ASSURED GUARANTY LTD

Insurance Segment Results

Insurance Segment Results

Net Earned Premiums and Credit Derivative Revenues

Premiums are earned over the contractual lives, or in the case of insured obligations backed by homogeneous pools of assets, the remaining expected lives, of financial guaranty insurance contracts. The Company periodically estimates remaining expected lives of its insured obligations backed by homogeneous pools of assets and makes prospective adjustments for such changes in expected lives. Scheduled net earned premiums decrease each year unless replaced by a higher amount of new business or books of business acquired in business combinations. See Item 1, Financial Statements, Note 5, Contracts Accounted for as Insurance, Premiums, for additional information.

Net earned premiums due to accelerations are attributable to changes in the expected lives of insured obligations driven by: (i) refundings of insured obligations; or (ii) terminations of insured obligations either through negotiated agreements or the exercise of the Company’s contractual rights to make claim payments on an accelerated basis.

Refundings occur in the public finance market when municipalities and other public finance issuers pay down insured obligations prior to their originally scheduled maturities. Refundings tend to increase when issuers can refinance their debt obligations at lower rates than they are currently paying. The premiums associated with the insured obligations of municipalities and other public finance issuers are generally received upfront when the obligations are issued and insured. When issuers pay down insured obligations, the Company is no longer on risk for payment defaults and therefore accelerates the recognition of any remaining nonrefundable deferred premium revenue. The amortization of the Company’s outstanding book of business along with the previously high levels of refunding activity and the higher interest rate environment has led to a lower volume of refunding opportunities over the last several years.

Terminations are generally negotiated agreements with beneficiaries resulting in the extinguishment of the Company’s insurance obligation. Terminations have historically been more common in the structured finance asset class but may also occur in the public finance asset class. While each termination may have different terms, they all result in the expiration of the Company’s insurance risk, the acceleration of the recognition of the associated deferred premium revenue and the reduction of any remaining premiums receivable.

Net Earned Premiums and Credit Derivative Revenues

(1) Includes accretion of discount.

Net earned premiums and credit derivative revenues decreased in third quarter 2025 compared with third quarter 2024 primarily due to lower refundings and terminations, partially offset by an increase in scheduled premiums due to earnings on large transactions and supplemental premiums written in 2024. Net earned premiums and credit derivative revenues increased in nine months 2025 compared with nine months 2024 primarily due to credit derivative revenues related to the resolution of the LBIE litigation (see Item 1, Financial Statements, Note 6, Contracts Accounted for as Credit Derivatives) and earnings on large transactions and supplemental premiums written in 2024, partially offset by lower financial guaranty refundings and terminations. As of September 30, 2025, $3.7 billion of net deferred premium revenue remained to be earned over the life of the financial guaranty insurance contracts.

New Business Production

Gross Written Premiums and

New Business Production

(1) PVP and Gross Par Written in the table above are based on “close date,” when the transaction settles. See “— Non-GAAP Financial Measures — PVP or Present Value of New Business Production.” PVP was discounted at 5.0% in all periods presented above.

GWP relates to insurance and reinsurance contracts for both financial guaranty and specialty business. Financial guaranty insurance and reinsurance GWP includes: (i) amounts collected upfront on new business written; (ii) the present value of future contractual or expected premiums on new financial guaranty business written (discounted at risk-free rates); and (iii) the effects of changes in the estimated premium or lives of certain transactions in the in-force book of business. Specialty business GWP is recorded as premiums are due. Credit derivatives are accounted for at fair value and therefore not included in GWP. PVP and gross par written include the present value of future gross revenues and exposure, respectively, associated with a financial guaranty written by the Company that, under GAAP, is accounted for under Accounting Standards Codification 460, Guarantees.

The non-GAAP financial measure, PVP, includes upfront premiums and the present value of expected future installments on new business at the time of issuance, discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, for all contracts regardless of form or accounting model. See “— Non-GAAP Financial Measures” below.

The increase in U.S. public finance GWP and PVP in third quarter 2025 compared with third quarter 2024 was primarily attributable to several large transportation, health care and tax-backed transactions as well as higher GWP and PVP generated in the secondary market. The Company’s primary par written represented 61% of the total municipal market insured par sold in third quarter 2025, compared with 60% in third quarter 2024, and the Company’s penetration of all municipal issuance was 4.9% in third quarter 2025 compared with 4.2% in third quarter 2024.

In the U.S. public finance secondary market, GWP and PVP both increased to $10 million in third quarter 2025 compared with $2 million in third quarter 2024. The Company’s par written in the secondary market represented 7.4% of U.S. public finance par written in third quarter 2025, compared with 3.9% in third quarter 2024.

GWP for non-U.S. public finance in third quarter 2025 was negative due to the early repayment of several U.K. sub-sovereign credits. In third quarter 2025, non-U.S. public finance GWP and PVP consisted of guaranties of regulated utilities.

Global structured finance GWP and PVP in third quarter 2025 primarily consisted of the upsize of a transaction providing protection on a core lending portfolio for an Australian bank, as well as subscription finance transactions.

Business activity in the non-U.S. public finance and structured finance markets often has long lead times and therefore may vary from period to period.

U.S. public finance GWP and PVP in nine months 2025 were lower than GWP and PVP in nine months 2024, primarily due to several large transportation revenue transactions that were written in nine months 2024. Nine months 2025 included a large transportation transaction. The Company’s primary par written represented 63% of the total U.S. municipal market insured par sold in nine months 2025, compared with 57% in nine months 2024, and the Company’s penetration of all municipal issuance was 5.0% in nine months 2025 compared with 4.4% in nine months 2024.

In the U.S. public finance secondary market, GWP and PVP both increased to $32 million in nine months 2025 compared with $5 million in nine months 2024. The Company’s par written in the secondary market represented 7.0% of U.S. public finance par written in nine months 2025, compared with 2.4% in nine months 2024.

Non-U.S. public finance GWP in nine months 2025 was negative due to the early repayment of several U.K. sub-sovereign credits. Non-U.S. public finance PVP in nine months 2025 was lower than PVP in nine months 2024, primarily due to a lower volume of large transactions in nine months 2025. Non-U.S. public finance in nine months 2025 included several primary infrastructure finance and regulated utility transactions in the U.K. and the European Union, as well as secondary market transactions for U.K. sub-sovereign credits. Non-U.S. public finance GWP in nine months 2025 also included a reduction in the present value of estimated future premiums from certain transactions in the legacy insured portfolio.

Global structured finance GWP and PVP in nine months 2025 were primarily attributable to subscription finance business and the upsize of a transaction providing protection on a core lending portfolio for an Australian bank.

Financial Strength Ratings

Demand for the financial guaranties issued by the Company’s 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 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.

Ratings are subject to continuous rating agency review and revision or withdrawal at any time. In addition, the Company periodically assesses the value of each rating assigned to each of its companies, and as a result of such assessment may request that a rating agency add or drop a rating from certain of its companies. There can be no assurance that any of the rating agencies will not take negative action on the financial strength ratings (or similar ratings) of AGL’s insurance subsidiaries in the future or cease to rate one or more of AGL’s insurance subsidiaries, either voluntarily or at the request of that subsidiary.

Net investment income is a function of the yield that the Company earns on available-for-sale fixed-maturity securities and short-term investments and the size of such portfolio. The investment yield on fixed-maturity securities is a function of market interest rates at the time of investment as well as the type, credit quality and maturity of the securities in this portfolio.

CVIs issued by Puerto Rico and received as part of the resolution of defaulting Puerto Rico exposures in 2022 are classified as trading with changes in fair value reported in “fair value gains (losses) on trading securities” in the condensed consolidated statements of operations. The fair value of remaining CVIs as of September 30, 2025 and December 31, 2024 was $125 million and $123 million, respectively.

Equity method investments in the Insurance segment include certain alternative investments. The income (loss) on such investments is reported in “equity in earnings (losses) of investees” and typically represents the Company’s share of earnings of its investees. As part of a stock redemption that occurred on August 5, 2024, certain alternative investments were distributed to AGMH, whose results are now reported in the Corporate division.

Net investment income for third quarter 2025 and nine months 2025 increased compared to third quarter 2024 and nine months 2024, primarily due to a shift in the portfolio from municipal securities to higher yielding corporate securities and investment income on CLO equity tranches in the available-for-sale portfolio. Certain CLO equity tranche investments were reclassified to the available-for-sale fixed-maturity portfolio in the fourth quarter of 2024, with interest income now reported in net investment income, and changes in fair value reported in other comprehensive income. The Company had previously held the CLO equity tranches in a Sound Point managed fund with changes in net asset value (NAV) reported in “equity in earnings (losses) of investees.” Short-term investment income declined as a result of lower short-term interest rates and lower short-term average investment balances. The Company’s overall pre-tax book yield of available-for-sale fixed-maturity securities and short-term investments was 4.80% as of September 30, 2025 and 4.10% as of September 30, 2024.

Equity in earnings (losses) of investees for third quarter 2025 and nine months 2025 decreased compared to third quarter 2024 and nine months 2024, primarily due to the reclassification of certain CLO equity tranches to the available-for-sale portfolio, as described above. In addition, equity in earnings (losses) of investees in third quarter 2024 and nine months 2024 included $6 million and $18 million, respectively, related to certain alternative investments which AG transferred to AGMH as part of a stock redemption that occurred on August 5, 2024. See “Corporate Division” below. These decreases were partially offset by an increase in the NAV of a private healthcare fund in nine months 2025.

Other Income (Loss)

The increase in “other income (loss)” in nine months 2025 was primarily attributable to consent and usage fees associated with the workout and purchase of bonds issued by a U.K. regulated utility to which the Company has insured exposure and interest on missed financial guaranty premiums.

Economic Loss Development (Benefit)

The insured portfolio includes policies accounted for under several different accounting models depending on the characteristics of the contract and the Company’s control rights. For a discussion of methodologies and significant estimates for expected loss to be paid (recovered), see Part II, Item 8, Financial Statements and Supplementary Data, Note 4, Expected Loss to be Paid (Recovered), of the Company’s 2024 Annual Report on Form 10-K. The GAAP accounting policies for measurement and recognition for each type of contract are described in the notes listed below in Part II, Item 8, Financial Statements and Supplementary Data, of the Company’s 2024 Annual Report on Form 10-K:

•Note 5 for contracts accounted for as insurance;

•Note 6 for contracts accounted for as credit derivatives;

•Note 8 for FG VIEs; and

•Note 9 for fair value methodologies for credit derivatives and FG VIEs’ assets and liabilities.

In order to efficiently evaluate and manage the economics of the entire insured portfolio, management compiles and analyzes expected loss information for all policies on a consistent basis. The discussion of losses that follows encompasses expected losses on all contracts in the insured portfolio regardless of accounting model, unless otherwise specified. Net expected loss to be paid (recovered) is equal to the present value of expected future cash outflows for loss and LAE payments, net of: (i) inflows for expected salvage, subrogation and other recoveries; (ii) excess spread on underlying collateral, as applicable; and (iii) amounts ceded to reinsurers. Assumptions used in the determination of the net expected loss to be paid (recovered) such as delinquency, severity, discount rates and expected time frames to recovery are consistent for each sector regardless of the accounting model used.

Current risk-free rates are used to discount expected losses at the end of each reporting period. Therefore, changes in such rates from period to period affect economic loss development and loss and LAE. However, the effect of changes in discount rates is not indicative of actual credit impairment or improvement. The weighted average discount rates used to discount expected losses (recoveries) were 4.02% and 4.38% as of September 30, 2025 and December 31, 2024, respectively.

The composition of economic loss development (benefit) by accounting model and by sector is presented in the tables that follow, and the drivers of economic loss development (benefit) are discussed below.

Net Expected Loss to be Paid (Recovered) and Net Economic Loss Development (Benefit)

by Accounting Model

(1) Includes $63 million of recoveries related to the resolution of the LBIE litigation.

Roll Forward by Sector

(1) Net of ceded paid losses, whether or not such amounts have been settled with reinsurers. Ceded paid losses are typically settled 45 days after the end of the reporting period. Such amounts are recorded as reinsurance recoverable on paid losses in “other assets.”

The effects of changes in the risk-free rates included in economic loss development (benefit) were losses of $3 million in third quarter 2024, $6 million in nine months 2025 and $1 million in nine months 2024.

Third Quarter 2025 Net Economic Loss Development

Public Finance: The economic benefit of $8 million for public finance exposures was primarily attributable to lower estimated costs related to certain healthcare exposures.

U.S. RMBS: The economic benefit of $31 million for U.S. RMBS primarily consisted of a $26 million benefit due to higher assumed recoveries for charged-off second lien loans.

Third Quarter 2024 Net Economic Loss Development

Public Finance: The economic benefit of $23 million for U.S. public finance exposures was primarily attributable to certain healthcare exposures. The economic loss development of $46 million for non-U.S. public finance exposures was primarily attributable to certain U.K. regulated utilities.

U.S. RMBS: The economic benefit for U.S. RMBS was $56 million and was primarily attributable to a $29 million benefit from higher assumed recoveries for charged-off second lien loans and a $15 million benefit from higher assumed recoveries for deferred principal balances of modified first lien loans.

Nine Months 2025 Net Economic Loss Development

Public Finance: The economic loss development of $51 million for U.S. public finance exposures was primarily attributable to PREPA and certain healthcare exposures. The economic loss development of $36 million for non-U.S. public finance exposures was primarily attributable to certain U.K. regulated utility exposures.

U.S. RMBS: The economic benefit for U.S. RMBS was $40 million and was primarily attributable to a $31 million benefit related to higher recoveries for charged-off second lien loans.

Other Structured Finance: The benefit attributable to other structured finance of $64 million was primarily attributable to recoveries related to the resolution of the LBIE litigation (see Item 1, Financial Statements, Note 6, Contracts Accounted for as Credit Derivatives).

See Item 1, Financial Statements, Note 4, Expected Loss to be Paid (Recovered), for additional information.

Nine Months 2024 Net Economic Loss Development

Public Finance: The economic benefit of $14 million for U.S. public finance exposures was primarily attributable to certain healthcare exposures, partially offset by higher expected loss adjustment expenses related to certain Puerto Rico exposures. The economic loss development of $63 million for non-U.S. public finance exposures was primarily attributable to certain U.K. regulated utilities and healthcare exposures.

U.S. RMBS: The economic benefit for U.S. RMBS was $69 million and was mainly attributable to a $41 million benefit from higher assumed recoveries for charged-off first and second lien loans and a $15 million benefit from higher assumed recoveries for deferred principal first lien balances.

Insurance Segment Loss Expense

The primary differences between net economic loss development and the amount reported as “loss and LAE (benefit)” in the consolidated statements of operations are that loss and LAE (benefit): (i) considers deferred premium revenue in the calculation of loss reserves for financial guaranty insurance contracts; (ii) eliminates loss and LAE related to FG VIEs; and (iii) does not include estimated losses or benefits on credit derivatives.

For financial guaranty insurance contracts, each transaction’s expected loss to be expensed is compared with the deferred premium revenue of that transaction. Expected loss to be expensed represents past or expected future net claim payments that have not yet been expensed. Such amounts will be expensed in future periods as deferred premium revenue amortizes into income on financial guaranty insurance policies. Expected loss to be expensed is the Company’s projection of incurred losses that will be recognized in future periods, excluding accretion of discount. When the expected loss to be expensed exceeds the deferred premium revenue, a loss is recognized in income for the amount of such excess. Therefore, the timing of loss recognition in income does not necessarily coincide with the timing of the actual credit impairment or improvement reported in net economic loss development. Transactions acquired in business combinations or seasoned portfolios assumed from legacy financial guaranty insurers (particularly BIG transactions) generally have large deferred premium revenue balances. To the extent that a BIG transaction has a large deferred premium revenue, the difference between economic development and loss and LAE may be significant.

While expected loss to be paid (recovered) is an important measure that provides the present value of amounts that the Company expects to pay or recover in future periods regardless of accounting model, expected loss to be expensed is important because it presents the Company’s projection of net expected losses that will be recognized in the consolidated statement of operations in future periods as deferred premium revenue amortizes into income for financial guaranty insurance policies.

The amount of Insurance segment loss expense, which includes losses on policies regardless of form, is a function of the amount of economic loss development discussed above and the deferred premium revenue amortization in a given period, on a contract-by-contract basis. The following table presents the Insurance segment loss expense (benefit).

Loss Expense (Benefit)

(1) Nine months 2025 includes $63 million of recoveries in connection with the resolution of the LBIE litigation (see Item 1, Financial Statements, Note 6, Contracts Accounted for as Credit Derivatives).