ASSURED GUARANTY LTD

Financial Results

(1) See “— Non-GAAP Financial Measures” for a definition of the financial measures that were not determined in accordance with accounting principles generally accepted in the United States of America (GAAP), a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure, if available, and for additional details.

(2) Relates to the effect of consolidating FG VIEs and CIVs.

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

Consolidated Results of Operations

Consolidated Results of Operations

Net income attributable to AGL in 2023 was higher compared with 2022 primarily due to the following:

•the gain associated with the Sound Point Transaction and AHP Transaction, net of transaction expenses, of $222 million (pre-tax),

•the benefit related to Bermuda tax law changes of $189 million,

•foreign exchange remeasurement gains in 2023, compared with losses on 2022,

•higher income from fixed-maturity and alternative investment portfolio,

•fair value gains on credit derivatives in 2023 compared with losses in 2022, and

•fair value gains on trading securities in 2023 compared with losses in 2022.

These increases were partially offset by:

•lower net earned premiums in 2023 compared with 2022, which benefited from premium accelerations related to the 2022 Puerto Rico resolutions, and

•higher loss and LAE in 2023 compared with 2022.

The Company’s effective tax rate reflects the proportion of income recognized by each of the Company’s operating subsidiaries, with U.S. subsidiaries generally taxed at the U.S. marginal corporate income tax rate of 21%, U.K. subsidiaries taxed at the U.K. marginal corporate tax rate of 19% prior to March 31, 2023 and 25% after April 1 2023, the French subsidiary taxed at the French marginal corporate tax rate of 25%, and no taxes for the Company’s Bermuda subsidiaries, unless subject to U.S. tax by election or as a U.S. controlled foreign corporation. In 2023, the Company also recognized a benefit of $189 million attributable to changes in Bermuda tax laws and a $19 million benefit related to a change in New York State tax law. See Part II, Item 8, Financial Statements and Supplementary Data, Note 14, Income Taxes.

Adjusted Operating Income

Adjusted operating income in 2023 was $648 million, compared with $267 million in 2022. The increase was primarily due to the gain associated with the Sound Point Transaction and AHP Transaction, the benefit attributable to Bermuda tax law changes, and fair value gains on trading securities, offset in part by higher loss expense and lower net earned premiums in 2023, compared with 2022 which included premium accelerations of $133 million related to the 2022 Puerto Rico Resolutions. See “— Results of Operations — Reconciliation to GAAP” for the reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).

Book Value and Adjusted Book Value

Shareholders’ equity attributable to AGL as of December 31, 2023 increased compared with December 31, 2022, due to net income and unrealized gains on investments, which was partially offset by dividends and share repurchases. Adjusted operating shareholders’ equity and adjusted book value increased primarily due to the gain on the Sound Point Transaction and AHP Transaction of $160 million after-tax and the benefit due attributable to Bermuda tax law change of $189 million, offset in part by dividends and share repurchases of $267 million, and in the case of adjusted book value, the increase was also primarily due to GWP of $357 million, partially offset by economic loss development of $164 million. See “— Non-GAAP Financial Measures” below for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity and adjusted book value.

On a per share basis, shareholders’ equity attributable to AGL, adjusted operating shareholders’ equity, and adjusted book value increased as of December 31, 2023 compared with December 31, 2022, due in part to the accretive effect of the share repurchase program. See “— Non-GAAP Financial Measures” for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity and adjusted book value.