ASSURED GUARANTY LTD

The summarized consolidated statements of cash flows in the table below present the cash flow effect for the aggregate of the Insurance and Asset Management businesses and holding companies, separately from the aggregate effect of consolidating FG VIEs and CIVs. In the third quarter of 2023, as a result of the Sound Point Transaction and AHP Transaction, the Company deconsolidated all CLOs and CLO warehouses and certain funds. As a result, beginning July 1, 2023, the Company’s cash flow statements will no longer include all the operating, investing and financing cash flow activity of the deconsolidated CIVs. See Item 8, Financial Statements and Supplementary Data, and Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, for additional information.

Summarized Consolidated Cash Flows

(1) Claims paid on consolidated FG VIEs are presented in the consolidated statements of cash flows as a component of paydowns on FG VIEs’ liabilities in financing activities as opposed to operating activities.

Cash flows from operations, excluding FG VIEs and CIVs, were an outflow of $108 million in 2023 and an outflow of $1,056 million in 2022. The decrease in outflows during 2023 was primarily due to a $964 million decrease in net claim payments, primarily due to the 2022 Puerto Rico Resolutions as well as a decrease of $101 million in tax payments. Cash flows from operations attributable to FG VIE and CIV were inflows in 2023 and outflows in 2022, primarily because all the CLOs and CLO warehouses, which generally reported significant operating cash flows, had limited operating activities and new issuances in the first half of 2023 pending the closing of the Sound Point Transaction and AHP Transaction, at which point the CLOs and CLO warehouses were deconsolidated. The consolidated statements of cash flows present the investing activities of the consolidated Sound Point funds, which were formerly known as AssuredIM funds, and CLOs as cash flows from operations. The increase in inflows in 2023 compared with 2022 was mainly due to a decrease of $3,084 million in investment purchases, partially offset by a decrease of investment sales, maturities and paydowns of $1,122 million.

Investing activities primarily consisted of net sales (purchases) of debt and short-term investments, and paydowns on and sales of FG VIEs’ assets. The decrease in investing cash inflows in 2023 compared with 2022 was mainly attributable to an increase in short-term investments in 2023 compared to net sales of short-term and fixed-maturity securities in 2022. In 2022, investing inflows were used to fund claim payments under the 2022 Puerto Rico Resolutions and share repurchases. See Item 8, Financial Statements and Supplementary Data, Note 3, Outstanding Exposure, for additional information.

Financing activities primarily consist of (i) AGL share repurchases and dividends, (ii) paydowns of FG VIEs’ liabilities and (iii) CLO issuances and CLO warehouse financing activities. The CIVs’ financing cash flows mainly included issuances and repayments of CLOs and CLO warehouse financing debt in 2022. The decrease in financing cash flow activity from VIEs was primarily due to a decrease of $2,363 million in issuances, partially offset by a decrease in repayments of $1,002 million by the previously consolidated CLOs and CLO warehouses. The proceeds from CLO issuances and CLO warehouse borrowings were used to fund the purchases of loans. FG VIEs’ cash flows relate to the paydowns of FG VIEs’ liabilities. See Item 8, Financial Statements and Supplementary Data, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

From January 1, 2024 through February 27, 2024, the Company repurchased an additional 951 thousand common shares. As of February 27, 2024, the Company was authorized to purchase $228 million of its common shares. For more information about the Company’s share repurchases and authorizations, see Item 8, Financial Statements and Supplementary Data, Note 19, Shareholders’ Equity.