andremeasurement LAE, which was a benefitgains of $26$96 million in 20242025, compared with a losslosses of $162$27 million in 2023,2024,

(i) significant changes in inflation, interest rates, the world’s credit markets or segments thereof, credit spreads, foreign exchange rates, tariff regimes or general economic conditions, including the possibility of a recession or stagflation; (ii) geopolitical risk, terrorism and political violence risk, including regional and global military conflicts, and strategic competition and trade confrontation; (iii) cybersecurity risk and the impacts of artificial intelligence, machine learning and other technological advances, including the possibility of malicious cyber attacks, dissemination of misinformation, and disruption of markets in which Assured Guaranty participates; (iv) the impact of a United States (U.S.) government shutdown and/or the possibility of payment defaults on the debt of the U.S. government or instruments issued, insured or guaranteed by related institutions, agencies or instrumentalities, and downgrades to their credit ratings; (v) developments in the world’s financial and capital markets, including stresses in banking institutions, and the possibility that increasing participation of unregulated financial institutions in these markets results in losses or lower valuations of assets, reduced liquidity and credit and/or contraction of these markets, that adversely affect repayment rates of insured obligors, Assured Guaranty’s insurance loss or recovery experience, or investments of Assured Guaranty; (vi) reduction in the amount or market rates of return of available insurance or reinsurance opportunities and/or the demand for Assured Guaranty’s insurance and reinsurance; (vii) the failure or ineffectiveness of Assured Guaranty’s risk mitigation strategies or activities, including distressed credit workouts, management of exposure limits, hedging activities, and the procurement of third partythird-party reinsurance for insured exposures; (viii) any rating agency action in relation to Assured Guaranty, and/or of any securities Assured Guaranty has issued, and/or of transactions that Assured Guaranty has insured, including requirements to maintain rating agency capital redundancy and to hold additional capital against certain insured exposures; (ix) the possibility that investments made by Assured Guaranty for its investment portfolio do not result in the benefits anticipated or subject Assured Guaranty to negative consequences; (ixx) the possibility that Assured Guaranty’s strategies or strategic transactions do not result in the benefits anticipated and/or subject Assured Guaranty to negative consequences; (xxi) the impact of the announcement of Assured Guaranty’s strategies on Assured Guaranty and the perception of Assured Guaranty by its investors, regulators, rating agencies, and employees; (xixii) risks related to the expansion into annuity reinsurance and the launching of Assured Life Reinsurance Ltd.; (xiixiii) the failure of Assured Guaranty to successfully integrate acquired businesses, including Assured Guaranty’s acquisition of Warwick Company (UK) Limited; (xiiixiv) loss of key personnel; (xivxv) the possibility that longevity, mortality, lapse, withdrawal or surrender experience in Assured Guaranty’s annuity reinsurance business is less favorable than the rates Assured Guaranty used in pricing its reinsurance agreements; (xvxvi) the inability to control the business, management or policies of entities in which Assured Guaranty holds a noncontrolling interest; (xvixvii) the impact of market volatility on the fair value of Assured Guaranty’s assets and liabilities subject to mark-to-market, including certain of its investments, contracts accounted for as derivatives, its committed capital securities, and its consolidated variable interest entities; (xviixviii) the possibility that budget or pension shortfalls, difficulties in obtaining additional financing, changes in applicable laws or regulations or other factors will result in credit losses or liquidity claims on obligations that Assured Guaranty insures or reinsures; (xviiixix) insured losses, including losses with respect to related legal proceedings, in excess of those expected by Assured Guaranty or the failure of Assured Guaranty to realize loss recoveries that are assumed in its expected loss estimates for insurance exposures; (xixxx) the possibility that underwriting insurance in new jurisdictions and/or covering new sectors, lines or classes of business does not result in the benefits anticipated or subjects Assured Guaranty to negative consequences; (xxxxi) increased competition, including from new market entrants and alternative forms of credit protection; (xxi) any rating agency action in relation to Assured Guaranty, and/or of any securities Assured Guaranty has issued, and/or of transactions that Assured Guaranty has insured, including rating agency requirements to hold additional capital against insured exposures; (xxii) the inability of Assured Guaranty to access capital on acceptable terms or have sufficient liquidity to cover unexpected stress; (xxiii) noncompliance with, and/or changes in, applicable laws or regulations, including insurance, bankruptcy and tax laws, tariffs, or other governmental actions; (xxiv) the possibility that legal or regulatory decisions or determinations subject Assured Guaranty or obligations that it insures or reinsures to negative consequences; (xxv) difficulties or delays with the execution of Assured Guaranty’s business strategy; (xxvi) changes in applicable accounting policies or practices; (xxvii) public health crises, including pandemics and endemics, and the governmental and private actions taken in response to such events; (xxviii) natural or man-made catastrophes; (xxix) the impact of climate change on Assured Guaranty’s business and regulatory actions taken related to such risk; (xxx) other risk factors identified in AGL’s filings with the U.S. Securities and Exchange Commission; (xxxi) other risks and uncertainties that have not been identified at this time; and (xxxii) management’s response to these factors.

The Company reports its results of operations in three distinct segments, Financial Guaranty, Annuity Reinsurance,Reinsurance 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 variable interest entities (FG VIEs) and consolidated investment vehicles (CIVs)) are presented separately.

In the Financial Guaranty segment (which, prior to the three-month period ended March 31, 2026 (first quarter 2026),2026, was called the Insurance segment), the Company provides credit protection products to the United States (U.S.) and non-U.S. public finance (including infrastructure) and structured finance markets. The Annuity Reinsurance segment comprises the results of Assured Life Reinsurance Ltd. (Assured Life Re) and other subsidiaries acquired in the acquisition of Assured Life Re. The Company participates in the asset management business through its ownership interest in Sound Point Capital Management, LP (Sound Point, LP) and certain of its investment management affiliates (together with Sound Point, LP, Sound Point). See Item 1. Financial Statements, Note 1. Business and Basis of Presentation.Presentation and Note 9. Investments.

Demand for the financial guaranties issued by the Company’s financial guaranty (FG) 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 FGfinancial 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.

Strength of the Economy Generally. Global tariffs have increased since the U.S. administration announced a “reciprocal tariff” strategy on April 2, 2025, with the announced objective of rectifying trade practices that contribute to large and persistent annual U.S. goods trade deficits. Since that time, there have been numerous changes to announced tariffs as well as legal actions relating to tariff policies, resulting in uncertainty as to the future levels of U.S. tariffs. For example, the U.S. Supreme Court held on February 20, 2026,2026 that the International Emergency Economic Powers Act (IEEPA) does not authorize the President of the U.S. to impose tariffs. However, following this decision, the U.S. administration hasimplemented indicated thatalternative tariffs foundeffective July 24, 2026, and tariff levels and related trade policies continue to be illegal by the U.S. Supreme Court will be replaced with alternative tariffs.evolve. Some U.S. trading partners have announced or imposed tariffs or other trading restrictions in response to U.S. actions. These actions by the U.S. and its trading partners have disrupted international trade and are negatively impacting the U.S. and global economies.

According to the first quarter 2026 advance estimate released by the U.S. Bureau of Economic Analysis, real gross domestic product (GDP) increased at an annual rate of 2.0%1.5% in firstthe three-month period ended June 30, 2026 (second quarter 2026,2026), compared to a real GDP increase of 0.5%2.1% in the fourthfirst quarter of 2025.2026. At the end of MarchJune 2026, the U.S. unemployment rate, seasonally adjusted, stood at 4.3%, slightly4.2%, lower than where it started the year at 4.4%.

The Company believes a more robust economy makes it less likely that obligors whose obligations it guarantees in its FGfinancial guaranty business will default, while a recession, if it were to occur, would make it more likely that obligors whose obligations it guarantees will default. However, a recession may also cause credit spreads to widen as investors seek security, which tends to create new business opportunities for the Company in its financial guaranty business.

Inflation. 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 MarchJune 2026, as measured by the Consumer Price Index for All Urban Consumers, was 3.3%,3.5%, as compared to 2.4%2.7% for the 12-month period ending MarchJune 2025. According to the United Kingdom (U.K.) Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs rose 3.4%2.8% for the 12 months through MarchJune 2026, thelower same asthan for the 12 months through MarchJune 2025. Recent increases in oil prices associated with geopolitical developments in the Middle East have contributed to market concerns regarding future inflation, particularly in economies that are more exposed to imported energy costs, including the U.K.

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 the Company’s reported net par outstanding for certain U.K. exposures with $24.0 billion of net par outstanding as of MarchJune 31,30, 2026, 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.

The Company’s U.K. bulk purchase annuity (pension risk transfer,transfers, PRT) reinsurance business is also subject to U.K. inflation, as the annuity payments under such transactions are typically adjusted for changes in U.K. consumer price or retail price indices, meaning that the projected benefit obligations the Company reinsures increase in an inflationary environment, which in turn can increase the Company’s benefit payments under those reinsurance contracts. The Company holds inflation-linked assets, including index-linked gilts and inflation swaps, to mitigate this inflation exposure.

Interest Rates. The federal funds rate is the rate at which U.S. banks lend to and borrow from each other, is the benchmark for most U.S. interest rates, and tends to influence U.S. mortgage rates. As the federal funds rate decreases, interest rates, including mortgage rates, tend to decrease. From September 2024 through December 2025, the Federal Open Market Committee (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 AprilJuly 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.

From 2024, the Bank of England’s Monetary Policy Committee (MPC) took actions similar to those of the FOMC to spur economic growth. As inflationary pressures eased and the U.K. economy showed signs of stagnation or mild recession, the MPC kept the Bank of England base rate (Bank Rate) unchanged for most of 2024, 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. As of AprilJuly 30, 2026, the Bank Rate stood at 3.75%, down from a high of 5.25% in mid-2024. Recent increases in oil prices may contribute to higher inflation expectations, which could influence future Bank of England policy decisions and place upward pressure on U.K. gilt yields, as longer-term rates reflect, among other factors, market expectations regarding future short-term rates and the term premium investors require to hold longer-dated securities.

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 its FGfinancial guaranty transactions.

Credit Spreads. 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%4.33% for thesecond quarter ended2026, March 2026,slightly higher thanto the 4.18% average rate for the quarter ended December 2025 and higher than the 4.04%4.30% average rate for the quarter ended March 2026 and lower than the 4.47% average rate for the quarter ended June 2025. Meanwhile, the difference, or credit spread, between the 30-year BBB rated general obligation relative to the 30-year AAA MMD averaged 8483.7 basis points (bps) for thesecond quarter ended March 2026, which is slightly narrower compared to the 88 bps average for the quarter ended December 2025 and narrower compared to the 9084.3 bps average for the quarter ended March 2026 and narrower compared to the 90.0 bps average for the quarter ended June 2025. The Company believes that wider spreads could permit it to increase its premium rates on new business.

U.S. Residential Mortgage Rates. According to Freddie Mac, the 30-year fixed-rate mortgage rate averaged 6.38%6.49% for the week ending MarchJune 26,25, 2026, lower than the 30-year mortgage rate average of 6.65%6.77% from one year ago. The National Association of Realtors reported that there was a 3.6%2.8% decreaseincrease in year-over-year existing-home sales from MarchJune 2025 to MarchJune 2026, and that the median existing-home sales price increased 1.4%1.8% from MarchJune 2025 ($403,100$432,700) to MarchJune 2026 ($408,800$440,600). Higher housing prices may benefit the distressed residential mortgage-backed securities (RMBS) that the Company insures.

Foreign Exchange Rates. For thesecond quarter ended March 31, 2026, the exchange rates between the pound sterling and the U.S. dollar and between the euro and the U.S. dollar traded inwithin arelatively tightnarrow range,ranges bothand finishingfinished the quarter nearat levels generally consistent with where they started.began.

The Company is subject to foreign exchange risk in several areas of its business. First, with respect to the financial guaranty business, the Company guarantees non-U.S. obligations denominated primarily in pound sterling and euros, and also invests in pound sterling and euro denominated investments. Second, PRT reinsurance liabilities are denominated in pound sterling, along with the assets (after hedging) supporting this business. The impact of fluctuations in the pound sterling/U.S. dollar exchange raterates on premiums receivable, financial guaranty loss reserves and PRT liabilities, along with any cross-currency derivatives, is reflected in the Company's consolidated statements of operations, while the impact of fluctuations in the pound sterling/U.S. dollar exchange raterates on the Company’s investments classified as available-for-sale is reported in other comprehensive income.

The Company seeks to grow its core FGfinancial 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 additional revenue streams, such as annuity reinsurance and asset management, with the objective of diversifying its revenue streams and growing its net income.

FGFinancial Guaranty Insurance Portfolio

The Company seeks to grow its FG 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 the Commonwealth of Puerto Rico (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 that demand for its insurance in this market will continue 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 FGfinancial 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,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.

The Company seeks to expand its FGfinancial 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.

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 FGfinancial guaranty business.

The Company also, from time to time and where appropriate, participates in litigation to enforce or defend its rights in its financial guaranty business. For example, the Company initiated a number of legal actions to enforce its rights with respect to obligations 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 1. Financial Statements, Note 8. Derivatives, for additional information.

The Company may also purchase attractively priced obligations, including below-investment-grade (BIG) obligations, that it has insured and for which it had expected losses to be paid, in order to mitigate the economic effect of insured losses (Loss Mitigation Securities). The fair value of Loss Mitigation Securities as of MarchJune 31,30, 2026 (excluding the value of the Company’s insurance) was $135$151 million.

The Company’s capital management strategy is designed to efficiently allocate and utilize capital across the Assured Guaranty group in order to optimizeenhance 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, annuity reinsurance and asset management 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.

Since the launch of its share repurchase program in 2013, the Company has returned $6.0 billion of excess capital to its shareholders by repurchasing 81% of its common shares outstanding at the beginning of the program.

As of May 6,August  5, 2026, the Company was authorized to repurchase an additional $147$121 million of its common shares.

As part of its overall capital management strategy, the Company regularly evaluates the level of its share repurchase program on a quarter-to-quarterquarterly basis,basis including alternativeplanned uses of available capital.capital, Thewhich Companymay currently plans to reduce its share repurchases to a target of $30 million of its common shares over the next three months in order to use a portion of its available capital to supportinclude growth opportunities in its financial guaranty insurance and annuity reinsurance businesses, inmaintaining additiona capital cushion to othersupport strategicits considerations.existing business and share repurchases.

As of MarchJune 31,30, 2026, the estimated accretive effect of the cumulative repurchases of common shares since the beginning of 2013 was approximately: $68.14$69.85 per share in shareholders’ equity attributable to AGL, $71.47$72.75 per share in adjusted operating shareholders’ equity and $118.28$119.45 per share in adjusted book value (ABV).

FirstSecond Quarter 2026 Compared with FirstSecond Quarter 2025

Net income attributable to AGL for firstsecond quarter 2026 was lower compared with firstthe three-month period ended June 30, 2025 (second quarter 2025) primarily due to the following:

•foreign exchange losses on remeasurement of $19$2 million in firstsecond quarter 2026, compared with gains of $37$79 million in firstsecond quarter 2025, and

•lower equity in earnings of investees in firstsecond quarter 2026, primarily due to losses generated by the Company’s investment in a collateralized loan obligation (CLO) fund.

•a lower loss and LAE in firstsecond quarter 2026 of $17$4 million,million compared with a loss and LAE of $40$28 million in firstsecond quarter 2025.

Adjusted operating income in firstsix quartermonths 2026 was $115$170 million, compared with $162$212 million in firstsix quartermonths 2025. The decrease was primarily due to a $103 million gain related to the resolution of the LBIE litigation in firstsix quartermonths 2025 and2025, a decrease of $22$36 million ofin equity in earnings of investees in firstsix quartermonths 2026,2026 primarily due to losses generated by the Company’s investment in a CLO equity fund, and lower other income due to $15 million recognized in six months 2025 associated with the workout and purchase of bonds issued by a U.K. regulated utility to which the Company has insured exposure and interest received on late financial guaranty premiums. These decreases were offset in part by a $51 million decrease in loss expense in the public finance sector, a $33 million discrete tax benefit resulting from the enactment of the U.K. Finance Act 2026, and a $25$21 million increase in performance fees, net of related expenses, due to the impact of the payout of carried interest from the sale of the underlying asset in a single-asset fund in firstsix quarter 2026 and a $23 million decrease in loss expense in the public finance sector in first quartermonths 2026. See “— Results of Operations — Reconciliation to GAAP” for the reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).

Shareholders’ equity attributable to AGL as of MarchJune 31,30, 2026 decreased compared with December 31, 2025, primarily due to unrealized losses on the investment portfolio, share repurchases and dividends, partially offset by net income. Adjusted operating shareholders’ equity increaseddecreased primarily due to adjustedshare operatingrepurchases income,and dividends, partially offset by shareadjusted repurchasesoperating and dividends.income. ABV decreased primarily due to share repurchases, dividends and loss development, partially offset by adjusted operating income, GWP and the accretive effect of Assured Life Re Acquisition. 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 AGLAGL, decreased primarily due to unrealized losses on the investment portfolio. Adjustedadjusted operating shareholders’ equity and ABV increased as of MarchJune 31,30, 2026 compared with December 31, 2025, due, in part, to the accretive effect of the share repurchase program and Assured Life Re Acquisition. See “— Non-GAAP Financial Measures” for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders’ equity and ABV.

The most recent events around the Strait of Hormuz have caused oil prices to rise, which the Company believes has increasedcontributed upwardto pressuremarket onconcerns interestregarding rates andfuture inflation, especiallyparticularly in economies that are more exposed to imported energy costs, including the U.K. For information on the impact on the Company of any future increases in interest rates and inflation, see “ — Overview — Economic Environment — Inflation" and " — Interest Rates.”

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 $196$191 million in net par outstanding as of MarchJune 31,30, 2026, consisting of the sovereign debt of Poland. The Company rates this exposure investment grade.