ASSURED GUARANTY LTD

Previous wording

This Form 10-Q contains information that includes or is based upon forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements give the expectations or forecasts of future events of Assured Guaranty Ltd. (AGL) and its subsidiaries (collectively with AGL, Assured Guaranty or the Company). These statements can be identified by the fact that they do not relate strictly to historical or current facts and relate to future operating or financial performance.

Current wording

This Form 10-Q contains information that includes or is based upon forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements give the expectations or forecasts of future events of Assured Guaranty Ltd. (AGL and, together with its subsidiaries, Assured Guaranty or the Company). These statements can be identified by the fact that they do not relate strictly to historical or current facts and relate to future operating or financial performance.

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 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.

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, restructuring arrangements, 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) loss of key personnel; (xiii) risks related to the expansion into annuity reinsurance and the launching of Assured Life Reinsurance Ltd.; (xiv) the failure of Assured Guaranty to successfully integrate acquired busine…

Excerpt shortened here; the source contains the full paragraph.

Previous 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.

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 primarily 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

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%.

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 3.4% in the three-month period ended September 30, 2026 (third quarter 2026), compared to a real GDP increase of 2.2% (as revised) in the second quarter of 2026. At the end of September 2026, the U.S. unemployment rate, seasonally adjusted, stood at 4.2%, lower than where it started the year at 4.4%.

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 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.

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 September 2026, as measured by the Consumer Price Index for All Urban Consumers, was 3.7%, as compared to 3.0% for the 12-month period ending September 2025. According to the United Kingdom (U.K.) Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs rose 3.6% for the 12 months through September 2026, lower than the 4.1% for the 12 months through September 2025. Increases in oil and other energy prices associated with the continuing conflict in the Middle East have contributed to elevated inflation and to market concerns regarding future inflation, particularly in economies that are more exposed to imported energy costs, including the U.K.

Previous wording

Interest Rates. The federal funds rate is the rate at which U.S. banks lend to and borrow from each other, is the benchmark for most U.S. interest rates, and tends to influence U.S. mortgage rates. As the federal funds rate decreases, interest rates, including mortgage rates, tend to decrease. From September 2024 through December 2025, the Federal Open Market Committee (FOMC) lowered the federal funds rate from a target range of 5.25% to 5.50% to a range of 3.50% to 3.75%. Most recently, at its July 2026 meeting, the FOMC held the federal funds rate at a target range of 3.50% to 3.75%, stating that it is strongly committed to supporting maximum employment and returning inflation to its 2% objective.

Current wording

Interest Rates. The federal funds rate is the rate at which U.S. banks lend to and borrow from each other, is the benchmark for most U.S. interest rates, and tends to influence U.S. mortgage rates. As the federal funds rate increases or decreases, interest rates, including mortgage rates, tend to move in the same direction. From September 2024 through December 2025, the Federal Open Market Committee (FOMC) lowered the federal funds rate from a target range of 5.25% to 5.50% to a range of 3.50% to 3.75%, and it held the federal funds rate at that range through its July 2026 meeting. At its September 2026 meeting, citing elevated inflation, the FOMC raised the federal funds rate by 0.25 percentage point to a target range of 3.75% to 4.00%, its first increase since 2023, stating that the action will support a timelier return to its 2% inflation objective. Most recently, at its October 2026 meeting, the FOMC held the federal funds rate at a target range of 3.75% to 4.00%. Longer-term U.S. Treasury yields also increased during third quarter 2026, reflecting, among other factors, market concerns regarding inflation, energy prices and government debt levels.

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 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.

Current wording

From 2024 through early 2026, 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 slowing, the MPC further lowered the Bank Rate several times. At its November 2026 meeting, however, the MPC voted to increase the Bank Rate to 4.00%. Recent increases in oil and other energy prices may contribute to higher inflation expectations, which could influence future Bank of England policy decisions, including potential further increases in the Bank Rate, and place further 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 financial guaranty 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, higher interest rates may decrease the fair value of fixed-maturity securities currently held in the Company’s investment portfolio, dampen municipal and infrastructure bond issuance and adversely impact the finances of some of the obligors whose payments the Company insures, particularly those that need to refinance maturing debt. On the other hand, higher interest rates may increase the base on which the Company charges up-front premium on most new municipal and infrastructure bond transactions and may also increase amounts the Company can earn on securities newly acquired for its investment portfolio. Higher interest rates also may be accompanied by wider credit spreads, which may also increase the level of premiums the Company can charge for its financial guaranty transactions. Lower interest rates generally have the opposite effects.

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 4.33% 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.

Current wording

September 2025. Meanwhile, the difference, or credit spread, between the 30-year BBB rated general obligation relative to the 30-year AAA MMD averaged 76.6 basis points (bps) for third quarter 2026, which is narrower compared to the 83.7 bps average for the second quarter of 2026 and narrower compared to the 90.0 bps average for the quarter ended September 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 6.49% 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.

Current wording

U.S. Residential Mortgage Rates. According to Freddie Mac, the 30-year fixed-rate mortgage rate averaged 7.03% for the week ending September 24, 2026, higher than the 30-year mortgage rate average of 6.30% from one year ago. The National Association of Realtors reported that there was a 2.2% decrease in year-over-year existing-home sales from September 2025 to September 2026, and that the median existing-home sales price increased 1.3% from September 2025 ($412,300) to September 2026 ($417,500). Higher housing prices may benefit the distressed residential mortgage-backed securities (RMBS) that the Company insures.

Previous 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.

Current wording

Foreign Exchange Rates. For third 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 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.

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 euro, 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 condensed 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 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.

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 wider credit spreads may improve demand for bond insurance.

Previous wording

(1) Source: The amounts in the table are those reported by London Stock Exchange Group. The table excludes private placements and Corporate-CUSIP transactions insured by Assured Guaranty, certain of which the Company also considers to be public finance business.

Current wording

(1) Source: The amounts in the table are those reported by London Stock Exchange Group (LSEG). The table excludes private placements and Corporate-CUSIP transactions insured by Assured Guaranty, certain of which the Company also considers to be public finance business.

Previous 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.

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 continues to evaluate business opportunities with an emphasis on sound credit fundamentals and pricing that delivers appropriate risk-adjusted returns. 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

On January 21, 2026, the Company purchased all of the outstanding share capital in Warwick Company (UK) Limited (Warwick), which is the 100% indirect owner of Assured Life Re, formerly known as Warwick Re Limited, for a purchase price of $158 million, subject to certain post-closing adjustments (Assured Life Re Acquisition). Assured Life Re is a Class E long-term (life) reinsurance company incorporated and registered in Bermuda. Assured Life Re focuses on annuity reinsurance including U.K. PRT and U.S. multi-year guaranteed annuity (MYGA) transactions. The Company believes that the acquisition of the Assured Life Re platform will provide it with annuity business opportunities that complement its financial guaranty and asset management businesses, are consistent with its risk profile and benefit from its core competencies, including credit analysis and underwriting. The Assured Life Re Acquisition represents the Company’s first platform dedicated solely to the annuity reinsurance business.

Current wording

On January 21, 2026, the Company purchased all of the outstanding share capital in Warwick Company (UK) Limited (Warwick), which was the 100% indirect owner of Assured Life Re, formerly known as Warwick Re Limited, for a purchase price of $158 million, subject to certain post-closing adjustments (Assured Life Re Acquisition). Assured Life Re is a Class E long-term (life) reinsurance company incorporated and registered in Bermuda. Assured Life Re focuses on annuity reinsurance including U.K. PRT and U.S. multi-year guaranteed annuity (MYGA) transactions. The Company believes that the acquisition of the Assured Life Re platform will provide it with annuity business opportunities that complement its financial guaranty and asset management businesses, are consistent with its risk profile and benefit from its core competencies, including credit analysis and underwriting. The Assured Life Re Acquisition represents the Company’s first platform dedicated solely to the annuity reinsurance business.

Previous wording

The Company continues to investigate additional opportunities in the annuity reinsurance business and in other businesses in line with its risk profile and that would benefit from its core competencies.

Current wording

The Company is actively pursuing additional opportunities in the annuity reinsurance business and in other businesses in line with its risk profile and that would benefit from its core competencies.

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 financial guaranty business.

Current wording

The Company participates in the asset management business primarily through its ownership interest in Sound Point. 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 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.

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 three-month period ended March 31, 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 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.

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 September 30, 2026 (excluding the value of the Company’s insurance) was $143 million.

Previous wording

The Company seeks to maintain an investment portfolio that supports the requirements of its insurance subsidiaries, strategic initiatives and liquidity needs, while maximizing the income it earns from such investments. In support of that goal, the Company aims to diversify the types of investments in its portfolio. Simultaneously with the Company’s acquisition of an ownership interest in Sound Point, AG engaged Sound Point as its sole alternative credit manager and transferred to Sound Point the management of certain existing alternative investments and related commitments. The Company expects to enhance its alternative investment opportunities and the return on its investments by investing $1 billion with Sound Point across multiple strategies, and establishing a long-term investment partnership with Sound Point pursuant to which AG has agreed to reinvest all returns of capital from Sound Point investments until July 1, 2038 and to reinvest all gains and dividends from Sound Point investments until July 1, 2025, and fifty percent of such gains and dividends thereafter until July 1, 2033. See Item 1. Financial Statements, Note 9. Investments, for a description of the alternative investments agreement with Sound Point.

Current wording

The Company seeks to maintain an investment portfolio that supports the requirements of its insurance subsidiaries, strategic initiatives and liquidity needs, while maximizing the income it earns from such investments. In support of that goal, the Company aims to diversify the types of investments in its portfolio. Simultaneously with the Company’s acquisition of an ownership interest in Sound Point, AG engaged Sound Point as its sole alternative credit manager and transferred to Sound Point the management of certain existing alternative investments and related commitments. The Company expects to continue broadening its alternative investment opportunities and the return on its investments by investing $1 billion with Sound Point across multiple strategies, and establishing a long-term investment partnership with Sound Point pursuant to which AG agreed to reinvest all returns of capital from Sound Point investments until July 1, 2038 and to reinvest all gains and dividends from

Previous 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).

Current wording

As of September 30, 2026, the estimated accretive effect of the cumulative repurchases of common shares since the beginning of 2013 was approximately: $67.42 per share in shareholders’ equity attributable to AGL, $74.48 per share in adjusted operating shareholders’ equity and $121.86 per share in adjusted book value (ABV).

Previous wording

The Company considers the appropriate mix of debt and equity in its capital structure. The Company may in the future choose to issue new debt or redeem or purchase its existing debt. See “— Liquidity and Capital Resources — AGL and its U.S. Holding Companies.”

Current wording

The Company considers the appropriate mix of debt and equity in its capital structure. The Company may in the future choose to issue new debt or redeem or purchase its existing debt. See “— Liquidity and Capital Resources — AGL and its Holding Companies.”

Previous wording

Net income attributable to AGL for second quarter 2026 was lower compared with the three-month period ended June 30, 2025 (second quarter 2025) primarily due to the following:

Current wording

Net income attributable to AGL for third quarter 2026 was lower compared with the three-month period ended September 30, 2025 (third quarter 2025) primarily due to the following:

Previous wording

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

Current wording

•lower foreign exchange losses on remeasurement of $1 million in third quarter 2026, compared with losses of $23 million in third quarter 2025, and

Previous wording

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

Current wording

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

Previous wording

•foreign exchange losses on remeasurement of $21 million in six months 2026, compared with gains of $116 million in six months 2025,

Current wording

•foreign exchange losses on remeasurement of $22 million in nine months 2026, compared with gains of $93 million in nine months 2025,

Previous wording

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

Current wording

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

Previous wording

•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.

Current wording

•a decrease of $44 million in equity in earnings of investees in nine months 2026, primarily due to losses generated by the Company’s investment in a collateralized loan obligation (CLO) equity fund.

Previous 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

Current wording

•a discrete tax benefit of $33 million in the three-month period ended March 31, 2026 (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, and

Previous 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.

Current wording

•an increase of $19 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.

Previous wording

Adjusted operating income in second quarter 2026 was $55 million, compared with $50 million in second quarter 2025. The increase was primarily due to lower loss expense of $24 million primarily related to the U.S. and non-U.S. public finance sectors and the increase of $14 million in net earned premiums and credit derivative revenues in second quarter 2026, partially offset by the decreases of $14 million in equity in earnings of investees, $9 million in foreign exchange remeasurement gains related primarily to cash and lower other income due primarily to $6 million of interest received on late financial guaranty premiums in second quarter 2025. 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 third quarter 2026 was $86 million, compared with $124 million in third quarter 2025. The decrease was primarily due to unfavorable loss expense variance of $32 million, mainly related to updates of recoveries for charged-off second lien U.S. RMBS loans in third quarter 2025, and fair value gains on trading securities in third quarter 2025, partially offset by the increase of $16 million in net earned premiums and credit derivative revenues due to higher refunding. See “— Results of Operations — Reconciliation to GAAP” for the reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).

Previous 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).

Current wording

Adjusted operating income in nine months 2026 was $256 million, compared with $336 million in nine months 2025. The decrease was primarily due to a $103 million gain related to the resolution of the LBIE litigation in nine months 2025 and a decrease of $44 million in equity in earnings of investees in nine months 2026 primarily due to losses generated by the Company’s investment in a CLO equity fund. These decreases were offset in part by a $33 million discrete tax benefit resulting from the enactment of the U.K. Finance Act 2026; a $23 million increase in net investment income; a $21 million increase in net earned premiums and credit derivative revenues, excluding the effect of LBIE litigation, due to higher refundings and higher scheduled premiums; and a $19 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 nine 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 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.

Current wording

Shareholders’ equity attributable to AGL as of September 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 increased primarily due to adjusted operating income, partially offset by share repurchases and dividends. ABV increased primarily due to adjusted operating income, GWP and the accretive effect of the Assured Life Re Acquisition, partially offset by share repurchases, dividends and loss development. 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, 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.

Current 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 per share and ABV per share increased as of September 30, 2026 compared with December 31, 2025, due, in part, to the accretive effect of the share repurchase program and the 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

Russia’s invasion of Ukraine has led to the imposition of economic sanctions by many western countries against Russia and certain Russian individuals, dislocation in global energy markets, massive refugee movements and payment default by certain Russian credits. The economic sanctions imposed by western governments, along with decisions by private companies regarding their presence in Russia, continue to reduce western economic ties to Russia and to reshape global economic and political ties more generally, and the Company cannot predict all of the potential effects of the conflict on the world or the Company.

Current wording

Russia’s ongoing war with Ukraine has led to the imposition of economic sanctions by many western countries against Russia and certain Russian individuals, dislocation in global energy markets, massive refugee movements and payment default by certain Russian credits. The economic sanctions imposed by western governments, along with decisions by private companies regarding their presence in Russia, continue to reduce western economic ties to Russia and to reshape global economic and political ties more generally, and the Company cannot predict all of the potential effects of the conflict on the world or the Company.

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 $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.

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 $198 million in net par outstanding as of September 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 $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.

Current wording

On January 3, 2026, the U.S. executed an operation within Venezuela apprehending Nicolas Maduro and his wife Cilia Flores who were taken to New York City and indicted in the U.S. District Court for the Southern District 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 $146 million in net par outstanding as of September 30, 2026, consisting of infrastructure finance located primarily in Colombia. The Company rates these exposures investment grade.