Assured Guaranty(AGO)2025-02-28 13:53Competitive 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 7.7 billion (89%) consisting of fixed-maturity securities and short-term investments[122]. - The majority (70% or 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].