PART I Financial Information [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Q1 2025 net income surged to $176 million, driven by fair value gains and FX, with total assets at $11.94 billion and positive operating cash flow Condensed Consolidated Balance Sheet Highlights (As of March 31, 2025 vs. December 31, 2024) | Metric | March 31, 2025 ($M) | December 31, 2024 ($M) | | :--- | :--- | :--- | | **Total Investments** | 8,670 | 8,663 | | **Total Assets** | 11,938 | 11,901 | | **Total Liabilities** | 6,281 | 6,348 | | **Total Shareholders' Equity** | 5,657 | 5,553 | Condensed Consolidated Statement of Operations Highlights (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | **Total Revenues** | 345 | 245 | | Net Earned Premiums | 91 | 119 | | Fair Value Gains on Credit Derivatives | 104 | 10 | | Foreign Exchange Gains (Losses) | 37 | (12) | | **Total Expenses** | 169 | 125 | | Loss and Loss Adjustment Expenses | 40 | (1) | | **Net Income Attributable to AGL** | 176 | 109 | | **Diluted EPS** | $3.44 | $1.89 | Condensed Consolidated Cash Flow Summary (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | 87 | (74) | | **Net Cash from Investing Activities** | 134 | 253 | | **Net Cash from Financing Activities** | (170) | (327) | | Repurchases of Common Shares | (120) | (129) | | Dividends Paid | (19) | (19) | - During Q1 2025, the company repurchased **1.34 million** common shares for **$120 million** and paid dividends of **$18 million** (**$0.34 per share**)[20](index=20&type=chunk) [Business and Basis of Presentation](index=11&type=section&id=1.%20Business%20and%20Basis%20of%20Presentation) Assured Guaranty operates in Insurance and Asset Management, providing credit protection and managing investments through Sound Point - The company provides credit protection products to public finance (including infrastructure) and structured finance markets in the U.S. and internationally through its insurance subsidiaries[31](index=31&type=chunk)[32](index=32&type=chunk) - The company participates in the asset management business via its **~30% ownership** in Sound Point and has committed to invest **$1 billion** in Sound Point managed funds and vehicles[33](index=33&type=chunk)[34](index=34&type=chunk) [Segment Information](index=12&type=section&id=2.%20Segment%20Information) Q1 2025 saw Insurance segment adjusted operating income rise to $168 million and Asset Management to $12 million, with reduced corporate losses Segment Adjusted Operating Income (Loss) (Q1 2025 vs. Q1 2024) | Segment | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | **Insurance** | 168 | 149 | | **Asset Management** | 12 | 1 | | **Corporate Division** | (20) | (37) | | **Other** | 2 | 0 | | **Total Adjusted Operating Income** | 180 | 150 | - The Chief Operating Decision Maker (CODM) primarily uses adjusted operating income to assess performance and allocate resources for each segment[43](index=43&type=chunk)[44](index=44&type=chunk) [Outstanding Exposure](index=16&type=section&id=3.%20Outstanding%20Exposure) Net par outstanding increased to $263.6 billion, with 96.4% investment grade and below-investment-grade exposure decreasing to $9.5 billion Financial Guaranty Portfolio - Net Par Outstanding | Category | March 31, 2025 ($M) | Dec 31, 2024 ($M) | | :--- | :--- | :--- | | Public Finance | 252,531 | 250,375 | | Structured Finance | 11,060 | 11,177 | | **Total Net Par** | **263,591** | **261,552** | - The portfolio is heavily weighted towards investment-grade credits, with **96.4%** of net par outstanding rated BBB or higher as of March 31, 2025[81](index=81&type=chunk) Components of BIG Net Par Outstanding | Category | March 31, 2025 ($M) | Dec 31, 2024 ($M) | | :--- | :--- | :--- | | BIG 1 | 7,079 | 8,102 | | BIG 2 | 1,099 | 706 | | BIG 3 | 1,364 | 1,374 | | **Total BIG** | **9,542** | **10,182** | [Expected Loss to be Paid (Recovered)](index=22&type=section&id=4.%20Expected%20Loss%20to%20be%20Paid%20(Recovered)) Net expected loss to be paid increased to $150 million, driven by public finance losses but offset by structured finance recoveries from LBIE litigation Net Expected Loss to be Paid (Recovered) Roll Forward - Q1 2025 | (in millions) | Amount | | :--- | :--- | | **Beginning Balance (Dec 31, 2024)** | **$106** | | Total Economic Loss Development (Benefit) | ($15) | | Net (Paid) Recovered Losses | $59 | | **Ending Balance (Mar 31, 2025)** | **$150** | - Economic loss development for public finance in Q1 2025 was primarily due to higher expected losses for Puerto Rico Electric Power Authority (PREPA) and U.K. regulated utilities exposures[120](index=120&type=chunk) - The economic benefit in structured finance was mainly driven by recoveries from the resolution of the LBIE litigation[116](index=116&type=chunk) - As of March 31, 2025, the company's only unresolved defaulting Puerto Rico exposure was PREPA, with net par outstanding of **$532 million**[124](index=124&type=chunk) [Contracts Accounted for as Insurance](index=32&type=section&id=5.%20Contracts%20Accounted%20for%20as%20Insurance) Net earned premiums decreased to $91 million in Q1 2025 due to fewer accelerations, while loss and LAE expense rose to $40 million Net Earned Premiums (Q1 2025 vs. Q1 2024) | Category | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | Scheduled Net Earned Premiums | 76 | 71 | | Accelerations from Refundings | 5 | 39 | | Accretion of Discount | 9 | 7 | | Specialty Net Earned Premiums | 1 | 2 | | **Total Net Earned Premiums** | **91** | **119** | Loss and LAE (Benefit) by Sector (Q1 2025 vs. Q1 2024) | Sector | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | Public Finance | 42 | (2) | | Structured Finance | (2) | 1 | | **Total Loss and LAE (Benefit)** | **40** | **(1)** | [Contracts Accounted for as Credit Derivatives](index=38&type=section&id=6.%20Contracts%20Accounted%20for%20as%20Credit%20Derivatives) Credit derivative net par was $3.76 billion, with Q1 2025 fair value gains of $104 million driven by a $103 million LBIE litigation resolution gain - In Q1 2025, the company recognized a realized gain of **$103 million** from the full satisfaction of the judgment in the LBIE litigation[204](index=204&type=chunk) Fair Value Gains (Losses) on Credit Derivatives (Q1 2025 vs. Q1 2024) | Category | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | Realized Gains (Losses) & Settlements | 105 | (1) | | Net Unrealized Gains (Losses) | (1) | 11 | | **Total Fair Value Gains (Losses)** | **104** | **10** | [Investments](index=40&type=section&id=7.%20Investments) The investment portfolio remained stable at $8.67 billion, generating $87 million in net investment income and $53 million in equity earnings from investees Investment Portfolio Carrying Value | Category | March 31, 2025 ($M) | Dec 31, 2024 ($M) | | :--- | :--- | :--- | | Fixed-maturity securities, available-for-sale | 6,415 | 6,369 | | Fixed-maturity securities, trading | 137 | 147 | | Short-term investments | 1,158 | 1,221 | | Other invested assets | 960 | 926 | | **Total** | **8,670** | **8,663** | Income from Investments (Q1 2025 vs. Q1 2024) | Category | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | Net Investment Income | 87 | 84 | | Equity in Earnings of Investees | 53 | 24 | | Fair Value Gains on Trading Securities | 1 | 26 | - As of March 31, 2025, the company had **$608 million** in unfunded commitments to alternative investments as part of its **$1.5 billion** total commitment[214](index=214&type=chunk) [Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles](index=45&type=section&id=8.%20Financial%20Guaranty%20Variable%20Interest%20Entities%20and%20Consolidated%20Investment%20Vehicles) The company consolidates 23 structured finance FG VIEs and one CIV, with their assets held separately and not available to general creditors - The company consolidates **23** structured finance FG VIEs, all of which are RMBS, for which it has elected the fair value option for all assets and liabilities[251](index=251&type=chunk) - As of March 31, 2025, one CIV was consolidated with assets of **$119 million**, consisting of investments with Sound Point affiliated entities[259](index=259&type=chunk) - The assets of consolidated FG VIEs and CIVs are held in separate legal entities and are not available to creditors of Assured Guaranty, and vice versa[248](index=248&type=chunk)[258](index=258&type=chunk) [Fair Value Measurement](index=48&type=section&id=9.%20Fair%20Value%20Measurement) As of March 31, 2025, $8.11 billion in assets and $197 million in liabilities were at fair value, with $1.42 billion of assets and all liabilities classified as Level 3 Fair Value Hierarchy (As of March 31, 2025) | (in millions) | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **Assets at Fair Value** | $1,222 | $5,467 | $1,421 | $8,110 | | **Liabilities at Fair Value** | $0 | $0 | $197 | $197 | - Level 3 assets are primarily composed of fixed-maturity securities (**$1,142M**), FG VIEs' assets (**$145M**), and assets of CIVs (**$118M**)[296](index=296&type=chunk) - Level 3 liabilities consist of FG VIEs' liabilities (**$163M**) and other liabilities including credit derivatives (**$34M**)[296](index=296&type=chunk) [Income Taxes](index=59&type=section&id=10.%20Income%20Taxes) The Q1 2025 effective tax rate was 18.9%, influenced by jurisdictional income distribution and the OECD Pillar Two minimum tax rule - The effective tax rate was **18.9%** for Q1 2025, compared to **21.4%** for Q1 2024[327](index=327&type=chunk) - The company is subject to the OECD Pillar Two income inclusion rule, requiring a minimum effective tax rate of **15%** in all jurisdictions of operation[323](index=323&type=chunk) - Bermuda enacted a **15%** corporate income tax effective for accounting periods starting on or after January 1, 2025[324](index=324&type=chunk) [Contingencies](index=60&type=section&id=11.%20Contingencies) The company is involved in ordinary course legal proceedings, including PREPA litigation, with no expected material adverse financial impact - Management believes the outcome of current litigation will not have a material adverse effect on the company's financial position[329](index=329&type=chunk) - The company is actively involved in legal actions concerning its insured exposure to PREPA in Puerto Rico[330](index=330&type=chunk) [Shareholders' Equity](index=61&type=section&id=12.%20Shareholders'%20Equity) The company repurchased 1.34 million shares for $120 million in Q1 2025, with $181 million remaining under authorization as of May 8, 2025 Share Repurchases | Period | Number of Shares | Total Payments ($M) | Average Price Paid | | :--- | :--- | :--- | :--- | | **Q1 2025** | 1,335,228 | 120 | $89.72 | | **Apr 1 - May 8, 2025** | 603,103 | 51 | $84.43 | - As of May 8, 2025, the remaining share repurchase authorization was approximately **$181 million**[338](index=338&type=chunk) [Earnings Per Share](index=63&type=section&id=13.%20Earnings%20Per%20Share) Basic EPS for Q1 2025 increased significantly to $3.49, with diluted EPS at $3.44, driven by higher net income Earnings Per Share (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Basic EPS** | $3.49 | $1.94 | | **Diluted EPS** | $3.44 | $1.89 | | Diluted Shares (millions) | 50.7 | 57.1 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=64&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 performance drivers and outlines key strategies for insurance, asset management, and capital management - Net income attributable to AGL for Q1 2025 was **$176 million**, up from **$109 million** in Q1 2024[401](index=401&type=chunk) - The increase in net income was primarily driven by a **$103 million** gain on credit derivatives from the LBIE litigation resolution and **$37 million** in foreign exchange gains[402](index=402&type=chunk)[380](index=380&type=chunk) - Key business strategies are focused on four areas: insurance growth, asset management, alternative investments, and capital management[365](index=365&type=chunk) - Management notes that new U.S. tariff strategies have heightened volatility and raised the risk of recession, which could increase defaults in the insured portfolio but also create new business opportunities from wider credit spreads[357](index=357&type=chunk) [Overview](index=65&type=section&id=Overview) The overview details segment operations, performance drivers, and strategic focus areas including insurance, asset management, and capital management - The company's key business strategies are centered on four areas: (i) insurance; (ii) asset management, (iii) alternative investments; and (iv) capital management[365](index=365&type=chunk) - Management notes that a new U.S. "reciprocal tariff" strategy announced in April 2025 has heightened market volatility and recession risk, which may increase defaults among insured obligors but could also widen credit spreads, creating new business opportunities[357](index=357&type=chunk) - The company has repurchased approximately **78%** of its shares outstanding since the program began in 2013, for a total of **$5.5 billion** through May 8, 2025[387](index=387&type=chunk) Key Financial Metrics (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net Income (attributable to AGL)** | $176M | $109M | | **Adjusted Operating Income** | $162M | $113M | | **Gross Written Premiums (GWP)** | $35M | $61M | | **PVP** | $39M | $63M | [Results of Operations](index=76&type=section&id=Results%20of%20Operations) Q1 2025 net income rose to $176 million, driven by credit derivative gains and FX, partially offset by higher loss expenses and lower earned premiums - The primary drivers of increased net income were a **$104M** fair value gain on credit derivatives and a **$37M** foreign exchange gain, partially offset by a **$40M** loss expense[401](index=401&type=chunk)[402](index=402&type=chunk) - Insurance segment adjusted operating income increased to **$168 million** in Q1 2025 from **$149 million** in Q1 2024, driven by credit derivative revenues from the LBIE litigation resolution[423](index=423&type=chunk)[431](index=431&type=chunk) - Asset Management segment adjusted operating income grew to **$12 million** in Q1 2025 from **$1 million** in Q1 2024, primarily due to higher equity in earnings from Sound Point[476](index=476&type=chunk) Reconciliation of Net Income to Adjusted Operating Income (Q1 2025) | (in millions) | Amount | | :--- | :--- | | **Net Income Attributable to AGL** | **$176** | | Less: Realized (gains) losses on investments | ($16) | | Less: Non-credit unrealized gains on credit derivatives | ($2) | | Less: Fair value gains on CCS | $2 | | Less: Foreign exchange gains on remeasurement | $33 | | Less: Tax effect on adjustments | ($3) | | **Adjusted Operating Income** | **$162** | [Insured Portfolio](index=94&type=section&id=Insured%20Portfolio) The insured portfolio's net par outstanding reached $263.6 billion, predominantly public finance, with $637 million exposure to Puerto Rico Net Par Outstanding by Sector (As of March 31, 2025) | Sector | Net Par ($M) | | :--- | :--- | | **Total Public Finance** | **252,531** | | U.S. Public Finance | 202,417 | | Non-U.S. Public Finance | 50,114 | | **Total Structured Finance** | **11,060** | | **Total Net Par Outstanding** | **263,591** | - Total insured net par exposure to Puerto Rico was **$637 million** as of March 31, 2025[534](index=534&type=chunk) - The only remaining unresolved defaulting Puerto Rico exposure is PREPA, with **$532 million** in net par outstanding[535](index=535&type=chunk) [Liquidity and Capital Resources](index=96&type=section&id=Liquidity%20and%20Capital%20Resources) Holding company liquidity relies on subsidiary distributions, with Q1 2025 operating cash flow at $87 million, supported by an $8.67 billion investment portfolio - The liquidity of AGL and its U.S. Holding Companies is largely dependent on dividends and other distributions from their operating subsidiaries[540](index=540&type=chunk) - For 2025, the maximum amount available for AG to distribute as ordinary dividends is approximately **$287 million**, while AG Re has the capacity to pay dividends of approximately **$222 million**[569](index=569&type=chunk)[570](index=570&type=chunk) - The total investment portfolio carrying value was **$8.67 billion** as of March 31, 2025[578](index=578&type=chunk) - Net cash flow from operating activities was an inflow of **$87 million** in Q1 2025, compared to an outflow of **$74 million** in Q1 2024, primarily due to the **$97 million** receipt from the LBIE litigation resolution[600](index=600&type=chunk)[603](index=603&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=107&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to the company's market risk exposures have occurred since December 31, 2024 - There were no material changes to the company's market risk exposures since December 31, 2024[608](index=608&type=chunk) [Controls and Procedures](index=107&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2025, with no material changes to internal controls - The President and Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[610](index=610&type=chunk) - No changes in internal control over financial reporting occurred during Q1 2025 that have materially affected, or are reasonably likely to materially affect, the company's internal controls[611](index=611&type=chunk) PART II Other Information [Legal Proceedings](index=108&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings, including those related to Puerto Rico, as detailed in financial statement notes - The company is subject to legal proceedings and claims, with further details provided in Notes 4 and 11 of the financial statements, particularly concerning Puerto Rico[612](index=612&type=chunk) [Risk Factors](index=108&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K have occurred - No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K have occurred[613](index=613&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=108&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 1.34 million shares for $120 million in Q1 2025, with $181 million remaining for future repurchases Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | Jan 2025 | 427,425 | $91.02 | 427,425 | | Feb 2025 | 741,194 | $91.35 | 428,486 | | Mar 2025 | 479,444 | $86.44 | 479,317 | | **Total** | **1,648,063** | **$89.83** | **1,335,228** | - As of May 8, 2025, the remaining authorization for share repurchases was approximately **$181 million**[617](index=617&type=chunk) [Other Matters](index=108&type=section&id=Item%205.%20Other%20Matters) No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading plan during Q1 2025[616](index=616&type=chunk) [Exhibits](index=109&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including certifications, subsidiary lists, and Inline XBRL financial data - The exhibits filed with the report include CEO and CFO certifications (Sections 302 and 906), a list of subsidiaries, and financial statements in Inline XBRL format[618](index=618&type=chunk)

Group 1 - Assured Guaranty reported quarterly earnings of $3.18 per share, exceeding the Zacks Consensus Estimate of $3.15 per share, and showing a significant increase from $1.96 per share a year ago, representing an earnings surprise of 0.95% [1] - The company posted revenues of $239 million for the quarter ended March 2025, which was 17.59% below the Zacks Consensus Estimate, but an increase from $229 million in the same quarter last year [2] - Assured Guaranty shares have declined approximately 2.6% since the beginning of the year, while the S&P 500 has decreased by 4.3% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $1.58 on revenues of $186.4 million, and for the current fiscal year, it is $8.15 on revenues of $847.1 million [7] - The Zacks Industry Rank for Insurance - Multi line is in the top 30% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] - Assured Guaranty has a Zacks Rank of 3 (Hold), suggesting that the stock is expected to perform in line with the market in the near future [6]

[Selected Financial Highlights](index=3&type=section&id=Selected%20Financial%20Highlights) Q1 2025 financial and operating performance, including GAAP and non-GAAP profitability and balance sheet highlights, are presented [Financial and Operating Performance](index=3&type=section&id=Financial%20and%20Operating%20Performance) For the first quarter of 2025, Assured Guaranty reported significant year-over-year growth in profitability, with GAAP net income rising to $176 million ($3.44 per diluted share) from $109 million ($1.89 per diluted share). Non-GAAP adjusted operating income also increased to $162 million from $113 million. Key balance sheet metrics like shareholders' equity per share and adjusted book value (ABV) per share saw modest growth from year-end 2024. However, new business production, measured by Gross Written Premiums (GWP) and Present Value of New Business Production (PVP), declined compared to the prior-year quarter Q1 2025 vs Q1 2024 GAAP Highlights | GAAP Highlight | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income attributable to AGL | $176 million | $109 million | | Net income per diluted share | $3.44 | $1.89 | | GAAP return on equity (ROE) | 12.7% | 7.7% | Q1 2025 vs Q1 2024 Non-GAAP Highlights | Non-GAAP Highlight | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Adjusted operating income | $162 million | $113 million | | Adjusted operating income per diluted share | $3.18 | $1.96 | | Adjusted operating ROE | 11.2% | 7.6% | Key Balance Sheet and Exposure Metrics | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Shareholders' equity per share | $112.80 | $108.80 | | Adjusted book value (ABV) per share | $172.79 | $170.12 | | Financial guaranty net par outstanding | $263.6 billion | $261.6 billion | | Claims-paying resources | $10.3 billion | $10.2 billion | - Gross written premiums (GWP) decreased to **$35 million** in Q1 2025 from **$61 million** in Q1 2024, and the Present Value of New Business Production (PVP) also declined to **$39 million** from **$63 million** over the same period[6](index=6&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The company's condensed consolidated statements of operations and balance sheets for Q1 2025 and year-end 2024 are provided [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenues for Q1 2025 increased to $345 million from $245 million year-over-year, primarily driven by a significant increase in fair value gains on credit derivatives ($104 million vs. $10 million) and a positive swing in foreign exchange gains. This revenue growth, despite a decrease in net earned premiums, led to a higher net income attributable to AGL of $176 million, up from $109 million in Q1 2024 Condensed Consolidated Statements of Operations (unaudited) | (in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net earned premiums | $91 | $119 | | Net investment income | $87 | $84 | | Fair value gains on credit derivatives | $104 | $10 | | **Total revenues** | **$345** | **$245** | | Loss and LAE (benefit) | $40 | $(1) | | **Total expenses** | **$169** | **$125** | | **Net income attributable to AGL** | **$176** | **$109** | | **Diluted EPS** | **$3.44** | **$1.89** | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, Assured Guaranty's balance sheet remained stable compared to year-end 2024. Total assets were $11.94 billion, with total investments at $8.67 billion. Total shareholders' equity attributable to AGL increased slightly to $5.59 billion from $5.50 billion at the end of 2024, primarily due to retained earnings growth Condensed Consolidated Balance Sheets (unaudited) | (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total investments | $8,670 | $8,663 | | **Total assets** | **$11,938** | **$11,901** | | Unearned premium reserve | $3,671 | $3,719 | | Long-term debt | $1,700 | $1,699 | | **Total liabilities** | **$6,281** | **$6,348** | | **Total shareholders' equity attributable to AGL** | **$5,590** | **$5,495** | [GAAP to Non-GAAP Reconciliations](index=7&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) Reconciliations of GAAP financial measures to non-GAAP adjusted operating income and adjusted book value (ABV) are detailed [Adjusted Operating Income Reconciliation](index=7&type=section&id=Adjusted%20Operating%20Income%20Reconciliation) Adjusted operating income for Q1 2025 was $162 million, derived from a GAAP net income of $176 million. The primary adjustments included adding back $16 million in realized investment losses and subtracting $33 million in foreign exchange gains on remeasurement of reserves Reconciliation of Net Income to Adjusted Operating Income (Q1 2025) | (in millions) | Amount | | :--- | :--- | | Net income attributable to AGL | $176 | | Less: Realized gains on investments | $(16) | | Less: Non-credit unrealized fair value gains on credit derivatives | $(2) | | Less: Fair value gains on CCS | $2 | | Less: Foreign exchange gains on remeasurement | $33 | | Less: Tax effect on adjustments | $(3) | | **Adjusted operating income** | **$162** | [Adjusted Book Value (ABV) Reconciliation](index=9&type=section&id=Adjusted%20Book%20Value%20(ABV)%20Reconciliation) As of March 31, 2025, Adjusted Book Value (ABV) was $8.56 billion, or $172.79 per share. This is reconciled from GAAP shareholders' equity of $5.59 billion by adjusting for unrealized gains/losses on investments and derivatives, and adding back the value of the in-force book of business, specifically the net deferred premium revenue in excess of expected losses ($3.42 billion) Reconciliation of Shareholders' Equity to ABV (March 31, 2025) | (in millions) | Amount | | :--- | :--- | | Shareholders' equity attributable to AGL | $5,590 | | Adjustments for unrealized gains/losses (net of tax) | $228 | | **Adjusted operating shareholders' equity** | **$5,818** | | Less: Deferred acquisition costs | $181 | | Plus: Net present value of estimated net future revenue | $199 | | Plus: Net deferred premium revenue in excess of expected loss | $3,415 | | Plus: Taxes on adjustments | $(689) | | **Adjusted Book Value (ABV)** | **$8,562** | [Income Components](index=10&type=section&id=Income%20Components) Income is broken down by segment, highlighting contributions from Insurance, Asset Management, and Corporate divisions [Income Components by Segment](index=10&type=section&id=Income%20Components%20by%20Segment) The breakdown of income for Q1 2025 shows the Insurance segment as the primary profit driver, contributing $168 million to adjusted operating income. The Asset Management segment generated $12 million, while the Corporate division recorded a loss of $20 million. The Insurance segment's revenue of $239 million was primarily from net earned premiums and net investment income Components of Income for Q1 2025 (in millions) | Segment | Total Revenues | Total Expenses | Equity in Earnings | Adjusted Operating Income (pre-tax) | | :--- | :--- | :--- | :--- | :--- | | Insurance | $239 | $64 | $30 | $205 | | Asset Management | $6 | $4 | $13 | $15 | | Corporate | $4 | $40 | $16 | $(20) | [Investment Portfolio](index=12&type=section&id=Investment%20Portfolio) The investment portfolio, including fixed-maturity securities, cash, and alternative investments by asset type and rating, is presented [Fixed-Maturity Securities, Short-Term Investments and Cash](index=12&type=section&id=Fixed-Maturity%20Securities,%20Short-Term%20Investments%20and%20Cash) As of March 31, 2025, the company's available-for-sale fixed-maturity securities portfolio had a fair value of $6.42 billion. The portfolio is predominantly high-quality, with 86.0% rated A or higher (including U.S. government securities). The largest allocations are to corporate securities (38.6%) and obligations of states and political subdivisions (29.9%). The portfolio's duration was 3.8 years Fixed-Maturity AFS Portfolio Composition (March 31, 2025) | Asset Type | Fair Value (millions) | % of Portfolio | | :--- | :--- | :--- | | Corporate securities | $2,477 | 38.6% | | Obligations of states and political subdivisions | $1,924 | 29.9% | | RMBS | $569 | 8.9% | | CLOs | $542 | 8.4% | | Other | $903 | 14.2% | | **Total** | **$6,415** | **100.0%** | Fixed-Maturity AFS Portfolio by Rating (March 31, 2025) | Rating | Fair Value (millions) | % of Portfolio | | :--- | :--- | :--- | | U.S. government and agencies | $72 | 1.1% | | AAA/Aaa | $801 | 12.5% | | AA/Aa | $2,181 | 34.0% | | A/A | $1,501 | 23.4% | | BBB | $1,071 | 16.7% | | BIG | $538 | 8.4% | | Not rated | $251 | 3.9% | | **Total** | **$6,415** | **100.0%** | [Investment Portfolio, Cash and CIVs](index=13&type=section&id=Investment%20Portfolio,%20Cash%20and%20CIVs) The total investment portfolio and cash stood at $8.85 billion as of March 31, 2025. The vast majority of these assets ($7.94 billion) are held by insurance-related subsidiaries, with holding companies holding $907 million. Alternative investments, excluding the interest in Sound Point, have generated an inception-to-date annualized IRR of 13% - Alternative investments (excluding Sound Point) had an inception-to-date annualized internal rate of return (IRR) of **13%**[40](index=40&type=chunk) Investment Portfolio by Entity Type (March 31, 2025) | (in millions) | Insurance Subsidiaries | Holding Companies | Other | AGL Consolidated | | :--- | :--- | :--- | :--- | :--- | | Fixed-maturity securities | $6,534 | $18 | $— | $6,552 | | Short-term investments and cash | $952 | $339 | $44 | $1,335 | | Other invested assets | $449 | $550 | $(39) | $960 | | **Total** | **$7,935** | **$907** | **$5** | **$8,847** | [Insurance Segment](index=16&type=section&id=Insurance%20Segment) The Insurance segment's results, claims-paying resources, new business production, and financial guaranty profile are detailed here [Insurance Segment Results](index=17&type=section&id=Insurance%20Segment%20Results) The Insurance segment's adjusted operating income increased to $168 million in Q1 2025 from $149 million in Q1 2024. This improvement was driven by a combination of higher net earned premiums and credit derivative revenues (up to $134 million from $122 million) and a loss benefit of $23 million compared to a $4 million loss expense in the prior year Insurance Segment Results (in millions) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net earned premiums and credit derivative revenues | $134 | $122 | | Net investment income | $86 | $83 | | Total segment revenues | $239 | $229 | | Loss expense (benefit) | $(23) | $4 | | Total segment expenses | $64 | $85 | | Equity in earnings of investees | $30 | $40 | | **Segment adjusted operating income** | **$168** | **$149** | [Claims-Paying Resources](index=18&type=section&id=Claims-Paying%20Resources) As of March 31, 2025, the company's total claims-paying resources were robust at $10.27 billion, a slight increase from year-end 2024. Key components include $5.78 billion in qualified statutory capital and $2.96 billion in unearned premium reserves. Leverage ratios remained stable, with the net exposure to qualified statutory capital ratio at 46:1 Claims-Paying Resources (March 31, 2025) | (in millions) | Amount | | :--- | :--- | | Qualified statutory capital | $5,779 | | Unearned premium reserve | $2,961 | | Loss and LAE reserves | $46 | | Present value of installment premium | $1,080 | | Committed capital securities (CCS) | $400 | | **Total claims-paying resources** | **$10,266** | [New Business Production](index=19&type=section&id=New%20Business%20Production) New business production declined in Q1 2025 compared to the prior-year quarter. Gross Written Premiums (GWP) fell to $35 million from $61 million, and the non-GAAP measure Present Value of New Business Production (PVP) decreased to $39 million from $63 million. Despite the lower premium volume, Gross Par Written increased to $5.0 billion from $3.7 billion, driven by U.S. public finance New Business Production (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Gross Written Premiums (GWP) | $35 | $61 | | Present Value of New Business Production (PVP) | $39 | $63 | | Gross par written | $5,002 | $3,743 | - The decline in PVP was seen across all categories, with U.S. Public Finance PVP falling to **$25 million** from **$43 million** year-over-year[62](index=62&type=chunk) [Financial Guaranty Profile](index=26&type=section&id=Financial%20Guaranty%20Profile) As of March 31, 2025, the total financial guaranty net par outstanding was $263.6 billion. The portfolio is heavily weighted towards public finance ($252.5 billion, or 95.8% of total) and is geographically concentrated in the United States (80.0%). The credit quality remains high, with 96.4% of the portfolio rated investment grade - Total net par outstanding was **$263.6 billion**, with U.S. public finance accounting for **$202.4 billion**[80](index=80&type=chunk) - The portfolio is predominantly investment grade, with **96.4%** rated BBB or higher. Below-investment-grade (BIG) exposures represent **3.6%** of the total[81](index=81&type=chunk) - Geographically, **80.0%** of the exposure is in the U.S., followed by the U.K. at **15.9%**[84](index=84&type=chunk) [Puerto Rico Profile](index=31&type=section&id=Puerto%20Rico%20Profile) As of March 31, 2025, the company's primary remaining defaulted exposure in Puerto Rico is to PREPA, with a total net par outstanding of $532 million. The company also has $92 million in non-defaulting exposure to other Puerto Rico entities Puerto Rico Net Par Outstanding (March 31, 2025) | Issuer | Net Par Outstanding (millions) | | :--- | :--- | | PREPA (Defaulted) | $532 | | Resolved Exposure | $13 | | Non-Defaulting Exposure | $92 | [Below Investment Grade Exposures](index=33&type=section&id=Below%20Investment%20Grade%20Exposures) Total below-investment-grade (BIG) net par outstanding decreased to $9.54 billion as of March 31, 2025, from $10.18 billion at year-end 2024. The largest concentration of BIG exposure is in non-U.S. public finance regulated utilities ($4.9 billion), primarily related to Southern Water and Thames Water in the U.K - Total BIG net par outstanding was **$9,542 million**, down from **$10,182 million** at the end of 2024[98](index=98&type=chunk) - The largest BIG exposures by revenue source are Southern Water Services Limited (**$2.7 billion** net par) and Thames Water Utilities Finance Plc (**$2.2 billion** net par)[105](index=105&type=chunk) [Asset Management Segment](index=41&type=section&id=Asset%20Management%20Segment) The Asset Management segment's financial performance, focusing on adjusted operating income and revenue drivers, is outlined [Asset Management Results](index=42&type=section&id=Asset%20Management%20Results) The Asset Management segment reported a significant increase in profitability, with adjusted operating income rising to $12 million in Q1 2025 from just $1 million in Q1 2024. The growth was primarily driven by a $12 million increase in equity in earnings of investees Asset Management Segment Results (in millions) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Segment revenues | $6 | $1 | | Segment expenses | $4 | $— | | Equity in earnings of investees | $13 | $1 | | **Segment adjusted operating income** | **$12** | **$1** | [Corporate Division](index=43&type=section&id=Corporate%20Division) The Corporate division's financial results, detailing revenues, expenses, and adjusted operating income (loss), are presented [Corporate Division Results](index=44&type=section&id=Corporate%20Division%20Results) The Corporate division's adjusted operating loss narrowed to $20 million in Q1 2025 from a loss of $37 million in Q1 2024. The improvement was mainly due to the recognition of $16 million in equity in earnings of investees, which was not present in the prior-year period, while interest and operating expenses remained relatively stable Corporate Division Results (in millions) | | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $4 | $5 | | Total expenses | $40 | $47 | | Equity in earnings of investees | $16 | $— | | **Adjusted operating income (loss)** | **$(20)** | **$(37)** | [Summary](index=47&type=section&id=Summary) A multi-year summary of key financial and statistical data, including historical GAAP and non-GAAP reconciliations, is offered [Summary of Financial and Statistical Data](index=48&type=section&id=Summary%20of%20Financial%20and%20Statistical%20Data) This section provides a multi-year summary of key financial and statistical data. As of March 31, 2025, total assets were $11.9 billion and shareholders' equity was $5.6 billion. Financial guaranty net par outstanding has grown steadily from $236 billion in 2021 to $264 billion. Total claims-paying resources have remained robust, standing at $10.3 billion Historical Key Metrics (End of Period) | (in billions) | Mar 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $11.9 | $11.9 | $12.5 | $16.8 | | Shareholders' Equity (AGL) | $5.6 | $5.5 | $5.7 | $5.1 | | Net Par Outstanding | $263.6 | $261.6 | $249.2 | $233.3 | | Total Claims-Paying Resources | $10.3 | $10.2 | $10.7 | $10.8 | [Summary of GAAP to Non-GAAP Reconciliations](index=50&type=section&id=Summary%20of%20GAAP%20to%20Non-GAAP%20Reconciliations) This summary presents historical reconciliations of key non-GAAP metrics. Adjusted operating income has consistently been a significant contributor to earnings, totaling $389 million in 2024 and $648 million in 2023. Adjusted Book Value (ABV) per share has shown consistent growth, increasing from $130.67 at year-end 2021 to $172.79 as of March 31, 2025, highlighting the value of the company's in-force business Historical Adjusted Operating Income (in millions) | | Q1 2025 | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) attributable to AGL | $176 | $376 | $739 | $124 | | **Adjusted operating income (loss)** | **$162** | **$389** | **$648** | **$267** | Historical Adjusted Book Value (ABV) Per Share | | Mar 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Shareholders' equity per share | $112.80 | $108.80 | $101.63 | $85.80 | | **ABV per share** | **$172.79** | **$170.12** | **$155.92** | **$141.98** |

Financial Performance - Net income attributable to Assured Guaranty Ltd. for Q4 2024 was $18 million, a decrease of 95.2% from $376 million in Q4 2023[6]. - Adjusted operating income for Q4 2024 was $66 million, down 80.5% from $338 million in Q4 2023[6]. - The company reported a diluted earnings per share of $0.35 for Q4 2024, a significant decrease from $6.40 in Q4 2023[6]. - Total revenues for the year ended December 31, 2024, were $872 million, down from $1,373 million in 2023, a decrease of 36.6%[15]. - The company reported a basic earnings per share of $0.36 for Q4 2024, down from $6.54 in Q4 2023, a decline of 94.5%[15]. - The company reported a total of $98 million in net income for Q4 2024, compared to $339 million in Q4 2023[30]. - Net income attributable to AGL for 2024 was $376 million, a decrease of 49% compared to $739 million in 2023[153]. Revenue and Premiums - Gross written premiums (GWP) increased to $186 million in Q4 2024, up 37% from $136 million in Q4 2023[6]. - Net earned premiums increased to $103 million in Q4 2024 from $83 million in Q4 2023, representing a 24% growth[15]. - Net earned premiums for the insurance segment increased to $104 million in Q4 2024, compared to $83 million in Q4 2023, reflecting a growth of 25.3%[30]. - Net earned premiums rose to $406 million in 2024, compared to $344 million in 2023, reflecting an increase of 18%[33][36]. - Total Gross Written Premium (GWP) for Q4 2024 was $186 million, an increase from $136 million in Q4 2023, representing a growth of 37%[67]. - The company reported total GWP of $357 million for 2023, with an increase to $440 million anticipated for 2024[76]. Assets and Equity - Total shareholders' equity attributable to Assured Guaranty Ltd. decreased to $5,495 million as of December 31, 2024, from $5,713 million a year earlier[11]. - Total assets decreased to $11,901 million as of December 31, 2024, from $12,539 million as of December 31, 2023, a decline of 5.1%[17]. - Shareholders' equity attributable to AGL decreased to $5,495 million as of December 31, 2024, from $5,713 million as of December 31, 2023, a decrease of 3.8%[17]. - Shareholders' equity attributable to AGL per share increased to $108.80 in 2024 from $101.63 in 2023[153]. - Adjusted operating shareholders' equity was $5,795 million in 2024, down from $5,990 million in 2023, a decrease of about 3.25%[160]. Investment Income - Net investment income remained stable at $93 million for Q4 2024, consistent with the previous quarter[27]. - Net investment income decreased slightly to $340 million in 2024 from $365 million in 2023, a decline of approximately 7%[33][36]. - Total net investment income for the year ended December 31, 2024, was $340 million, a decrease of 8.3% from $365 million in 2023[56]. - The company reported a total of $15 million in net investment income from funds in the fourth quarter of 2024, down from a loss of $2 million in the same quarter of 2023[53][55]. Claims and Reserves - Claims-paying resources were reported at $10,211 million as of December 31, 2024, down from $10,665 million a year prior[11]. - The loss and LAE reserve decreased to $268 million as of December 31, 2024, from $376 million as of December 31, 2023, a decline of 28.8%[17]. - The total claims-paying resources decreased to $10,211 million in 2024 from $10,665 million in 2023[153]. Tax and Expenses - The effective tax rate on net income for Q4 2024 was 26.6%, compared to an effective tax rate of (87.9)% in Q4 2023[6]. - Total expenses for Q4 2024 were $106 million, a slight increase from $81 million in Q4 2023[30]. - Total expenses for 2024 were $446 million, down from $733 million in 2023, indicating a reduction of 39%[33][36]. - Interest expenses for the Corporate Division remained stable at $101 million in 2024, compared to $99 million in 2023, reflecting a slight increase of about 2.02%[144]. Market and Business Outlook - The company plans to continue expanding its market presence and exploring new business opportunities in both U.S. and non-U.S. public finance sectors[67]. - The company expects installment premiums to contribute $294 million to total PVP in 2023, decreasing to $262 million in 2024[76]. - The company anticipates a total of $1,304 million in net expected loss to be paid from 2025 to 2029[84]. Financial Metrics and Ratios - The adjusted operating return on equity (ROE) for Q4 2024 was 4.5%, down from 23.1% in Q4 2023[6]. - The capital ratio improved to 73:1 in 2024 from 66:1 in 2023, indicating stronger capital adequacy[62]. - The unrealized loss on the investment portfolio was $(397) million in 2024, compared to $(361) million in 2023, indicating a worsening of approximately 9.97%[160]. Corporate Division Performance - Total revenues for the Corporate Division for the year ended December 31, 2024, were $17 million, down from $275 million in 2023, indicating a decline of approximately 93.82%[144]. - Adjusted operating income (loss) for the Corporate Division was $(135) million for the year ended December 31, 2024, compared to $45 million in 2023, marking a significant decline[144]. - Total revenues for Other Results in the three months ended December 31, 2024, were $10 million, compared to $33 million in the same period of 2023, a decrease of approximately 69.7%[148].

Financial Data and Key Metrics Changes - Adjusted operating income for Q4 2024 was $66 million, or $1.27 per share, compared to $338 million, or $5.75 per share in Q4 2023, which included non-recurring tax benefits [28][29] - Full year 2024 adjusted operating income was $389 million, or $7.10 per share, down from $648 million, or $10.78 per share in 2023 [39][40] - Adjusted book value per share reached $170.12, and adjusted operating shareholders' equity per share was $114.75 [8][44] Business Line Data and Key Metrics Changes - PVP across three financial guaranty businesses topped $400 million for the second consecutive year, up from $375 million in 2022 [16][17] - US Public Finance PVP reached $270 million, the highest in four years, with a total insured municipal par sold exceeding $24 billion, the most since 2010 [9][18] - Non-US Public Finance contributed $67 million of PVP, while Global Structured Finance generated $65 million of PVP [24][25] Market Data and Key Metrics Changes - The US municipal bond market started 2025 with strong new issue volume, with some analysts projecting that 2025 volume may rival or exceed the record volume of 2024 [13] - The bond insurance industry’s annual penetration rate was 8.3% of par issued, marking the fourth consecutive year above 8% [17] Company Strategy and Development Direction - The company merged its two primary insurance subsidiaries into one, creating a more efficient capital structure and a larger insurer with a diversified portfolio [11] - Geographic expansion efforts included opening offices in Australia and Singapore, with a focus on opportunities in Continental Europe and Asia [10][26] - The company aims to diversify earnings through its Asset Management segment and improve investment results via alternative investments [34][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the UK water sector, particularly regarding Thames Water, and noted that the macroeconomic background appears favorable [52][54] - The company remains committed to resolving its Puerto Rico exposure and is optimistic about the political landscape aiding in this process [106][108] - Management highlighted the resilience of the business model and the potential for untapped opportunities globally [14] Other Important Information - The company repurchased 6.2 million shares for $502 million in 2024, representing 11% of shares outstanding as of December 31, 2023 [43][44] - A pre-tax gain of approximately $103 million from litigation with Lehman Brothers International Europe will be recognized in Q1 2025 [45] Q&A Session Summary Question: Recent developments on Thames Water and reserve provisioning - Management noted that the UK government does not plan to nationalize water utilities and Thames Water is making progress in regulatory determinations [52][54] Question: Impact of California wildfires on exposures - Management confirmed no significant exposure to California wildfires, with no missed debt service payments [63] Question: Non-US structured finance par written this quarter - Management indicated that the UK dominates, but opportunities are emerging in Australia and Continental Europe [65][66] Question: Return on equity with current premium rates - Management discussed that ROE varies based on the mix of business, with structured finance and international infrastructure yielding higher returns [79][84] Question: AOCI and its impact on book value - Management acknowledged that interest rates fluctuate, affecting unrealized gains and losses, but noted the upcoming gain from Lehman Brothers will positively impact book value [90][91]

Financial Highlights - Adjusted operating income was $389 million ($7.10 per share) for the full year 2024[19], and $66 million ($1.27 per share) for the fourth quarter[16] - Shareholders' equity attributable to AGL, adjusted operating shareholders' equity and adjusted book value reached record highs of $108.80, $114.75 and $170.12 per share, respectively[16] - Alternative investments portfolio increased to a fair value of approximately $884 million[14] - The company repurchased over 6 million shares at a total cost of $502 million, representing 11% of shares outstanding on December 31, 2023[25] Insurance Business - The company insured $32 billion of new business par in 2024, the largest amount in a decade[24, 29] - New business production (PVP) generated $402 million in 2024, exceeding $400 million for the second consecutive year[24] - U S public finance PVP in 2024 was 27% higher than in 2023[31] - The average premium rate (PVP to gross par written) was 126% in 2024[31] Portfolio Overview - Insured net par outstanding was $2616 billion as of December 31, 2024, with $2012 billion in U S public finance, $492 billion in non-U S public finance, and $112 billion in global structured finance[40] - Claims-paying resources totaled $102 billion[40] - BIG (below investment grade) exposure was $102 billion, representing 39% of total net par outstanding[150]

Financial Data and Key Metrics Changes - Adjusted operating income per share for 2024 was $7.1, down from $10.78 in 2023, reflecting a decrease in overall profitability [29] - Adjusted operating income for Q4 2024 was $66 million or $1.27 per share, compared to $338 million or $5.75 per share in Q4 2023, primarily due to non-recurring tax benefits in the prior year [21][22] - Total insured municipal par sold reached $24 billion in 2024, the highest since 2010, with a 14-year high for annual new issue insured par [13][14] Business Line Data and Key Metrics Changes - U.S. Public Finance PVP reached $270 million in 2024, significantly contributing to the overall PVP of over $400 million across all business lines [12][13] - Non-U.S. Public Finance contributed $67 million of PBP in 2024, with strong performance in secondary market guarantees and liquidity guarantees [18] - Global structured finance generated $65 million of PVP, focusing on insurance securitizations and bank balance sheet relief [18][19] Market Data and Key Metrics Changes - The bond insurance industry maintained an annual penetration rate of 8.3% of par issued, marking the fourth consecutive year above 8% [13] - The U.S. Municipal bond market started 2025 with strong new issue volume, with projections suggesting it may rival or exceed 2024's record volume [10] Company Strategy and Development Direction - The company merged its two primary insurance subsidiaries to create a more efficient capital structure and a larger insurer with a diversified portfolio [9] - Geographic expansion efforts included opening offices in Australia and Singapore, with a focus on opportunities in Continental Europe and Asia [8][20] - The company aims to diversify earnings through its asset management segment and improve investment results via alternative investments, which have generated an annualized return of approximately 13% [30][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the UK water sector, particularly regarding Thames Water, citing a positive macroeconomic background and potential for improved financials [36][38] - The company remains committed to resolving its Puerto Rico exposure, with ongoing mediation efforts and a strong legal position affirmed by the courts [10][86] - Management anticipates continued growth in new business production and a strong performance in the municipal bond market for 2025 [10][30] Other Important Information - The company repurchased 6.2 million shares for $502 million in 2024, representing 11% of shares outstanding as of December 31, 2023 [32][33] - A pre-tax gain of approximately $103 million from litigation with Lehman Brothers International Europe will be recognized in Q1 2025 [34] Q&A Session Summary Question: Recent developments on Thames Water and Southern Water - Management highlighted the UK government's stance against nationalization and positive regulatory developments for Thames Water, expressing optimism for future outcomes [36][38] Question: Impact of California wildfires on exposure - Management confirmed no significant exposure to California wildfires, with all debt service payments being met [48] Question: Non-U.S. structured finance par written this quarter - Management noted strong performance in Australia and other regions, with a focus on shorter-dated structured finance transactions [49][51] Question: Return on equity expectations - Management indicated that return on equity is influenced by the mix of business, with structured finance and international infrastructure yielding higher returns [61][62] Question: Interest rates and AOCI impact - Management acknowledged that interest rates fluctuate, affecting unrealized gains and losses, but confirmed the positive impact of the Lehman Brothers gain on per-share earnings [70][71] Question: Exposure in the D.C. market - Management stated minimal exposure in the D.C. market and expressed no significant concerns regarding potential disruptions [78][79] Question: Financial troubles in healthcare facilities - Management explained that healthcare facilities face operational risks, including high labor costs, but emphasized their proactive management approach [81][82] Question: Political changes and PREPA resolution - Management expressed cautious optimism regarding the new political landscape's potential to facilitate a resolution for PREPA, while maintaining a strong legal position [86][87]

Competitive Positioning - In 2024, the Company insured approximately 58% of the par value of new U.S. public finance bonds sold with insurance, while its competitor BAM insured approximately 42%[83]. - The Company maintains a competitive advantage over BAM due to its larger capital base and ability to insure larger transactions across diverse bond sectors[83]. - The Company is the only financial guaranty insurance company currently writing new guaranties in the U.S. and non-U.S. structured finance markets, which provides a competitive advantage due to greater diversification[85]. Capital Management - The Company has excess capital based on its internal capital model and rating agency models, and has been returning some of this excess capital to shareholders through share repurchases and dividends[89]. - The Company has a co-guarantee structure with AGUK, where AG guarantees 85% of obligations and AGUK guarantees 15%[91]. - The Company has a quota share reinsurance agreement with AGUK, reinsuring approximately 50-100% of most outstanding financial guaranties written by AGUK prior to 2011[93]. Investment Strategy - As of December 31, 2024, the investment portfolio had a carrying value of $8.7 billion, with approximately $7.7 billion (89%) consisting of fixed-maturity securities and short-term investments[122]. - The majority (70% or $5.5 billion) of fixed-maturity securities and short-term investments was managed by Goldman Sachs Asset Management, L.P., Wellington Management Company, LLP, and MacKay Shields LLC[122]. - The Company has committed to invest a total of $1 billion in funds and vehicles managed by Sound Point within the first two years of their engagement[107]. - The Company's ownership interest in Sound Point was valued at $418 million as of December 31, 2024, reported under "other invested assets"[125]. - The Company aims to diversify its earnings into fee-based industries leveraging its core competency in credit through its investment in Sound Point[110]. Risk Management - The Company has established several management committees to develop enterprise-level risk management guidelines tailored to its insurance and reinsurance subsidiaries[132]. - The Company has established a comprehensive risk management framework, including a Portfolio Risk Management Committee responsible for credit, market, and liquidity risk management[19]. - Each insurance subsidiary has a Reserve Committee that reviews reserve methodologies and establishes reserves based on loss projection scenarios and probability weights[134]. - The Company conducts quarterly risk reporting to keep the Board and senior management informed about material risk-related developments[138]. - The Company integrates climate risk into its underwriting and credit approval processes, requiring assessments of environmental risks for insured exposures[148]. Climate Risk Management - The Company has invested in talent and technology to enhance its understanding of climate risks and their financial implications[149]. - The Company is subject to various regulatory reporting requirements regarding climate risk management, which have not materially impacted its financial condition[152]. - The Environmental and Social Responsibility Committee oversees the Company's approach to addressing climate change risk[153]. - The Company has formed an environmental risk working group to evaluate the financial impact of evolving climate conditions on its insured portfolio[154]. Regulatory Compliance - AG, the Company's insurance subsidiary, is licensed to write financial guaranty insurance in all 50 U.S. states, the District of Columbia, and Puerto Rico[156]. - AG is required to file financial statements with insurance departments in every U.S. state where it is licensed, and its operations are subject to periodic examinations every three to five years[160]. - The Maryland Commissioner evaluates the financial strength and management integrity of applicants before approving control acquisitions, which may delay or deter potential proposals[159]. - AG's Bermuda reinsurance subsidiaries, AG Re and AGRO, are not licensed in any state but have established trusts to secure their reinsurance obligations[176]. Employee and Diversity Initiatives - As of December 31, 2024, the Company employed 361 people globally, with approximately 40% female and 60% male workforce[216]. - The average tenure of employees at the Company is approximately 13 years[216]. - The Company has established five employee resource groups (ERGs) to foster community and support among employees[223]. - The Company’s Diversity and Inclusion Committee is composed of employees from various backgrounds to promote cultural awareness and support a diverse workforce[224]. Taxation and Financial Reporting - AGL has elected to be treated as a U.S. corporation for all U.S. federal tax purposes, subjecting it to regular corporate tax rates[240]. - AGL is subject to U.K. corporation tax at a main rate of 25% on its worldwide profits, effective from November 2013[244]. - The current standard rate of U.K. VAT is 20%, and AGL is registered to report its VAT liability[244]. - AGL's dividends received from direct subsidiaries are exempt from U.K. corporation tax due to section 931D of the U.K. Corporation Tax Act 2009[245].

Core Viewpoint - Assured Guaranty reported quarterly earnings of $1.27 per share, missing the Zacks Consensus Estimate of $1.48 per share, and a significant decline from $5.75 per share a year ago, indicating an earnings surprise of -14.19% [1] Group 1: Earnings Performance - The company posted revenues of $199 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.13%, although this is a slight decrease from $201 million in the same quarter last year [2] - Over the last four quarters, Assured Guaranty has surpassed consensus EPS estimates two times and topped consensus revenue estimates four times [2] Group 2: Stock Performance and Outlook - Assured Guaranty shares have increased by approximately 1.8% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [3] - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), suggesting that shares are expected to perform in line with the market in the near future [6] Group 3: Future Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $1.47 on revenues of $183 million, and for the current fiscal year, it is $6.50 on revenues of $728 million [7] - The outlook for the industry, particularly the Zacks Industry Rank for Insurance - Multi line, is in the bottom 47% of over 250 Zacks industries, which may impact stock performance [8]

Financial Data and Key Metrics Changes - Adjusted book value per share reached a record high of $166.47, and adjusted operating shareholders' equity per share reached $113.96 at the end of Q3 2024 [7] - Year-to-date adjusted operating income was $5.80 per share, a 13% increase compared to the first nine months of the previous year [9] - Adjusted operating income for Q3 2024 was $130 million or $2.42 per share, compared to $206 million or $3.42 per share in Q3 2023, which included a one-time gain [27] Business Line Data and Key Metrics Changes - Year-to-date production value premium (PVP) was $281 million, $32 million higher than the same period last year, with Q3 PVP at $63 million, up $17 million year-over-year [8][16] - U.S. public finance segment insured $16.6 billion of new issue par, an 18% increase year-over-year, capturing 57% of all insured par sold in the primary U.S. municipal bond market [17][18] - Non-U.S. public finance business produced $44 million of PVP year-to-date, $6 million higher than the previous year [22] - Global structured finance also produced $44 million of PVP year-to-date, with Q3 PVP at $19 million, $5 million higher than the same quarter last year [23] Market Data and Key Metrics Changes - The company has seen an increase in the number of large high-profile transactions using insurance, indicating strong market demand [14] - The municipal bond issuance in the first nine months of 2024 was significantly higher year-over-year, contributing to the company's strong performance [17] Company Strategy and Development Direction - The company aims to optimize capital alignment with business opportunities to improve returns, targeting $500 million in share repurchases annually [12][37] - The merger of AGM into AG is expected to enhance operating efficiency and capital utilization, with no change in ratings post-merger [9][10] - The company is strategically pursuing new product opportunities while managing emerging risks and capital [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued growth trajectory of the business, driven by strong demand for bond insurance and infrastructure investment needs [14][40] - The company anticipates sustained high issuance levels in the municipal market, supported by the recognized value of insurance [40] - Management noted that the developments with U.K. utilities would not impact dividend capacity or the buyback program [39] Other Important Information - The company has authorized an additional $250 million in share repurchases, bringing the total authorization to approximately $385 million [13] - The investment portfolio continues to perform well, with alternative investments generating an annualized internal rate of return of approximately 13% [32][70] Q&A Session Summary Question: How do developments with U.K. utilities impact capital management outlook for 2025? - Management indicated that there would be no impact on dividend capacity or the buyback program, expecting to reach the $500 million target for share repurchases [39] Question: Can you provide context around the lower insured par market penetration this quarter? - Management noted that insured penetration has been increasing year-over-year and expects this trend to continue due to the recognized value of insurance [40] Question: How will the 15% Bermuda income tax rate affect corporate tax rate in 2025? - Management expects a slight decrease in the corporate tax rate in 2025 due to the utilization of tax benefits [42] Question: Is there a possibility of a contingency payment based on the outcome of PREPA? - Management stated they have made offers that make sense for both parties but are waiting for the right price [44] Question: What is causing the cash shortfall for U.K. water utilities? - Management explained that equity owners have pulled money out without reinvesting, leading to a need for new equity to support capital improvements [54] Question: Will the upcoming rate determination from the U.K. water regulator impact loss adjustments? - Management indicated that while the outcome is important, they do not expect it to significantly change their numbers [59]