ASSURED GUARANTY LTD

Previous wording

(i) significant changes in inflation, interest rates, the world’s credit markets or segments thereof, credit spreads, foreign exchange rates, tariff regimes or general economic conditions, including the possibility of a recession or stagflation; (ii) geopolitical risk, terrorism and political violence risk, including regional and global military conflicts, and strategic competition and trade confrontation; (iii) cybersecurity risk and the impacts of artificial intelligence, machine learning and other technological advances, including the possibility of malicious cyber attacks, dissemination of misinformation, and disruption of markets in which Assured Guaranty participates; (iv) the impact of a United States (U.S.) government shutdown and/or the possibility of payment defaults on the debt of the U.S. government or instruments issued, insured or guaranteed by related institutions, agencies or instrumentalities, and downgrades to their credit ratings; (v) developments in the world’s financial and capital markets, including stresses in banking institutions, and the possibility that increasing participation of unregulated financial institutions in these markets results in losses or lower valuations of assets, reduced liquidity and credit and/or contraction of these markets, that adversely affect repayment rates of insured obligors, Assured Guaranty’s insurance loss or recovery experience, or investments of Assured Guaranty; (vi) reduction in the amount or market rates of return of available insurance opportunities and/or the demand for Assured Guaranty’s insurance; (vii) the failure or ineffectiveness of Assured Guaranty’s risk mitigation strategies or activities, including distressed credit workouts, management of exposure limits, hedging activities, and the procurement of third party reinsurance for insured exposures; (viii) the possibility that investments made by Assured Guaranty for its investment portfolio do not result in the benefits anticipated or subject Assured Guaranty to negative consequences; (ix) the possibility that Assured Guaranty’s strategies or strategic transactions do not result in the benefits anticipated and/or subject Assured Guaranty to negative consequences; (x) the impact of the announcement of Assured Guaranty’s strategies on Assured Guaranty and the perception of Assured Guaranty by its investors, regulators, rating agencies, and employees; (xi) risks related to the expansion into annuity reinsurance and the launching of Assured Life Reinsurance Ltd.; (xii) the failure of Assured Guaranty to successfully integrate acquired businesses, including Assured Guaranty’s acquisition of Warwick Company (UK) Limited; (xiii) loss of key personnel; (xiv) the possibility that longevity, mortality, lapse, withdrawal or surrender experience in Assured Guaranty’s annuity reinsurance business is less favorable than the rates Assured Guaranty used in pricing its reinsurance agreements; (xv) the inability to control the business, managemen…

Excerpt shortened here; the source contains the full paragraph.

Current wording

(i) significant changes in inflation, interest rates, the world’s credit markets or segments thereof, credit spreads, foreign exchange rates, tariff regimes or general economic conditions, including the possibility of a recession or stagflation; (ii) geopolitical risk, terrorism and political violence risk, including regional and global military conflicts, and strategic competition and trade confrontation; (iii) cybersecurity risk and the impacts of artificial intelligence, machine learning and other technological advances, including the possibility of malicious cyber attacks, dissemination of misinformation, and disruption of markets in which Assured Guaranty participates; (iv) the impact of a United States (U.S.) government shutdown and/or the possibility of payment defaults on the debt of the U.S. government or instruments issued, insured or guaranteed by related institutions, agencies or instrumentalities, and downgrades to their credit ratings; (v) developments in the world’s financial and capital markets, including stresses in banking institutions, and the possibility that increasing participation of unregulated financial institutions in these markets results in losses or lower valuations of assets, reduced liquidity and credit and/or contraction of these markets, that adversely affect repayment rates of insured obligors, Assured Guaranty’s insurance loss or recovery experience, or investments of Assured Guaranty; (vi) reduction in the amount or market rates of return of available insurance or reinsurance opportunities and/or the demand for Assured Guaranty’s insurance and reinsurance; (vii) the failure or ineffectiveness of Assured Guaranty’s risk mitigation strategies or activities, including distressed credit workouts, management of exposure limits, hedging activities, and the procurement of third-party reinsurance for insured exposures; (viii) any rating agency action in relation to Assured Guaranty, and/or of any securities Assured Guaranty has issued, and/or of transactions that Assured Guaranty has insured, including requirements to maintain rating agency capital redundancy and to hold additional capital against certain insured exposures; (ix) the possibility that investments made by Assured Guaranty for its investment portfolio do not result in the benefits anticipated or subject Assured Guaranty to negative consequences; (x) the possibility that Assured Guaranty’s strategies or strategic transactions do not result in the benefits anticipated and/or subject Assured Guaranty to negative consequences; (xi) the impact of the announcement of Assured Guaranty’s strategies on Assured Guaranty and the perception of Assured Guaranty by its investors, regulators, rating agencies, and employees; (xii) risks related to the expansion into annuity reinsurance and the launching of Assured Life Reinsurance Ltd.; (xiii) the failure of Assured Guaranty to successfully integrate acquired businesses, including Assured Guaranty’s acquisition of Warwick…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

In the Financial Guaranty segment (which, prior to the three-month period ended March 31, 2026 (first quarter 2026), was called the Insurance segment), the Company provides credit protection products to the United States (U.S.) and non-U.S. public finance (including infrastructure) and structured finance markets. The Annuity Reinsurance segment comprises the results of Assured Life Reinsurance Ltd. (Assured Life Re) and other subsidiaries acquired in the acquisition of Assured Life Re. The Company participates in the asset management business through its ownership interest in Sound Point Capital Management, LP (Sound Point, LP) and certain of its investment management affiliates (together with Sound Point, LP, Sound Point). See Item 1. Financial Statements, Note 1. Business and Basis of Presentation.

Current wording

In the Financial Guaranty segment (which, prior to March 31, 2026, was called the Insurance segment), the Company provides credit protection products to the U.S. and non-U.S. public finance (including infrastructure) and structured finance markets. The Annuity Reinsurance segment comprises the results of Assured Life Reinsurance Ltd. (Assured Life Re) and other subsidiaries acquired in the acquisition of Assured Life Re. The Company participates in the asset management business through its ownership interest in Sound Point Capital Management, LP (Sound Point, LP) and certain of its investment management affiliates (together with Sound Point, LP, Sound Point). See Item 1. Financial Statements, Note 1. Business and Basis of Presentation and Note 9. Investments.

Previous wording

Demand for the financial guaranties issued by the Company’s financial guaranty (FG) 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 FG 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.

Current wording

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

Previous wording

Strength of the Economy Generally. Global tariffs have increased since the U.S. administration announced a “reciprocal tariff” strategy on April 2, 2025, with the announced objective of rectifying trade practices that contribute to large and persistent annual U.S. goods trade deficits. Since that time, there have been numerous changes to announced tariffs as well as legal actions relating to tariff policies, resulting in uncertainty as to the future levels of U.S. tariffs. For example, the U.S. Supreme Court held on February 20, 2026, that the International Emergency Economic Powers Act (IEEPA) does not authorize the President of the U.S. to impose tariffs. However, the U.S. administration has indicated that tariffs found to be illegal by the U.S. Supreme Court will be replaced with alternative tariffs. Some U.S. trading partners have announced or imposed tariffs or other trading restrictions in response to U.S. actions. These actions by the U.S. and its trading partners have disrupted international trade and are negatively impacting the U.S. and global economies.

Current wording

Strength of the Economy Generally. Global tariffs have increased since the U.S. administration announced a “reciprocal tariff” strategy on April 2, 2025, with the announced objective of rectifying trade practices that contribute to large and persistent annual U.S. goods trade deficits. Since that time, there have been numerous changes to announced tariffs as well as legal actions relating to tariff policies, resulting in uncertainty as to the future levels of U.S. tariffs. For example, the U.S. Supreme Court held on February 20, 2026 that the International Emergency Economic Powers Act does not authorize the President of the U.S. to impose tariffs. However, following this decision, the U.S. administration implemented alternative tariffs effective July 24, 2026, and tariff levels and related trade policies continue to evolve. Some U.S. trading partners have announced or imposed tariffs or other trading restrictions in response to U.S. actions.

Previous wording

According to the first quarter 2026 advance estimate released by the U.S. Bureau of Economic Analysis, real gross domestic product (GDP) increased at an annual rate of 2.0% in first quarter 2026, compared to a real GDP increase of 0.5% in the fourth quarter of 2025. At the end of March 2026, the U.S. unemployment rate, seasonally adjusted, stood at 4.3%, slightly lower than where it started the year at 4.4%.

Current wording

According to the advance estimate released by the U.S. Bureau of Economic Analysis, real gross domestic product (GDP) increased at an annual rate of 1.5% in the three-month period ended June 30, 2026 (second quarter 2026), compared to a real GDP increase of 2.1% in the first quarter of 2026. At the end of June 2026, the U.S. unemployment rate, seasonally adjusted, stood at 4.2%, lower than where it started the year at 4.4%.

Previous wording

The Company believes a more robust economy makes it less likely that obligors whose obligations it guarantees in its FG business will default, while a recession, if it were to occur, would make it more likely that obligors whose obligations it guarantees will default. However, a recession may also cause credit spreads to widen as investors seek security, which tends to create new business opportunities for the Company in its financial guaranty business.

Current wording

The Company believes a more robust economy makes it less likely that obligors whose obligations it guarantees in its financial guaranty business will default, while a recession, if it were to occur, would make it more likely that obligors whose obligations it guarantees will default. However, a recession may also cause credit spreads to widen as investors seek security, which tends to create new business opportunities for the Company in its financial guaranty business.

Previous wording

Inflation. According to the U.S. Bureau of Labor Statistics, the inflation rate in the U.S. before seasonal adjustment for the 12-month period ending March 2026, as measured by the Consumer Price Index for All Urban Consumers, was 3.3%, as compared to 2.4% for the 12-month period ending March 2025. According to the United Kingdom (U.K.) Office for National

Current wording

Inflation. According to the U.S. Bureau of Labor Statistics, the inflation rate in the U.S. before seasonal adjustment for the 12-month period ending June 2026, as measured by the Consumer Price Index for All Urban Consumers, was 3.5%, as compared to 2.7% for the 12-month period ending June 2025. According to the United Kingdom (U.K.) Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs rose 2.8% for the 12 months through June 2026, lower than for the 12 months through June 2025. Recent increases in oil prices associated with geopolitical developments in the Middle East have contributed to market concerns regarding future inflation, particularly in economies that are more exposed to imported energy costs, including the U.K.

Previous wording

Generally, inflation reduces the real value of money over time. For obligors whose payments the Company insures, inflation can mean that the real value of their fixed debt payments decreases, potentially making it relatively easier for obligors to service these fixed-rate debts and less likely for them to default. However, if inflation increases operating expenses and revenues or incomes do not keep pace, obligors may find it more difficult to make their payment obligations, even if nominal debt payments remain unchanged. Higher inflation can also lead to tighter monetary policies, which are actions taken by sovereign central banks to reduce the amount of money circulating in the economy, including raising interest rates, which can make refinancing or servicing debt more difficult. In addition, consumer price inflation in the U.K. affects reported net par outstanding for certain U.K. exposures with $24.0 billion of net par outstanding as of March 31, 2026, and also affects projected future installment premiums on the portion of such exposure that pays at least a portion of the premium on an installment basis over the term of the exposure.

Current wording

Generally, inflation reduces the real value of money over time. For obligors whose payments the Company insures, inflation can mean that the real value of their fixed debt payments decreases, potentially making it relatively easier for obligors to service these fixed-rate debts and less likely for them to default. However, if inflation increases operating expenses and revenues or incomes do not keep pace, obligors may find it more difficult to make their payment obligations, even if nominal debt payments remain unchanged. Higher inflation can also lead to tighter monetary policies, which are actions taken by sovereign central banks to reduce the amount of money circulating in the economy, including raising interest rates, which can make refinancing or servicing debt more difficult. In addition, consumer price inflation in the U.K. affects the Company’s reported net par outstanding for certain U.K. exposures with $24.0 billion of net par outstanding as of June 30, 2026, and also affects projected future installment premiums on the portion of such exposure that pays at least a portion of the premium on an installment basis over the term of the exposure.

Previous wording

The Company’s U.K. bulk purchase annuity (pension risk transfer, PRT) reinsurance business is also subject to U.K. inflation, as the annuity payments under such transactions are typically adjusted for changes in U.K. consumer price or retail price indices, meaning that the projected benefit obligations the Company reinsures increase in an inflationary environment, which in turn can increase the Company’s benefit payments under those reinsurance contracts. The Company holds inflation-linked assets, including index-linked gilts and inflation swaps, to mitigate this inflation exposure.

Current wording

The Company’s U.K. bulk purchase annuity (pension risk transfers, PRT) reinsurance business is also subject to U.K. inflation, as the annuity payments under such transactions are typically adjusted for changes in U.K. consumer price or retail price indices, meaning that the projected benefit obligations the Company reinsures increase in an inflationary environment, which in turn can increase the Company’s benefit payments under those reinsurance contracts. The Company holds inflation-linked assets, including index-linked gilts and inflation swaps, to mitigate this inflation exposure.

Previous wording

From 2024, the Bank of England’s Monetary Policy Committee (MPC) took actions similar to those of the FOMC to spur economic growth. As inflationary pressures eased and the U.K. economy showed signs of stagnation or mild recession, the MPC kept the Bank of England base rate (Bank Rate) unchanged for most of 2024, before beginning to decrease the Bank Rate in August 2024. In 2025 and early 2026, with inflation being closer to the MPC’s target level and economic growth slowed, the MPC further lowered the Bank Rate several times. As of April 30, 2026, the Bank Rate stood at 3.75%, down from a high of 5.25% in mid-2024.

Current wording

From 2024, the Bank of England’s Monetary Policy Committee (MPC) took actions similar to those of the FOMC to spur economic growth. As inflationary pressures eased and the U.K. economy showed signs of stagnation or mild recession, the MPC kept the Bank of England base rate (Bank Rate) unchanged for most of 2024, before beginning to decrease the Bank Rate in August 2024. In 2025 and early 2026, with inflation being closer to the MPC’s target level and economic growth slowed, the MPC further lowered the Bank Rate several times. As of July 30, 2026, the Bank Rate stood at 3.75%, down from a high of 5.25% in mid-2024. Recent increases in oil prices may contribute to higher inflation expectations, which could influence future Bank of England policy decisions and place upward pressure on U.K. gilt yields, as longer-term rates reflect, among other factors, market expectations regarding future short-term rates and the term premium investors require to hold longer-dated securities.

Previous wording

The level and direction of change of interest rates and credit spreads impact the Company in numerous ways. On the one hand, lower interest rates may increase the fair value of fixed-maturity securities currently held in the Company’s investment portfolio, encourage municipal and infrastructure bond issuance and positively impact the finances of some of the obligors whose payments the Company insures. On the other hand, lower interest rates may decrease the base on which the Company charges up-front premium on most new municipal and infrastructure bond transactions and may also decrease amounts the Company can earn on securities newly acquired for its investment portfolio. Lower interest rates also are often accompanied by narrower credit spreads, which may also decrease the level of premiums the Company can charge for its FG transactions.

Current wording

The level and direction of change of interest rates and credit spreads impact the Company in numerous ways. On the one hand, lower interest rates may increase the fair value of fixed-maturity securities currently held in the Company’s investment portfolio, encourage municipal and infrastructure bond issuance and positively impact the finances of some of the obligors whose payments the Company insures. On the other hand, lower interest rates may decrease the base on which the Company charges up-front premium on most new municipal and infrastructure bond transactions and may also decrease amounts the Company can earn on securities newly acquired for its investment portfolio. Lower interest rates also are often accompanied by narrower credit spreads, which may also decrease the level of premiums the Company can charge for its financial guaranty transactions.

Previous wording

Credit Spreads. The 30-year AAA Municipal Market Data (MMD) rate is a measure of interest rates in the Company’s largest financial guaranty insurance market, U.S. public finance. The MMD rate averaged 4.30% for the quarter ended March 2026, higher than the 4.18% average rate for the quarter ended December 2025 and higher than the 4.04% average rate for the quarter ended March 2025. Meanwhile, the difference, or credit spread, between the 30-year BBB rated general obligation relative to the 30-year AAA MMD averaged 84 basis points (bps) for the quarter ended March 2026, which is narrower compared to the 88 bps average for the quarter ended December 2025 and narrower compared to the 90 bps average for the quarter ended March 2025. The Company believes that wider spreads could permit it to increase its premium rates on new business.

Current wording

Credit Spreads. The 30-year AAA Municipal Market Data (MMD) rate is a measure of interest rates in the Company’s largest financial guaranty insurance market, U.S. public finance. The MMD rate averaged 4.33% for second quarter 2026, slightly higher to the 4.30% average rate for the quarter ended March 2026 and lower than the 4.47% average rate for the quarter ended June 2025. Meanwhile, the difference, or credit spread, between the 30-year BBB rated general obligation relative to the 30-year AAA MMD averaged 83.7 basis points (bps) for second quarter 2026, which is slightly narrower compared to the 84.3 bps average for the quarter ended March 2026 and narrower compared to the 90.0 bps average for the quarter ended June 2025. The Company believes that wider spreads could permit it to increase its premium rates on new business.

Previous wording

U.S. Residential Mortgage Rates. According to Freddie Mac, the 30-year fixed-rate mortgage rate averaged 6.38% for the week ending March 26, 2026, lower than the 30-year mortgage rate average of 6.65% from one year ago. The National Association of Realtors reported that there was a 3.6% decrease in year-over-year existing-home sales from March 2025 to March 2026, and that the median existing-home sales price increased 1.4% from March 2025 ($403,100) to March 2026 ($408,800).

Current wording

U.S. Residential Mortgage Rates. According to Freddie Mac, the 30-year fixed-rate mortgage rate averaged 6.49% for the week ending June 25, 2026, lower than the 30-year mortgage rate average of 6.77% from one year ago. The National Association of Realtors reported that there was a 2.8% increase in year-over-year existing-home sales from June 2025 to June 2026, and that the median existing-home sales price increased 1.8% from June 2025 ($432,700) to June 2026 ($440,600). Higher housing prices may benefit the distressed residential mortgage-backed securities (RMBS) that the Company insures.

Previous wording

Foreign Exchange Rates. For the quarter ended March 31, 2026, the exchange rates between the pound sterling and the U.S. dollar and between the euro and the U.S. dollar traded in a tight range, both finishing the quarter near where they started.

Current wording

Foreign Exchange Rates. For second quarter 2026, the exchange rates between the pound sterling and the U.S. dollar and between the euro and the U.S. dollar traded within relatively narrow ranges and finished the quarter at levels generally consistent with where they began.

Previous wording

The Company is subject to foreign exchange risk in several areas of its business. First, with respect to the financial guaranty business, the Company guarantees non-U.S. obligations denominated primarily in pound sterling and euros, and also invests in pound sterling and euro denominated investments. Second, PRT reinsurance liabilities are denominated in pound sterling, along with the assets (after hedging) supporting this business. The impact of fluctuations in the pound sterling/U.S. dollar exchange rate on premiums receivable, financial guaranty loss reserves and PRT liabilities, along with any cross-currency derivatives, is reflected in the Company's consolidated statements of operations, while the impact of fluctuations in the pound sterling/U.S. dollar exchange rate on the Company’s investments classified as available-for-sale is reported in other comprehensive income.

Current wording

The Company is subject to foreign exchange risk in several areas of its business. First, with respect to the financial guaranty business, the Company guarantees non-U.S. obligations denominated primarily in pound sterling and euros, and also invests in pound sterling and euro denominated investments. Second, PRT reinsurance liabilities are denominated in pound sterling, along with the assets (after hedging) supporting this business. The impact of fluctuations in exchange rates on premiums receivable, financial guaranty loss reserves and PRT liabilities, along with any cross-currency derivatives, is reflected in the Company's consolidated statements of operations, while the impact of fluctuations in exchange rates on the Company’s investments classified as available-for-sale is reported in other comprehensive income.

Previous wording

The Company seeks to grow its core FG insurance business through new business production in established sectors and jurisdictions and by entering into new markets, lines and classes of business. In addition, the Company seeks to leverage its core credit competencies by expanding its business into additional revenue streams, such as annuity reinsurance and asset management, with the objective of diversifying its revenue streams and growing its net income.

Current wording

The Company seeks to grow its core financial guaranty insurance business through new business production in established sectors and jurisdictions and by entering into new markets, lines and classes of business. In addition, the Company seeks to leverage its core credit competencies by expanding its business into additional revenue streams, such as annuity reinsurance and asset management, with the objective of diversifying its revenue streams and growing its net income.

Previous wording

The Company seeks to grow its FG insurance portfolio through new business production in each of its markets: public finance (including infrastructure) and structured finance. The Company believes high-profile defaults by municipal obligors, such as the Commonwealth of Puerto Rico (Puerto Rico), Detroit, Michigan and Stockton, California as well as events such as the COVID-19 pandemic have led to increased awareness of the value of bond insurance and stimulated demand for the product. The Company believes that demand for its insurance in this market will continue because, for those exposures that the Company guarantees, it undertakes the tasks of credit selection, analysis, negotiation of terms, surveillance and, if necessary, loss mitigation. The Company believes that its insurance: (i) encourages retail investors, who typically have fewer resources than the Company for analyzing municipal bonds, to purchase such bonds; (ii) enables institutional investors to operate more efficiently; and (iii) allows smaller, less well-known issuers to gain market access on a more cost-effective basis.

Current wording

The Company believes high-profile defaults by municipal obligors, such as the Commonwealth of Puerto Rico (Puerto Rico), Detroit, Michigan and Stockton, California as well as events such as the COVID-19 pandemic have led to increased awareness of the value of bond insurance and stimulated demand for the product. The Company believes that demand for its insurance in this market will continue because, for those exposures that the Company guarantees, it undertakes the tasks of credit selection, analysis, negotiation of terms, surveillance and, if necessary, loss mitigation. The Company believes that its insurance: (i) encourages retail investors, who typically have fewer resources than the Company for analyzing municipal bonds, to purchase such bonds; (ii) enables institutional investors to operate more efficiently; and (iii) allows smaller, less well-known issuers to gain market access on a more cost-effective basis.

Previous wording

The low interest rate environment and tight U.S. municipal credit spreads from when the financial crisis began in 2008 through early 2020 dampened demand for bond insurance compared with the levels before the financial crisis. After the onset of the COVID-19 pandemic in early 2020, credit spreads initially widened as a result of market concerns about the impact of the COVID-19 pandemic on some municipal credits, thereby improving demand for FG insurance even in a low interest rate environment, before narrowing again in 2022. The Company believes that, over time, wider credit spreads may improve demand for bond insurance.

Current wording

The low interest rate environment and tight U.S. municipal credit spreads from when the financial crisis began in 2008 through early 2020 dampened demand for bond insurance compared with the levels before the financial crisis. After the onset of the COVID-19 pandemic in early 2020, credit spreads initially widened as a result of market concerns about the impact of the COVID-19 pandemic on some municipal credits, thereby improving demand for financial guaranty insurance even in a low interest rate environment, before narrowing again in 2022. The Company believes that, over time, wider credit spreads may improve demand for bond insurance.

Previous wording

The Company seeks to expand its FG business geographically by entering new markets; in 2024, the Company opened new offices in Australia and Singapore. The Company has recently undertaken, and continues to undertake, several initiatives to broaden its insurance lines and classes of business, and improve the efficiency of its secondary market execution. For example, the Company has enhanced its structured finance new business production by developing fund finance into a flow business line. In addition, the Company is pursuing nonpayment insurance business strategies through internal and/or external growth opportunities.

Current wording

The Company seeks to expand its financial guaranty business geographically by entering new markets; in 2024, the Company opened new offices in Australia and Singapore. The Company has recently undertaken, and continues to undertake, several initiatives to broaden its insurance lines and classes of business, and improve the efficiency of its secondary market execution. For example, the Company has enhanced its structured finance new business production by developing fund finance into a flow business line. In addition, the Company is pursuing nonpayment insurance business strategies through internal and/or external growth opportunities.

Previous wording

The Company participates in the asset management business through its ownership interest in Sound Point, and does not directly manage investments for third parties. The Company’s ownership interest in Sound Point furthers its growth strategy of participating in a diversifying fee-based earnings stream independent of the risk-based premiums generated by its FG business.

Current wording

The Company participates in the asset management business through its ownership interest in Sound Point, and does not directly manage investments for third parties. The Company’s ownership interest in Sound Point furthers its growth strategy of participating in a diversifying fee-based earnings stream independent of the risk-based premiums generated by its financial guaranty business.

Previous wording

The Company also, from time to time and where appropriate, participates in litigation to enforce or defend its rights in its financial guaranty business. For example, the Company initiated a number of legal actions to enforce its rights with respect to obligations of Puerto Rico and various obligations of its related authorities and public corporations. In addition, the Company successfully defended claims brought by Lehman Brothers International (Europe) (in administration) (LBIE) and prevailed in its counterclaim against LBIE; following the exhaustion of LBIE’s appeals, the Company recognized a realized gain on credit derivatives in first quarter 2025 of $103 million, which represents the full satisfaction of the judgment it was awarded and its claims for attorneys’ fees, expenses and interest in connection with this litigation. See Item 1. Financial Statements, Note 8. Derivatives, for additional information.

Current wording

The Company also, from time to time and where appropriate, participates in litigation to enforce or defend its rights in its financial guaranty business. For example, the Company initiated a number of legal actions to enforce its rights with respect to obligations of Puerto Rico and various obligations of its related authorities and public corporations. In addition, the Company successfully defended claims brought by Lehman Brothers International (Europe) (in administration) (LBIE) and prevailed in its counterclaim against LBIE; following the exhaustion of LBIE’s appeals, the Company recognized a realized gain on credit derivatives in the first quarter of 2025 of $103 million, which represents the full satisfaction of the judgment it was awarded and its claims for attorneys’ fees, expenses and interest in connection with this litigation.

Previous wording

The Company may also purchase attractively priced obligations, including below-investment-grade (BIG) obligations, that it has insured and for which it had expected losses to be paid, in order to mitigate the economic effect of insured losses (Loss Mitigation Securities). The fair value of Loss Mitigation Securities as of March 31, 2026 (excluding the value of the Company’s insurance) was $135 million.

Current wording

The Company may also purchase attractively priced obligations, including BIG obligations, that it has insured and for which it had expected losses to be paid, in order to mitigate the economic effect of insured losses (Loss Mitigation Securities). The fair value of Loss Mitigation Securities as of June 30, 2026 (excluding the value of the Company’s insurance) was $151 million.

Previous wording

The Company’s capital management strategy is designed to efficiently allocate and utilize capital across the Assured Guaranty group in order to optimize outcomes for rating agency assessments, regulatory compliance and the Company’s own strategic initiatives and risk management requirements. The Company believes this disciplined approach to capital management supports the long-term stability and strength of Assured Guaranty, enabling it to advance its financial guaranty, annuity reinsurance and asset management businesses, and other corporate strategies. Assured Guaranty seeks to enhance financial flexibility and resiliency by proactively managing its capital and aligning resources with its business objectives and stakeholder interests.

Current wording

The Company’s capital management strategy is designed to efficiently allocate and utilize capital across the Assured Guaranty group in order to enhance outcomes for rating agency assessments, regulatory compliance and the Company’s own strategic initiatives and risk management requirements. The Company believes this disciplined approach to capital management supports the long-term stability and strength of Assured Guaranty, enabling it to advance its financial guaranty, annuity reinsurance and asset management businesses, and other corporate strategies. Assured Guaranty seeks to enhance financial flexibility and resiliency by proactively managing its capital and aligning resources with its business objectives and stakeholder interests.

Previous wording

Since the launch of its share repurchase program in 2013, the Company has returned $6.0 billion of excess capital to its shareholders by repurchasing 81% of its common shares outstanding at the beginning of the program.

Current wording

Since the launch of its share repurchase program in 2013, the Company has returned $6.0 billion of capital to its shareholders by repurchasing 81% of its common shares outstanding at the beginning of the program.

Previous wording

As of May 6, 2026, the Company was authorized to repurchase an additional $147 million of its common shares.

Current wording

As of August 5, 2026, the Company was authorized to repurchase an additional $121 million of its common shares.

Previous wording

As of March 31, 2026, the estimated accretive effect of the cumulative repurchases of common shares since the beginning of 2013 was approximately: $68.14 per share in shareholders’ equity attributable to AGL, $71.47 per share in adjusted operating shareholders’ equity and $118.28 per share in adjusted book value (ABV).

Current wording

As of June 30, 2026, the estimated accretive effect of the cumulative repurchases of common shares since the beginning of 2013 was approximately: $69.85 per share in shareholders’ equity attributable to AGL, $72.75 per share in adjusted operating shareholders’ equity and $119.45 per share in adjusted book value (ABV).

Previous wording

•foreign exchange losses on remeasurement of $19 million in first quarter 2026, compared with gains of $37 million in first quarter 2025, and

Current wording

•foreign exchange losses on remeasurement of $2 million in second quarter 2026, compared with gains of $79 million in second quarter 2025, and

Previous wording

•lower equity in earnings of investees in first quarter 2026, primarily due to losses generated by the Company’s investment in a collateralized loan obligation (CLO) fund.

Current wording

•lower equity in earnings of investees in second quarter 2026, primarily due to losses generated by the Company’s investment in a collateralized loan obligation (CLO) fund.

Previous wording

•a lower loss and LAE in first quarter 2026 of $17 million, compared with a loss and LAE of $40 million in first quarter 2025.

Current wording

•a loss and LAE in second quarter 2026 of $4 million compared with a loss and LAE of $28 million in second quarter 2025.

Previous wording

Net income attributable to AGL for first quarter 2026 was lower compared with first quarter 2025 primarily due to the following:

Current wording

Net income attributable to AGL for six months 2026 was lower compared with six months 2025 primarily due to the following:

Previous wording

•a fair value gain on credit derivatives related to the resolution of the LBIE litigation of $103 million in first quarter 2025,

Current wording

•a fair value gain on credit derivatives related to the resolution of the LBIE litigation of $103 million in six months 2025, and

Previous wording

•a discrete tax benefit of $33 million in first quarter 2026 resulting from the enactment of the U.K. Finance Act 2026, which clarified that certain Bermuda pre-regime deferred taxes are excluded from covered taxes under the Pillar Two global minimum tax framework,

Current wording

•a discrete tax benefit of $33 million in the first quarter of 2026 resulting from the enactment of the U.K. Finance Act 2026, which clarified that certain Bermuda pre-regime deferred taxes are excluded from covered taxes under the Pillar Two global minimum tax framework, and

Previous wording

•the increase of $25 million in performance fees (net of related expenses) due to the impact of the payout of carried interest from the sale of the underlying asset in a single-asset fund in first quarter 2026, and

Current wording

•the increase of $21 million in performance fees (net of related expenses) due to the impact of the payout of carried interest from the sale of the underlying asset in a single-asset fund in the first quarter of 2026.

Previous wording

Adjusted operating income in first quarter 2026 was $115 million, compared with $162 million in first quarter 2025. The decrease was primarily due to a $103 million gain related to the resolution of the LBIE litigation in first quarter 2025 and a decrease of $22 million of equity in earnings of investees in first quarter 2026, primarily due to losses generated by the Company’s investment in a CLO fund, offset in part by a $33 million discrete tax benefit resulting from the enactment of the U.K. Finance Act 2026, a $25 million increase in performance fees, net of related expenses, due to the impact of the payout of carried interest from the sale of the underlying asset in a single-asset fund in first quarter 2026 and a $23 million decrease in loss expense in the public finance sector in first quarter 2026. See “— Results of Operations — Reconciliation to GAAP” for the reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).

Current wording

Adjusted operating income in six months 2026 was $170 million, compared with $212 million in six months 2025. The decrease was primarily due to a $103 million gain related to the resolution of the LBIE litigation in six months 2025, a decrease of $36 million in equity in earnings of investees in six months 2026 primarily due to losses generated by the Company’s investment in a CLO equity fund, and lower other income due to $15 million recognized in six months 2025 associated with the workout and purchase of bonds issued by a U.K. regulated utility to which the Company has insured exposure and interest received on late financial guaranty premiums. These decreases were offset in part by a $51 million decrease in loss expense in the public finance sector, a $33 million discrete tax benefit resulting from the enactment of the U.K. Finance Act 2026, and a $21 million increase in performance fees, net of related expenses, due to the impact of the payout of carried interest from the sale of the underlying asset in a single-asset fund in six months 2026. See “— Results of Operations — Reconciliation to GAAP” for the reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).

Previous wording

Shareholders’ equity attributable to AGL as of March 31, 2026 decreased compared with December 31, 2025, primarily due to unrealized losses on the investment portfolio, share repurchases and dividends, partially offset by net income. Adjusted operating shareholders’ equity increased primarily due to adjusted operating income, partially offset by share repurchases and dividends. ABV decreased primarily due to share repurchases, dividends and loss development, partially offset by adjusted operating income, GWP and the accretive effect of Assured Life Re Acquisition. See “— Non-GAAP Financial Measures” below for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity and ABV.

Current wording

Shareholders’ equity attributable to AGL as of June 30, 2026 decreased compared with December 31, 2025, primarily due to unrealized losses on the investment portfolio, share repurchases and dividends, partially offset by net income. Adjusted operating shareholders’ equity decreased primarily due to share repurchases and dividends, partially offset by adjusted operating income. ABV decreased primarily due to share repurchases, dividends and loss development, partially offset by adjusted operating income, GWP and the accretive effect of Assured Life Re Acquisition. See “— Non-GAAP Financial Measures” below for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity and ABV.

Previous wording

On a per share basis, shareholders’ equity attributable to AGL decreased primarily due to unrealized losses on the investment portfolio. Adjusted operating shareholders’ equity and ABV increased as of March 31, 2026 compared with December 31, 2025, due, in part, to the accretive effect of the share repurchase program and Assured Life Re Acquisition. See “— Non-GAAP Financial Measures” for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders’ equity and ABV.

Current wording

On a per share basis, shareholders’ equity attributable to AGL, adjusted operating shareholders’ equity and ABV increased as of June 30, 2026 compared with December 31, 2025, due, in part, to the accretive effect of the share repurchase program and Assured Life Re Acquisition. See “— Non-GAAP Financial Measures” for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders’ equity and ABV.

Previous wording

The most recent events around the Strait of Hormuz have caused oil prices to rise, which the Company believes has increased upward pressure on interest rates and inflation, especially in the U.K. For information on the impact on the Company of any future increases in interest rates and inflation, see “ — Overview — Economic Environment — Inflation" and " — Interest Rates.”

Current wording

The most recent events around the Strait of Hormuz have caused oil prices to rise, which the Company believes has contributed to market concerns regarding future inflation, particularly in economies that are more exposed to imported energy costs, including the U.K. For information on the impact on the Company of any future increases in interest rates and inflation, see “ — Overview — Economic Environment — Inflation" and " — Interest Rates.”

Previous wording

The Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, and have identified no material direct exposure to Ukraine or Russia. In fact, the Company’s direct insurance exposure to Eastern Europe generally is limited to $196 million in net par outstanding as of March 31, 2026, consisting of the sovereign debt of Poland. The Company rates this exposure investment grade.

Current wording

The Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, and have identified no material direct exposure to Ukraine or Russia. In fact, the Company’s direct insurance exposure to Eastern Europe generally is limited to $191 million in net par outstanding as of June 30, 2026, consisting of the sovereign debt of Poland. The Company rates this exposure investment grade.

Previous wording

On January 3, 2026, the U.S. executed an operation within Venezuela apprehending President Nicolas Maduro and his wife Cilia Flores who were taken to New York City and indicted in the U.S. Southern District Court of New York on several charges related to narcoterrorism. In light of this development, the Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, and have identified no direct exposure to Venezuela. The Company’s direct insurance exposure to South America is generally limited to $132 million in net par outstanding as of March 31, 2026, consisting of infrastructure finance in Colombia and Chile. The Company rates these exposures investment grade.

Current wording

On January 3, 2026, the U.S. executed an operation within Venezuela apprehending President Nicolas Maduro and his wife Cilia Flores who were taken to New York City and indicted in the U.S. Southern District Court of New York on several charges related to narcoterrorism. In light of this development, the Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, and have identified no direct exposure to Venezuela. The Company’s direct insurance exposure to South America is generally limited to $141 million in net par outstanding as of June 30, 2026, consisting of infrastructure finance located primarily in Colombia. The Company rates these exposures investment grade.