Assured Guaranty Ltd.

~~As part of the Radian Asset Acquisition, the Company acquired $19 million of foreign tax credits (FTC) which will expire in 2020. In addition, AGE had $1 million of FTC prior~~Notes to revoking its election to be taxed as a U.S. company in 2017. After reviewing positive and negative evidence, the Company came to the conclusion that it is more likely than not that the FTC will not be utilized, and therefore recorded a valuation allowance with respect to this tax attribute.Condensed Consolidated Financial Statements (Unaudited), Continued

The Company came to the conclusion that it is more likely than not that the remaining net deferred tax asset will be fully realized after weighing all positive and negative evidence available as required under GAAP. The positive evidence that was considered included the cumulative income the Company has earned over the last three years, and the significant unearned premium income to be included in taxable income. The positive evidence outweighs any negative evidence that exists. As such, the Company believes that no valuation allowance is necessary in connection with this deferred tax asset. The Company will continue to analyze the need for a valuation allowance on a quarterly basis.

Audits

As of September 30, ~~2017,~~2023, AGUS had open tax years with the U.S. Internal Revenue Service (IRS) for 2018 forward and is currently under audit for the 2018 and 2019 tax years. As of September 30, 2023, Assured Guaranty Overseas US Holdings Inc. had open tax years with the IRS for 2013 to present. In December 2016, the IRS issued a Revenue Agent Report (RAR) which did not identify any material adjustments that were not already accounted for in the prior periods. In April 2017, the Company received a final letter from the IRS to close the audit with no additional findings or changes,2019 forward and as a result the Company released previously recorded uncertain tax position reserves and accrued interest of approximately $37 million in the second quarter of 2017. Assured Guaranty Oversees US Holdings Inc. has open tax years of 2014 forward. The Company's U.K. subsidiaries areis not currently under ~~examination~~audit with the IRS. In September 2022, His Majesty’s Revenue & Customs completed a business risk review of Assured Guaranty that commenced in July 2022 and ~~have open tax years of 2015 forward. CIFGNA, which was acquired by AGC during 2016,~~assigned a low-risk rating for corporate taxes in the U.K. The Company’s French subsidiary is not currently under examination and has open tax years of ~~2014 to present. The Company's French subsidiary, CIFGE, is not currently under examination and has open years of 2014 to present.~~2019 forward.

~~Uncertain Tax Positions~~

The Company's policy is to recognize interest related to uncertain tax positions in income tax expense and has accrued $1.2 million for Nine Months 2017 and $2 million for the full year 2016. As of September 30, 2017 and December 31, 2016, the Company has accrued $2 million and $7 million of interest, respectively.

The total amount of reserves for unrecognized tax positions, including accrued interest, as of September 30, 2017 and December 31, 2016 that would affect the effective tax rate, if recognized, was $30 million and $57 million, respectively. The reduction in reserves is driven by the closure of the 2009- 2012 IRS Audit.


13.	~~Reinsurance and Other Monoline Exposures~~

The Company assumes exposure (Assumed Business) and may cede portions of exposure it has insured (Ceded Business) in exchange for premiums, net of ceding commissions. Substantially all of the Company’s Assumed Business and Ceded Business relates to financial guaranty insurance, except for a modest amount that relates to non-financial guaranty business assumed by AGRO. The Company historically entered into, and with respect to new business originated by AGRO continues to enter into, ceded reinsurance contracts in order to obtain greater business diversification and reduce the net potential loss from large risks.

The following table presents the components of premiums and losses reported in the consolidated statements of operations and the contribution of the Company's Assumed and Ceded Businesses (both financial guaranty and non-financial guaranty).

~~Effect of Reinsurance on Statement of Operations~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Premiums Written:
Direct $ 46
$ 17
$ 227
$ 80
Assumed (1) (1 ) (1 ) 8
(9 )
Ceded (2) 27
0
37
(17 )
Net $ 72
$ 16
$ 272
$ 54
Premiums Earned:
Direct $ 186
$ 237
$ 516
$ 647
Assumed 6
6
20
19
Ceded (6 ) (12 ) (24 ) (38 )
Net $ 186
$ 231
$ 512
$ 628
Loss and LAE:
Direct $ 231
$ 7
$ 377
$ 217
Assumed (1 ) (1 ) (1 ) (4 )
Ceded (7 ) (15 ) (22 ) (30 )
Net $ 223
$ (9 ) $ 354
$ 183

~~____________________~~


~~(1)~~	~~Negative assumed premiums written were due to changes in expected debt service schedules.~~

~~(2) Positive ceded premiums written were due to commutations and changes in expected debt service schedules.~~

In addition to the items presented in the table above, the Company records in the consolidated statements of operations, the effect of assumed and ceded credit derivative exposures. These amounts were losses of $0.2 million in Third Quarter 2017, $25 million in Third Quarter 2016, $0.8 million for Nine Months 2017 and $26 million for Nine Months 2016.

~~Amounts Due (To) From All Reinsurers~~

~~As of September 30, 2017~~

Assumed
Premium, net
of Commissions Ceded
Premium, net
of Commissions Assumed
Expected
Loss to be Paid Ceded
Expected
Loss to be Paid
(in millions)
Reinsurers rated investment grade $ 5
$ —
$ 1
$ —
Reinsurers rated BIG or not rated:
American Overseas Reinsurance Company Limited —
(4 ) —
36
Syncora 13
(18 ) —
(11 )
Ambac 31
—
1
—
MBIA 0
—
(3 ) —
Financial Guaranty Insurance Company and FGIC UK Limited 3
—
(16 ) —
Ambac Assurance Corp. Segregated Account 6
—
(46 ) —
Subtotal 53
(22 ) (64 ) 25
Other 0
(3 ) —
—
Total $ 58
$ (25 ) $ (63 ) $ 25

~~Assumed and Ceded Financial Guaranty Business~~

The Company assumes financial guaranty business (Assumed Financial Guaranty Business) from third party insurers, primarily other monoline financial guaranty companies. Under these relationships, the Company assumes a portion of the ceding company’s insured risk in exchange for a portion of the ceding company's premium for the insured risk (typically, net of a ceding commission). The Company’s facultative and treaty agreements are generally subject to termination at the option of the ceding company:

~~if the Company fails to meet certain financial and regulatory criteria and to maintain a specified minimum financial strength rating, or~~

~~upon certain changes of control of the Company.~~

Upon termination under these conditions, the Company may be required (under some of its reinsurance agreements) to return to the ceding company unearned premiums (net of ceding commissions) and loss reserves calculated on a statutory basis of accounting, attributable to reinsurance assumed pursuant to such agreements after which the Company would be released from liability with respect to the Assumed Financial Guaranty Business.

Upon the occurrence of the conditions set forth in the first bullet above, whether or not an agreement is terminated, the Company may be required to obtain a letter of credit or alternative form of security to collateralize its obligation to perform under such agreement or it may be obligated to increase the level of ceding commission paid.

The downgrade of the financial strength ratings of AG Re or of AGC gives certain ceding companies the right to recapture business they had ceded to AG Re and AGC, which would lead to a reduction in the Company's unearned premium reserve and related earnings on such reserve. With respect to a significant portion of the Company's in-force Assumed Financial Guaranty Business, based on AG Re's and AGC's current ratings and subject to the terms of each reinsurance agreement, the third party ceding company may have the right to recapture business it had ceded to AG Re and/or AGC, and in connection therewith, to receive payment from AG Re or AGC of an amount equal to the statutory unearned premium (net of ceding commissions) and statutory loss reserves (if any) associated with that business, plus, in certain cases, an additional required payment. As of September 30, 2017, if each third party insurer ceding business to AG Re and/or AGC had a right to recapture such business, and chose to exercise such right, the aggregate amounts that AG Re and AGC could be required to pay to all such companies would be approximately $49 million and $16 million, respectively.

The Company has ceded financial guaranty business to non-affiliated companies to limit its exposure to risk. Under these relationships, the Company ceded a portion of its insured risk to the reinsurer in exchange for the reinsurer receiving a

share of the Company's premiums for the insured risk (typically, net of a ceding commission). The Company remains primarily liable for all risks it directly underwrites and is required to pay all gross claims. It then seeks reimbursement from the reinsurer for its proportionate share of claims. The Company may be exposed to risk for this exposure if it were required to pay the gross claims and not be able to collect ceded claims from an assuming company experiencing financial distress. A number of the financial guaranty insurers to which the Company has ceded par have experienced financial distress and been downgraded by the rating agencies as a result. In addition, state insurance regulators have intervened with respect to some of these insurers. The Company’s ceded contracts generally allow the Company to recapture ceded financial guaranty business after certain triggering events, such as reinsurer downgrades.

During the first quarter of 2017, the Company entered into a commutation agreement to reassume the entire portfolio previously ceded to one of its unaffiliated reinsurers, consisting predominantly (over 97%) of U.S. public finance and international public and project finance exposures. During Third Quarter 2017, the Company entered into two commutation agreements. In one case, it reassumed the entire portfolio previously ceded to one of its unaffiliated reinsurers under quota share reinsurance, consisting predominantly of U.S. public finance and international public and project finance exposures. In the other case, it reassumed a portion of the portfolio previously ceded to one of its other unaffiliated reinsurers. The table below summarizes the effect of commutations.

~~Commutations of Ceded Reinsurance Contracts~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Increase (decrease) in net unearned premium reserve $ 62
$ —
$ 80
$ —
Increase (decrease) in net par outstanding 3,455
28
4,628
28
Commutation gains (losses) 255
8
328
8

~~Other Exposures to Monoline Financial Guaranty Insurers~~

In addition to the Company’s assumed and ceded reinsurance arrangements with other monoline financial guaranty insurers, the Company may also have exposure to such companies in other areas. Second-to-pay insured par outstanding represents transactions the Company has insured that were previously insured by such other monoline financial guaranty insurers. The Company underwrites such transactions based on the underlying insured obligation without regard to the primary insurer. Another area of exposure is in the investment portfolio where the Company holds fixed-maturity securities that are wrapped by monolines and whose value may change based on the rating of the monoline. As of September 30, 2017, based on fair value, the Company had fixed-maturity securities in its investment portfolio consisting of $98 million insured by National Public Finance Guarantee Corporation (National), $69 million insured by Ambac and $8 million insured by other guarantors.

~~Reinsurance and Other Exposures to Monolines~~

Par Outstanding
As of September 30, 2017
Reinsurer
Ceded Par
Outstanding (1)

Assumed Par
Outstanding

Second-to-
Pay Insured Par
Outstanding (2)
(in millions)
Reinsurers rated investment grade:
National $ —
$ 3,245
$ 2,730
Subtotal —
3,245
2,730
Reinsurers rated BIG or not rated:
American Overseas Reinsurance Company Limited (3) 2,445
—
—
Syncora (3) 1,994
674
1,156
ACA Financial Guaranty Corp. 208
—
10
Ambac and Ambac Assurance UK Limited 112
4,902
1,927
MBIA —
137
565
Financial Guaranty Insurance Company and FGIC UK Limited —
275
821
Ambac Assurance Corp. Segregated Account —
567
51
Subtotal 4,759
6,555
4,530
Other (3) 52
111
410
Total $ 4,811
$ 9,911
$ 7,670

~~____________________~~


~~(1)~~	~~Of the total ceded par to reinsurers rated BIG or not rated, $305 million is rated BIG.~~


~~(2)~~	~~The par on second-to-pay exposure where the primary insurer and underlying transaction rating are both BIG, and/or not rated, is $774 million.~~


~~(3)~~	~~The total collateral posted by all non-affiliated reinsurers required to post, or that had agreed to post, collateral as of September 30, 2017 was approximately $123 million~~.

~~Assumed and Ceded Non-Financial Guaranty Business~~

As described in Note 4, Outstanding Exposure, Non-Financial Guaranty Insurance, the Company, through AGRO, assumes non-financial guaranty business from third party insurers (Assumed Non-Financial Guaranty Business). It also retrocedes some of this business to third party reinsurers. The downgrade of AGRO’s financial strength rating by S&P below “A” would require AGRO to post, as of September 30, 2017, an estimated $5 million of collateral in respect of certain of its Assumed Non-Financial Guaranty Business. A further downgrade of AGRO’s S&P rating below A- would give the company ceding such business the right to recapture the business for AGRO’s collateral amount, and, if also accompanied by a downgrade of AGRO's financial strength rating by A.M. Best Company, Inc. below A-, would also require AGRO to post, as of September 30, 2017, an estimated $5 million of collateral in respect of a different portion of AGRO’s Assumed Non-Financial Guaranty Business. AGRO’s ceded contracts generally have equivalent provisions requiring the assuming reinsurer to post collateral and/or allowing AGRO to recapture the ceded business upon certain triggering events, such as reinsurer rating downgrades.

~~Excess of Loss Reinsurance Facility~~

AGC, AGM and MAC entered into a $360 million aggregate excess of loss reinsurance facility with a number of reinsurers, effective as of January 1, 2016, that covers losses occurring either from January 1, 2016 through December 31, 2023, or January 1, 2017 through December 31, 2024, at the option of AGC, AGM and MAC. It terminates on January 1, 2018, unless AGC, AGM and MAC choose to extend it. The facility covers certain U.S. public finance credits insured or reinsured by AGC, AGM and MAC as of September 30, 2015, excluding credits that were rated non-investment grade as of December 31, 2015 by Moody’s or S&P or internally by AGC, AGM or MAC and is subject to certain per credit limits. Among the credits excluded are those associated with the Commonwealth of Puerto Rico and its related authorities and public corporations. The

facility attaches when AGC’s, AGM’s and MAC’s net losses (net of AGC’s and AGM's reinsurance (including from affiliates) and net of recoveries) exceed $1.25 billion in the aggregate. The facility covers a portion of the next $400 million of losses, with the reinsurers assuming pro rata in the aggregate $360 million of the $400 million of losses and AGC, AGM and MAC jointly retaining the remaining $40 million. The reinsurers are required to be rated at least AA- or to post collateral sufficient to provide AGM, AGC and MAC with the same reinsurance credit as reinsurers rated AA-. AGM, AGC and MAC are obligated to pay the reinsurers their share of recoveries relating to losses during the coverage period in the covered portfolio. AGC, AGM and MAC paid approximately $9 million of premiums in 2016 for the term January 1, 2016 through December 31, 2016 and approximately $9 million of premiums for January 1, 2017 through December 31, 2017.

~~14.~~ Commitments and Contingencies

Legal Proceedings

Lawsuits arise in the ordinary course of the Company’s business. It is the opinion of the Company’s management, based upon the information available, that the expected outcome of litigation against the Company, individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, ~~or liquidity,~~ although an adverse resolution of litigation against the Company in a fiscal quarter or year could have a material adverse effect on the Company’s results of operations or liquidity in a particular quarter or year.

In addition, in the ordinary course of their respective businesses, certain of ~~the Company's~~AGL’s insurance subsidiaries ~~assert claims~~are involved in ~~legal proceedings against~~litigation with third parties to recover insurance losses paid in prior periods or prevent or reduce losses in the future. For example, the Company ~~has commenced~~is involved in a number of legal actions in the ~~U.S.~~Federal District Court ~~for the District~~ of Puerto Rico to enforce or defend its rights with respect to the obligations it insures of Puerto Rico and various of its related authorities and public corporations. See the ~~"Exposure~~“Exposure to Puerto ~~Rico"~~Rico” section of Note 4,3, Outstanding Exposure, for a description of such actions. ~~See also the "Recovery Litigation" section of Note 5, Expected Loss to be Paid, for a description of recovery litigation unrelated to Puerto Rico.~~ The ~~amounts,~~impact, if any, ~~the Company will recover in~~of these and other proceedings ~~to recover~~on the amount of recoveries the Company receives and losses ~~are~~it pays in the future is uncertain, and ~~recoveries, or failure to obtain recoveries, in~~the impact of any one or more of these proceedings during any quarter or year could be material to the ~~Company's~~Company’s results of operations in that particular quarter or year. In the first quarter of 2023, the Company reduced its previously recorded accrual of $20 million to zero in connection with developments in litigation.

The Company also receives subpoenas~~duces tecum~~ and interrogatories from regulators from time to time.

The Company establishes accruals for litigation and regulatory matters to the extent it is probable that a loss has been incurred and the amount of that loss can be reasonably estimated. For litigation and regulatory matters where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established, but if the matter is material, it is disclosed, including matters discussed below. The Company reviews relevant information with respect to its litigation and regulatory matters on a quarterly basis and updates its accruals, disclosures and estimates of reasonably possible loss based on such reviews.

Litigation

On November 28, 2011, Lehman Brothers International (Europe) (in administration) (LBIE) sued AG Financial Products Inc. (AGFP), an affiliate of AGC, which, in the past, had provided credit protection to counterparties under CDS. AGC acts as the credit support provider of AGFP under these CDS. LBIE’s complaint, which was filed in the Supreme Court of the State of New York ~~alleged that AGFP improperly terminated~~(the Court), asserted a claim for breach of the implied covenant of good faith and fair dealing based on AGFP's termination in December 2008 of nine credit derivative transactions between LBIE and AGFP and ~~improperly calculated~~asserted claims for breach of contract and breach of the implied covenant of good faith and fair dealing based on AGFP’s termination ~~payment~~ in ~~connection with the termination~~July 2009 of 28 other credit derivative transactions between LBIE and ~~AGFP.~~AGFP and AGFP’s calculation of the termination payment in connection with those 28 other credit derivative transactions. Following defaults by LBIE, AGFP ~~properly~~had terminated the transactions in question in compliance with the agreement between AGFP and LBIE, and ~~calculated the termination payment properly. AGFP~~properly calculated that LBIE owes AGFP approximately ~~$29~~$4 million for the claims which were dismissed (as described below) and approximately $21 million in connection with the termination of the other credit derivative transactions, whereas LBIE asserted in the complaint that AGFP owes LBIE a termination payment of approximately $1.4 billion. On ~~February 3, 2012, AGFP filed a motion to dismiss certain of the counts in the complaint, and on~~ March 15, 2013, the ~~court~~Court granted ~~AGFP's~~AGFP’s motion to dismiss in respect of the count relating to ~~improper termination of~~ the nine credit derivative transactions and ~~denied AGFP's motion to dismiss the counts relating~~narrowed LBIE’s claim with respect to the ~~remaining~~28 other credit derivative transactions. Following a bench trial, on March 8, 2023, the Court rendered its decision and found in favor of AGFP. On ~~February~~June 30, 2023, the clerk entered judgment in favor of AGFP in the amount of approximately $54 million plus prejudgment simple interest at an annual rate of 8%. On September 22, ~~2016,~~2023, LBIE appealed this judgment. On July 1, 2023, AGFP ~~filed~~moved the Court to award it approximately $58 million for attorneys’ fees and expenses AGFP incurred through March 2023. The parties reached a confidential settlement with respect to this motion for ~~summary judgment~~attorneys’ fees, and AGFP withdrew the motion without prejudice on ~~the remaining causes of action asserted by LBIE and on AGFP's counterclaims. Oral argument on AGFP's motion took place on July 21, 2016. LBIE's administrators disclosed~~October 30, 2023. The Company did not accrue in ~~an April 10, 2015 report to LBIE’s unsecured creditors that LBIE's valuation expert has calculated LBIE's claim for damages in aggregate~~its financial statements for the ~~28 transactions~~judgment it was awarded or the attorneys’ fees it sought.

Table of Contents

Assured Guaranty Ltd.

Notes to range between a minimum of approximately $200 million and a maximum of approximately $500 million, depending on what adjustment, if any, is made for AGFP's credit risk and excluding any applicable interest.

~~Proceedings Resolved Since December 31, 2016~~

~~On December 22, 2014, Deutsche Bank National Trust Company, as indenture trustee for the AAA Trust 2007-2 Re-REMIC (the Trustee)~~Condensed Consolidated Financial Statements (Unaudited), filed a “trust instructional proceeding” petition in the State of California Superior Court (Probate Division, Orange County), seeking the court’s instruction as to how it should allocate the losses resulting from its December 2014 sale of four RMBS owned by the AAA Trust 2007-2 Re-REMIC. This sale of approximately $70 million principal balance of RMBS was made pursuant to AGC’s liquidation direction in November 2014, and resulted in approximately $27 million of gross proceeds to the Re-REMIC. On December 22, 2014, AGC directed the indenture trustee to allocate to the uninsured Class A-3 Notes the losses realized from the sale. On May 4, 2015, the Superior Court rejected AGC’s allocation direction, and ordered the Trustee to allocate to the Class A-3 noteholders a pro rata share of the $27 million of gross proceeds. On May 17, 2017, the California Court of Appeal upheld the Superior Court’s rejection of AGC’s allocation direction. On June 15, 2017, the California Court of Appeal denied AGC’s petition for a rehearing, pursuant to an order that modified its initial opinion and affirmed the Superior Court’s May 4, 2015 order.

On September 25, 2013, Wells Fargo Bank, N.A., as trust administrator of the MASTR Adjustable Rate Mortgages Trust 2007-3 (Wells Fargo), filed an interpleader complaint in the U.S. District Court for the Southern District of New York seeking adjudication of a dispute between Wales LLC (Wales) and AGM as to whether AGM is entitled to reimbursement from certain cashflows for principal claims paid in respect of insured certificates. After the court issued an opinion on September 30, 2016, denying a motion for judgment on the pleadings filed by Wales, Wales sold its interests in the MASTR Adjustable Rate Mortgage Trust 2007-3 certificates, and on March 20, 2017, the court dismissed the case.


~~15.~~	~~Long-Term Debt and Credit Facilities~~

~~The principal and carrying values of the Company’s long-term debt are presented in the table below.~~

~~Principal and Carrying Amounts of Debt~~

Continued

As of September 30, 2017 As of December 31, 2016
Principal
Carrying
Value

Principal
Carrying
Value
(in millions)
AGUS:

7% Senior Notes (1) $ 200
$ 197

$ 200
$ 197
5% Senior Notes (1) 500

496
500
496
Series A Enhanced Junior Subordinated Debentures (2) 150
150

150
150
Total AGUS 850
843

850
843
AGMH(3):

67/8% QUIBS (1) 100
70

100
69
6.25% Notes (1) 230
142

230
141
5.6% Notes (1) 100
56

100
56
Junior Subordinated Debentures (2) 300
191

300
187
Total AGMH 730
459

730
453
AGM(3):

AGM Notes Payable 8
8

9
10
Total AGM 8
8
9
10
Purchased debt (4) (28 ) (18 ) —
—
Total $ 1,560
$ 1,292

$ 1,589
$ 1,306
14. Shareholders’ Equity

~~____________________~~


~~(1)~~	~~AGL fully and unconditionally guarantees these obligations~~


~~(2)~~	~~Guaranteed by AGL on a junior subordinated basis.~~


~~(3)~~	Carrying amounts are different than principal amounts due primarily to fair value adjustments at the AGMH acquisition date, which are accreted or amortized into interest expense over the remaining terms of these obligations.


~~(4)~~	~~In 2017, AGUS purchased $28 million principal amount of AGMH's outstanding Junior Subordinated Debentures.~~

~~Intercompany Credit Facility and Intercompany Debt~~

On October 25, 2013, AGL, as borrower, and AGUS, as lender, entered into a revolving credit facility pursuant to which AGL may, from time to time, borrow for general corporate purposes. Under the credit facility, AGUS committed to lend a principal amount not exceeding $225 million in the aggregate. Such commitment terminates on October 25, 2018 (the loan termination date). The unpaid principal amount of each loan will bear interest at a fixed rate equal to 100% of the then applicable Federal short-term or mid-term interest rate, as the case may be, as determined under Section 1274(d) of the Code, and interest on all loans will be computed for the actual number of days elapsed on the basis of a year consisting of 360 days. Accrued interest on all loans will be paid on the last day of each June and December, beginning on December 31, 2013, and at maturity. AGL must repay the then unpaid principal amounts of the loans by the third anniversary of the loan termination date. No amounts are currently outstanding under the credit facility.

In addition, in 2012 AGUS borrowed $90 million from its affiliate AGRO to fund the acquisition of MAC. During 2016, AGUS repaid $20 million in outstanding principal as well as accrued and unpaid interest, and the parties agreed to extend the maturity date of the loan from May 2017 to November 2019. As of September 30, 2017, $70 million remained outstanding.

~~Committed Capital Securities~~

Each of AGC and AGM have entered into put agreements with four separate custodial trusts allowing AGC and AGM, respectively, to issue an aggregate of $200 million of non-cumulative redeemable perpetual preferred securities to the trusts in exchange for cash. The custodial trusts were created for the primary purpose of issuing $50 million face amount of CCS, investing the proceeds in high-quality assets and entering into put options with AGC or AGM, as applicable. The Company does not consider itself to be the primary beneficiary of the trusts and the trusts are not consolidated in Assured Guaranty's financial statements.

The trusts provide AGC and AGM access to new equity capital at their respective sole discretion through the exercise of the put options. Upon AGC's or AGM's exercise of its put option, the relevant trust will liquidate its portfolio of eligible assets and use the proceeds to purchase the AGC or AGM preferred stock, as applicable. AGC or AGM may use the proceeds from its sale of preferred stock to the trusts for any purpose, including the payment of claims. The put agreements have no scheduled termination date or maturity. However, each put agreement will terminate if (subject to certain grace periods) specified events occur. Both AGC and AGM continue to have the ability to exercise their respective put options and cause the related trusts to purchase their preferred stock.

Prior to 2008 or 2007, the amounts paid on the CCS were established through an auction process. All of those auctions failed in 2008 or 2007, and the rates paid on the CCS increased to their respective maximums. The annualized rate on the AGC CCS is one-month LIBOR plus 250 basis points, and the annualized rate on the AGM CPS is one-month LIBOR plus 200 basis points.

~~Please refer to Note 7, Fair Value Measurement, –Other Assets–Committed Capital Securities, for a fair value measurement discussion.~~

~~16. Earnings Per Share~~

~~Computation of EPS~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Basic EPS:
Net income (loss) attributable to AGL $ 208
$ 479
$ 678
$ 684
Less: Distributed and undistributed income (loss) available to nonvested shareholders 0
1
1
1
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, basic $ 208
$ 478
$ 677
$ 683
Basic shares 118.7
131.9
121.8
134.0
Basic EPS $ 1.75
$ 3.63
$ 5.56
$ 5.10

Diluted EPS:
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, basic $ 208
$ 478
$ 677
$ 683
Plus: Re-allocation of undistributed income (loss) available to nonvested shareholders of AGL and subsidiaries 0
0
0
0
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, diluted $ 208
$ 478
$ 677
$ 683

Basic shares 118.7
131.9
121.8
134.0
Dilutive securities:
Options and restricted stock awards 2.0
0.9
1.7
0.9
Diluted shares 120.7
132.8
123.5
134.9
Diluted EPS $ 1.72
$ 3.60
$ 5.48
$ 5.06
Potentially dilutive securities excluded from computation of EPS because of antidilutive effect —
0.0
0.1
0.5


~~17.~~	~~Shareholders' Equity~~

Other Comprehensive Income

The following tables present the changes in each component of ~~AOCI~~accumulated other comprehensive income (AOCI) and the effect of reclassifications out of AOCI oninto the respective ~~line items~~lines in ~~net income.~~the condensed consolidated statements of operations.

Changes in Accumulated Other Comprehensive Income (Loss) by Component

Third Quarter ~~2017~~2023


	Net Unrealized Gains (Losses) on Investments with:				ISCR on FG VIEs’ Liabilities with Recourse		Cumulative Translation Adjustment		Cash Flow Hedge		Total AOCI
	No Credit Impairment		Credit Impairment
	(in millions)
Balance, June 30, 2023	$	(284)	$	(115)	$	(22)	$	(42)	$	5	$	(458)
Other comprehensive income (loss) before reclassifications	(115)		(14)		10		(1)		—		(120)
Less: Amounts reclassified from AOCI to:
Net realized investment gains (losses)	(2)		(7)		—		—		—		(9)

Fair value gains (losses) on CIVs	—		—		—		(6)		—		(6)

Total before tax	(2)		(7)		—		(6)		—		(15)
Tax (provision) benefit	—		1		—		1		—		2
Total amount reclassified from AOCI, net of tax	(2)		(6)		—		(5)		—		(13)
Other comprehensive income (loss)	(113)		(8)		10		4		—		(107)
Balance, September 30, 2023	$	(397)	$	(123)	$	(12)	$	(38)	$	5	$	(565)

Net Unrealized
Gains (Losses) on
Investments with no Other-Than-Temporary Impairment

Net Unrealized
Gains (Losses) on
Investments with Other-Than-Temporary Impairment

Cumulative
Translation
Adjustment

Cash Flow
Hedge

Total
Accumulated
Other
Comprehensive
Income
(in millions)
Balance, June 30, 2017 $ 228
$ 107
$ (27 ) $ 7
$ 315
Other comprehensive income (loss) before reclassifications 27
(15 ) 3
—
15
Amounts reclassified from AOCI to:
Net realized investment gains (losses) (24 ) 17
—
—
(7 )
Net investment income —
—
—
—
—
Interest expense —
—
—
0
0
Total before tax (24 ) 17
—
0
(7 )
Tax (provision) benefit 9
(6 ) —
0
3
Total amount reclassified from AOCI, net of tax (15 ) 11
—
0
(4 )
Net current period other comprehensive income (loss) 12
(4 ) 3
0
11
Balance, September 30, 2017 $ 240
$ 103
$ (24 ) $ 7
$ 326

Changes in Accumulated Other Comprehensive Income (Loss) by Component

Third Quarter ~~2016~~2022


	Net Unrealized Gains (Losses) on Investments with:				ISCR on FG VIEs’ Liabilities with Recourse		Cumulative Translation Adjustment		Cash Flow Hedge		Total AOCI
	No Credit Impairment		Credit Impairment
	(in millions)
Balance, June 30, 2022	$	(205)	$	(107)	$	(19)	$	(45)	$	6	$	(370)
Other comprehensive income (loss) before reclassifications	(286)		(1)		(3)		(4)		—		(294)
Less: Amounts reclassified from AOCI to:
Net realized investment gains (losses)	(11)		(3)		—		—		—		(14)

Total before tax	(11)		(3)		—		—		—		(14)
Tax (provision) benefit	2		—		—		—		—		2
Total amount reclassified from AOCI, net of tax	(9)		(3)		—		—		—		(12)
Other comprehensive income (loss)	(277)		2		(3)		(4)		—		(282)
Balance, September 30, 2022	$	(482)	$	(105)	$	(22)	$	(49)	$	6	$	(652)

Net Unrealized
Gains (Losses) on
Investments with no Other-Than-Temporary Impairment

Net Unrealized
Gains (Losses) on
Investments with Other-Than-Temporary Impairment

Cumulative
Translation
Adjustment

Cash Flow
Hedge

Total
Accumulated
Other
Comprehensive
Income
(in millions)
Balance, June 30, 2016 $ 426
$ (24 ) $ (26 ) $ 7
$ 383
Other comprehensive income (loss) before reclassifications (33 ) 13
(5 ) —
(25 )
Amounts reclassified from AOCI to:

Net realized investment gains (losses) (3 ) 4
—
—
1
Net investment income —
—
—
—
—
Interest expense —
—
—
0
0
Total before tax (3 ) 4
—
0
1
Tax (provision) benefit 0
(1 ) —
0
(1 )
Total amount reclassified from AOCI, net of tax (3 ) 3
—
0
—
Net current period other comprehensive income (loss) (36 ) 16
(5 ) 0
(25 )
Balance, September 30, 2016 $ 390
$ (8 ) $ (31 ) $ 7
$ 358

Table of Contents

Assured Guaranty Ltd.

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

Changes in Accumulated Other Comprehensive Income (Loss) by Component

Nine Months ~~2017~~2023


	Net Unrealized Gains (Losses) on Investments with:				ISCR on FG VIEs’ Liabilities with Recourse		Cumulative Translation Adjustment		Cash Flow Hedge		Total AOCI
	No Credit Impairment		Credit Impairment
	(in millions)
Balance, December 31, 2022	$	(343)	$	(110)	$	(23)	$	(45)	$	6	$	(515)
Other comprehensive income (loss) before reclassifications	(54)		(31)		9		2		—		(74)
Less: Amounts reclassified from AOCI to:
Net realized investment gains (losses)	2		(22)		—		—		—		(20)
Fair value gains (losses) on FG VIEs	—		—		(2)		—		—		(2)
Fair value gains (losses) on CIVs	—		—		—		(6)		—		(6)
Interest expense	—		—		—		—		1		1
Total before tax	2		(22)		(2)		(6)		1		(27)
Tax (provision) benefit	(2)		4		—		1		—		3
Total amount reclassified from AOCI, net of tax	—		(18)		(2)		(5)		1		(24)
Other comprehensive income (loss)	(54)		(13)		11		7		(1)		(50)
Balance, September 30, 2023	$	(397)	$	(123)	$	(12)	$	(38)	$	5	$	(565)

Net Unrealized
Gains (Losses) on
Investments with no Other-Than-Temporary Impairment

Net Unrealized
Gains (Losses) on
Investments with Other-Than-Temporary Impairment

Cumulative
Translation
Adjustment

Cash Flow
Hedge

Total
Accumulated
Other
Comprehensive
Income
(in millions)
Balance, December 31, 2016 $ 171
$ 10
$ (39 ) $ 7
$ 149
Other comprehensive income (loss) before reclassifications 133
81
15
—
229
Amounts reclassified from AOCI to:
Net realized investment gains (losses) (71 ) 18
—
—
(53 )
Net investment income (28 ) —
—
—
(28 )
Interest expense —
—
—
0
0
Total before tax (99 ) 18
—
0
(81 )
Tax (provision) benefit 35
(6 ) —
0
29
Total amount reclassified from AOCI, net of tax (64 ) 12
—
0
(52 )
Net current period other comprehensive income (loss) 69
93
15
0
177
Balance, September 30, 2017 $ 240
$ 103
$ (24 ) $ 7
$ 326

Changes in Accumulated Other Comprehensive Income (Loss) by Component

Nine Months ~~2016~~2022


	Net Unrealized Gains (Losses) on Investments with:				ISCR on FG VIEs’ Liabilities with Recourse		Cumulative Translation Adjustment		Cash Flow Hedge		Total AOCI
	No Credit Impairment		Credit Impairment
	(in millions)
Balance, December 31, 2021	$	375	$	(24)	$	(21)	$	(36)	$	6	$	300
Other comprehensive income (loss) before reclassifications	(886)		(92)		(2)		(13)		—		(993)
Less: Amounts reclassified from AOCI to:
Net realized investment gains (losses)	(35)		(13)		—		—		—		(48)
Fair value gains (losses) on FG VIEs	—		—		(2)		—		—		(2)
Total before tax	(35)		(13)		(2)		—		—		(50)
Tax (provision) benefit	6		2		1		—		—		9
Total amount reclassified from AOCI, net of tax	(29)		(11)		(1)		—		—		(41)
Other comprehensive income (loss)	(857)		(81)		(1)		(13)		—		(952)
Balance, September 30, 2022	$	(482)	$	(105)	$	(22)	$	(49)	$	6	$	(652)

Net Unrealized
Gains (Losses) on
Investments with no Other-Than-Temporary Impairment

Net Unrealized
Gains (Losses) on
Investments with Other-Than-Temporary Impairment

Cumulative
Translation
Adjustment

Cash Flow
Hedge

Total
Accumulated
Other
Comprehensive
Income
(in millions)
Balance, December 31, 2015 $ 260
$ (15 ) $ (16 ) $ 8
$ 237
Other comprehensive income (loss) before reclassifications 146
(10 ) (15 ) —
121
Amounts reclassified from AOCI to:
Net realized investment gains (losses) (20 ) 25
—
—
5
Net investment income (3 ) —
—
—
(3 )
Interest expense —
—
—
(1 ) (1 )
Total before tax (23 ) 25
—
(1 ) 1
Tax (provision) benefit 7
(8 ) —
0
(1 )
Total amount reclassified from AOCI, net of tax (16 ) 17
—
(1 ) 0
Net current period other comprehensive income (loss) 130
7
(15 ) (1 ) 121
Balance, September 30, 2016 $ 390
$ (8 ) $ (31 ) $ 7
$ 358

Table of Contents

Assured Guaranty Ltd.

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

~~Share Repurchase~~

~~The following table presents share repurchases since January 2016.~~

Share Repurchases

Period Number of Shares Repurchased
Total Payments
(in millions)
Average Price Paid Per Share
2016 (January 1 - March 31) 3,038,928
$ 75
$ 24.69
2016 (April 1 - June 30) 2,331,474
60
25.73
2016 (July 1 - September 30) 2,050,229
55
26.83
2016 (October 1 - December 31, 2016) 3,300,617
116
35.09
Total 2016 10,721,248
306
28.53
2017 (January 1 - March 31) 5,430,041
216
39.83
2017 (April 1 - June 30, 2017) 3,456,711
135
39.05
2017 (July 1 - September 30, 2017) 1,847,901
$ 80
43.29
2017 (October 1 - through November 2, 2017) 533,618
$ 20
37.48
Total 2017 11,268,271
451
40.05
Cumulative repurchases since the beginning of 2013 79,911,478
2,166
27.11

~~The~~On November 1, 2023, the Board of Directors (the Board) authorized ~~on November 1, 2017,~~the repurchase of an additional $300 million of ~~share repurchases. The total remaining capacity for share repurchases under the Board of Directors~~its common shares. Under this and previous authorizations, ~~was $398 million~~ as of November ~~2, 2017.~~7, 2023, the Company was authorized to purchase $372 million of its common shares. The Company expects to repurchase shares from time to time in the open market or in privately negotiated transactions. The timing, form and amount of the share repurchases under the program are at the discretion of management and will depend on a variety of factors, including funds available at the parent company, other potential uses for such funds, market conditions, the ~~Company's~~Company’s capital position, legal requirements and other factors. The repurchase program may be modified, extended or terminated by the Board ~~of Directors~~ at any time. It does not have an expiration date.

Share Repurchases

~~Deferred Compensation~~


Period	Number of Shares Repurchased	Total Payments (in millions)		Average Price Paid Per Share
2022 (January 1 - March 31)	2,738,223	$	155	$	56.62
2022 (April 1 - June 30)	2,605,947	151		58.03
2022 (July 1- September 30)	1,790,395	97		53.77
2022 (October 1- December 31)	1,713,416	100		58.34
Total 2022	8,847,981	$	503	56.79
2023 (January 1 - March 31)	36,369	2		62.23
2023 (April 1 - June 30)	453,942	24		53.08
2023 (July 1 - September 30)	1,065,902	64		59.67
2023 (October 1 - November 7)	682,676	42		61.17
Total 2023	2,238,889	$	132	58.83

Table of Contents

Assured Guaranty Ltd.

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

15. Earnings Per Share

~~The Company used a portion~~Computation of its share repurchase program to repurchase 297,131 common shares from its Chief Executive Officer and 23,062 common shares from its General Counsel on January 6, 2017. The shares were purchased at the closing priceEarnings Per Share


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions, except per share amounts)
Basic Earnings Per Share (EPS):
Net income (loss) attributable to AGL	$	157	$	11	$	363	$	30
Less: Distributed and undistributed income (loss) available to nonvested shareholders	2		—		3		—
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, basic	$	155	$	11	$	360	$	30
Basic shares	58.5		61.7		58.9		63.9
Basic EPS	$	2.65	$	0.18	$	6.11	$	0.47

Diluted EPS:
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, basic	$	155	$	11	$	360	$	30
Plus: Re-allocation of undistributed income (loss) available to nonvested shareholders of AGL and subsidiaries	—		—		—		—
Distributed and undistributed income (loss) available to common shareholders of AGL and subsidiaries, diluted	$	155	$	11	$	360	$	30
Basic shares	58.5		61.7		58.9		63.9
Dilutive securities:
Restricted stock awards	1.1		1.2		1.1		1.2
Diluted shares	59.6		62.9		60.0		65.1
Diluted EPS	$	2.60	$	0.18	$	5.99	$	0.46
Potentially dilutive securities excluded from computation of EPS because of antidilutive effect	0.1		0.1		0.1		0.8

Table of a common share of the Company on the New York Stock Exchange on January 6, 2017. Separately, these officers also received 297,131 and 23,062 common shares, respectively, on January 6, 2017 in settlement of 297,131 share units and 23,062 share units held by them in the employer stock fund of the Assured Guaranty Ltd. Supplemental Employee Retirement Plan (the AGL SERP). The distribution of shares occurred in January 2017 pursuant to the terms of an amendment adopted in 2011 to the AGL SERP. Such amendment was adopted to comply with requirements of Section 409A of the Code and Section 457A of the Code, which required all grandfathered amounts (within the meaning of Section 457A of the Code), including the units in the employer stock fund in the AGL SERP, to be included in the income of the applicable participant no later than 2017.Contents


~~18.~~	~~Subsidiary Information~~

The following tables present the condensed consolidating financial information for AGUS and AGMH, 100%-owned subsidiaries of AGL, which have issued publicly traded debt securities (please refer to Note 15, Long Term Debt and Credit Facilities). The information for AGL, AGUS and AGMH presents its subsidiaries on the equity method of accounting. The following tables reflect transfers of businesses between entities within the consolidated group that occurred in the current reporting period consistently for all prior periods presented.

~~CONDENSED CONSOLIDATING BALANCE SHEET~~

~~AS OF~~ ~~SEPTEMBER 30, 2017~~

~~(in millions)~~

Assured
Guaranty Ltd.
(Parent)

AGUS
(Issuer)

AGMH
(Issuer)

Other
Entities

Consolidating
Adjustments

Assured
Guaranty Ltd.
(Consolidated)
ASSETS

Total investment portfolio and cash $ 47
$ 143
$ 24
$ 11,776
$ (327 ) $ 11,663
Investment in subsidiaries 6,799
6,257
4,216
208
(17,480 ) —
Premiums receivable, net of commissions payable —
—
—
1,076
(154 ) 922
Ceded unearned premium reserve —
—
—
1,009
(901 ) 108
Deferred acquisition costs —
—
—
150
(45 ) 105
Reinsurance recoverable on unpaid losses —
—
—
394
(355 ) 39
Credit derivative assets —
—
—
50
(47 ) 3
Deferred tax asset, net —
76
—
153
(94 ) 135
Intercompany receivable —
—
—
70
(70 ) —
Financial guaranty variable interest entities’ assets, at fair value —
—
—
707
—
707
Dividend receivable from affiliate 25
—
—
—
(25 ) —
Other 22
28
51
1,100
(234 ) 967
TOTAL ASSETS $ 6,893
$ 6,504
$ 4,291
$ 16,693
$ (19,732 ) $ 14,649
LIABILITIES AND SHAREHOLDERS’ EQUITY

Unearned premium reserves $ —
$ —
$ —
$ 4,565
$ (968 ) $ 3,597
Loss and LAE reserve —
—
—
1,646
(320 ) 1,326
Long-term debt —
843
459
8
(18 ) 1,292
Intercompany payable —
70
—
300
(370 ) —
Credit derivative liabilities —
—
—
352
(47 ) 305
Deferred tax liabilities, net —
—
87
—
(87 ) —
Financial guaranty variable interest entities’ liabilities, at fair value —
—
—
768
—
768
Dividend payable to affiliate —
25
—
—
(25 ) —
Other 15
19
22
815
(388 ) 483
TOTAL LIABILITIES 15
957
568
8,454
(2,223 ) 7,771
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD. 6,878
5,547
3,723
8,031
(17,301 ) 6,878
Noncontrolling interest —
—
—
208
(208 ) —
TOTAL SHAREHOLDERS' EQUITY 6,878
5,547
3,723
8,239
(17,509 ) 6,878
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 6,893
$ 6,504
$ 4,291
$ 16,693
$ (19,732 ) $ 14,649

~~CONDENSED CONSOLIDATING BALANCE SHEET~~

ASITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF ~~DECEMBER 31, 2016~~

~~(in millions)~~

Assured
Guaranty Ltd.
(Parent)

AGUS
(Issuer)

AGMH
(Issuer)

Other
Entities

Consolidating
Adjustments

Assured
Guaranty Ltd.
(Consolidated)
ASSETS

Total investment portfolio and cash $ 36
$ 384
$ 22
$ 11,029
$ (368 ) $ 11,103
Investment in subsidiaries 6,164
5,696
3,799
296
(15,955 ) —
Premiums receivable, net of commissions payable —
—
—
699
(123 ) 576
Ceded unearned premium reserve —
—
—
1,099
(893 ) 206
Deferred acquisition costs —
—
—
156
(50 ) 106
Reinsurance recoverable on unpaid losses —
—
—
484
(404 ) 80
Credit derivative assets —
—
—
69
(56 ) 13
Deferred tax asset, net —
16
—
597
(116 ) 497
Intercompany receivable —
—
—
70
(70 ) —
Financial guaranty variable interest entities’ assets, at fair value —
—
—
876
—
876
Dividend receivable from affiliate 300

—

—

—
(300 ) —
Other 11
78
26
801
(222 ) 694
TOTAL ASSETS $ 6,511
$ 6,174
$ 3,847
$ 16,176
$ (18,557 ) $ 14,151
LIABILITIES AND SHAREHOLDERS’ EQUITY

Unearned premium reserves $ —
$ —
$ —
$ 4,488
$ (977 ) $ 3,511
Loss and LAE reserve —
—
—
1,596
(469 ) 1,127
Long-term debt —
843
453
10
—
1,306
Intercompany payable —
70
—
300
(370 ) —
Credit derivative liabilities —
—
—
458
(56 ) 402
Deferred tax liabilities, net —
—
88
—
(88 ) —
Financial guaranty variable interest entities’ liabilities, at fair value —
—
—
958
—
958
Dividend payable to affiliate —
300
—
—
(300 ) —
Other 7
3
14
665
(346 ) 343
TOTAL LIABILITIES 7
1,216
555
8,475
(2,606 ) 7,647
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO ASSURED GUARANTY LTD. 6,504
4,958
3,292
7,405
(15,655 ) 6,504
Noncontrolling interest —
—
—
296
(296 ) —
TOTAL SHAREHOLDERS’ EQUITY 6,504
4,958
3,292
7,701
(15,951 ) 6,504
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 6,511
$ 6,174
$ 3,847
$ 16,176
$ (18,557 ) $ 14,151

~~CONDENSED CONSOLIDATING STATEMENT~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~AND COMPREHENSIVE INCOME~~

~~FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2017~~

~~(in millions)~~

Assured
Guaranty Ltd.
(Parent)

AGUS
(Issuer)

AGMH
(Issuer)

Other
Entities

Consolidating
Adjustments

Assured
Guaranty Ltd.
(Consolidated)
REVENUES

Net earned premiums $ —
$ —
$ —
$ 190
$ (4 ) $ 186
Net investment income 0
0
0
101
(2 ) 99
Net realized investment gains (losses) —
0
0
(9 ) 16
7
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements —
—
—
(1 ) 0
(1 )
Net unrealized gains (losses) —
—
—
59
—
59
Net change in fair value of credit derivatives —
—
—
58
0
58
Other 3
—
—
302
(32 ) 273
TOTAL REVENUES 3
0
0
642
(22 ) 623
EXPENSES

Loss and LAE —
—
—
250
(27 ) 223
Amortization of deferred acquisition costs —
—
—
8
(3 ) 5
Interest expense —
12
13
3
(4 ) 24
Other operating expenses 10
1
0
91
(44 ) 58
TOTAL EXPENSES 10
13
13
352
(78 ) 310
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES (7 ) (13 ) (13 ) 290
56
313
Total (provision) benefit for income taxes —
4
4
(94 ) (19 ) (105 )
Equity in net earnings of subsidiaries 215
237
178
8
(638 ) —
NET INCOME (LOSS) $ 208
$ 228
$ 169
$ 204
$ (601 ) $ 208
Less: noncontrolling interest —
—
—
8
(8 ) —
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD. $ 208
$ 228
$ 169
$ 196
$ (593 ) $ 208

COMPREHENSIVE INCOME (LOSS) $ 219
$ 237
$ 178
$ 274
$ (689 ) $ 219

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~AND COMPREHENSIVE INCOME~~

~~FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016~~

~~(in millions)~~

Assured
Guaranty Ltd.
(Parent)

AGUS
(Issuer)

AGMH
(Issuer)

Other
Entities

Consolidating
Adjustments

Assured
Guaranty Ltd.
(Consolidated)
REVENUES

Net earned premiums $ —
$ —
$ —
$ 239
$ (8 ) $ 231
Net investment income 0
0
0
95
(1 ) 94
Net realized investment gains (losses) 0
3
0
(2 ) (3 ) (2 )
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements —
—
—
15
0
15
Net unrealized gains (losses) —
—
—
6
—
6
Net change in fair value of credit derivatives —
—
—
21
0
21
Bargain purchase gain and settlement of pre-existing relationship —
—
—
257
2
259
Other 0
—
—
(37 ) —
(37 )
TOTAL REVENUES 0
3
0
573
(10 ) 566
EXPENSES

Loss and LAE —
—
—
(15 ) 6
(9 )
Amortization of deferred acquisition costs —
—
—
9
(5 ) 4
Interest expense —
13
13
3
(3 ) 26
Other operating expenses 7
1
1
58
(2 ) 65
TOTAL EXPENSES 7
14
14
55
(4 ) 86
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES (7 ) (11 ) (14 ) 518
(6 ) 480
Total (provision) benefit for income taxes —
4
5
(13 ) 3
(1 )
Equity in net earnings of subsidiaries 486
433
82
11
(1,012 ) —
NET INCOME (LOSS) $ 479
$ 426
$ 73
$ 516
$ (1,015 ) $ 479
Less: noncontrolling interest —
—
—
11
(11 ) —
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD. $ 479
$ 426
$ 73
$ 505
$ (1,004 ) $ 479

COMPREHENSIVE INCOME (LOSS) $ 454
$ 414
$ 51
$ 497
$ (962 ) $ 454

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~AND COMPREHENSIVE INCOME~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017~~

~~(in millions)~~

Assured
Guaranty Ltd.
(Parent)

AGUS
(Issuer)

AGMH
(Issuer)

Other
Entities

Consolidating
Adjustments

Assured
Guaranty Ltd.
(Consolidated)
REVENUES

Net earned premiums $ —
$ —
$ —
$ 523
$ (11 ) $ 512
Net investment income 0
1
0
325
(4 ) 322
Net realized investment gains (losses) —
0
0
53
1
54
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements —
—
—
19
0
19
Net unrealized gains (losses) —
—
—
87
—
87
Net change in fair value of credit derivatives —
—
—
106
0
106
Bargain purchase gain and settlement of pre-existing relationships —
—
—
58
0
58
Other 8
—
—
527
(129 ) 406
TOTAL REVENUES 8
1
0
1,592
(143 ) 1,458
EXPENSES

Loss and LAE —
—
—
301
53
354
Amortization of deferred acquisition costs —
—
—
19
(6 ) 13
Interest expense —
36
40
8
(11 ) 73
Other operating expenses 30
8
1
286
(142 ) 183
TOTAL EXPENSES 30
44
41
614
(106 ) 623
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES (22 ) (43 ) (41 ) 978
(37 ) 835
Total (provision) benefit for income taxes —
13
15
(194 ) 9
(157 )
Equity in net earnings of subsidiaries 700
574
422
22
(1,718 ) —
NET INCOME (LOSS) $ 678
$ 544
$ 396
$ 806
$ (1,746 ) $ 678
Less: noncontrolling interest —
—
—
22
(22 ) —
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD. $ 678
$ 544
$ 396
$ 784
$ (1,724 ) $ 678

COMPREHENSIVE INCOME (LOSS) $ 855
$ 705
$ 484
$ 1,004
$ (2,193 ) $ 855

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~AND COMPREHENSIVE INCOME~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016~~

~~(in millions)~~

Assured
Guaranty Ltd.
(Parent)

AGUS
(Issuer)

AGMH
(Issuer)

Other
Entities

Consolidating
Adjustments

Assured
Guaranty Ltd.
(Consolidated)
REVENUES

Net earned premiums $ —
$ —
$ —
$ 653
$ (25 ) $ 628
Net investment income 0
0
0
293
(2 ) 291
Net realized investment gains (losses) 0
3
0
(4 ) (4 ) (5 )
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements —
—
—
47
—
47
Net unrealized gains (losses) —
—
—
(23 ) —
(23 )
Net change in fair value of credit derivatives —
—
—
24
—
24
Bargain purchase gain and settlement of pre-existing relationship —
—
—
257
2
259
Other 0
0
0
10
0
10
TOTAL REVENUES 0
3
0
1,233
(29 ) 1,207
EXPENSES

Loss and LAE —
—
—
182
1
183
Amortization of deferred acquisition costs —
—
—
23
(10 ) 13
Interest expense —
39
40
8
(10 ) 77
Other operating expenses 23
1
2
165
(3 ) 188
TOTAL EXPENSES 23
40
42
378
(22 ) 461
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN NET EARNINGS OF SUBSIDIARIES (23 ) (37 ) (42 ) 855
(7 ) 746
Total (provision) benefit for income taxes —
13
15
(94 ) 4
(62 )
Equity in net earnings of subsidiaries 707
623
272
34
(1,636 ) —
NET INCOME (LOSS) $ 684
$ 599
$ 245
$ 795
$ (1,639 ) $ 684
Less: noncontrolling interest —
—
—
34
(34 ) —
NET INCOME (LOSS) ATTRIBUTABLE TO ASSURED GUARANTY LTD. $ 684
$ 599
$ 245
$ 761
$ (1,605 ) $ 684

COMPREHENSIVE INCOME (LOSS) $ 805
$ 660
$ 261
$ 923
$ (1,844 ) $ 805

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

~~FOR THE NINE MONTHS ENDED~~ ~~SEPTEMBER 30, 2017~~

~~(in millions)~~

Assured
Guaranty Ltd.
(Parent)

AGUS
(Issuer)

AGMH
(Issuer)

Other
Entities

Consolidating
Adjustments

Assured
Guaranty Ltd.
(Consolidated)
Net cash flows provided by (used in) operating activities $ 503
$ 175
$ 105
$ 469
$ (898 ) $ 354
Cash flows from investing activities

Fixed-maturity securities:

Purchases —
(75 ) (15 ) (1,552 ) 27
(1,615 )
Sales —
112
12
1,004
—
1,128
Maturities —
7
0
682
—
689
Sales (purchases) of short-term investments, net (11 ) 218
3
(450 ) —
(240 )
Net proceeds from financial guaranty variable entities’ assets —
—
—
117
—
117
Investment in subsidiaries —
(28 ) —
(69 ) 97
—
Proceeds from sale of subsidiaries —
—
—
139
(139 ) —
Acquisition of MBIA UK, net of cash acquired —
—
—
95
—
95
Other —
—
—
58
—
58
Net cash flows provided by (used in) investing activities (11 ) 234
—
24
(15 ) 232
Cash flows from financing activities

Return of capital —
—
—
(70 ) 70
—
Capital contribution —
—
25
3
(28 ) —
Dividends paid (53 ) (390 ) (128 ) (380 ) 898
(53 )
Repurchases of common stock (431 ) —
—
—
—
(431 )
Repurchases of common stock to pay withholding taxes (13 ) —
—
—
—
(13 )
Net paydowns of financial guaranty variable entities’ liabilities —
—
—
(124 ) —
(124 )
Repayment/ extinguishment of long-term debt —
—
—
(2 ) (27 ) (29 )
Proceeds from options exercises 5
—
—
—
—
5
Net cash flows provided by (used in) financing activities (492 ) (390 ) (103 ) (573 ) 913
(645 )
Effect of exchange rate changes —
—
—
4
—
4
Increase (decrease) in cash and restricted cash 0
19
2
(76 ) —
(55 )
Cash and restricted cash at beginning of period 0
1
0
126
—
127
Cash and restricted cash at end of period $ 0
$ 20
$ 2
$ 50
$ —
$ 72

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

~~FOR THE NINE MONTHS ENDED~~ ~~SEPTEMBER 30, 2016~~

~~(in millions)~~

Assured
Guaranty Ltd.
(Parent)

AGUS
(Issuer)

AGMH
(Issuer)

Other
Entities

Consolidating
Adjustments

Assured
Guaranty Ltd.
(Consolidated)
Net cash flows provided by (used in) operating activities $ 288
$ 171
$ 159
$ 3
$ (810 ) $ (189 )
Cash flows from investing activities

Fixed-maturity securities:

Purchases (4 ) (44 ) (10 ) (970 ) —
(1,028 )
Sales 4
—
12
861
—
877
Maturities —
23
—
838
—
861
Sales (purchases) of short-term investments, net (49 ) (3 ) (1 ) 133
—
80
Net proceeds from financial guaranty variable entities’ assets —
—
—
590
—
590
Investment in subsidiaries —
—
—
4
(4 ) —
Acquisition of CIFG, net of cash acquired —
—
—
(442 ) 7
(435 )
Other —
7
—
(12 ) (7 ) (12 )
Net cash flows provided by (used in) investing activities (49 ) (17 ) 1
1,002
(4 ) 933
Cash flows from financing activities

Return of capital —
—
—
(4 ) 4
—
Dividends paid (52 ) (223 ) (158 ) (429 ) 810
(52 )
Repurchases of common stock (190 ) —
—
—
—
(190 )
Share repurchases to pay withholding taxes

(2 ) —
—
—
—
(2 )
Net paydowns of financial guaranty variable entities’ liabilities —
—
—
(567 ) —
(567 )
Payment of long-term debt —
—
—
(2 ) —
(2 )
Proceeds from options exercises

6
—
—
—
—
6
Net cash flows provided by (used in) financing activities (238 )
(223 )
(158 )
(1,002 )
814

(807 )
Effect of exchange rate changes —
—
—
(4 ) —
(4 )
Increase (decrease) in cash and restricted cash 1
(69 ) 2
(1 ) —
(67 )
Cash and restricted cash at beginning of period 0
95
8
63
—
166
Cash and restricted cash at end of period $ 1
$ 26
$ 10
$ 62
$ —
$ 99


~~ITEM 2.~~	~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Forward Looking Statements

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.

Any or all of Assured Guaranty’s forward looking statements herein are based on current expectations and the current economic environment and may turn out to be incorrect. Assured Guaranty’s actual results may vary materially. Among factors that could cause actual results to differ adversely are:

•significant changes in inflation, interest rates, the world’s credit markets or segments thereof, credit spreads, foreign exchange rates or general economic conditions, including the possibility of a recession or stagflation;

•geopolitical risk, including Russia’s invasion of Ukraine and the resulting economic sanctions, volatility in energy prices, potential for increased cyberattacks, and risk of intentional or accidental escalation between The North Atlantic Treaty Organization (NATO) and Russia, conflict in the Middle East, confrontation over Iran’s nuclear program, and United States (U.S.) – China strategic competition and the pursuit of technological independence;

•the possibility of a U.S. government shutdown, 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;

•public health crises, including pandemics and endemics, and the governmental and private actions taken in response to such events;

•developments in the world’s financial and capital markets, including stresses in the financial condition of banking institutions in the U.S., that adversely affect repayment rates related to commercial real estate, municipalities and other insured obligors, Assured Guaranty’s insurance loss or recovery experience, or investments of Assured Guaranty;

•reduction in the amount of available insurance opportunities and/or in the demand for Assured ~~Guaranty's~~Guaranty’s insurance;

rating agency action, including a ratings downgrade, a change in outlook, the placement of ratings on watch for downgrade, or a change in rating criteria, at any time, of AGL or any of its subsidiaries, and/or of any securities AGL or any of its subsidiaries have issued, and/or of transactions that AGL's subsidiaries have insured;

developments in the world’s financial and capital markets that adversely affect obligors’ payment rates, Assured Guaranty’s loss experience, or its exposure to refinancing risk in transactions (which could result in substantial liquidity claims on its guarantees);

•the possibility that budget or pension shortfalls or other factors will result in credit losses or impairments on obligations of state, territorial and local governments and their related authorities and public corporations that Assured Guaranty insures or reinsures;

•insured losses, including losses with respect to related legal proceedings, in excess of those expected by Assured Guaranty or the failure of Assured Guaranty to realize loss recoveries that are assumed in its expected loss ~~estimates;~~estimates for insurance exposures, including as a result of the final resolution of Assured Guaranty’s remaining Puerto Rico exposures or the amounts recovered on securities received in connection with the resolution of Puerto Rico exposures already resolved;

•the impact of the Company satisfying its obligations under insurance policies with respect to legacy insured Puerto Rico bonds;

•increased competition, including from new entrants into the financial guaranty ~~industry;~~industry, nonpayment insurance and other forms of capital saving or risk syndication available to banks and insurers;

•the possibility that investments made by Assured Guaranty for its investment portfolio, including alternative investments and investments it manages, do not result in the benefits anticipated or subject Assured Guaranty to reduced liquidity at a time it requires liquidity, or to other negative or unanticipated consequences;

•the impacts of the completion of Assured Guaranty’s transactions with Sound Point Capital Management, LP (Sound Point) and/or Assured Healthcare Partners LLC (AHP) on Assured Guaranty and its relationships with its shareholders, regulators, rating agencies, employees and the obligors it insures and on the asset management business contributed to Sound Point and on the business of AHP and their relationships with their respective clients and employees;

•the possibility that strategic transactions made by Assured Guaranty, including the consummation of the transactions with Sound Point and/or AHP, do not result in the benefits anticipated or subject Assured Guaranty to negative consequences;

•the inability to control the business, management or policies of entities in which the Company holds a minority interest;

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•the impact of market volatility on the mark-to-market of Assured Guaranty’s assets and liabilities subject to mark-to-market, including certain of its investments, contracts accounted for as derivatives, and certain consolidated variable interest entities (VIEs);

•rating agency action, including a ratings downgrade, a change in outlook, the placement of ratings on ~~obligors, including sovereign debtors, resulting~~watch for downgrade, or a change in ~~a reduction in the value~~rating criteria, at any time, of AGL or any of its insurance subsidiaries, and/or of any securities ~~in Assured Guaranty’s investment portfolio and in collateral posted by and to Assured Guaranty;~~AGL or any of its subsidiaries have issued, and/or of transactions that AGL’s insurance subsidiaries have insured;

•the inability of Assured Guaranty to access external sources of capital on acceptable terms;

~~changes in the world’s credit markets, segments thereof, interest rates or general economic conditions;~~

~~the impact of market volatility on the mark-to-market of Assured Guaranty’s contracts written in credit default swap form;~~

•changes in applicable accounting policies or practices;

•changes in applicable laws or regulations, including insurance, bankruptcy and tax laws, or other governmental actions;

the impact of changes in the world’s economy and credit and currency markets and in applicable laws or regulations relating to the decision of the United Kingdom (U.K.) to exit the European Union (EU);

~~the possibility that acquisitions or alternative investments made by Assured Guaranty do not result in the benefits anticipated or subject Assured Guaranty to unanticipated consequences;~~

deterioration in the financial condition of Assured Guaranty’s reinsurers, the amount and timing of reinsurance recoverables actually received and the risk that reinsurers may dispute amounts owed to Assured Guaranty under its reinsurance agreements;

•difficulties with the execution of Assured Guaranty’s business strategy;

•loss of key personnel;

•the effects of mergers, acquisitions and divestitures;

•natural or man-made ~~catastrophes;~~catastrophes or pandemics;

•the impact of climate change on Assured Guaranty’s business and regulatory actions taken related to such risk;

•other risk factors identified in AGL’s filings with the U.S. Securities and Exchange Commission ~~(the SEC)~~(SEC);

•other risks and uncertainties that have not been identified at this time; and

•management’s response to these factors.

The foregoing review of important factors should not be construed as exhaustive, and should be read in conjunction with the other cautionary statements and risk factors that are included in this Form 10-Q, as well as the risk factors included in ~~AGL's 2016~~the Company’s 2022 Annual Report on Form 10-K. The Company undertakes no obligation to update publicly or review any forward looking statement, whether as a result of new information, future developments or otherwise, except as required by law. Investors are advised, however, to consult any further disclosures the Company makes on related subjects in the Company’s reports filed with the SEC.

If one or more of these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may vary materially from what the Company projected. Any forward looking statements in this Form 10-Q reflect the Company’s current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to its operations, results of operations, growth strategy and liquidity.

For these statements, the Company claims the protection of the safe harbor for forward looking statements contained in Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act).

Available Information

The Company maintains an ~~Internet~~internet web site at www.assuredguaranty.com. The Company makes available, free of charge, on its web site (under ~~assuredguaranty.com/~~www.assuredguaranty.com/sec-filings) the ~~Company's annual report~~Company’s Annual Report on Form 10-K, ~~quarterly reports~~Quarterly Reports on Form 10-Q, ~~current reports~~Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13 (a) or 15 (d) of the Exchange Act as soon as reasonably practicable after the Company files such material with, or furnishes it to, the SEC. The Company also makes available, free of charge, through its web site (under ~~assuredguaranty.com/~~www.assuredguaranty.com/governance) links to the ~~Company's~~Company’s Corporate Governance Guidelines, ~~its~~the Company’s Global Code of ~~Conduct, AGL's~~Ethics, AGL’s Bye-Laws and the charters for the committees of its Board ~~committees.~~of Directors. In addition, the SEC maintains a web site (at www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The Company routinely posts important information for investors on its web site (under ~~assuredguaranty.com/~~www.assuredguaranty.com/company-statements and, more generally, under the Investor Information tab at www.assuredguaranty.com/investor-informationand Businesses ~~pages)~~tab at www.assuredguaranty.com/businesses). The Company also maintains a social media account on LinkedIn (www.linkedin.com/company/assured-guaranty/). The Company uses ~~this~~its web site and may use its social media account as a means of disclosing material information and for complying with its disclosure obligations under SEC Regulation FD (Fair Disclosure). Accordingly, investors should monitor the Company Statements, Investor Information and Businesses portions of the ~~Company's~~Company’s web site as well as the Company’s social media account on LinkedIn, in addition to following the ~~Company's~~Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

The information contained on, or that may be accessed through, the ~~Company's~~Company’s web site or social media account is not incorporated by reference into, and is not a part of, this report.

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~~Executive Summary~~

Overview

~~This executive summary~~

Business

The Company reports its results of ~~management’s discussion~~operations in two distinct segments, Insurance and ~~analysis highlights selected information~~Asset Management, consistent with the manner in which the Company’s chief operating decision maker reviews the business to assess performance and ~~may not contain all~~allocate resources. The Company’s Corporate division and other activities (including financial guaranty VIEs (FG VIEs) and consolidated investment vehicles (CIVs)) are presented separately.

In 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. Until July 1, 2023, the Company served as investment advisor to collateralized loan obligations (CLOs) and opportunity funds, through Assured Investment Management LLC (AssuredIM LLC) and its investment management affiliates (together with AssuredIM LLC, AssuredIM). Beginning July 1, 2023, the Company participates in the asset management business through its ownership interest in Sound Point as described below.

The Corporate division consists primarily of interest expense on the ~~information that is important to readers~~debt of ~~this Quarterly Report. For a more detailed description of events, trends~~Assured Guaranty US Holdings Inc. (AGUS) and ~~uncertainties,~~Assured Guaranty Municipal Holdings Inc. (AGMH) (the U.S. Holding Companies), as well as other operating expenses attributed to holding company activities, including administrative services performed by certain subsidiaries for the ~~capital, liquidity,~~holding companies. Other activities include the effect of consolidating FG VIEs and CIVs (FG VIE and CIV consolidation). See Item 1, Financial Statements, Note 2, Segment Information.

Asset Management Transactions

On July 1, 2023, Assured Guaranty contributed to Sound Point most of its asset management business, other than that conducted by Assured Healthcare Partners LLC (AssuredIM Contributed Business), as contemplated by the transaction agreement entered into with Sound Point on April 5, 2023 (Transaction Agreement). In addition, in accordance with the terms of a letter agreement (Letter Agreement), effective July 1, 2023, Assured Guaranty Municipal Corp. (AGM) and Assured Guaranty Corp. (AGC) (collectively, the U.S. Insurance Subsidiaries) (i) engaged Sound Point as their sole alternative credit ~~operational~~manager, and ~~market risks~~(ii) transitioned to Sound Point the management of certain existing alternative investments and related commitments. The Letter Agreement also provides that, in the first two years of Sound Point’s engagement, the U.S. Insurance Subsidiaries would, subject to regulatory approval, make new investments in funds, other vehicles and separately managed accounts managed by Sound Point which, when aggregated with the alternative investments and commitments transitioned from AssuredIM, will total $1 billion. See Note 7, Investments. Assured Guaranty received, subject to certain potential post-closing adjustments, common interests in Sound Point representing a 30% participation percentage in Sound Point, and certain other interests in related Sound Point entities (the transactions contemplated under the Transaction Agreement and the ~~critical accounting policies~~Letter Agreement, the Sound Point Transaction). As of September 30, 2023, Sound Point is the fifth largest CLO manager by assets under management (AUM) in the world (based on September 30, 2023 CreditFlux CLO manager rankings).

In July 2023, Assured Guaranty sold all of its equity interests in Assured Healthcare Partners LLC (AHP), which manages healthcare funds, to an entity owned and ~~estimates affecting~~controlled by the managing partner of AHP (AHP Transaction). In connection with the AHP Transaction, the Company ~~this Quarterly Report should be read~~agreed to remain a strategic investor in ~~its entirety~~certain AHP investment vehicles, is retaining certain carried interest in AHP entities and ~~in addition to AGL's 2016 Annual Report on Form 10-K.~~received other consideration.

Economic Environment

~~The Company believes reported statistics indicate that positive economic momentum~~Real gross domestic product (GDP) increased at an annual rate of 4.9% in ~~the United States (U.S.) since the beginning of 2016 has continued through~~ the three-month period ended September 30, ~~2017 (Third Quarter 2017)~~2023 (third quarter 2023), compared to an increase of 2.1% in the second quarter of 2023, according to the advance estimate released by the U.S. Bureau of Economic Analysis (BEA). At the end of September 2023, the U.S. unemployment rate, seasonally adjusted, stood at 3.8%, up slightly from the 3.6% rate where it had started the quarter, and down from the COVID-19 pandemic high of 14.7% in April 2020. The Company believes a more robust economy makes it less likely that obligors whose obligations it guarantees will default.

According to the U.S. Bureau of Labor Statistics (BLS), ~~for~~ the months of July through September 2017, the U.S. economy added an estimated 274 thousand jobs. Additionally, the BLS estimated that the seasonally adjusted monthly unemployment rate fell to 4.2% in September 2017, down from 4.4% at the end of the second quarter of 2017 and 4.5% at the end of the first quarter of 2017, and was lower than the May 2017 unemployment figure of 4.3%, which was already a 16-year low. The BLS’ analysis of the net effect of the hurricanes was to reduce the estimate of total non-farm payroll employment for September, while having no discernible effect on the national unemployment rate.

~~The U.S. Bureau of Economic Analysis reported that real gross domestic product (GDP) increased at an annualized rate of 3.1% in the second quarter of 2017, more than double the annualized~~inflation rate in the ~~first quarter of 2017. This represents~~U.S. before seasonal adjustment for the ~~thirteenth consecutive quarter of positive growth in real GDP.~~

~~U.S. home prices also continued to rise,~~12-month period ending September 2023, as measured by the ~~S&P CoreLogic Case-Shiller U.S. National Home~~Consumer Price Index ~~which~~for All Urban Consumers (CPI-U), was 3.7%, as compared to 3.0% for the 12-month period ending June 2023. According to the United Kingdom’s (U.K.) Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs (CPIH) was 6.3% for the 12 months through September 2023, down from 7.3% for the 12 months ended June 2023. Consumer price inflation may impact the Company indirectly to the extent it makes it more difficult for obligors to make their debt payments or causes interest rates to rise more generally. In addition, consumer price inflation in the U.K. increases reported net par outstanding for certain U.K

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exposures with approximately $21.2 billion of net par outstanding as of September 30, 2023, and also increases projected future installment premiums on the portion of such exposure that pays at least a portion of the premium on an ~~annual gain in July~~installment basis over the term of ~~5.9% while~~ the ~~20-City Composite posted a 5.8% year-over-year gain.~~exposure.

~~At the September 20, 2017 meeting of~~With the Federal Open Market Committee (FOMC), acknowledging the need to combat inflation, in March 2022 the FOMC ~~maintained~~began again raising the target range for the federal funds rate ~~between 1.00%~~ and ~~1.25%, and reiterated its prior position~~stated that ~~additional rate hikes were very likely in 2018, with one also possible at the end of this year. The FOMC announced that in October 2017~~ it ~~planned to begin the balance sheet normalization program that was outlined in June, reducing~~would reduce its holdings ~~in a gradual~~of treasury securities and ~~predictable manner. The~~agency debt and agency mortgage-backed securities. From March 2022 through July 26, 2023, the FOMC ~~pointed again to sustained strength in~~raised the ~~labor market, increased household spending, and expanded business investments as the primary drivers to increase~~target range for the federal funds rate ~~going forward.~~from a range of 0% to 0.25% where it started 2022 to a range of 5.25% to 5.50% at its July 25-26, 2023 meeting. The FOMC has repeatedly declared that it seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. In ~~its statement,~~determining the extent to which additional policy firming may be appropriate to return inflation to 2% over time, the FOMC ~~noted~~indicated that it will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic ~~growth~~activity and inflation, and economic and financial developments. Since its July 25-26, 2023 meeting, the FOMC has maintained the federal funds rate at 5.25% to 5.50%, including through its most recent meeting held October 31 – November 1, 2023, stating that it would continue to assess additional information and its implications for monetary policy.

The level and direction of interest rates and credit spreads impact the Company in numerous ways. On the one hand, higher interest rates may reduce the fair value of fixed-maturity securities currently held in the ~~Third Quarter was held back~~Company’s investment portfolio, dampen municipal bond issuance and negatively impact the finances of some of the obligors whose payments the Company insures. On the other hand, higher interest rates are often accompanied by wider spreads, which may make the ~~severe economic disruptions caused by Hurricanes Harvey, Irma,~~Company’s credit enhancement products more attractive in the U.S. municipal bond market and ~~Maria,~~increase the level of premiums it can charge for those products.

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 3.77% for the quarter ended September 2023, higher than the 3.41% average for the quarter ended June 2023, and higher than the 3.22% average for the quarter ended September 2022. Meanwhile, the difference, or credit spread, between the 30-year BBB-rated general obligation relative to the 30-year AAA MMD averaged 101 basis points (bps) in the quarter ended September 2023, which is the same spread as the quarter ended June 2023, but noted that growth would likely bounce back as economic activity resumes and rebuilding begins. Please refer to Part I, Item I, Financial Statements, Note 4, Outstanding Exposure and Note 5, Expected Loss to be Paid,wider than the 95 bps average for ~~information on~~ the ~~effects of these hurricanes on the Company's Puerto Rico and other Caribbean exposures.~~

quarter ended September 2022. The Company believes that, continued increases in stock prices during the quarter are also indicative of positive economic momentum in the U.S.. U.S. stocks reached record highs, as investors anticipate another strong earnings season. The Dow Jones Industrial Average (DJIA), Nasdaq compositeover time, wider spreads could permit it to increase its premium rates on new business, and the S&P 500 Index all set records highs during the quarter, with the DJIA recently touching 23,000 for the first time, and corporate earnings for the S&P S&P 500 Index remaining strong for three quarters in a row.

~~Average municipal~~higher interest rates remained relatively low by historical standards, but above the lows experienced in 2016, when 30-year AAA MMD rates were at times below 2%. Since July 2016, the 30-year AAA MMD rate increased from a low of 1.95% to as high as 3.06% on May 2, 2017, still low by historical standards. Since then, that MMD rate has declined to 2.84% as of September 29, 2017.

~~Financial Performance of Assured Guaranty~~

~~Financial Results~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Net income (loss) $ 208
$ 479
$ 678
$ 684
Operating income (non-GAAP)(1) 156
497
570
756
Gain (loss) related to the effect of consolidating FG VIEs (FG VIE consolidation) included in operating income (1 ) (11 ) 9
(4 )

Net income (loss) per diluted share $ 1.72
$ 3.60
$ 5.48
$ 5.06
Operating income per share (non-GAAP)(1) 1.29
3.74
4.62
5.61
Gain (loss) related to FG VIE consolidation included in operating income per share (0.01 ) (0.09 ) 0.08
(0.03 )

Diluted shares 120.7
132.8
123.5
134.9

Gross written premiums (GWP) $ 45
$ 16
$ 235
$ 71
Present value of new business production (PVP)(1) 43
50
212
129
Gross par written 3,417
4,687
13,248
12,211

As of September 30, 2017 As of December 31, 2016
Amount Per Share Amount Per Share
(in millions, except per share amounts)
Shareholders' equity $ 6,878
$ 58.32
$ 6,504
$ 50.82
Non-GAAP operating shareholders' equity(1) 6,590
55.87
6,386
49.89
Non-GAAP adjusted book value(1) 8,820
74.78
8,506
66.46
Gain (loss) related to FG VIE consolidation included in non-GAAP operating shareholders' equity 3
0.01
(7 ) (0.06 )
Gain (loss) related to FG VIE consolidation included in non-GAAP adjusted book value (13 ) (0.11 ) (24 ) (0.18 )
Common shares outstanding (2) 117.9
128.0

~~____________________~~

~~(1)~~

Please refer to “—Non-GAAP Financial Measures” for a definition of the financial measures that were not determined in accordance with accounting principles generally accepted in the United States of America (GAAP) and a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure, if available. Please note that the Company changed its definition of Operating Income (non-GAAP), Non-GAAP Operating Shareholders' Equity and Non-GAAP Adjusted Book Value starting in fourth quarter 2016 in response to new non-GAAP guidance issued by the SEC in 2016. Please refer to “—Non-GAAP Financial Measures” for additional details.


~~(2)~~	~~Please refer to "Key Business Strategies – Capital Management" below for information on common share repurchases.~~

Several primary drivers of volatility in net income or loss are not necessarily indicative of credit impairment or improvement, or ultimate economic gains or losses: changes in credit spreads of insured credit derivative obligations, changes in fair value of assets and liabilities of financial guaranty variable interest entities (FG VIEs) and committed capital securities (CCS), changes in the Company's own credit spreads, and changes in risk-free rates used to discount expected losses. Changes in credit spreads generally have the most significant effect on the fair value of credit derivatives and FG VIE assets and liabilities. In addition to non-economic factors, other factors such as: changes in expected losses,may also increase the amount the Company can earn on its largely fixed-maturity securities.

Additionally, the Company believes that higher interest rates are discouraging homeowners from moving as many are locked into lower mortgage interest rates at the homes in which they reside, which, in turn, is restricting housing inventory and ~~timing of refunding transactions and terminations, realized gains and losses on~~leading to an increase in home prices as demand outpaces supply. The increase in housing prices may benefit distressed residential mortgage-backed securities (RMBS) the investment portfolio (including other-than-temporary impairments), the effects of large settlements and transactions, acquisitions, and the effects of the Company's various loss mitigation strategies, among others, may also have a significant effect on reported net income or loss in a given reporting period.

~~Third Quarter 2017~~

Net income for Third Quarter 2017 was $208 million compared with $479 million in the three-month period ended September 30, 2016 (Third Quarter 2016). Net income in both Third Quarter 2017 and Third Quarter 2016 included significant gains attributable to our strategic initiatives. Third Quarter 2017 includes pretax commutation gains of $255 million relatedCompany insures. According to the ~~reassumption~~National Association of ~~previously ceded contracts (recorded~~Realtors reported that existing home sales declined 15.4% in ~~other income). Third Quarter 2016 included~~September 2023 from one year ago. The median existing-home price for all housing types in September 2023 was $394,300, a ~~pretax gain~~decrease of $259 million related to the acquisition of CIFG Holding Inc. (together with its subsidiaries CIFGH) (CIFG Acquisition). Excluding these gains, net income decreased due mainly to increased loss and adjustment expenses (LAE) attributable to U.S. public finance losses and lower net earned premiums3.9% from ~~refundings and terminations.~~June 2023 ($410,200).

The Company reported operating income (non-GAAP) of $156 million in Third Quarter 2017, compared with $497 million in Third Quarter 2016. The variances in operating income (non-GAAP) are attributable to the same items described for net income.

~~Nine Months 2017~~

Net income for the nine-month period ended September 30, 2017 (Nine Months 2017) was $678 million compared with $684 million for the nine-month period ended September 30, 2016 (Nine Months 2016). Net income in both Nine Months 2017 and Nine Months 2016 also included significant gains attributable to our strategic initiatives. Nine Months 2017 includes pretax commutation gains of $328 million and a pretax gain of $58 million on the acquisition of MBIA UK Insurance Limited (MBIA UK) (MBIA UK Acquisition). Nine Months 2016 includes pretax gains of $259 million on the CIFG Acquisition. Excluding these gains, net income decreased due mainly to increased loss and adjustment expenses (LAE) attributable to U.S. public finance losses and lower net earned premiums from refundings and terminations.

The Company reported operating income (non-GAAP) of $570 million in Nine Months 2017, compared with $756 million in Nine Months 2016. The variances in operating income (non-GAAP) are attributable to the same items described for net income.

Shareholders' equity increased since December 31, 2016 due primarily to positive net income (including the effect of MBIA UK Acquisition) and higher net unrealized gains on available for sale investment securities recorded in accumulated other comprehensive income (AOCI), partially offset by share repurchases and dividends. Non-GAAP operating shareholders' equity and non-GAAP adjusted book value also increased since December 31, 2016 due primarily to the MBIA UK Acquisition, new business production and commutations, offset in part by loss development, share repurchases and dividends. Shareholders' equity per share, non-GAAP operating shareholders' equity per share and non-GAAP adjusted book value per share benefited from the repurchase program that has been in place since the beginning of 2013.

Key Business Strategies

The Company continually evaluates its business ~~strategies. Currently, the Company~~strategies and is currently pursuing ~~the following~~key business strategies ~~each described~~ in ~~more detail below:~~three areas: (i) insurance; (ii) asset management and alternative investments; and (iii) capital management.

~~New~~Insurance

The Company seeks to grow the insurance business through new business production, acquisitions of monoline financial guaranty companies that currently are in runoff and no longer actively writing new business (legacy monoline insurers) or reinsurance of their insured portfolios, and to continue to mitigate losses in its current insured portfolio.

~~Capital management~~

~~Alternative strategies~~ Growth of the Insured Portfolio

The Company seeks to ~~create value, including~~grow its financial guaranty insurance portfolio through ~~acquisitions, investments~~new business production in each of its markets: public finance (including infrastructure) and ~~commutations~~

~~Loss mitigation~~

~~New Business Production~~

structured finance. The Company believes high-profile defaults by municipal obligors, such as 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 there will be continued demand for its insurance in this market 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

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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.

~~On the other hand, the persistently~~ The low interest rate environment ~~has~~and tight U.S. municipal credit spreads from when the financial crisis began in 2008 through early 2020 dampened demand for bond insurance ~~and, after~~compared to the levels before the financial crisis. After the onset of the COVID-19 pandemic in early 2020, credit spreads initially widened as a ~~number~~result of ~~years in which~~market concerns about the ~~Company was essentially~~impact of the ~~only financial guarantor, there is now one other financial guarantor active in one of its markets.~~

~~U.S. Municipal Market Data and Penetration Rates (1)~~

~~Based~~COVID-19 pandemic on ~~Sale Date~~

Nine Months 2017 Nine Months 2016 Year Ended December 31, 2016
(dollars in billions, except number of issues and percent)
Par:
New municipal bonds issued $ 271.6
$ 323.3
$ 423.7
Total insured $ 16.8
$ 18.5
$ 25.3
Insured by Assured Guaranty $ 9.8
$ 10.1
$ 14.2
Number of issues:
New municipal bonds issued 7,583
9,489
12,271
Total insured 1,242
1,404
1,889
Insured by Assured Guaranty 634
672
904
Market penetration based on:
Par 6.2 % 5.7 % 6.0 %
Number of issues 16.4 % 14.8 % 15.4 %
Single A par sold 26.9 % 23.1 % 22.6 %
Single A transactions sold 59.5 % 55.1 % 55.8 %
$25 million and under par sold 20.0 % 17.1 % 17.8 %
$25 million and under transactions sold 19.0 % 16.9 % 17.5 %

~~____________________~~

~~(1) Source: Thomson Reuters.~~

~~Gross Written Premiums and~~

~~New Business Production~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
GWP
Public Finance—U.S. $ 37
$ 24
$ 132
$ 72
Public Finance—non-U.S. 8
(9 ) 92
6
Structured Finance—U.S. 1
1
3
(5 )
Structured Finance—non-U.S. (1 ) 0
8
(2 )
Total GWP $ 45
$ 16
$ 235
$ 71

PVP (1):
Public Finance—U.S. $ 39
$ 25
$ 137
$ 89
Public Finance—non-U.S. 4
2
58
16
Structured Finance—U.S. (2) 0
23
5
24
Structured Finance—non-U.S. (3) —
—
12
—
Total PVP $ 43
$ 50
$ 212
$ 129
Gross Par Written (1):
Public Finance—U.S. $ 3,328
$ 3,459
$ 11,590
$ 10,574
Public Finance—non-U.S. 89
164
1,260
570
Structured Finance—U.S. (2) —
1,064
243
1,067
Structured Finance—non-U.S. (3) —
—
155
—
Total gross par written $ 3,417
$ 4,687
$ 13,248
$ 12,211

~~____________________~~


~~(1)~~	~~PVP and Gross Par Written in the table above are based on "close date," when the transaction settles. See “– Non-GAAP Financial Measures – PVP or Present Value of New Business Production.”~~

~~(2) Includes capital relief triple-X excess of loss life reinsurance transactions written in 2017 and 2016.~~

~~(3) Relates to reinsurance of aircraft residual value insurance (RVI) policies.~~

~~GWP include amounts collected upfront on new business written, the present value of future premiums on new~~some municipal credits, thereby improving demand for financial guaranty ~~business written (discounted at risk free rates), as well as~~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.

In certain segments of the ~~effects of changes in~~infrastructure and structured finance markets, the ~~estimated lives of transactions in the inforce book of financial guaranty business.~~

~~Third Quarter 2017~~

In Third Quarter 2017, U.S. public finance GWP increased to $37 million from $24 million in Third Quarter 2016, due primarily to increased PVP. The increase in non-U.S. public finance GWP was due to higher new business production in Third Quarter 2017 than Third Quarter 2016 and changes in estimated lives in Third Quarter 2016 resulting in negative GWP.

U.S. public finance PVP increased in Third Quarter 2017 compared with the comparable prior-year period due to higher par written in the secondary market. Assured Guaranty's secondary market PVP increased by more than four times compared to with Third Quarter 2016. Assured Guaranty once again guaranteed the majority of insured par issued while maintaining an A- average rating on new business written.

Outside the U.S., the Company generated $4 million of public finance PVP in Third Quarter 2017. The two transactions written in Third Quarter 2017 were secondary market guaranties of regulated utilities.

~~The~~ Company believes its financial guaranty product is competitive with other financing ~~options in~~options. For example, certain ~~segments~~investors may receive advantageous capital requirement treatment with the addition of the ~~infrastructure market. Future business activity will be influenced by the typically long lead times for these types of transactions.~~

Structured finance transactions tend to have long lead times and may vary from period to period. In general, the Company expects that structured finance opportunities will increase in the future as the global economy recovers, interest rates rise, more issuers return to the capital markets for financings and institutional investors again utilize financial guaranties.Company’s guaranty. The Company considers its involvement in both infrastructure and structured finance ~~and international infrastructure~~ transactions to be beneficial because such transactions diversify both the ~~Company's~~Company’s business opportunities and its risk profile beyond U.S. public finance. ~~U.S. structured finance PVP in Third Quarter 2016 primarily comprised a structured capital relief Triple-X excess~~The timing of ~~loss life reinsurance transaction.~~

~~Nine Months 2017~~

~~GWP increased in Nine Months 2017 compared to Nine Months 2016 due to increased~~ new business production in ~~global public finance.~~ the infrastructure and structured finance sectors is influenced by typically long lead times and therefore may vary from period to period.

U.S. Municipal Market Data and Bond Insurance Penetration Rates (1)

Based on Sale Date


	Nine Months 2023			Nine Months 2022			Year Ended December 31, 2022
	(dollars in billions, except number of issues and percentages)
Par:
New municipal bonds issued	$	266.2		$	292.2		$	359.7
Total insured	$	22.6		$	22.9		$	28.8
Insured by Assured Guaranty	$	14.1		$	12.9		$	17.0
Number of issues:
New municipal bonds issued	5,393			6,420			7,902
Total insured	1,000			1,146			1,420
Insured by Assured Guaranty	467			529			648
Bond insurance market penetration based on:
Par	8.5		%	7.8		%	8.0		%
Number of issues	18.5		%	17.9		%	18.0		%
Single A par sold	34.3		%	29.9		%	30.2		%
Single A transactions sold	61.4		%	58.8		%	59.0		%
$25 million and under par sold	24.1		%	21.6		%	21.9		%
$25 million and under transactions sold	22.7		%	21.0		%	21.4		%

____________________

(1) Source: The amounts in the table are those reported by Thomson Reuters. The table excludes Corporate-CUSIP transactions insured by Assured Guaranty, which the Company also considers to be public finance ~~PVP increased in Nine Months 2017 compared with the comparable prior year period due~~business.

The Company also considers opportunities to ~~higher par written in both the primary and secondary market, while maintaining an A- average rating on~~acquire financial guaranty portfolios, whether by acquiring financial guarantors who are no longer actively writing new business ~~written. Outside the U.S.,~~or their insured portfolios, generally through reinsurance. These transactions enable the Company ~~generated $58 million~~to improve its future earnings and deploy excess capital.

Loss Mitigation

In an effort to avoid, reduce or recover losses and potential losses in its insurance portfolio, the Company employs a number of strategies.

In the public finance ~~PVP, compared with $16 million in Nine Months 2016. PVP generated outside~~area, the ~~U.S. in Nine Months 2017 was derived from three university housing transactions, one hospital transaction, a senior liquidity guarantee provided~~Company believes its experience and the resources it is prepared to deploy, as well as its ability to provide bond insurance or other contributions as part of a ~~European infrastructure refinancing, and several secondary market regulated utility transactions. For Nine Months 2016, non-U.S.~~solution, result in more favorable outcomes in distressed public finance ~~PVP~~situations than would be the case without its participation. This has been illustrated by the Company’s role in the Detroit, Michigan and Stockton, California financial crises, and more recently by the Company’s role in negotiating various agreements in connection with the restructuring of obligations of the Commonwealth of Puerto Rico and various obligations of

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its related authorities and public corporations. The Company will also, where appropriate, pursue litigation to enforce its rights. For example, the Company initiated a number of legal actions to enforce its rights with respect to obligations of the Commonwealth of Puerto Rico and various obligations of its related authorities and public corporations.

After over five years of negotiations, 2022 was ~~primarily derived from secondary market financial guarantees written on utility bonds and additional future premiums~~a turning point for resolving a substantial portion of the Company’s Puerto Rico exposure in accordance with four orders entered by the United States District Court of the District of Puerto Rico (Federal District Court of Puerto Rico) related to the ~~restructuring~~Company’s exposure to all defaulting Puerto Rico credits except Puerto Rico Electric Power Authority (PREPA) (2022 Puerto Rico Resolutions) as discussed in Item 1, Financial Statements, Note 3, Outstanding Exposure—Exposure to Puerto Rico.

As a result of the 2022 Puerto Rico Resolutions, the Company’s obligations under its insurance policies covering debt of the Puerto Rico Convention Center District Authority (PRCCDA) and Puerto Rico Infrastructure Authority (PRIFA) were extinguished, and its insurance exposure to Puerto Rico general obligations (GO) bonds, Public Buildings Authority (PBA) bonds and Puerto Rico Highway and Transportation Authority (PRHTA) bonds was greatly reduced. The Company believes the 2022 Puerto Rico Resolutions mark significant milestones in its Puerto Rico loss mitigation efforts. In connection with the 2022 Puerto Rico Resolutions, the Company received substantial amounts of cash, new general obligation bonds (New GO Bonds) and new bonds backed by toll revenues (Toll Bonds, and together with New GO Bonds, New Recovery Bonds) and contingent value instruments (CVIs) associated with its direct exposures. The Company has sold some of the New Recovery Bonds and CVIs it had received in connection with the 2022 Puerto Rico Resolutions and may continue to sell amounts it still retains, subject to market conditions. The Company continues to work to resolve its remaining unresolved defaulted Puerto Rico exposure, PREPA. For more information about developments in Puerto Rico and related recovery litigation being pursued by the Company, see Item 1, Financial Statements, Note 3, Outstanding Exposure, and the Insured Portfolio section below.

The Company is, and for several years has been, working with the servicers of some of the RMBS transactions it insures to encourage the servicers to provide alternatives to distressed borrowers that will encourage them to continue making payments on their loans to help improve the performance of the related RMBS.

The Company also purchases 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 September 30, 2023 (excluding the value of the Company’s insurance) was $448 million, with a par of $745 million.

In some instances, the terms of the Company’s policy give it the option to pay principal on an ~~existing insured obligation.~~accelerated basis on an obligation on which it has paid a claim, thereby reducing the amount of guaranteed interest due in the future. The ~~non-U.S. structured finance PVP~~Company has at times exercised this option, which uses cash but reduces projected future losses. The Company may also facilitate the issuance of refunding bonds, by either providing insurance on the refunding bonds or purchasing refunding bonds, or both. Refunding bonds may provide the issuer with payment relief.

Asset Management and Alternative Investments

Until July 1, 2023, the Company pursued its asset management strategy through AssuredIM. With the consummation of the Sound Point Transaction and AHP Transaction, effective as of July 1, 2023, the Company participates in ~~Nine Months 2017 related~~the asset management business through its ownership interest in Sound Point, and will no longer directly manage investments for third parties.

The Company’s ownership interest in Sound Point furthers its strategy of participating in a fee-based earnings stream independent of the risk-based premiums generated by its financial guaranty business. The Sound Point business was strengthened by the addition of AssuredIM’s AUM (excluding AUM relating to AHP).

The Company also expects its relationship with Sound Point to enhance its alternative investment opportunities. Upon closing of the ~~reinsurance~~Sound Point Transaction and the AHP Transaction in July, the Company has increased the aggregate amount it has agreed to invest in alternative investments to $1.5 billion, including the $1 billion with Sound Point, subject to regulatory approval. See Note 1, Business and Basis of ~~aircraft RVI policies.~~Presentation, for a description of the Sound Point Transaction. Of the $1.5 billion, the U.S. Insurance Subsidiaries through their jointly owned investment subsidiary, AG Asset Strategies LLC (AGAS), are authorized to invest up to $750 million plus previously distributed gains of $132 million for a total of $882 million as of September 30, 2023. As of September 30, 2023, AGAS commitments to funds managed by Sound Point, AHP, and, prior to July 1, 2023, AssuredIM (Sound Point and AHP funds, some of which were formerly known as AssuredIM funds) were $703 million.

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Capital Management

~~In recent years, the~~ The Company has developed strategies to efficiently manage capital within the Assured Guaranty ~~group more efficiently.~~group.

From 2013 through November ~~2, 2017,~~7, 2023, the Company has repurchased ~~79.9~~143 million common shares for approximately ~~$2,166 million, excluding commissions. The~~$4.8 billion, representing approximately 74% of the total shares outstanding at the beginning of the repurchase program in 2013. On November 1, 2023, the AGL Board of Directors (the Board) authorized ~~on November 1, 2017,~~the repurchase of an additional $300 million of ~~share repurchases. As~~common shares. Under this and previous authorizations, as of November ~~2, 2017, $398~~7, 2023, the Company was authorized to purchase $372 million ~~remains available under the Company's share repurchase authorizations. The Company expects the repurchases to~~of its common shares. Shares may be ~~made~~repurchased from time to time in the open market or in privately negotiated transactions. The timing, form and amount of the share repurchases under the program are at the discretion of management and will depend on a variety of factors, including ~~free~~ funds available at the parent company, other potential uses for such funds, market conditions, the ~~Company's~~Company’s capital position, legal requirements and other factors. The repurchase program may be modified, extended or terminated by the Board at any ~~time. It~~time and it does not have an expiration date. ~~Please refer to Part I,~~See Item 1, Financial Statements, Note ~~17, Shareholders'~~14, Shareholders’ Equity, for additional information about the ~~Company's~~Company’s repurchases of its common shares.

Summary of Share Repurchases


	Amount		Number of Shares	Average price per share
	(in millions, except per share data)
2013 - 2022	$	4,661	140.875	$	33.09
2023 (First Quarter)	2		0.036	62.23
2023 (Second Quarter)	24		0.454	53.08
2023 (Third Quarter)	64		1.066	59.67
2023 (through November 7)	42		0.683	61.17
Cumulative repurchases since the beginning of 2013	$	4,793	143.114	33.49

Amount Number of Shares Average price per share
(in millions, except per share data)
2013 $ 264
12.51
$ 21.12
2014 590
24.41
24.17
2015 555
21.00
26.43
2016 306
10.72
28.53
2017 (January 1 - March 31) 216
5.43
39.83
2017 (April 1 - June 30) 135
3.46
39.05
2017 (July 1 - September 30) 80
1.85
43.29
2017 (through November 2) 20
0.53
37.48
Cumulative repurchases since the beginning of 2013 $ 2,166
79.91
$ 27.11

~~Accretive Effect~~As of ~~Cumulative Repurchases (1)~~

Third Quarter 2017 Nine Months 2017 As of
September 30, 2017
(per share)
Net income $ 0.61
$ 1.88

Operating income (non-GAAP) 0.44
1.56

Shareholders' equity $ 12.46
Non-GAAP operating shareholders' equity 11.48
Non-GAAP adjusted book value 19.01

~~_________________~~


~~(1)~~	~~Cumulative repurchases since the beginning of 2013.~~

~~In December 2016, Assured Guaranty Municipal Corp. (AGM) repurchased $300 million of its common stock from its parent, Assured Guaranty Municipal Holdings Inc. (AGMH). Subsequently, AGMH distributed~~September 30, 2023, the proceeds as dividends to its immediate parent, Assured Guaranty US Holdings Inc. (AGUS), and in 2017, AGUS began using these proceeds to pay dividends to AGL. AGL has used these funds predominantly to repurchase its publicly traded common shares. On September 25, 2017, Municipal Assurance Corp. (MAC) redeemed 64,322 of its shares from Municipal Assurance Holdings Inc. (MAC Holdings), its direct parent, for approximately $104 million in cash and $146 million in marketable securities. MAC Holdings then distributed such assets to its shareholders, AGM and Assured Guaranty Corp. (AGC), in proportion to their respective 61% and 39% ownership interests, such that AGM received approximately $152 million ($6 million in cash and $146 million in securities) and AGC received approximately $98 million (all in cash). Please refer to Part I, Item 1, Financial Statements, Note 11, Insurance Company Regulatory Requirements, for information about dividend capacityestimated accretive effect of the ~~Company's insurance companies.~~cumulative repurchases of common shares since the beginning of 2013 was approximately: $40.71 per share in shareholders’ equity attributable to AGL, $46.65 per share in adjusted operating shareholders’ equity and $81.29 per share in adjusted book value.

The Company ~~also~~ considers the appropriate mix of debt and equity in its capital ~~structure,~~structure. In 2023, the Company issued $350 million in 6.125% Senior Notes due in 2028, and ~~may repurchase some~~used the proceeds primarily to redeem $330 million of ~~its~~5% Senior Notes due in 2024. In 2021, the Company also redeemed $600 million in long-dated high coupon debt using proceeds from ~~time~~the issuance of $900 million in shorter-dated, lower coupon debt. Proceeds from the debt issuances that were not used to ~~time. For example, in Nine Months~~redeem debt were used for general corporate purposes, including share repurchases. Since the second quarter of 2017, AGUS has also purchased ~~$28~~$154 million in principal of ~~AGMH's~~AGMH’s outstanding Junior Subordinated Debentures.

The Company may choose to redeem or make additional purchases of this or other Company debt in the future. See “— Liquidity and Capital Resources — AGL and its U.S. Holding Companies” for the U.S. Holding Companies’ long-term debt.

~~In order~~

Executive Summary

This executive summary of management’s discussion and analysis highlights selected information and may not contain all of the information that is important to ~~reduce leverage,~~readers of this Quarterly Report. For a more detailed description of events, trends and ~~possibly rating agency~~uncertainties, as well as the capital, ~~charges,~~liquidity, credit, operational and market risks and the critical accounting policies and estimates affecting the Company, ~~has mutually agreed~~this Quarterly Report should be read in its entirety and in addition to the Company’s 2022 Annual Report on Form 10-K.

The primary drivers of volatility in the Company’s net income include: loss and loss adjustment expense (LAE changes in fair value of credit derivatives, FG VIEs, CIVs and committed capital securities (CCS), as well as foreign exchange gains (losses), the level of refundings of insured obligations, changes in the value of the Company’s alternative investments, the effects of any large settlements, commutations and loss mitigation strategies, among other factors. Changes in laws and regulations, among other factors, may also have a significant effect on reported net income or loss in a given reporting period.

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Financial Performance of Assured Guaranty

Financial Results


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions, except per share amounts)
GAAP
Net income (loss) attributable to AGL	$	157	$	11	$	363	$	30
Net income (loss) attributable to AGL per diluted share	$	2.60	$	0.18	$	5.99	$	0.46
Weighted average diluted shares	59.6		62.9		60.0		65.1

Non-GAAP
Adjusted operating income (loss) (1)	$	206	$	133	$	310	$	253
Adjusted operating income per diluted share	$	3.42	$	2.11	$	5.12	$	3.88
Weighted average diluted shares	59.6		62.9		60.0		65.1

Gain (loss) related to FG VIE and CIV consolidation included in adjusted operating income	$	(8)	$	7	$	(30)	$	7
Gain (loss) related to FG VIE and CIV consolidation included in adjusted operating income per share	$	(0.13)	$	0.12	$	(0.49)	$	0.11

Components of total adjusted operating income (loss)
Insurance segment	$	59	$	159	$	282	$	347
Asset Management segment	—		(3)		(3)		(3)
Corporate division	155		(30)		61		(98)
Other (2)	(8)		7		(30)		7
Adjusted operating income (loss)	$	206	$	133	$	310	$	253

Insurance Segment
Gross written premiums (GWP)	$	40	$	94	$	221	$	229
Present value of new business production (PVP) (1)	46		95		249		240
Gross par written	5,948		3,846		20,285		15,012


	As of September 30, 2023				As of December 31, 2022
	Amount		Per Share		Amount		Per Share
	(in millions, except per share amounts)
Shareholders’ equity attributable to AGL	$	5,252	$	90.84	$	5,064	$	85.80
Adjusted operating shareholders' equity (1)	5,735		99.18		5,543		93.92
Adjusted book value (1)	8,559		148.03		8,379		141.98
Gain (loss) related to FG VIE and CIV consolidation included in adjusted operating shareholders’ equity	4		0.06		17		0.28
Gain (loss) related to FG VIE and CIV consolidation included in adjusted book value	(2)		(0.03)		11		0.19
Common shares outstanding (3)	57.8				59.0

____________________

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

(2) Relates to the ~~Company has targeted investment grade securities~~effect of consolidating FG VIEs and CIVs.

(3) See “— Overview — Key Business Strategies — Capital Management” above for which claims are not expected but which carry a disproportionately large rating agency capital charge. The Company terminated investment grade financial guaranty and credit default swap (CDS) contracts with net parinformation on common share repurchases.

Table of ~~$1.7 billion in~~ Contents

Condensed Consolidated Results of Operations


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(in millions)
Revenues:
Net earned premiums	$	95		$	89		$	261		$	385
Net investment income	100			67			270			191
Asset management fees	—			16			53			71
Net realized investment gains (losses)	(9)			(14)			(20)			(39)
Fair value gains (losses) on credit derivatives	9			(48)			115			(42)
Fair value gains (losses) on CCS	(20)			1			(35)			12
Fair value gains (losses) on FG VIEs	6			11			(2)			27
Fair value gains (losses) on CIVs	(4)			8			60			25
Foreign exchange gains (losses) on remeasurement	(39)			(80)			9			(181)
Fair value gains (losses) on trading securities	4			(8)			42			(30)
Gain on sale of asset management subsidiaries	255			—			255			—
Other income (loss)	6			(1)			38			12
Total revenues	403			41			1,046			431
Expenses:
Loss and LAE (benefit)	100			(75)			159			(29)
Interest expense	24			20			67			60
Amortization of deferred acquisition cost (DAC)	4			4			10			11
Employee compensation and benefit expenses	47			57			199			189
Other operating expenses	44			37			170			120
Total expenses	219			43			605			351
Income (loss) before income taxes and equity in earnings (losses) of investees	184			(2)			441			80
Equity in earnings (losses) of investees	18			(20)			25			(31)
Income (loss) before income taxes	202			(22)			466			49
Less: Provision (benefit) for income taxes	43			(27)			84			(6)
Net income (loss)	159			5			382			55
Less: Noncontrolling interests	2			(6)			19			25
Net income (loss) attributable to Assured Guaranty Ltd.	$	157		$	11		$	363		$	30

Effective tax rate	21.4		%	123.5		%	18.1		%	(12.1)		%

Third Quarter ~~2016. There were no investment grade financial guaranty or CDS terminations in~~2023 Compared with Third Quarter ~~2017.~~ 2022

The ~~Company terminated~~increase in net income attributable to AGL in third quarter 2023 compared with the three-month period ended September 30, 2022 (third quarter 2022) was primarily due to:

•the gain associated with the Sound Point Transaction and AHP Transaction, net of transaction expenses, of $241 million (pre-tax),

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

•lower foreign exchange losses on remeasurement, and

•higher income from the fixed-maturity and alternative investment ~~grade financial guaranty~~portfolio.

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These increases were offset in part by losses and ~~CDS contracts~~LAE in third quarter 2023 compared with ~~net par of $298 million and $5.8 billion~~a benefit in third quarter 2022.

Nine Months ~~2017 and~~2023 Compared with Nine Months ~~2016, respectively. Please refer~~2022

Net income attributable to ~~Part I,~~AGL for the six-month period ended September 30, 2023 (nine months 2023) was higher compared with the nine-month period ended September 30, 2022 (nine months 2022) primarily due to:

•the gain associated with the Sound Point Transaction and AHP Transaction, net of transaction expenses, of $215 million (pre-tax),

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

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

•higher income from the fixed-maturity and alternative investment portfolio.

These increases were offset in part by:

•losses and LAE in nine months 2023 compared with a benefit in nine months 2022,

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

•higher operating expenses in nine months 2023 primarily due to $46 million in expenses associated with the Sound Point Transaction and AHP Transaction.

The Company’s effective tax rate reflects the proportion of income recognized by each of the Company’s operating subsidiaries, with U.S. subsidiaries generally taxed at the U.S. marginal corporate income tax rate of 21%, U.K. subsidiaries taxed at the U.K. marginal corporate tax rate of 19% prior to March 31, 2023 and 25% after April 1 2023, the French subsidiary taxed at the French marginal corporate tax rate of 25%, and no taxes for the Company’s Bermuda subsidiaries, unless subject to U.S. tax by election or as a U.S. controlled foreign corporation. See Item 1,1. Financial Statements, Note ~~6, Contract Accounted~~12, Income Taxes.

Adjusted Operating Income

Adjusted operating income in third quarter 2023 was $206 million, compared with $133 million in third quarter 2022. The increase was primarily due to the gain associated with the Sound Point Transaction and AHP Transaction, offset in part by higher loss expense. Adjusted operating income in nine months 2023 was $310 million, compared with $253 million in nine months 2022. The increase was primarily due to the gain associated with the Sound Point Transaction and AHP Transaction, offset in part by higher loss expense and lower net earned premiums in nine months 2023, compared with nine months 2022 which included premium accelerations of $104 million related to the 2022 Puerto Rico Resolutions. See “— Results of Operations — Reconciliation to GAAP” for ~~as Insurance and Note 8, Contract Accounted for as Credit Derivatives, for additional information on~~ the ~~effect~~reconciliation of ~~credit derivative terminations on the consolidated statements of operations.~~

~~Alternative Strategies~~

The Company considers alternative strategies in order to create long-term shareholder value. For example, the Company considers opportunities to acquire financial guaranty portfolios, whether by acquiring financial guarantors who are no longer actively writing new business or their insured portfolios, or by commuting business that it had previously ceded. These transactions enable the Company to improve its future earnings and deploy some of its excess capital. In 2016, the Company established an alternative investments group to focus on deploying a portion of the Company's excess capital to pursue acquisitions and develop new business opportunities that complement the Company's financial guaranty business, are in line with its risk profile and benefit from its core competencies.

~~MBIA UK Insurance Limited~~.On January 10, 2017 (the MBIA UK Acquisition Date), AGC completed its acquisition of MBIA UK. Please refer to Part I, Item I, Financial Statements, Note 2, Acquisitions, for additional information. In Nine Months 2017, the acquisition contributed net income of approximately $1.04 per share including the bargain purchase gain, gain on settlement of pre-existing relationships, realized gain on Zohar II Notes, and activity since the MBIA UK Acquisition Date. The effect on(loss) attributable to AGL to adjusted operating income (loss).

Book Value and Adjusted Book Value

Shareholders’ equity attributable to AGL as of September 30, 2023 increased compared with December 31, 2022, due to net income, which was ~~approximately $0.64 per~~partially offset by dividends, share ~~in Nine Months 2017. Shareholders'~~repurchases, and unrealized losses on investments. Adjusted operating shareholders’ equity and ~~non-GAAP~~adjusted book value increased primarily due to operating income components of $310 million offset in part by dividends and share repurchases of $141 million, and in the case of adjusted book value, the increase was also primarily due to gross written premiums of $221 million, which was partially offset by economic loss development of $147 million. See “— Non-GAAP Financial Measures” below for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity ~~benefited by $0.65 per share~~ and ~~non-GAAP~~ adjusted book ~~value benefited~~value.

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Other Matters

Inflation

By some key measures, consumer price inflation in the U.S. and the U.K. was higher in recent years than it has been in decades, and interest rates generally increased. Consumer price inflation in the U.K. impacts the Company directly by ~~$2.52 per share as~~increasing exposure for certain index-linked U.K. debt with par that accretes with increasing inflation, and also increasing projected future installment premiums on the portion of such exposure that pays at least some of the ~~MBIA UK Acquisition Date.~~

MBIA UK changed its name to Assured Guaranty (London) Ltd. and re-registered as a public limited company to become Assured Guaranty (London) plc (AGLN). Assured Guaranty currently maintains AGLN as a stand-alone entity, but is actively working to combine AGLN with its other affiliated European insurance companies. Aspremium on an ~~initial step, on June 26, 2017, AGM purchased from its affiliate AGC, all~~installment basis over the term of the ~~shares of AGC’s European subsidiaries, and then immediately contributed these European subsidiaries to AGM’s wholly owned subsidiary, Assured Guaranty (Europe) plc (AGE). While~~exposure. Consumer price inflation may also impact the Company indirectly to the extent it makes it more difficult for obligors to make their debt payments, and may be accompanied by higher interest rates that could impact the Company in several ways.

Higher interest rates impact the Company in numerous other ways. For example, higher interest rates are often accompanied by wider credit spreads, which may make the Company’s credit enhancement products more attractive in the market and increase the level of premiums it can charge for that product. Despite the recent increases in interest rates since 2022, the pace of credit spread widening was more modest and market penetration of municipal bond insurance in the U.S. public finance market remained relatively flat compared to 2021 when interest rates were lower. Over time, higher interest rates also increase the amount the Company can earn on its ~~European subsidiaries have received~~largely fixed-maturity investment portfolio. However, higher interest rates may, in turn, reduce the fair value of its largely fixed-rate fixed-maturity investment portfolio, dampen municipal bond issuance and negatively impact the finances of some insured obligors.

See “Overview — Economic Environment”.

Russia’s Invasion of Ukraine

Russia’s invasion of Ukraine has led to the imposition of economic sanctions by many western countries against Russia and certain ~~regulatory approvals, the combination is subject~~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 ~~further regulatory~~reduce western economic ties to Russia and ~~court approvals. As a result,~~to reshape global economic and political ties more generally, and the Company cannot predict ~~whether, or when, such combination will be completed.~~

~~CIFG Holding Inc.~~ ~~On July 1, 2016, AGC acquired~~ all of the ~~issued~~potential effects of the conflict on the world or on the Company.

The Company’s surveillance and ~~outstanding capital stock of CIFGH, for $450.6~~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 approximately $249 million in cash that contributed $2.23 per share to shareholders' equity, $2.23 per share to non-GAAP operating shareholders' equity and $3.85 per share to non-GAAP adjusted book value at the date of acquisition. Please refer to Part II, Item 8, "Financial Statements and Supplementary Data", Note 2, Acquisitions, of the Company's 2016 Annual Report on Form 10-K, for additional information.

~~Alternative Investments.~~ The alternative investments group has been investigating a number of new business opportunities that complement the Company's financial guaranty business, are in line with its risk profile and benefit from its core competencies, including, among others, both controlling and non-controlling investments in investment managers. In February 2017 the Company agreed to purchase up to $100 million of limited partnership interests in a fund that invests in the equity of private equity managers.

~~Separately, in September, 2017, the Company acquired a minority interest in Wasmer, Schroeder & Company LLC, an independent investment advisory firm specializing in separately managed accounts (SMAs).~~

~~The Company continues to investigate additional opportunities.~~

~~Commutations.~~ During the first quarter of 2017, the Company entered into a commutation agreement to reassume the entire portfolio previously ceded to one of its unaffiliated reinsurers, consisting predominantly (over 97%) of U.S. public finance and international public and project finance exposures. During Third Quarter 2017, the Company entered into two commutation agreements. In one case, it reassumed the entire portfolio previously ceded to one of its unaffiliated reinsurers under quota share reinsurance, consisting predominantly of U.S. public finance and international public and project finance exposures. In the other case it reassumed a portion of the portfolio previously ceded to one of its other unaffiliated reinsurers. These commutations resulted in gains of $255 million and $328 million (recorded in other income) for Third Quarter 2017 and Nine Months 2017, respectively, and additional net unearned premium reserve of $62 million and $80 million for such periods, respectively. The Company may in the future enter into new commutation agreements reassuming portions of its remaining ceded business.

~~Loss Mitigation~~

~~In an effort to avoid or reduce potential losses in its insurance portfolios, the Company employs a number of strategies.~~

In the public finance area, the Company believes that its experience and the resources it is prepared to deploy, as well as its ability to provide bond insurance or other contributions as part of a solution, have resulted in more favorable outcomes in distressed public finance situations than would have been the case without its participation, as illustrated, for example, by the Company's role in the Detroit, Michigan; Stockton, California; and Jefferson County, Alabama financial crises. Currently, for example, the Company is actively working to mitigate potential losses in connection with the obligations it insures of the Commonwealth of Puerto Rico and various obligations of its related authorities and public corporations. The Company will also, where appropriate, pursue litigation to enforce its rights, and it has initiated several legal actions to enforce its rights in Puerto Rico. For more information about developments in Puerto Rico and related recovery litigation being pursued by the Company, please refer to Part I, Item 1, Financial Statements, Note 4, Outstanding Exposure.

The Company is currently working with the servicers of some of the RMBS it insures to encourage the servicers to provide alternatives to distressed borrowers that will encourage them to continue making payments on their loans and so improve the performance of the related RMBS.

The Company also continues to purchase attractively priced obligations, including below-investment-grade (BIG) obligations, that it has insured and for which it has expected losses to be paid, in order to mitigate the economic effect of insured losses (loss mitigation securities). The fair value of assets purchased for loss mitigation purposespar outstanding as of September 30, 2023, comprising $208 million net par exposure to the sovereign debt of Poland and $41 million net par exposure to a toll road in Hungary. The Company rates all such exposure investment grade.

~~2017 (excluding~~Middle East Conflict

In light of recent events in the ~~value~~Middle East, the Company’s surveillance and treasury functions have reviewed the Company’s insurance and investment portfolios, respectively, for exposures to the Middle East. After review, the Company’s surveillance and treasury functions have identified no material direct exposure to such area. The Company’s direct insurance exposure to the Middle East is generally is limited to approximately $49 million in net par outstanding as of September 30, 2023, comprised of funded commitments to subscription finance facilities; however, such exposure may increase to a total of approximately $94 million to the extent all unfunded commitments under the facilities are ultimately funded. The Company rates all such insurance exposure investment grade.

Income Taxes

The U.S. Internal Revenue Service and Department of the ~~Company's insurance) was $1,042 million, with~~Treasury issued final and proposed regulations in October 2020 relating to the tax treatment of passive foreign investment company. The final regulations are not expected to have a ~~par of $1,661 million (including bonds related~~material impact to ~~FG VIEs of $44 million in fair value~~the Company’s business operation or its shareholders and ~~$229 million in par).~~

In some instances, the terms of the Company's policy gives it the option to pay principal on an accelerated basis on an obligation on which it has paid a claim, thereby reducing the amount of guaranteed interest due in the future. The Company has at times exercised this option, which uses cash but reduces projected future losses.

~~In an effort to recover losses~~ the Company ~~experienced in its insured U.S. RMBS portfolio,~~is continuing to evaluate the ~~Company also continues to pursue providers~~proposed regulations. See Note 12, Income Taxes.

Table of representations and warranties (R&W) by enforcing R&W provisions in contracts, negotiating agreements with R&W providers relating to those provisions and, where appropriate, pursuing litigation against R&W providers.Contents

~~Other Events~~

The Company continues to monitor developments related to the referendum held in the U.K. on June 23, 2016, in which a majority voted to exit the EU, known as "Brexit", and the U.K.’s service of formal notice on March 29, 2017 to the European Council of its wish to withdraw under Article 50 of the Treaty on EU. The Company may take action in anticipation of or in reaction to Brexit-related developments, especially those related to financial services regulation. The Company cannot predict the direction Brexit-related developments will take nor the impact of those developments on the economies of the markets the Company serves.

Results of Operations

~~Estimates and Assumptions~~

Critical Accounting Estimates

The ~~Company’s~~preparation of financial statements in accordance with GAAP requires the application of accounting policies that often involve a significant degree of judgment and require the Company to make estimates and assumptions, based on available information, that affect the amounts of assets, liabilities, revenues and expenses reported in the financial statements. Estimates are inherently subject to change and actual results could differ from those estimates, and the differences may be material to the condensed consolidated financial ~~statements include amounts that are determined using~~statements.

Critical estimates and ~~assumptions. The~~assumptions are evaluated on an on-going basis based on historical developments, market conditions, industry trends and other information that is reasonable under the circumstances. There can be no assurance that actual ~~amounts realized could ultimately~~results will conform to estimates and assumptions and that reported results of operations will not be materially different ~~from the amounts currently provided for~~ in the Company’s consolidated financial statements. Management believes the most significant items requiring inherently subjective and complex estimates are expected losses, fair value estimates, other-than-temporary impairment, deferred income taxes, and premium revenue recognition. The following discussion of the results of operations includes information regarding thefuture to reflect changes in these estimates and assumptions ~~used for these items and should be read in conjunction with the notes~~from time to ~~the Company’s consolidated financial statements.~~time.

~~An understanding of the Company’s~~The accounting policies isthat the Company believes are most dependent on the application of ~~critical importance to understanding its consolidated financial statements.~~judgment, estimates and assumptions are listed below. See Part II, Item ~~8. “Financial~~8, Financial Statements and Supplementary ~~Data”~~Data, Note 1, Business and Basis of Presentation, of the ~~Company's 2016~~Company’s 2022 Annual Report on Form 10-K, for ~~a discussion of~~ the Company’s significant accounting policies which includes a reference to the applicable note where further details regarding the significant estimates and assumptions are provided, as well as Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of the Company’s 2022 Annual Report on Form 10-K, for further details regarding sensitivity analyses.

•Expected loss ~~estimation process,~~to be paid (recovered);

•Fair value of certain assets and liabilities, primarily:

▪Investments

▪Assets and liabilities of CIVs

▪Assets and liabilities of FG VIEs

▪Credit derivatives;

•Credit impairment of financial instruments;

•Other-than-temporary-impairment of equity method investments;

•Revenue recognition;

•Income tax assets and liabilities, including the ~~fair value methodologies.~~recoverability of deferred tax assets (liabilities).

Results of Operations by Segment

The Company ~~carries a significant amount~~analyzes the operating performance of its assets and a portion of its liabilities at fair value, the majority of which are measured at fair value on a recurring basis. Level 3 assets, consisting primarily of FG VIE assets, credit derivative assets and investments, represented approximately 16% and 19% of the total assets that are measured at fair value on a recurring basiseach segment using each segment’s adjusted operating income as ~~of September 30, 2017 and December 31, 2016, respectively. All of the Company's liabilities that are measured at fair value are Level 3. Please refer to Part I,~~described in Item 1, Financial Statements, Note ~~7, Fair Value Measurement, for additional information about assets and liabilities classified as Level 3.~~2, Segment Information.

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Insurance Segment Results


	Third Quarter				Nine Months
	2023		2022		2023		2022

Segment revenues
Net earned premiums and credit derivative revenues	$	99	$	92	$	271	$	397
Net investment income	101		69		273		198
Fair value gains (losses) on trading securities	4		(8)		42		(30)
Foreign exchange gains (losses) on remeasurement and other income (loss)	4		(6)		36		(1)
Total segment revenues	208		147		622		564
Segment expenses
Loss expense (benefit)	101		(75)		154		(32)
Interest expense	—		—		—		1
Amortization of DAC	4		4		10		11
Employee compensation and benefit expenses	37		34		112		107
Other operating expenses	23		21		78		60
Total segment expenses	165		(16)		354		147
Equity in earnings (losses) of investees	25		(11)		60		(46)
Segment adjusted operating income (loss) before income taxes	68		152		328		371
Less: Provision (benefit) for income taxes	9		(7)		46		24
Segment adjusted operating income (loss)	$	59	$	159	$	282	$	347

~~Consolidated Results of Operations~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017
2016
(in millions)
Revenues:
Net earned premiums $ 186
$ 231
$ 512
$ 628
Net investment income 99
94
322
291
Net realized investment gains (losses) 7
(2 ) 54
(5 )
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements (1 ) 15
19
47
Net unrealized gains (losses) 59
6
87
(23 )
Net change in fair value of credit derivatives 58
21
106
24
Fair value gains (losses) on CCS (4 ) (23 ) (4 ) (50 )
Fair value gains (losses) on FG VIEs 3
(11 ) 25
11
Bargain purchase gain and settlement of pre-existing relationships —
259
58
259
Other income (loss) 274
(3 ) 385
49
Total revenues 623
566
1,458
1,207
Expenses:
Loss and LAE 223
(9 ) 354
183
Amortization of deferred acquisition costs 5
4
13
13
Interest expense 24
26
73
77
Other operating expenses 58
65
183
188
Total expenses 310
86
623
461
Income (loss) before provision for income taxes 313
480
835
746
Provision (benefit) for income taxes 105
1
157
62
Net income (loss) $ 208
$ 479
$ 678
$ 684

Net Earned Premiums and Credit Derivative Revenues

Premiums are earned ~~and recognized~~ over the contractual lives, or in the case of insured obligations backed by homogeneous pools of ~~insured obligations,~~assets, the remaining expected lives, of financial guaranty insurance contracts. The Company periodically estimates remaining expected lives of its insured obligations backed by homogeneous pools of assets and makes prospective adjustments for such changes in expected lives. Scheduled net earned premiums ~~are expected to~~ decrease each year unless replaced by a higher amount of new business, ~~reassumptions of previously ceded business~~ or books of business acquired in a business ~~combination. Please refer to Part I,~~combinations. See Item 1, Financial Statements, Note 6,5, Contracts Accounted for as Insurance, ~~Financial Guaranty Insurance~~ Premiums, for additional ~~information and the expected timing of future premium earnings.~~information.

Net ~~Earned Premiums~~

Third Quarter Nine Months
2017 2016 2017
2016
(in millions)
Financial guaranty insurance:
Public finance
Scheduled net earned premiums and accretion $ 76
$ 80
$ 240
$ 222
Accelerations:
Refundings 84
105
189
267
Terminations —
21
1
21
Total accelerations 84
126
190
288
Total Public finance 160
206
430
510
Structured finance(1)
Scheduled net earned premiums and accretion 23
25
67
74
Terminations 3
—
14
44
Total structured finance 26
25
81
118
Other 0
—
1
0
Total net earned premiums $ 186
$ 231
$ 512
$ 628

~~____________________~~


~~(1)~~	~~Excludes $3 million and $4 million for Third Quarter 2017 and 2016, respectively, and $11 million and $12 million for Nine Months 2017 and 2016, respectively, related to consolidated FG VIEs.~~

Net earned premiums decreased in Third Quarter 2017 compared with Third Quarter 2016 due primarily to lower accelerations. Net earned premiums decreased in Nine Months 2017 compared with Nine Months 2016 due primarily to lower accelerations, offset in part by higher scheduled net earned premiums related to recent acquisitions. At September 30, 2017, $3.5 billion of net deferred premium revenue remained to be earned over the life of the insurance contracts. The MBIA UK Acquisition increased deferred premium revenue by $383 million at the date of the acquisition. The CIFG Acquisition increased deferred premium revenue by $296 million.

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

Refundings occur in the public finance market ~~and have been at historically high levels in recent years due primarily to the low interest rate environment, which has allowed many~~when municipalities and other public finance issuers pay down insured obligations prior to their originally scheduled maturities. Refundings tend to increase when issuers can refinance their debt obligations at lower ~~rates.~~rates than they are currently paying. The premiums associated with the insured obligations of municipalities and other public finance issuers are generally received upfront when the obligations are issued and insured. When ~~such~~ issuers pay down insured obligations, ~~prior to their originally scheduled maturities,~~ the Company is no longer on risk for payment defaults, and therefore accelerates the recognition of the remaining nonrefundable deferred premium ~~revenue remaining.~~revenue. The amortization of the Company’s outstanding book of business along with the previously high levels of refunding activity has led to a lower volume of refunding opportunities over the last several years, except for refundings of Puerto Rico policies under the 2022 Puerto Rico Resolutions.

Terminations are generally negotiated agreements with ~~issuers~~beneficiaries resulting in the extinguishment of the Company’s insurance ~~obligation with respect to the insured obligations.~~obligation. Terminations ~~are~~have been more common in the structured finance asset

class, but may also occur in the public finance asset class. While each termination may have different terms, they all result in the expiration of the Company’s insurance risk, ~~such that~~ the ~~Company accelerates~~acceleration of the recognition of the associated ~~unearned premiums.~~deferred premium revenue and the reduction of any remaining premiums receivable.

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Insurance Segment

Net ~~Investment Income~~Earned Premiums and Credit Derivative Revenues


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions)
Net earned premiums:
Financial guaranty insurance:
Public finance
Scheduled net earned premiums (1)	$	65	$	62	$	188	$	196
Accelerations:
Refundings	14		12		26		145

Total accelerations	14		12		26		145
Total public finance	79		74		214		341
Structured finance scheduled net earned premiums (1)	16		15		47		44
Specialty insurance and reinsurance	1		1		3		3
Total net earned premiums	96		90		264		388

Credit derivative revenues:
Scheduled net earned premiums	2		2		6		7
Accelerations	1		—		1		2
Total credit derivative revenues	3		2		7		9
Total net earned premiums and credit derivative revenues	$	99	$	92	$	271	$	397

____________________

(1) Includes accretion of discount.

Net earned premiums and credit derivative revenues increased in third quarter 2023 compared with third quarter 2022 primarily due to higher refundings in third quarter 2023 and updates to debt service assumptions in third quarter 2022. Net earned premiums and credit derivative revenues decreased in nine months 2023 compared with nine months 2022 primarily due to refundings of $104 million related to the resolution of PRCCDA, PRIFA and GO/PBA exposures discussed in Item 1. Financial Statements, Note 3, Outstanding Exposure. As of September 30, 2023, $3.6 billion of net deferred premium revenue on financial guaranty insurance remained to be earned over the life of the insurance contracts.

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New Business Production

Gross Written Premiums and

New Business Production


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions)
GWP (1)
Public finance—U.S.	$	29	$	54	$	129	$	160
Public finance—non-U.S.	(5)		44		40		66
Structured finance—U.S.	15		(2)		48		4
Structured finance—non-U.S.	1		(2)		4		(1)
Total GWP	$	40	$	94	$	221	$	229
PVP (1):
Public finance—U.S.	$	30	$	57	$	129	$	163
Public finance—non-U.S.	2		37		38		67
Structured finance—U.S.	12		1		42		3
Structured finance—non-U.S. (2)	2		—		40		7
Total PVP	$	46	$	95	$	249	$	240
Gross Par Written (1):
Public finance—U.S.	$	5,098	$	3,622	$	15,752	$	13,982
Public finance—non-U.S.	61		194		670		624
Structured finance—U.S.	267		30		1,101		106
Structured finance—non-U.S. (2)	522		—		2,762		300
Total gross par written	$	5,948	$	3,846	$	20,285	$	15,012

____________________

(1) PVP and Gross Par Written in the table above are based on “close date,” when the transaction settles. See “— Non-GAAP Financial Measures — PVP or Present Value of New Business Production.” GWP may be negative due to changes in debt service assumptions.

(2) Nine months 2023 and 2022 PVP and gross par written include the present value of future gross revenues and exposure, respectively, associated with a financial guaranty written by the Company that, under GAAP, is accounted for under Accounting Standards Codification (ASC) 460, Guarantees.

Third Quarter 2023

U.S. public finance GWP and PVP in third quarter 2023 were lower than the comparable GWP and PVP in third quarter 2022, due to a large transportation revenue transaction in third quarter 2022 that did not recur in third quarter 2023, and higher credit quality new business that carry lower premium rates in third quarter 2023, compared with third quarter 2022. The Company’s direct par written represented 61% of the total U.S. municipal market insured issuance in third quarter 2023, compared with 56% in third quarter 2022, and the Company’s penetration of all municipal issuance was 4.6% in third quarter 2023 compared with 3.2% in third quarter 2022.

Structured finance GWP and PVP in third quarter 2023 primarily includes an insurance securitization.

Nine Months 2023

U.S. public finance GWP and PVP in nine months 2023 were lower than the comparable GWP and PVP in nine months 2022 primarily due to fewer secondary market transactions in nine months 2023, compared with nine months 2022. The Company’s direct par written represented 62% of the total U.S. municipal market insured issuance in nine months 2023, compared with 56% in nine months 2022, and the Company’s penetration of all municipal issuance was 5.3% in nine months 2023 compared with 4.4% in nine months 2022.

In nine months 2023, non-U.S. public finance GWP and PVP were lower than GWP and PVP in nine months 2022 due to a large amount of secondary market transactions in nine months 2022. In nine months 2023, new business primarily included the guaranty of a long-term sale and leaseback transaction with Glasgow City Council and several regulated utility transactions.

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In nine months 2023, structured finance GWP and PVP were $52 million and $82 million, respectively, compared with GWP and PVP of $3 million and $10 million, respectively, in nine months 2022. Structured finance GWP and PVP in nine months 2023 includes an insurance securitization and several subscription finance guaranties, as well as an excess-of-loss guaranty of a minimum amount of billed rent on a diversified portfolio of real estate properties for which no GWP was reported under GAAP because it is not accounted for as insurance.

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

Income from Investments

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

~~Net Investment Income (1)~~CVIs issued by Puerto Rico and received as part of the 2022 Puerto Rico Resolutions are classified as trading with changes in fair value reported in “fair value gains (losses) on trading securities” in the condensed consolidated statements on operations. The fair value of such instruments as of September 30, 2023 was $350 million.

Equity method investments in the Insurance segment include investments that the U.S. Insurance Subsidiaries make in certain alternative investments, primarily Sound Point and AHP funds. The income (loss) on such investments is reported in “equity in earnings (losses) of investees” and typically represents the change in net asset value (NAV) of these funds and the Company’s share of earnings of its other investees.

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Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Income from fixed-maturity securities managed by third parties $ 74
$ 75
$ 224
$ 231
Income from internally managed securities:
Fixed maturities 27
19
100
58
Other 1
2
5
8
Gross investment income 102
96
329
297
Investment expenses (3 ) (2 ) (7 ) (6 )
Net investment income $ 99
$ 94
$ 322
$ 291
Insurance Segment

Income from Investments


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions)
Net investment income
Fixed-maturity securities, available-for-sale:
Externally managed (1)	$	51	$	49	$	156	$	147
Loss Mitigation Securities	24		10		48		27
Puerto Rico, New Recovery Bonds	1		1		5		5
Other (2)	5		4		12		11
Short-term investments	19		4		47		5
Intercompany loans	2		2		7		7
Other investment assets	—		1		2		1
Investment income	102		71		277		203
Investment expenses	(1)		(2)		(4)		(5)
Net investment income	$	101	$	69	$	273	$	198

Fair value gains (losses) on trading securities	$	4	$	(8)	$	42	$	(30)

Equity in earnings (losses) of investees
Asset managers (3)	$	—	$	—	$	—	$	—
CLOs	7		6		23		(10)
Asset-based	—		—		3		7
Healthcare	12		3		21		(6)
Other	6		(20)		13		(37)
Equity in earnings (losses) of investees	$	25	$	(11)	$	60	$	(46)

____________________


~~(1)~~	Net investment income excludes $2 million and $1 million for Third Quarter 2017 and 2016, respectively, and $4 million and $8 million for Nine Months 2017 and 2016, respectively, related to securities in the investment portfolio owned by AGC and AGM that were issued by consolidated FG VIEs.

(1) Amounts for 2022 include income on the portion of the CLO portfolio that was previously managed by AssuredIM.

(2) Amounts for 2022 include income on the portion of the municipal bond portfolio that was previously managed by AssuredIM.

(3) The Company acquired its investment in Sound Point on July 1, 2023 and reports its equity in earnings on this investment on a one quarter lag.

Net investment income for ~~Third Quarter 2017~~third quarter 2023 increased compared to ~~Third Quarter 2016~~third quarter 2022 primarily due ~~primarily~~ to higher income from ~~internally managed securities. The higher income is due primarily to improved underlying cash flow~~loss mitigation securities and the ~~early payoff of certain investments.~~

increase in short-term rates and higher average short-term balances. Net investment income for ~~Nine Months 2017~~nine months 2023 increased compared to ~~Nine Months 2016~~nine months 2022, primarily due ~~primarily~~ to the ~~accretion on the Zohar II 2005-1 (the Zohar II Notes) (which was used as consideration for the purchase of MBIA UK) prior to the MBIA UK Acquisition Date~~increase in short-term rates and ~~also due to improved underlying cash flow~~higher average short-term balances, and ~~the early payoff of certain investments.~~

loss mitigation securities. The overall pre-tax book yield of available-for-sale fixed-maturity securities and short-term investments was ~~3.59%~~4.04% as of September 30, ~~2017~~2023 and ~~3.57%~~3.01% as of September 30, ~~2016, respectively. Excluding the internally managed portfolio, pre-tax book yield was 3.12% as of September 30, 2017~~2022.

Foreign Exchange Gains (Losses) on Remeasurement and Other Income (Loss)

The gain in “foreign exchange gains (losses) on remeasurement and other income (loss)” in nine months 2023 compared with ~~3.32% as of September 30, 2016. The decline in yield for the externally managed portfolio~~nine months 2022 was ~~primarily a result of lower yielding assets related to the MBIA UK investment portfolio.~~

~~Net Realized Investment Gains (Losses)~~

~~The table below presents the components of net realized investment gains (losses).~~

~~Net Realized Investment Gains (Losses)~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Gross realized gains on available-for-sale securities $ 23
$ 4
$ 92
$ 24
Gross realized losses on available-for-sale securities (3 ) (1 ) (9 ) (3 )
Net realized gains (losses) on other invested assets 0
0
0
0
Other-than-temporary impairment (13 ) (5 ) (29 ) (26 )
Net realized investment gains (losses) $ 7
$ (2 ) $ 54
$ (5 )

Realized gains in Third Quarter 2017 comprise primarily the gain on sale of investments from the internally managed portfolio. In addition, realized gains in Nine Months 2017 include the gain on sale of the Zohar II Notes exchanged in the MBIA UK Acquisition. Realized gains in Nine Months 2016 were due primarily to sales of securities in order to fund the CIFG Acquisition. Other-than-temporary-impairments in all periods presented were primarily attributable to ~~securities purchased for loss mitigation purposes.~~

~~Bargain Purchase Gain~~the reversal of a previously recorded litigation accrual of $20 million in nine months 2023, and ~~Settlement of Pre-existing Relationships~~

~~In connection with the MBIA UK Acquisition in Nine Months 2017, the Company recognized a $56 million bargain purchase gain and a $2 million~~foreign exchange gain on ~~settlement~~remeasurement of ~~pre-existing relationships. Please refer to Part I,~~$1 million in nine months 2023, compared with a loss of $7 million in nine months 2022. See Item 1, Financial Statements, Note ~~2, Acquisitions,~~13, Commitments and Contingencies, for additional information.

On July 1, 2016, AGC acquired all of the issued and outstanding capital stock of CIFGH, the parent of financial guaranty insurer CIFG Assurance North America, Inc. (CIFGNA), and on July 5, 2016, merged CIFGNA with and into AGC, with AGC as the surviving company. In connection with the acquisition, in 2016, the Company recognized a $357 million bargain purchase gain and a $98 million loss on settlement of pre-existing relationships.

~~Other Income (Loss)~~

Other income (loss) comprises recurring items such as foreign exchange remeasurement gains and losses, ancillary fees on financial guaranty policies such as commitment and consent, and if applicable, other revenue items on financial guaranty insurance and reinsurance contracts such as commutation gains on re-assumptions of previously ceded business, loss mitigation recoveries and certain non-recurring items.

~~Other Income (Loss)~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Foreign exchange gain (loss) on remeasurement of premium receivable and loss reserves $ 3
$ (2 ) $ 17
$ (21 )
Commutation gains 255
8
328
8
Loss on extinguishment of debt (2 ) —
(9 ) —
Other 18
(9 ) 49
62
Total other income (loss) $ 274
$ (3 ) $ 385
$ 49

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In Third Quarter 2017 and Nine Months 2017, other income comprises primarily commutation gains on reassumptions of previously ceded business. In Nine Months 2017, the loss on extinguishment of debt was related to AGUS' purchase of $28 million principal amount of AGMH's outstanding Junior Subordinated Debentures. The loss represents the difference between the amount paid to purchase AGMH's debt and the carrying value of the debt, which includes the remaining unamortized fair value adjustments that were recorded upon the Company's acquisition of AGMH in 2009. Foreign exchange gains in Nine Months 2017 and foreign exchange loss in Nine Months 2016 were due primarily to changes in the exchange rate of the British pound sterling. In Nine Months 2016, other income also included a benefit due to loss mitigation recoveries.

Economic Loss Development

The insured portfolio includes policies accounted for under ~~three separate~~several different accounting models depending on the characteristics of the contract and the Company’s control rights. ~~Please refer~~For a discussion of methodologies and significant estimates for expected loss to be paid (recovered), see Part I,II, Item 1,8, Financial Statements and Supplementary Data, Note 5,4, Expected Loss to be Paid ~~for a discussion~~(Recovered), of the ~~assumptions and methodologies used in calculating the expected loss to be paid~~Company’s 2022 Annual Report on Form 10-K. The GAAP accounting policies for ~~all contracts. For a discussion of the loss estimation process, approach to projecting losses and the~~ measurement and recognition ~~accounting policies under GAAP~~ for each type of contract ~~see~~are described in the ~~following~~notes listed below in Part II, Item 8, ~~"Financial~~Financial Statements and Supplementary ~~Data"~~Data, of the ~~Company's 2016~~Company’s 2022 Annual Report on Form 10-K:

•Note 5 for ~~expected loss to be paid,~~contracts accounted for as insurance;

•Note 6 for contracts accounted for as ~~insurance,~~credit derivatives;

•Note 78 for FG VIEs; and

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

~~Note 8 for contracts accounted for as credit derivatives, and~~

~~Note 9 for consolidated FG VIEs.~~

~~The discussion of losses that follows encompasses losses on all contracts in the insured portfolio regardless of accounting model, unless otherwise specified.~~ In order to ~~effectively~~efficiently evaluate and manage the economics of the entire insured portfolio, management compiles and analyzes expected loss information for all policies on a consistent basis. ~~That is, management monitors and assigns ratings and calculates~~The discussion of losses that follows encompasses expected losses on all contracts in the ~~same manner for all its exposures. Management also considers contract specific characteristics that affect the estimates~~insured portfolio regardless of ~~expected loss.~~

The surveillance process for identifying transactions with expected losses is described in the notes to the consolidated financial statements. More extensive monitoring and intervention is employed for all BIG surveillance categories, with internal credit ratings reviewed quarterly.

accounting model, unless otherwise specified. Net expected loss to be paid (recovered) primarily consists ~~primarily~~ of the present value of future: expected claim and LAE ~~payments,~~payments; expected recoveries from issuers or excess ~~spread and other collateral in the transaction structures,~~spread; cessions to ~~reinsurers, and~~reinsurers; expected ~~recoveries for~~recoveries/payables stemming from breaches of ~~R&W~~representation and warranties (R&W); and the effects of other loss mitigation strategies. Assumptions used in the determination of the net expected loss to be paid (recovered) such as delinquency, severity, discount rates and expected time frames to recovery were consistent by sector regardless of the accounting model used.

Current ~~risk free~~risk-free rates are used to discount expected losses at the end of each reporting ~~period and therefore~~period. Therefore, changes in such rates from period to period affect the expected loss estimates reported. Assumptions used in the determination of the net expected loss to be paid such as delinquency, severity, and discount rates and expected time frames to recovery in the mortgage market were consistent by sector regardless of the accounting model used. The primary drivers of economic loss development are discussed below. Changes in risk free rates used to discount losses affect economic loss development and loss and ~~LAE; however,~~LAE. However, the effect of changes in discount rates ~~are~~is not indicative of actual credit impairment or improvement in the period. The weighted average discount rates used to discount expected losses (recoveries) were 4.80% and 4.08% as of September 30, 2023 and December 31, 2022, respectively.

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

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

by Accounting Model


	Net Expected Loss to be Paid (Recovered)						Net Economic Loss Development (Benefit)
	As of						Third Quarter				Nine Months
Accounting Model	September 30, 2023			December 31, 2022			2023		2022		2023		2022
	(in millions)
Insurance	$	252		$	205		$	92	$	(67)	$	160	$	(137)
FG VIEs	235		(1)	314		(1)	(6)		(6)		(15)		(16)
Credit derivatives	3			3			1		1		2		5
Total	$	490		$	522		$	87	$	(72)	$	147	$	(148)

Net exposure rated BIG	$	5,258		$	5,976

____________________

(1) The expected loss to be paid for FG VIEs primarily relates to trusts established as part of the 2022 Puerto Rico Resolutions (Puerto Rico Trusts). See Item 1, Financial Statements, Note 3, Outstanding Exposure, and Note 4, Expected Loss to be Paid (Recovered).

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Net Expected Loss to be Paid (Recovered)

Roll Forward by Sector


	Third Quarter 2023
Sector	Net Expected Loss to be Paid (Recovered) as of June 30, 2023		Net Economic Loss Development (Benefit)		Net (Paid) Recovered Losses (1)		Net Expected Loss to be Paid (Recovered) as of September 30, 2023
	(in millions)
Public finance:
U.S. public finance	$	433	$	135	$	(169)	$	399
Non-U.S. public finance	10		(1)		—		9
Public finance	443		134		(169)		408
Structured finance:
U.S. RMBS	73		(48)		13		38
Other structured finance	44		1		(1)		44
Structured finance	117		(47)		12		82
Total	$	560	$	87	$	(157)	$	490


	Third Quarter 2022
Sector	Net Expected Loss to be Paid (Recovered) as of June 30, 2022		Net Economic Loss Development (Benefit)		Net (Paid) Recovered Losses (1)		Net Expected Loss to be Paid (Recovered) as of September 30, 2022
	(in millions)
Public finance:
U.S. public finance	$	210	$	24	$	392	$	626
Non-U.S. public finance	7		(2)		1		6
Public finance	217		22		393		632
Structured finance:
U.S. RMBS	179		(95)		(32)		52
Other structured finance	46		1		(4)		43
Structured finance	225		(94)		(36)		95
Total	$	442	$	(72)	$	357	$	727


	Nine Months 2023
Sector	Net Expected Loss to be Paid (Recovered) as of December 31, 2022		Net Economic Loss Development (Benefit)		Net (Paid) Recovered Losses (1)		Net Expected Loss to be Paid (Recovered) as of September 30, 2023
	(in millions)
Public finance:
U.S. public finance	$	403	$	193	$	(197)	$	399
Non-U.S. public finance	9		—		—		9
Public finance	412		193		(197)		408
Structured finance:
U.S. RMBS	66		(52)		24		38
Other structured finance	44		6		(6)		44
Structured finance	110		(46)		18		82
Total	$	522	$	147	$	(179)	$	490

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	Nine Months 2022
Sector	Net Expected Loss to be Paid (Recovered) as of December 31, 2021		Net Economic Loss Development (Benefit)		Net (Paid) Recovered Losses (1)		Net Expected Loss to be Paid (Recovered) as of September 30, 2022
	(in millions)
Public finance:
U.S. public finance	$	197	$	(16)	$	445	$	626
Non-U.S. public finance	12		(6)		—		6
Public finance	209		(22)		445		632
Structured finance:
U.S. RMBS	150		(127)		29		52
Other structured finance	52		1		(10)		43
Structured finance	202		(126)		19		95
Total	$	411	$	(148)	$	464	$	727

____________________

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

Third Quarter 2023 Net Economic Loss Development

Public Finance: The economic loss development on U.S. exposures in third quarter 2023 of $135 million was primarily attributable to PREPA.

U.S. RMBS: The economic benefit attributable to U.S. RMBS of $48 million was primarily attributable to a $37 million benefit related to higher recoveries for secured second lien charged-off loans, an $11 million benefit related to changes in discount rates, and a $6 million benefit related to higher assumed recoveries for deferred principal in first lien transactions, partially offset by losses related to lower excess spread.

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

Third Quarter 2022 Net Economic Loss Development

Public Finance: The economic loss development on U.S. exposures in third quarter 2022 was $24 million, and was primarily attributable to healthcare and Puerto Rico exposures, partially offset by the effect of changes in discount rates. Public finance expected loss to be paid primarily related to U.S. exposures, which had BIG net par outstanding of $4.2 billion as of September 30, 2022 compared with $5.4 billion as of December 31, 2021. The reduction in net par was primarily due to 2022 Puerto Rico Resolutions.

U.S. RMBS: The economic benefit attributable to U.S. RMBS was $95 million and was primarily attributable to a $27 million benefit related to the purchase of a loss mitigation security, a $26 million benefit related to updates in the projected conditional default rate (CDR) curves, a $17 million benefit on certain assumed RMBS transactions related to a settlement between a ceding company and a R&W provider, a $16 million benefit related to improved performance in certain transactions, a $12 million benefit related to changes in discount rates and a $7 million benefit related to higher recoveries for secured second lien charged-off loans, partially offset by losses of $10 million related to lower excess spread.

Nine Months 2023Net Economic Loss Development

Public Finance: The economic loss development on U.S. public finance exposures in nine months 2023 was $193 million, which was primarily attributable to PREPA and healthcare exposures, partially offset by higher projected recoveries in other municipal exposures.

U.S. RMBS: The net benefit attributable to U.S. RMBS was $52 million and was mainly attributable to a $50 million benefit related to higher recoveries for secured second lien charged-off loans, an $11 million benefit related to improved performance in certain transactions, a $9 million benefit related to changes in discount rates, and a $6 million benefit related to higher assumed recoveries for deferred principal in first lien transactions. These benefits were partially offset by a $18 million loss development related to the return of certain funds previously received and $6 million related to lower excess spread.

Table of Contents

Nine Months 2022 Net Economic Loss Development

Public Finance: The economic benefit on U.S. public finance exposures in nine months 2022 was $16 million, which was primarily attributable to changes in discount rates and higher projected revenues for certain exposures, partially offset by healthcare and Puerto Rico exposures.

U.S. RMBS: The net benefit attributable to U.S. RMBS was $127 million and was mainly related to a $56 million benefit related to changes in discount rates, a $43 million benefit related to improved performance in certain transactions, a $27 million benefit related to the purchase of a loss mitigation security, a $26 million benefit related to updates in the projected CDR curves, a $25 million benefit related to higher recoveries for secured second lien charged-off loans, a $17 million benefit on certain assumed RMBS transactions related to a settlement between a ceding company and a R&W provider, and an $12 million benefit related to lower severity assumptions, partially offset by losses of $79 million related to lower excess spread.

Insurance Segment Loss Expense

The primary differences between net economic loss development and ~~loss~~the amount reported as “loss and LAE ~~are that the amount reported~~(benefit)” in the consolidated statements of ~~operations:~~

operations are that loss and LAE (benefit): (i) considers deferred premium revenue in the calculation of loss reserves ~~and loss and LAE~~ for financial guaranty insurance ~~contracts,~~

contracts; (ii) eliminates loss and LAE related to FG ~~VIEs~~VIEs; and

(iii) does not include estimated losses on credit derivatives.

~~Loss~~ Insurance segment loss expense includes loss and LAE ~~reported in operating income (non-GAAP) (i.e. operating loss and LAE) includes losses~~ on financial guaranty insurance contracts ~~(other than those eliminated due~~and losses on credit derivatives, without giving effect to eliminations related to the consolidation of FG ~~VIEs), and credit derivatives.~~VIEs.

For financial guaranty insurance contracts, ~~the~~each transaction’s expected loss ~~and LAE reported in~~to be expensed is compared with the ~~consolidated statements of operations is generally recorded only when expected losses exceed~~ deferred premium ~~revenue.~~revenue of that transaction. Expected loss to be expensed represents past or expected future net claim payments that have not yet been expensed. Such amounts will be expensed in future periods as deferred premium revenue amortizes into income on financial guaranty insurance policies. Expected loss to be expensed is the Company’s projection of incurred losses that will be recognized in future periods, excluding accretion of discount. When the expected loss to be expensed exceeds the deferred premium revenue, a loss is recognized in income for the amount of such excess. Therefore, the timing of loss recognition in income does not necessarily coincide with the timing of the actual credit impairment or improvement reported in net economic loss development. Transactions (particularly BIG transactions) acquired in a business ~~combination~~combinations or seasoned portfolios assumed from legacy financial guaranty insurers generally have the largest deferred premium revenue ~~balances because of the purchase accounting fair value adjustments made at acquisition.~~balances. Therefore, the largest differences between net economic loss development and loss and LAE on financial guaranty insurance contracts generally relate to ~~these~~those policies. ~~See "Loss and LAE (Financial Guaranty Insurance Contracts)" below.~~

~~Net Expected Loss to be Paid~~

As of
September 30, 2017 As of
December 31, 2016
(in millions)
Public finance $ 1,093
$ 904
Structured finance
U.S. RMBS 176
206
Other structured finance 23
88
Structured finance 199
294
Total $ 1,292
$ 1,198

~~Economic Loss Development (Benefit) (1)~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Public finance $ 229
$ 8
$ 427
$ 216
Structured finance:
U.S. RMBS (19 ) (27 ) (70 ) (139 )
Other structured finance (6 ) (25 ) (59 ) (40 )
Structured finance (25 ) (52 ) (129 ) (179 )
Total $ 204
$ (44 ) $ 298
$ 37

~~____________________~~


~~(1)~~	Economic loss development includes the effects of changes in assumptions based on observed market trends, changes in discount rates, accretion of discount and the economic effects of loss mitigation efforts.

~~Third Quarter 2017 Net Economic Loss Development~~

The total economic loss development of $204 million in Third Quarter 2017 was primarily related to the public finance sector, offset in part by improvements in the structured finance sector. The risk-free rates for U.S. dollar denominated obligations used to discount expected losses ranged from 0.0% to 2.94% with a weighted average of 2.27% as of September 30, 2017 and 0.0% to 2.83% with a weighted average of 2.32% as of June 30, 2017. The effect of changes in the risk-free rates used to discount expected losses was a benefit of $6 million in Third Quarter 2017.

~~U.S. Public Finance Economic Loss Development:~~ The net par outstanding for U.S. public finance obligations rated BIG by the Company was $7.3 billion as of September 30, 2017 compared with $7.1 billion as of June 30, 2017. The Company projects that its total net expected loss across its troubled U.S. public finance credits as of September 30, 2017 will be $1,046 million, compared with $1,044 million as of June 30, 2017. Economic loss development in Third Quarter 2017 was $229 million, which was primarily attributable to Puerto Rico. See "Insured Portfolio-Exposure to Puerto Rico" below for details about significant developments that have taken place in Puerto Rico.

~~U.S. RMBS Economic Loss Development:~~ ~~The net benefit attributable to U.S. RMBS was $19 million and was mainly related to improvement in the underlying collateral performance of home equity lines of credit mortgages and improvements in~~

~~observed liquidation rates. Please refer to Part I, Item 1, Financial Statements, Note 5, Expected Loss to be Paid for additional information.~~

~~Other Structured Finance Economic Loss Development:~~ The net benefit attributable to structured finance (excluding U.S. RMBS) was $6 million, due primarily to decreased future loss expectations on certain transactions reinsured by the Company. Please refer to Part I, Item 1, Financial Statements, Note 5, Expected Loss to be Paid for additional information.

~~Third Quarter 2016 Net Economic Loss Development~~

Total economic loss of $44 million in Third Quarter 2016 was generated mainly by the structured finance sector. The risk-free rates for U.S. dollar denominated obligations used to discount expected losses ranged from 0.0% to 2.42% with a weighted average of 1.80% as of September 30, 2016 and 0.0% to 2.46% with a weighted average of 1.59% as of June 30, 2016. The effect of the change in the risk-free rates used to discount expected losses was a benefit of $29 million in Third Quarter 2016.

~~U.S. Public Finance Economic Loss Development:~~ The net par outstanding for U.S. public finance obligations rated BIG by the Company was $7.6 billion as of September 30, 2016 compared with $8.3 billion as of June 30, 2016. The Company projected that its total net expected loss across its troubled U.S. public finance credits as of September 30, 2016 would be $816 million, compared with $963 million as of June 30, 2016. Economic loss development in Third Quarter 2016 was $9 million, which was primarily attributable to Puerto Rico exposures.

~~U.S. RMBS Economic Loss Development:~~ The net benefit attributable to U.S. RMBS was $27 million due mainly to underlying collateral improvement on certain subprime transactions and an increase in the expected recovery rate on certain second lien transactions.

~~Other Structured Finance Economic Loss Development:~~ The net benefit attributable to structured finance (excluding U.S. RMBS) was $25 million, due primarily to a benefit from the purchase of a portion of an insured obligation as part of a loss mitigation strategy.

~~Nine Months 2017 Net Economic Loss Development~~

Total economic loss development of $298 million in Nine Months 2017 was generated mainly by the U.S. public finance sector, partially offset by a net benefit in the structured finance sector. Economic loss development in the public finance sector in Nine Months 2017 was $427 million, which was primarily attributable to exposures to Puerto Rico. This was partially offset by $129 million benefit in structured finance due to lower re-default assumptions on first and second lien modified loans, and a benefit from a litigation settlement related to two triple-X transactions. The effect of the change in the risk-free rates used to discount expected losses was a loss of $28 million in Nine Months 2017.

~~Nine Months 2016 Net Economic Loss Development~~

Total economic loss development of $37 million in Nine Months 2016 was generated mainly by the U.S. public finance sector on Puerto Rico exposures, partially offset by a net benefit in the structured finance sector. Economic loss development in the public finance sector in Nine Months 2016 was $216 million, which was primarily attributable to Puerto Rico exposures. This was partially offset by a $179 million benefit due to: the acceleration of claim payments as a means of mitigating future losses on certain Alt-A transactions and transaction performance improvement in U.S. RMBS, improved performance of various other structured finance credits and changes in interest rates. The effect of the change in the risk-free rates used to discount expected losses was a loss of $79 million in Nine Months 2016.

~~Loss and LAE (Financial Guaranty Insurance Contracts)~~

The amount of loss and LAE recognized in the consolidated statements of operations for financial guaranty contracts accounted for as insurance is dependent on the amount of economic loss development discussed above and the deferred premium revenue amortization in a given period, on a contract-by-contract basis. For these transactions, each transaction’s expected loss to be expensed, net of estimated recoveries, is compared with the deferred premium revenue of that transaction. Generally, when the expected loss to be expensed exceeds the deferred premium revenue, a loss is recognized in the consolidated statements of operations for the amount of such excess.

While expected loss to be paid (recovered) is an important ~~liquidity~~ measure that provides the present value of amounts that the Company expects to pay or recover in future periods on all contracts, expected loss to be expensed is important because it

presents the Company’s projection of ~~loss and LAE~~net expected losses that will be recognized in the consolidated statement of operations in future periods as deferred premium revenue amortizes into income ~~in the consolidated statements of operations~~ for financial guaranty insurance policies. ~~Expected~~

The amount of Insurance segment loss ~~to be paid for FG VIEs pursuant to AGC’s~~expense, which includes all policies regardless of form, is a function of the amount of economic loss development discussed above and ~~AGM’s financial guaranty policies is calculated~~the deferred premium revenue amortization in a ~~manner consistent with financial guaranty insurance contracts, but eliminated in consolidation under GAAP.~~

given period, on a contract-by-contract basis. The following table presents the Insurance segment loss expense (benefit).

Insurance Segment

Loss Expense (Benefit)


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions)
U.S. public finance	$	138	$	4	$	184	$	70

Structured finance:
U.S. RMBS	(38)		(82)		(35)		(104)
Other structured finance	1		3		5		2
Structured finance	(37)		(79)		(30)		(102)
Total Insurance segment loss expense (benefit)	$	101	$	(75)	$	154	$	(32)

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The difference between public finance loss expense and economic benefit in nine months 2022 was primarily attributable to the release of unearned premium reserve related to PRCCDA, PRIFA and GO/PBA exposures. As a result, the Company recognized loss and LAE ~~recorded~~expense that had not previously been reported in the ~~consolidated statements~~statement of ~~operations. Amounts presented are~~operations, and corresponding net ~~of reinsurance.~~

~~Loss and LAE Reported~~

earned premiums were recognized for the remaining deferred premium revenue on the ~~Consolidated Statements of Operations~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Public finance $ 233
$ 20
$ 421
$ 232
Structured finance:
U.S. RMBS (4 ) (2 ) (14 ) (3 )
Other structured finance (5 ) (27 ) (48 ) (42 )
Structured finance (9 ) (29 ) (62 ) (45 )
Total insurance contracts before FG VIE consolidation 224
(9 ) 359
187
Elimination of losses attributable to FG VIEs (1 ) 0
(5 ) (4 )
Total loss and LAE (1) $ 223
$ (9 ) $ 354
$ 183

~~____________________~~


~~(1)~~	Excludes credit derivative loss of $1 million and benefit $8 million for Third Quarter 2017 and Third Quarter 2016 and credit derivative benefit of $25 million and $25 million for Nine Months 2017 and Nine Months 2016.

~~Loss and LAE in Third Quarter 2017 was mainly driven by an increase in loss reserves on certain~~extinguished Puerto Rico exposures. Loss and LAE benefit in Third Quarter 2016 was mainly driven by a decrease in loss reserves in the structured finance sector. The non-U.S. RMBS structured finance sector benefited from the purchase of a portion of an insured obligation as part of a loss mitigation strategy.

Loss and LAE in Nine Months 2017 was mainly driven by higher loss reserves on certain Puerto Rico exposures, partially offset by a benefit from a litigation settlement related to two triple-X transactions. Loss and LAE in Nine Months 2016 was mainly driven by higher loss reserves on certain Puerto Rico exposures partially offset by a benefit from the non-U.S. RMBS structured finance transaction loss mitigation strategy described above, and commutations of certain assumed student loan exposures.

For financial guaranty contracts accounted for as insurance, the amounts reported in the GAAP financial statements may only reflect a portion of the current period’s economic loss development and may also include a portion of prior-period economic loss development. The difference between economic loss development on financial guaranty insurance contracts and loss and LAE recognized in the consolidated statements of operations relates to the effect of taking deferred premium revenue into account for loss and LAE, which is not considered in economic loss development.

For additional information on ~~schedule of~~ the expected timing of net expected losses to be expensed ~~please refer to Part I,~~see Item 1, Financial Statements, Note 6,5, Contracts Accounted for as Insurance.

Employee Compensation and Benefit Expenses and Other Operating Expenses

The increase in nine months 2023 compared with nine months 2022 was primarily attributable to an increase in value added taxes and increases in certain employee benefit related costs.

Financial Strength Ratings

Demand for the financial guaranties issued by the Company’s insurance subsidiaries may be impacted by changes in the credit ratings assigned to them by the rating agencies. The financial strength ratings (or similar ratings) assigned to AGL’s insurance subsidiaries, along with the date of the most recent rating action (or confirmation) by the rating agency assigning the rating, are shown in the table below.

S&P Global Ratings, a division of Standard & Poor’s Financial Services LLC (S&P)

Kroll Bond Rating
Agency

Moody’s Investors Service, Inc. (Moody’s)

A.M. Best Company,
Inc.

AGM

AA (stable) (7/13/23)

AA+ (stable) (10/20/23)

A1 (stable) (3/18/22)

—

AGC

AA (stable) (7/13/23)

AA+ (stable) (10/20/23)

(1)

—

Assured Guaranty Re Ltd. (AG Re)

AA (stable) (7/13/23)

—

Assured Guaranty Re Overseas Ltd. (AGRO)

AA (stable) (7/13/23)

—

A+ (stable) (7/21/23)

Assured Guaranty UK Limited (AGUK)

AA (stable) (7/13/23)

AA+ (stable) (10/20/23)

A1 (stable) (3/18/22)

—

Assured Guaranty (Europe) SA (AGE)

AA (stable) (7/13/23)

AA+ (stable) (10/20/23)

—

____________________

(1) AGC requested that Moody’s withdraw its financial strength ratings of AGC in January 2017, but Moody’s denied that request. Moody's rates AGC A2 (stable).

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

For a discussion of the effects of rating actions on the Company beyond potential effects on the demand for its insurance products, see “— Liquidity and Capital Resources — Insurance Subsidiaries” section below.

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Asset Management Segment Results


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions)
Segment revenues
Management fees	$	—	$	18	$	35	$	66
Performance fees	—		2		29		20
Foreign exchange gains (losses) on remeasurement and other income (loss)	—		1		7		2
Total segment revenues	—		21		71		88
Segment expenses
Interest expense	—		—		1		—
Employee compensation and benefit expenses	—		16		59		62
Other operating expenses	—		8		15		29
Total segment expenses	—		24		75		91
Segment adjusted operating income (loss) before income taxes	—		(3)		(4)		(3)
Less: Provision (benefit) for income taxes	—		—		(1)		—
Segment adjusted operating income (loss)	$	—	$	(3)	$	(3)	$	(3)

In the first half of 2023, prior to the Sound Point Transaction and the AHP Transaction, the Company owned and consolidated AssuredIM and reported asset management fees (primarily from CLOs and opportunity funds) in revenues. Since July 1, 2023, the Company reports its ownership interest in Sound Point through equity in earnings of investees (on a one quarter lag).

Assets Under Management

Until July 1, 2023, the effective date of the Sound Point Transaction and the AHP Transaction, the Company used AUM as one of the metrics to measure progress in its Asset Management segment. AUM refers to the assets managed, advised or serviced by AssuredIM. AUM as of June 30, 2023 was $16.4 billion. As of July 1, 2023, the management of approximately $15.1 billion of AUM (of which $385 million was attributable to the Company) was transferred to Sound Point. Also in July 2023, the management of approximately $1.3 billion in remaining AUM (of which $185 million was attributable to the Company) was transferred with the sale of AHP to an entity owned and controlled by its managing partner. AHP will continue to manage the healthcare funds. In the second quarter of 2023, (i) the management of approximately $159 million in AUM in respect of certain wind-down and opportunity funds in their harvest period were transferred to a third party liquidator and (ii) management of approximately $513 million at fair value in investment grade municipal bonds and CLOs under an IMA was transferred to an internal manager and to one of the Company’s external fixed-maturity security managers. Effective with the Sound Point Transaction and the AHP Transaction, the Company no longer has any AUM. See Note 1, Business and Basis of Presentation.

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Corporate Division Results


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions)
Revenues
Gain on sale of asset management subsidiaries	$	255	$	—	$	255	$	—
Other	4		1		8		3
Total revenues	259		1		263		3
Expenses
Interest expense	26		22		73		66
Employee compensation and benefit expenses	10		7		28		20
Other operating expenses	21		5		64		18
Total expenses	57		34		165		104
Equity in earnings (losses) of investees	—		—		—		—
Adjusted operating income (loss) before income taxes	202		(33)		98		(101)
Less: Provision (benefit) for income taxes	47		(3)		37		(3)
Adjusted operating income (loss)	$	155	$	(30)	$	61	$	(98)

Gain on sale of asset management subsidiaries relates to the Sound Point Transaction and AHP Transaction. See Item 1. Financial Statements, Note 1, Business and Basis of Presentation.

Corporate division interest expense primarily relates to debt issued by the U.S. Holding Companies, and also includes intersegment interest expense related primarily to the $250 million AGUS debt issued to the U.S. Insurance Subsidiaries. On August 21, 2023, AGUS issued $350 million of 6.125% Senior Notes due 2028. On September 25, 2023, AGUS used the proceeds of this issuance to redeem $330 million of 5% Senior Notes due 2024. Third quarter 2023 and nine months 2023 interest expense was higher than the comparable periods in 2022 due to additional interest expense on the 6.125% Senior Notes and higher interest on the variable rate AGMH Series A Enhanced Junior debentures. See Item 1. Financial Statements, Note 11, Long-Term Debt.

Corporate division employee compensation and benefits expenses are an allocation of expenses based on time studies and represent the costs incurred and time spent on holding company activities, capital management, corporate oversight and governance including Board of Director expenses, legal fees and other direct or allocated expenses. In third quarter 2023 and nine months 2023, operating expenses also include expenses related to the Sound Point Transaction and AHP Transaction, and for nine months 2023 a higher charge for value added taxes. Transaction related expenses in the corporate division for Sound Point and AHP were $14 million for third quarter 2023 and $40 million for nine months 2023, consisting primarily of $25 million advisory and consent fees and $8 million legal fees.

Other (Effect of Consolidating FG VIEs and CIVs)

The effect of consolidating FG VIEs and CIVs, intersegment eliminations and reclassifications of reimbursable fund expenses to revenue are presented in “other.” See Item 1, Financial Statements, Note 2, Segment Information.

The types of entities the Company consolidates when it is deemed to be the primary beneficiary primarily include: (i) entities whose debt obligations the insurance subsidiaries insure; (ii) custodial trusts established in connection with the consummation of the 2022 Puerto Rico Resolutions; and (iii) investment vehicles such as (a) collateralized financing entities, CLO warehouses until July 1, 2023, and (b) Sound Point and AHP funds. The Company eliminates the effects of intercompany transactions between its FG VIEs and CIVs and its insurance and asset management subsidiaries, as well as intercompany transactions between CIVs.

Consolidating FG VIEs (as opposed to accounting for the related insurance contracts in the Insurance segment) has a significant gross-up effect on the consolidated financial statements, and includes: (i) the establishment of the FG VIEs’ assets and liabilities and related changes in fair value on the condensed consolidated financial statements; (ii) eliminating the

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premiums and losses/recoveries associated with the financial guaranty insurance contracts between the insurance subsidiaries and the FG VIEs; and (iii) eliminating the investment balances associated with the insurance subsidiaries’ purchases of the debt obligations of the FG VIEs.

Consolidating CIVs (as opposed to accounting for them as equity method investments) has a significant effect on assets, liabilities and cash flows, and includes: (i) the establishment of the assets and liabilities of the CIVs, and related changes in fair value; (ii) eliminating the asset management fees earned by AssuredIM from the CIVs (prior to July 1, 2023); (iii) eliminating the equity method investments of the insurance subsidiaries and related equity in earnings (losses) of investees; and (iv) establishing noncontrolling interest for amounts not owned by the Company. The economic effect of the U.S Insurance Subsidiaries’ ownership interests in CIVs is presented in the Insurance segment as equity in earnings (losses) of investees, while the effect of CIVs is presented as separate line items (“fair value gains (losses) on consolidated investment vehicles” and “noncontrolling interest) on a consolidated basis. As a result of the Sound Point Transaction and AHP Transaction, the Company deconsolidated CIV assets of $4.7 billion and CIV liabilities of $4.4 billion. The Company recognized a loss on deconsolidation of $16 million, which is reported in “fair value gains (losses) on CIVs”. See Item. 1, Financial Statements, Note 1, Business and Basis of Presentation and Note 8, Financial Guaranty ~~Insurance Losses.~~Variable Interest Entities and Consolidated Investment Vehicles, for additional information.

The table below reflects the effect of consolidating FG VIEs and CIVs on the condensed consolidated statements of operations. The amounts represent: (i) the revenues and expenses of the FG VIEs and the CIVs; and (ii) the consolidation adjustments and eliminations between consolidated FG VIEs or CIVs and the operating and investment subsidiaries.

Effect of Consolidating FG VIEs and CIVs on the Condensed Consolidated Statements of Operations

Increase (Decrease)


	Third Quarter				Nine Months
	2023		2022		2023		2022
Effect on Financial Statement Line Item	(in millions)
Fair value gains (losses) on FG VIEs (1)	$	6	$	11	$	(2)	$	27
Fair value gains (losses) on CIVs	(4)		8		60		25
Equity in earnings (losses) of investees (2)	(7)		(9)		(35)		15
Other (3)	(3)		(8)		(42)		(32)
Effect on income before tax	(8)		2		(19)		35
Less: Tax provision (benefit)	(2)		1		(8)		3
Effect on net income (loss)	(6)		1		(11)		32
Less: Effect on noncontrolling interests (4)	2		(6)		19		25
Effect on net income (loss) attributable to AGL	$	(8)	$	7	$	(30)	$	7

By Type of VIE
FG VIEs	$	2	$	6	$	(13)	$	9
CIVs	(10)		1		(17)		(2)
Effect on net income (loss) attributable to AGL	$	(8)	$	7	$	(30)	$	7

____________________

(1) Changes in fair value of the FG VIEs’ assets and liabilities that are attributable to factors other than (i) changes in the Company’s own credit risk on FG VIE liabilities with recourse, and (ii) unrealized gains and losses on available-for-sale fixed maturity securities.

(2) Represents the elimination of the equity in earnings (losses) of investees of AGAS and the other subsidiaries’ investments in certain alternative investments, primarily Sound Point and AHP funds.

(3) Includes net earned premiums, net investment income, asset management fees, foreign exchange gains (losses) on remeasurement, other income (loss), loss and LAE (benefit) and other operating expenses.

(4) Represents the proportion of consolidated funds managed by Sound Point and prior to July 1, 2023, AssuredIM funds’ income that is not attributable to AGAS’ or any other subsidiaries’ ownership interest.

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Reconciliation to GAAP

Reconciliation of Net Income (Loss) Attributable to AGL

to Adjusted Operating Income (Loss)


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions)
Net income (loss) attributable to AGL	$	157	$	11	$	363	$	30
Less pre-tax adjustments:
Realized gains (losses) on investments	(9)		(14)		(20)		(39)
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives	6		(49)		109		(46)
Fair value gains (losses) on CCS	(20)		1		(35)		12
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves	(37)		(78)		9		(180)
Total pre-tax adjustments	(60)		(140)		63		(253)
Less tax effect on pre-tax adjustments	11		18		(10)		30
Adjusted operating income (loss)	$	206	$	133	$	310	$	253

Gain (loss) related to FG VIE and CIV consolidation (net of tax provision (benefit) of $(2), $1, $(8) and $3) included in adjusted operating income	$	(8)	$	7	$	(30)	$	7

Net ~~Change~~Realized Investment Gains (Losses)

The table below presents the components of net realized investment gains (losses).

Net Realized Investment Gains (Losses)


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions)
Gross realized gains on sales of available-for-sale securities	$	2	$	—	$	21	$	—
Gross realized losses on sales of available-for-sale securities	(1)		(10)		(16)		(33)
Net foreign currency gains (losses)	(1)		—		(1)		(3)
Change in allowance for credit losses and intent to sell	(8)		(4)		(23)		(13)
Other net realized gains (losses)	(1)		—		(1)		10
Net realized investment gains (losses)	$	(9)	$	(14)	$	(20)	$	(39)

Gross realized gains and losses on sales in all periods primarily relate to sales of New Recovery Bonds received as part of the 2022 Puerto Rico Resolutions.

Non-Credit Impairment-Related Unrealized Fair Value ofGains (Losses) on Credit Derivatives

Changes in the fair value of credit derivatives occur ~~primarily~~ because of changes in ~~interest rates,~~the Company’s own credit rating and credit spreads, collateral credit spreads, notional amounts, credit ratings of the referenced entities, expected terms, realized gains (losses) and other settlements, ~~and the issuing company's own credit rating and credit spreads,~~interest rates and other market factors. ~~With volatility continuing~~The components of changes in ~~the market, unrealized gains (losses) on~~fair value of credit derivatives ~~may fluctuate significantly~~related to credit derivative revenues and changes in ~~future periods.~~

~~Except for net estimated credit impairments (i.e., net~~ expected ~~payments), the~~losses are included in Insurance segment results. Non-credit impairment-related changes in unrealized fair value gains and losses on credit derivatives are not included in the Insurance segment measure of adjusted operating income because they do not represent actual claims or losses and are expected to ~~reduce~~reverse to zero as the exposure approaches its maturity date. Changes in the fair value of the Company’s credit derivatives that do not reflect actual or expected claims or credit losses have no impact on the Company’s statutory claims-paying resources, rating agency capital or regulatory capital positions. ~~Changes in expected losses in respect of contracts accounted for as~~Unrealized gains (losses) on credit derivatives ~~are included~~may fluctuate significantly in future periods. Except for underlying credit impairment, which is recognized as loss expense in the ~~discussion~~Insurance segment, the fair value adjustments on credit derivatives in the insured portfolio are non-economic adjustments that reverse to zero over the remaining term of ~~“Economic Loss Development” above.~~that portfolio.

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The impact of changes in credit spreads will vary based upon the volume, tenor, interest rates and other market conditions at the time ~~these~~ fair values are determined. In addition, since each transaction has unique collateral and structural terms, the underlying change in fair value of each transaction may vary considerably. The fair value of credit derivative contracts also reflects the change in the Company’s own credit cost based on the price to purchase credit protection on ~~AGC~~AGC. Due to the relatively low volume and ~~AGM.~~characteristics of credit default swaps (CDS) contracts remaining in AGM’s portfolio, changes in AGM’s credit spreads do not significantly affect the fair value of these CDS contracts. The Company determines its own credit risk based on quoted CDS prices traded on ~~the Company~~AGC at each balance sheet date. Generally, a widening of credit spreads of the underlying obligations results in unrealized losses and the tightening of credit spreads of the underlying obligations results in unrealized gains. A widening of the CDS prices traded on AGC ~~and AGM~~ has an effect of offsetting unrealized losses that result from widening general market credit spreads, while a narrowing of the CDS prices traded on AGC ~~and AGM~~ has an effect of offsetting unrealized gains that result from narrowing general market credit spreads.

The valuation of the Company’s credit derivative contracts requires the use of models that contain significant, unobservable ~~inputs, and are classified as Level 3 in the fair value hierarchy.~~inputs. The models used to determine fair value are primarily developed internally based on market conventions for similar transactions that the Company observed in the past. There has been very limited new issuance activity in this market ~~over the past several years~~since 2009 and, as of September 30, ~~2017,~~2023, market prices for the Company’s credit derivative contracts were generally not available. Inputs to the estimate of fair value include various market indices, credit spreads, the Company’s own credit spread and estimated contractual payments. ~~Please refer to Part I,~~See Item 1, Financial Statements, Note 7,9, Fair Value Measurement, for additional information.

~~Net Change in Fair Value of Credit Derivative Gain (Loss)~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Realized gains on credit derivatives $ 4
$ 11
$ 15
$ 39
Net credit derivative losses (paid and payable) recovered and recoverable and other settlements (5 ) 4
4
8
Realized gains (losses) and other settlements(1) (1 ) 15
19
47
Net unrealized gains (losses):
Pooled corporate obligations 35
3
41
(37 )
U.S. RMBS 11
(12 ) 24
0
Pooled infrastructure (1 ) 4
4
10
Infrastructure finance 0
1
2
0
Other 14
10
16
4
Net unrealized gains (losses) 59
6
87
(23 )
Net change in fair value of credit derivatives $ 58
$ 21
$ 106
$ 24

~~____________________~~


~~(1)~~	~~Includes realized gains and losses due to terminations and settlements of CDS contracts.~~

~~Terminations and Settlements~~

~~of Direct Credit Derivative Contracts~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Net par of terminated credit derivative contracts $ 40
$ 1,071
$ 273
$ 3,507
Realized gains on credit derivatives 0
3
0
11
Net credit derivative losses (paid and payable) recovered and recoverable and other settlements (3 ) —
(15 ) —
Net unrealized gains (losses) on credit derivatives 8
11
24
81

~~During~~ Third ~~Quarter 2017,~~quarter 2023 non-credit impairment unrealized fair value gains were generated primarily as a result of ~~CDS terminations in the Other sector, run-off of net par outstanding, and tighter implied net~~generally lower collateral asset spreads. The tighter implied net spreads were primarily a result of price improvements on the underlying collateral of the Company’s CDS and the increased cost to buy protection in AGC’s and AGM’s name as the market cost of AGC’s and AGM’s credit protection increased during the period. For those CDS transactions that were pricing at or above their floor levels, when the cost of purchasing CDS protection on AGC and AGM, which management refers to as the CDS spread on AGC and AGM, increased, the implied net spreads that the Company would expect to receive on these transactions decreased.

~~During~~ Nine ~~Months 2017,~~months 2023 non-credit impairment unrealized fair value gains on credit derivatives were generated primarily as a result of ~~CDS terminations, run-off~~generally lower collateral asset spreads and a widening of ~~net par outstanding, and tighter implied net~~AGC spreads. The tighter implied spreads were primarily a result of price improvements on the underlying collateral of the Company’s CDS and the increased cost to buy protection in AGC’s and AGM’s name as the market cost of AGC’s and AGM’s credit protection increased during the period. For those CDS transactions that were pricing at or above their floor levels, when the cost of purchasing CDS protection on AGC and AGM increased, the implied net spreads that the Company would expect to receive on these transactions decreased.

~~During~~ Third ~~Quarter 2016,~~quarter 2022 non-credit impairment unrealized fair value ~~gains~~losses were generated primarily as a result of ~~CDS terminations in the pooled corporate~~wider asset spreads and ~~other sectors and price improvements on the underlying collateral~~a tightening of the Company’s CDS. This was the primary driver of the unrealized fair value gains in the pooled corporate CLO, and other sectors. The unrealized fair value gains were partially offset by unrealized losses resulting from wider implied net spreads across all sectors. The wider implied net spreads were primarily a result of the decreased cost to buy protection in AGC’s and AGM’s name, particularly for the one year CDS spread, as the market cost of AGC’s and AGM’s credit protection decreased significantly during the period. For those CDS transactions that were pricing at or above their floor levels, when the cost of purchasing CDS protection on AGC ~~and AGM decreased, the implied spreads that the Company would expect to receive on these transactions increased.~~

~~During~~spreads. Nine ~~Months 2016,~~months 2022 non-credit impairment unrealized fair value losses on credit derivatives were generated primarily in the trust preferred sector, due to wider implied net spreads. The wider implied net spreads were primarily a result of the decreased cost to buy protection in AGC’s and AGM’s name, particularly for the one year and five year CDS spread, as the market cost of AGC’s and AGM’s credit protection decreased during the period. For those CDS transactions that were pricing at or above their floor levels, when the cost of purchasing CDS protection on AGC and AGM decreased, the implied spreads that the Company would expect to receive on these transactions increased. The unrealized fair value losses were partially offset by unrealized fair value gains which resulted from the terminations of several CDS transactions during the period. The majority of the CDS transactions were terminated as a result of ~~settlement agreements with the relevant CDS counterparties.~~wider asset spreads, partially offset by a widening of AGC spreads and changes in discount rates.

~~CDS~~Sensitivity to Changes in Credit Spread ~~on AGC and AGM~~

~~Quoted price of CDS contract (in basis points)~~

As of
September 30, 2017 As of June 30, 2017 As of
December 31, 2016 As of September 30, 2016 As of
June 30, 2016 As of
December 31, 2015
Five-year CDS spread:
AGC 190
136
158
170
265
376
AGM 190
140
158
170
265
366
One-year CDS spread
AGC 81
15
35
31
45
139
AGM 81
15
29
31
47
131

~~Effect of Changes in~~The following table summarizes the ~~Company’s Credit Spread on~~

~~Net Unrealized Gains (Losses) on Credit Derivatives~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Change in unrealized gains (losses) of credit derivatives:
Before considering implication of the Company’s credit spreads $ 38
$ 44
$ 75
$ 85
Resulting from change in the Company’s credit spreads 21
(38 ) 12
(108 )
After considering implication of the Company’s credit spreads $ 59
$ 6
$ 87
$ (23 )

Management believes that the trading level of AGC’s and AGM’s credit spreads over the past several years has been due to the correlation between AGC’s and AGM’s risk profile and the current risk profile of the broader financial markets. Offsetting the benefit attributable to AGC’s and AGM’s credit spread were higher credit spreads in the fixed income security markets relative to pre-financial crisis levels. The higher credit spreads in the fixed income security market are due to the lack of liquidity in the high-yield collateralized debt obligations (CDO), trust preferred securities CDOs, and collateralized loan obligation (CLO) markets as well as continuing market concerns over the 2005-2007 vintages of RMBS.

~~Financial Guaranty Variable Interest Entities~~

As of September 30, 2017 and December 31, 2016, the Company consolidated 31 and 32 VIEs, respectively. The table below presents the effects on reported GAAP income resulting from consolidating these FG VIEs and eliminating their related insurance and investment amounts. The consolidation of FG VIEs has an effect on net income and shareholders' equity due to:

~~changes in fair value gains (losses) on FG VIE assets and liabilities,~~

~~the eliminations of premiums and losses related to the AGC and AGM FG VIE liabilities with recourse, and~~

~~the elimination of investment balances related to the Company’s purchase of AGC and AGM insured FG VIE debt.~~

Upon consolidation of a FG VIE, the related insurance and, if applicable, the related investment balances, are considered intercompany transactions and therefore eliminated. Please refer to Part I, Item 1, Financial Statements, Note 9, Consolidated Variable Interest Entities, for additional information.

~~Effect of Consolidating FG VIEs on Net Income (Loss)~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Fair value gains (losses) on FG VIEs $ 3
$ (11 ) $ 25
$ 11
Elimination of insurance and investment balances (4 ) (6 ) (10 ) (16 )
Effect on income before tax (1 ) (17 ) 15
(5 )
Less: tax provision (benefit) 0
(6 ) 5
(2 )
Effect on net income (loss) $ (1 ) $ (11 ) $ 10
$ (3 )

~~Fair value gains (losses) on FG VIEs represent the net~~estimated change in fair value on the ~~consolidated FG VIEs’ assets and liabilities. During Third Quarter 2017 and Nine Months 2017, the Company recorded a pre-tax~~ net ~~fair value gain on consolidated FG VIEs of $3 million and $25 million, respectively. During Third Quarter 2017, the primary driver~~balance of the ~~gain was price depreciation on the FG VIE recourse liabilities during the quarter resulting from the Company's~~Company’s credit ~~risk. During the Nine Months 2017, the primary driver of the gain is price appreciation on the FG VIE assets resulting from improvements~~derivative positions assuming an immediate shift in the ~~underlying collateral.~~

~~During Third Quarter 2016,~~net spreads assumed by the ~~Company recorded a pre-tax~~Company. The net ~~fair value loss on consolidated FG VIEs~~spread is affected by the spread of $11 million and during Nine Months 2016, the Company recorded a gain of $11 million. The primary drivers of the loss during Third Quarter 2016 were the net mark-to-market losses due to price depreciation on the FG VIE assets, resulting from declines in value in the underlying collateral and the ~~price appreciation~~credit spreads on AGC.

Effect of Changes in Credit Spread


	As of September 30, 2023				As of December 31, 2022
Credit Spreads (1)	Estimated Net Fair Value (Pre-Tax)		Estimated Change in Gain (Loss) (Pre-Tax)		Estimated Net Fair Value (Pre-Tax)		Estimated Change in Gain (Loss) (Pre-Tax)
	(in millions)
Increase of 25 bps	$	(112)	$	(63)	$	(233)	$	(71)
Base Scenario	(49)		—		(162)		—
Decrease of 25 bps	(33)		16		(99)		63
All transactions priced at floor	(19)		30		(27)		135

____________________

(1)Includes the ~~FG VIE recourse liabilities during the quarter, resulting from the Company's credit risk. The primary driver~~effects of ~~the Nine Months 2016 gain in fair value of FG VIEs assets and liabilities was net mark-to-market gains due to price appreciation~~spreads on ~~the FG VIE assets during the nine months period resulting from improvements in~~both the underlying ~~collateral.~~asset classes and the Company’s own credit spread.

Fair Value Gains (Losses) on CCS

~~The decrease fair~~ Fair value losses on CCS in third quarter 2023 and nine months 2023 were primarily due to a tightening in market spreads. Fair value gains on CCS in third quarter 2022 and nine months 2022 were primarily due to a significant increase in London Interbank Offered Rate (LIBOR). Fair value gains (losses) of CCS are heavily affected by, and in part fluctuate with, changes in market spreads and interest rates, credit spreads and other market factors and are not expected to result in an economic gain or loss.

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Foreign Exchange Gain (Loss) on Remeasurement

Foreign exchange gains and losses in all periods primarily relate to remeasurement of long-dated premiums receivable, for which the ~~Company's CCS for Third Quarter 2017~~Company records the present value of future installment premiums, and ~~Nine Months 2017 compared~~are mainly due to changes in the exchange rate of the pound sterling and, to a lesser extent, the euro relative to the ~~prior year comparable periods was a result~~U.S. dollar. Approximately 70% and 74% of ~~improvements~~gross premiums receivable, net of commissions payable as of September 30, 2023 and December 31, 2022, respectively, are denominated in ~~observed market prices~~currencies other than the U.S. dollar, primarily the pound sterling and euro. Premiums on ~~securities referencing~~European infrastructure and structured finance transactions typically are paid, in whole or in part, on an installment basis, whereas premiums on U.S. public finance transactions are often paid upfront.

The following table presents the ~~Company.~~

~~Other Operating Expenses~~

Other operating expenses in Third Quarter 2017 decreased by $7 million due primarily to lower acquisition related expenses and higher rent expense and accelerated amortization of leasehold improvements in 2016foreign exchange rates as ~~a result~~ of the Company's move of its New York offices. Other operating expenses in Nine Months 2017 decreased by $5 million compared to Nine Months 2016 due primarily to lower rent and depreciation expense, offset in part by higher compensation expense.balance sheet dates.

~~Provision for Income Tax~~

~~Provision for Income Taxes and Effective Tax~~Foreign Exchange Rates

U.S. Dollar Per Foreign Currency


	As of September 30, 2023	As of December 31, 2022	As of September 30, 2022	As of December 31, 2021
Pound sterling	$1.220	$1.208	$1.117	$1.353
Euro	$1.057	$1.071	$0.980	$1.137

Third Quarter Nine Months
2017 2016 2017 2016
(dollars in millions)
Total provision (benefit) for income taxes $ 105
$ 1
$ 157
$ 62
Effective tax rate 33.6 % 0.3 % 18.8 % 8.3 %

The Company’s effective tax rate reflects the proportion of income recognized by each of the Company’s operating subsidiaries, with U.S. subsidiaries taxed at the U.S. marginal corporate income tax rate of 35%, U.K. subsidiaries taxed at the U.K. blended marginal corporate tax rate of 19.25% unless taxed as a U.S. controlled foreign corporation, and no taxes for the Company’s Bermuda subsidiaries, which consist of Assured Guaranty Re Ltd. (AG Re), Assured Guaranty Re Overseas Ltd. (AGRO), and Cedar Personnel Ltd., unless subject to U.S tax by election or as a U.S. controlled foreign corporation. AGE the

Company’s U.K. subsidiary, had previously elected under U.S. Internal Revenue Code Section 953(d) to be taxed as a U.S. company. In January 2017, AGE filed a request with the U.S. Internal Revenue Service (IRS) to revoke the election, which was approved in May 2017. As a result of the revocation of the Section 953(d) election, AGE will no longer be liable to pay future U.S. taxes beginning in 2017.

In April 2017, the Company received a final letter from the IRS to close the audit for the period of 2009 - 2012, with no additional findings or changes, and as a result the Company released previously recorded uncertain tax position reserves and accrued interest of approximately $37 million in the second quarter of 2017. The Company’s overall corporate effective tax rate fluctuates based on the distribution of taxable income across these jurisdictions. In each of the periods presented, the portion of taxable income from each jurisdiction varied. For Third Quarter 2017 and Nine Months 2017, the non-taxable book to tax differences were mostly consistent compared with the prior period, with the exception of the benefit on bargain purchase gains from the MBIA UK Acquisition and the CIFG Acquisition in January 2017 and July 2016, respectively.

Non-GAAP Financial Measures

~~To reflect the key financial measures that management analyzes in evaluating the Company’s operations and progress towards long-term goals, the~~The Company discloses ~~both~~both: (i) financial measures determined in accordance with ~~GAAP~~GAAP; and (ii) financial measures not determined in accordance with GAAP (non-GAAP financial measures).

Financial measures identified as non-GAAP should not be considered substitutes for GAAP financial measures. The primary limitation of non-GAAP financial measures is the potential lack of comparability to financial measures of other companies, whose definitions of non-GAAP financial measures may differ from those of ~~Assured Guaranty.~~the Company.

~~By disclosing non-GAAP financial measures, the~~The Company ~~gives investors, analysts and financial news reporters access to information that management and the Board of Directors review internally. Assured Guaranty~~ believes its presentation of non-GAAP financial measures ~~along with the effect on those measures of consolidating FG VIEs (FG VIE consolidation),~~ provides information that is necessary for analysts to calculate their estimates of Assured Guaranty’s financial results in their research reports on Assured Guaranty and for investors, analysts and the financial news media to evaluate Assured Guaranty’s financial results.

GAAP requires the Company to consolidate ~~certain variable interest~~ entities ~~(VIEs) that have issued debt obligations insured by~~where it is deemed to be the ~~Company. However,~~primary beneficiary which include:

•FG VIEs, which the Company does not own ~~such VIEs~~ and where its exposure is limited to its obligation under ~~its~~the financial guaranty insurance ~~contract. Therefore, the~~contract, and

•CIVs in which certain subsidiaries invest.

The Company ~~had previously removed~~discloses the effect of FG VIE and CIV consolidation that is embedded in ~~its calculation of its~~each non-GAAP financial ~~measures. However, since fourth quarter 2016, based~~measure, as applicable. The Company believes this information may also be useful to analysts and investors evaluating Assured Guaranty’s financial results. In the case of both the consolidated FG VIEs and the CIVs, the economic effect on the ~~SEC's May 2016 compliance~~Company of each of the consolidated FG VIEs and ~~disclosure interpretations,~~CIVs is reflected primarily in the results of the Insurance segment.

Management of the Company no longer removes the effect of FG VIE consolidation from its publicly disclosed non-GAAP financial measures. This change affects the Company's calculation of operating income (non-GAAP), operating ROE, non-GAAP operating shareholders’ equity and non-GAAP adjusted book value. Wherever possible, the Company has separately disclosed the effect of FG VIE consolidation. The prior-year quarterly non-GAAP financial measures have been updated to reflect the revised calculation.

~~Management and the~~AGL’s Board of Directors use non-GAAP financial measures further adjusted to remove the effect of FG VIE and CIV consolidation (which the Company refers to as its core financial measures), as well as GAAP financial measures and other factors, to evaluate the Company’s results of operations, financial condition and progress towards long-term goals. The Company uses ~~these~~ core financial measures in its ~~decision making~~decision-making process for and in its calculation of certain components of management compensation.

~~Many investors, analysts and~~ The financial ~~news reporters use non-GAAP~~measures that the Company uses to help determine compensation are: (1) adjusted operating ~~shareholders’ equity,~~income, further adjusted to remove the effect of FG VIE and CIV consolidation; (2) adjusted operating shareholders’ equity, further adjusted to remove the effect of FG VIE and CIV consolidation; (3) adjusted book value per share, further adjusted to remove the effect of FG VIE and CIV consolidation; and (4) PVP.

Management believes that many investors, analysts and financial news reporters use adjusted operating shareholders’ equity and/or adjusted book value, each further adjusted to remove the effect of FG VIE and CIV consolidation, as the principal financial ~~measure~~measures for valuing AGL’s current share price or projected share price and also as the basis of their decision to recommend, buy or sell AGL’s common shares. ~~Many~~Management also believes that many of the Company’s fixed income investors also use ~~this measure to evaluate the Company’s capital adequacy.~~

~~Many investors, analysts and financial news reporters also use non-GAAP~~ adjusted ~~book value,~~operating shareholders’ equity, further adjusted to remove the effect of FG VIE and CIV consolidation, to evaluate ~~AGL’s share price and as~~ the ~~basis~~Company’s capital adequacy.

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Table of ~~their decision to recommend, buy or sell the AGL common shares. Operating~~Contents

Adjusted operating income, further adjusted for the effect of FG VIE and CIV consolidation, enables investors and analysts to evaluate the Company’s financial results in comparison with the consensus analyst estimates distributed publicly by financial databases.

The core financial measures that the Company uses to help determine compensation are: (1) non-GAAP operating income, adjusted to remove the effect of FG VIE consolidation, (2) non-GAAP operating shareholders' equity, adjusted to

~~remove the effect of FG VIE consolidation, (3) growth in non-GAAP adjusted book value per share, adjusted to remove the effect of FG VIE consolidation, and (4) PVP.~~

The following paragraphs define each non-GAAP financial measure disclosed by the Company and describe why it is useful. ATo the extent there is a directly comparable GAAP financial measure, a reconciliation of the non-GAAP financial measure and the most directly comparable GAAP financial measure is presented below.

Adjusted Operating Income ~~(non-GAAP)~~

Management believes that adjusted operating income is a useful measure because it clarifies the understanding of the ~~underwriting~~operating results ~~and financial condition~~ of the Company and presents the results of operations of the Company excluding the fair value adjustments on credit derivatives and CCS that are not expected to result in economic gain or loss, as well as other adjustments described below. Management adjustsCompany. Adjusted operating ~~income further by removing FG VIE consolidation to arrive at its core operating income measure. Operating~~ income is defined as net income (loss) attributable to AGL, as reported under GAAP, adjusted for the following:

Elimination of realized gains (losses) on the Company’s investments, except for gains and losses on securities classified as trading. The timing of realized gains and losses, which depends largely on market credit cycles, can vary considerably across periods. The timing of sales is largely subject to the Company’s discretion and influenced by market opportunities, as well as the Company’s tax and capital profile.

1) Elimination of realized gains (losses) on the Company’s investments, except for gains and losses on securities classified as trading. The timing of realized gains and losses, which depends largely on market credit cycles, can vary considerably across periods. The timing of sales is largely subject to the Company’s discretion and influenced by market opportunities, as well as the Company’s tax and capital profile.

2) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives that are recognized in net income, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments. Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, the Company’s credit spreads, and other market factors and are not expected to result in an economic gain or loss.

Elimination of non-credit-impairment unrealized fair value gains (losses) on credit derivatives, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments. Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, the Company's credit spreads, and other market factors and are not expected to result in an economic gain or loss.

3) Elimination of fair value gains (losses) on the Company’s CCS that are recognized in net income. Such amounts are affected by changes in market interest rates, the Company’s credit spreads, price indications on the Company’s ~~CCS. Such amounts are affected by changes in market interest rates, the Company's credit spreads, price indications on the Company's~~ publicly traded debt and other market factors and are not expected to result in an economic gain or loss.

~~Elimination of foreign exchange gains (losses) on remeasurement of net premium receivables and loss and LAE reserves.~~

4) Elimination of foreign exchange gains (losses) on remeasurement of net premium receivables and loss and LAE reserves that are recognized in net income. Long-dated receivables and loss and LAE reserves represent the present value of future contractual or expected cash flows. Therefore, the current period’s foreign exchange remeasurement gains (losses) are not necessarily indicative of the total foreign exchange gains (losses) that the Company will ultimately recognize.


5)	5) Elimination of the tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

See “— Results of Operations — Reconciliation to GAAP” for a reconciliation of ~~Net Income (Loss)~~net income (loss) attributable to AGL to adjusted operating income (loss).

~~to Operating Income (non-GAAP)~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Net income (loss) $ 208
$ 479
$ 678
$ 684
Less pre-tax adjustments:
Realized gains (losses) on investments 7
(2 ) 54
(6 )
Non-credit impairment unrealized fair value gains (losses) on credit derivatives 55
(4 ) 60
(32 )
Fair value gains (losses) on CCS (4 ) (23 ) (4 ) (50 )
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves 18
(2 ) 49
(21 )
Total pre-tax adjustments 76
(31 ) 159
(109 )
Less tax effect on pre-tax adjustments (24 ) 13
(51 ) 37
Operating income (non-GAAP) $ 156
$ 497
$ 570
$ 756

Gain (loss) related to FG VIE consolidation (net of tax provision (benefit) of $(1), $(6), $5 and $(2)) included in operating income $ (1 ) $ (11 ) $ 9
$ (4 )

~~Non-GAAP~~Adjusted Operating Shareholders’ Equity and ~~Non-GAAP~~ Adjusted Book Value

Management believes that ~~non-GAAP~~adjusted operating shareholders’ equity is a useful measure because it ~~presents the equity of the Company excluding~~excludes the fair value adjustments on investments, credit derivatives and CCS that are not expected to result in economic gain or loss, along with other adjustments described below. Management adjusts non-GAAP operating shareholders’ equity further by removing FG VIE consolidation to arrive at its core operating shareholders' equity and core adjusted book value.loss.

~~Non-GAAP operating shareholders’ equity is the basis of the calculation of non-GAAP adjusted book value (see below). Non-GAAP~~ Adjusted operating shareholders’ equity is defined as shareholders’ equity attributable to AGL, as reported under GAAP, adjusted for the following:

~~Elimination of non-credit-impairment~~

1) Elimination of non-credit impairment-related unrealized fair value gains (losses) on credit derivatives, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments. Such fair value adjustments are heavily affected by, and in part fluctuate with, changes in market interest rates, credit spreads and other market factors and are not expected to result in an economic gain or loss.

2) Elimination of fair value gains (losses) on the Company’s CCS. Such amounts are affected by changes in market interest rates, the Company’s credit spreads, price indications on the Company’s ~~CCS. Such amounts are affected by changes in market interest rates, the Company's credit spreads, price indications on the Company's~~ publicly traded debt, and other market factors and are not expected to result in an economic gain or loss.

Elimination of unrealized gains (losses) on the Company’s investments that are recorded as a component of accumulated other comprehensive income (AOCI) (excluding foreign exchange remeasurement). The AOCI component of the fair value adjustment on the investment portfolio is not deemed economic because the Company generally holds these investments to maturity and therefore should not recognize an economic gain or loss.

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3) Elimination of unrealized gains (losses) on the Company’s investments that are recorded as a component of accumulated other comprehensive income (AOCI). The AOCI component of the fair value adjustment on the investment portfolio is not deemed economic because the Company generally holds these investments to maturity and therefore would not recognize an economic gain or loss.

4) Elimination of the tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

Management uses ~~non-GAAP~~ adjusted book value, further adjusted ~~for~~to remove the effect of FG VIE and CIV consolidation, to measure the intrinsic value of the Company, excluding franchise value. ~~Growth in non-GAAP adjusted~~Adjusted book value per share, further adjusted for FG VIE and CIV consolidation (core adjusted book value), is one of the key financial measures used in determining the amount of certain long-term compensation elements to management and employees and used by rating agencies and investors. Management believes that ~~non-GAAP~~ adjusted book value is a useful measure because it enables an evaluation of the ~~net present value of the~~ Company’s in-force premiums and revenues net of expected losses. ~~Non-GAAP adjusted~~Adjusted book value is ~~non-GAAP~~adjusted operating shareholders’ equity, as defined above, further adjusted for the following:


1)	1) Elimination of deferred acquisition costs, net. These amounts represent net deferred expenses that have already been paid or accrued and will be expensed in future accounting periods.


2)	~~Addition of the net present value of estimated net future revenue on non-financial guaranty contracts.~~ 2) Addition of the net present value of estimated net future revenue. See below.


3)	Addition of the deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed, net of reinsurance. This amount represents the expected future net earned premiums, net of expected losses to be expensed, which are not reflected in GAAP equity.

3) Addition of the deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed, net of reinsurance. This amount represents the present value of the expected future net earned premiums, net of the present value of expected losses to be expensed, which are not reflected in GAAP equity.

4) Elimination of the tax ~~asset or liability~~effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.

The unearned premiums and revenues included in ~~non-GAAP~~ adjusted book value will be earned in future periods, but actual earnings may differ materially from the estimated amounts used in determining current ~~non-GAAP~~ adjusted book value due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults and other factors.

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Reconciliation of Shareholders’ Equity Attributable to AGL

to ~~Non-GAAP~~Adjusted Operating Shareholders’ Equity and Adjusted Book Value


	As of September 30, 2023				As of December 31, 2022
	After-Tax		Per Share		After-Tax		Per Share
	(dollars in millions, except share amounts)
Shareholders’ equity attributable to AGL	$	5,252	$	90.84	$	5,064	$	85.80
Less pre-tax adjustments:
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives	38		0.66		(71)		(1.21)
Fair value gains (losses) on CCS	12		0.21		47		0.80
Unrealized gain (loss) on investment portfolio	(609)		(10.52)		(523)		(8.86)
Less taxes	76		1.31		68		1.15
Adjusted operating shareholders’ equity	5,735		99.18		5,543		93.92
Pre-tax adjustments:
Less: Deferred acquisition costs	158		2.73		147		2.48
Plus: Net present value of estimated net future revenue	190		3.28		157		2.66
Plus: Net deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed	3,404		58.88		3,428		58.10
Plus taxes	(612)		(10.58)		(602)		(10.22)
Adjusted book value	$	8,559	$	148.03	8,379		141.98

Gain (loss) related to FG VIE and CIV consolidation included in:
Adjusted operating shareholders’ equity (net of tax provision (benefit) of $1 and $4)	$	4	$	0.06	$	17	$	0.28
Adjusted book value (net of tax provision (benefit) of $(1) and $3)	(2)		(0.03)		11		0.19

As of
September 30, 2017 As of
December 31, 2016
After-Tax Per Share After-Tax Per Share
(dollars in millions, except per share amounts)
Shareholders’ equity $ 6,878
$ 58.32
$ 6,504
$ 50.82
Less pre-tax adjustments:
Non-credit impairment unrealized fair value gains (losses) on credit derivatives (129 ) (1.09 ) (189 ) (1.48 )
Fair value gains (losses) on CCS 58
0.49
62
0.48
Unrealized gain (loss) on investment portfolio excluding foreign exchange effect 506
4.29
316
2.47
Less taxes (147 ) (1.24 ) (71 ) (0.54 )
Non-GAAP operating shareholders’ equity 6,590
55.87
6,386
49.89
Pre-tax adjustments:

Less: Deferred acquisition costs 106
0.89
106
0.83
Plus: Net present value of estimated net future revenue 144
1.22
136
1.07
Plus: Net unearned premium reserve on financial guaranty contracts in excess of expected loss to be expensed 3,091
26.21
2,922
22.83
Plus taxes (899 ) (7.63 ) (832 ) (6.50 )
Non-GAAP adjusted book value $ 8,820
$ 74.78
$ 8,506
$ 66.46

Gain (loss) related to FG VIE consolidation included in non-GAAP operating shareholders' equity (net of tax (provision) benefit of $(1) and $4) $ 3
$ 0.01
(7 ) (0.06 )

Gain (loss) related to FG VIE consolidation included in non-GAAP adjusted book value (net of tax benefit of $7 and $12) $ (13 ) $ (0.11 ) (24 ) (0.18 )

Net Present Value of Estimated Net Future Revenue

Management believes that this amount is a useful measure because it enables an evaluation of the present value of estimated net future ~~estimated~~ revenue for non-financial guaranty insurance contracts. ~~There is no corresponding GAAP financial measure.~~ This amount represents the net present value of estimated future revenue from ~~the Company’s non-financial guaranty~~these contracts (other than credit derivatives with net expected losses), net of reinsurance, ceding commissions and premium ~~taxes, for contracts without expected economic losses, and is~~taxes.

Future installment premiums are discounted at ~~6%. Estimated net~~the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than Loss Mitigation Securities. The discount rate is recalculated annually and updated as necessary. Net present value of estimated future revenue for an obligation may change from period to period due to a change in the discount rate or due to a change in estimated net future revenue for the obligation, which may change due to changes in foreign exchange rates, prepayment speeds, terminations, credit defaults or other factors that affect par outstanding or the ultimate maturity of an obligation. There is no corresponding GAAP financial measure.

PVP or Present Value of New Business Production

Management believes that PVP is a useful measure because it enables the evaluation of the value of new business production ~~for~~in the ~~Company~~Insurance segment by taking into account the value of estimated future installment premiums on all new contracts underwritten in a reporting period as well as ~~premium supplements and~~ additional installment ~~premium~~premiums and fees on existing contracts ~~as to which~~(which may result from supplements or fees or from the issuer ~~has the right to call the~~not calling an insured obligation ~~but has not exercised such right, whether in insurance or credit derivative contract~~the Company projected would be called), regardless of form, which management believes GAAP gross written premiums and ~~the net~~changes in fair value of credit ~~derivative premiums received and receivable portion of net realized gains and other settlements on credit~~ derivatives ~~(Credit Derivative Realized Gains (Losses))~~ do not adequately measure. PVP in respect of contracts written in a specified period is defined as gross upfront and installment premiums received and the present value of gross estimated future installment premiums.

Future installment premiums are discounted ~~in each case,~~ at ~~6%.~~the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than certain fixed-maturity securities such as Loss Mitigation Securities. The

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discount rate is recalculated annually and updated as necessary. Under GAAP, financial guaranty installment premiums are discounted at a ~~risk free~~risk-free rate. Additionally, under GAAP, management records future installment premiums on financial guaranty insurance contracts covering non-homogeneous pools of assets based on the contractual term of the transaction, whereas for PVP purposes, management records an estimate of

the future installment premiums the Company expects to receive, which may be based upon a shorter period of time than the contractual term of the transaction.

Actual ~~future earned or written~~installment premiums ~~and Credit Derivative Realized Gains (Losses)~~ may differ from those estimated in the Company’s PVP calculation due to factors including, but not limited to, changes in foreign exchange rates, prepayment speeds, terminations, credit defaults or other factors that affect par outstanding or the ultimate maturity of an obligation.

Reconciliation of GWP to PVP


	Third Quarter 2023										Third Quarter 2022
	Public Finance				Structured Finance						Public Finance				Structured Finance
	U.S.		Non - U.S.		U.S.		Non - U.S.		Total		U.S.		Non - U.S.		U.S.		Non - U.S.		Total
	(in millions)
GWP	$	29	$	(5)	$	15	$	1	$	40	$	54	$	44	$	(2)	$	(2)	$	94
Less: Installment GWP and other GAAP adjustments (1)	6		(5)		15		1		17		—		44		(3)		(2)		39
Upfront GWP	23		—		—		—		23		54		—		1		—		55
Plus: Installment premiums and other (2)	7		2		12		2		23		3		37		—		—		40
PVP	$	30	$	2	$	12	$	2	$	46	$	57	$	37	$	1	$	—	$	95

Third Quarter 2017 Third Quarter 2016
Public Finance Structured Finance Public Finance Structured Finance
U.S. Non - U.S. U.S. Non - U.S. Total U.S. Non - U.S. U.S. Non - U.S. Total
(in millions)
GWP $ 37
$ 8
$ 1
$ (1 ) $ 45
$ 24
$ (9 ) $ 1
$ 0
$ 16
Less: Installment GWP and other GAAP adjustments(1) 2
8
1
(1 ) 10
(1 ) (9 ) 1
0
(9 )
Upfront GWP 35
—
—
—
35
25
—
—
—
25
Plus: Installment premium PVP 4
4
0
—
8
0
2
23
—
25
PVP $ 39
$ 4
$ 0
$ —
$ 43
$ 25
$ 2
$ 23
$ —
$ 50


	Nine Months 2017												Nine Months 2016															Nine Months 2023										Nine Months 2022
	Public Finance					Structured Finance							Public Finance					Structured Finance										Public Finance				Structured Finance						Public Finance				Structured Finance
	U.S.			Non - U.S.		U.S.		Non - U.S.			Total		U.S.			Non - U.S.		U.S.			Non - U.S.			Total				U.S.		Non - U.S.		U.S.		Non - U.S.		Total		U.S.		Non - U.S.		U.S.		Non - U.S.		Total
	(in millions)																											(in millions)
GWP	$	132		$	92	$	3	$	8		$	235	$	72		$	6	$	(5	)	$	(2	)	$	71		GWP	$	129	$	40	$	48	$	4	$	221	$	160	$	66	$	4	$	(1)	$	229
Less: Installment GWP and other GAAP adjustments(1)	(1		)	90		3		(2		)	90		(17		)	6		(5		)	(2		)	(18		)
Less: Installment GWP and other GAAP adjustments (1)																											Less: Installment GWP and other GAAP adjustments (1)	55		37		48		4		144		—		66		1		(1)		66
Upfront GWP	133			2		—		10			145		89			—		0			—			89			Upfront GWP	74		3		—		—		77		160		—		3		—		163
Plus: Installment premium PVP	4			56		5		2			67		0			16		24			—			40
Plus: Installment premiums and other (2)																											Plus: Installment premiums and other (2)	55		35		42		40		172		3		67		—		7		77
PVP	$	137		$	58	$	5	$	12		$	212	$	89		$	16	$	24		$	—		$	129		PVP	$	129	$	38	$	42	$	40	$	249	$	163	$	67	$	3	$	7	$	240

___________________


~~(1)~~	(1) Includes the present value of new business on installment policies discounted at the prescribed GAAP discount rates, GWP adjustments on existing installment policies due to changes in assumptions ~~any cancellations of assumed reinsurance contracts,~~ and other GAAP adjustments.

(2) Includes the present value of future premiums and fees on new business paid in installments, discounted at the approximate average pre-tax book yield of fixed-maturity securities purchased during the prior calendar year, other than certain fixed-maturities such as Loss Mitigation Securities. Nine months 2023 and 2022 also include the present value of future premiums and fees associated with other guaranties written by the Company that, under GAAP, are accounted for under Accounting Standards Codification (ASC) 460, Guarantees.

Insured Portfolio

Financial Guaranty Exposure

The following tables present information in respect of the financial guaranty insured portfolio to supplement the disclosures and discussion provided in Item 1, Financial Statements, Note 3, Outstanding Exposure.

110

Table of Contents

The following table presents the financial guaranty portfolio by ~~asset class~~sector, net of cessions to reinsurers. It includes all financial guaranty contracts outstanding as of the dates presented, regardless of the form written (i.e., credit derivative form or traditional financial guaranty insurance form) or the applicable accounting model (i.e., insurance, derivative or FG VIE consolidation). The Company excludes amounts attributable to loss mitigation securities (unless otherwise indicated) from par and principal or interest (debt service) outstanding, which amounts are included in the investment portfolio, because it manages such securities as investments and not insurance exposure. As of September 30, 2017 and December 31, 2016, the Company excluded $2.0 billion and $2.1 billion, respectively, of net par related to loss mitigation securities (which are mostly BIG), and other loss mitigation strategies.

Financial Guaranty Portfolio

Net Par Outstanding ~~and Average Internal Rating~~ by Sector


	As of September 30, 2023		As of December 31, 2022

Sector	(dollars in millions)
Public finance:
U.S. public finance:
General obligation	$	73,322	$	71,868
Tax backed	32,982		33,752
Municipal utilities	28,541		26,436
Transportation	20,602		19,688
Healthcare	11,842		11,304
Infrastructure finance	8,808		6,955
Higher education	7,256		7,137
Housing revenue	1,141		959
Investor-owned utilities	329		332
Renewable energy	171		180
Other public finance	979		1,025
Total U.S. public finance	185,973		179,636
Non-U.S public finance:
Regulated utilities	19,207		17,855
Infrastructure finance	14,031		13,915
Sovereign and sub-sovereign	9,403		9,526
Renewable energy	2,021		2,086
Pooled infrastructure	1,086		1,081
Total non-U.S. public finance	45,748		44,463
Total public finance	231,721		224,099
Structured finance:
U.S. structured finance:
Life insurance transactions	4,663		3,879
RMBS	1,817		1,956
Pooled corporate obligations	595		625
Financial products	447		453
Consumer receivables	342		437
Other structured finance	1,111		878
Total U.S. structured finance	8,975		8,228
Non-U.S. structured finance:
Pooled corporate obligations	339		344
RMBS	248		263
Other structured finance	550		324
Total non-U.S. structured finance	1,137		931
Total structured finance	10,112		9,159
Total net par outstanding	$	241,833	$	233,258

111

Table of Contents

As of September 30, 2017 As of December 31, 2016
Sector
Net Par
Outstanding

Avg.
Rating

Net Par
Outstanding

Avg.
Rating
(dollars in millions)
Public finance:

U.S.:

General obligation $ 93,904
A- $ 107,717
A
Tax backed 45,795
A- 49,931
A-
Municipal utilities 33,883
A- 37,603
A
Transportation 17,876
A- 19,403
A-
Healthcare 9,856
A 11,238
A
Higher education 8,911
A 10,085
A
Infrastructure finance 4,185
BBB+ 3,769
BBB+
Housing 1,221
A- 1,559
A-
Investor-owned utilities 587
BBB+ 697
BBB+
Other public finance—U.S. 1,998
A 2,796
A
Total public finance—U.S. 218,216
A- 244,798
A
Non-U.S.:

Infrastructure finance 18,803
BBB 10,731
BBB
Regulated utilities 15,847
BBB+ 9,263
BBB+
Pooled infrastructure 1,553
AAA 1,513
AAA
Other public finance 6,524
A 4,874
A
Total public finance—non-U.S. 42,727
BBB+ 26,381
BBB+
Total public finance 260,943
A- 271,179
A-
Structured finance:

U.S.:

RMBS 5,064
BBB- 5,637
BBB-
Insurance securitizations 2,308
AA- 2,308
A+
Pooled corporate obligations 2,042
AA- 10,050
AAA
Consumer receivables 1,630
A- 1,652
BBB+
Financial products 1,432
AA- 1,540
AA-
Commercial receivables 162
BBB 230
BBB-
Other structured finance—U.S. 504
A+ 640
AA-
Total structured finance—U.S. 13,142
A- 22,057
A+
Non-U.S.:

RMBS 639
A- 604
A-
Pooled corporate obligations 371
AA- 1,535
AA
Commercial receivables 309
A 356
BBB+
Other structured finance 363
A 587
AA
Total structured finance—non-U.S. 1,682
A 3,082
AA-
Total structured finance 14,824
A- 25,139
AA-
Total net par outstanding $ 275,767
A- $ 296,318
A

~~The following tables set forth~~Second-to-pay insured par outstanding represents transactions the Company has insured that are already insured by another financial guaranty insurer and where the Company’s ~~net~~obligation to pay under its insurance of such transactions arises only if both the obligor on the underlying insured obligation and the primary financial guaranty ~~portfolio by internal rating.~~

~~Financial Guaranty Portfolio by Internal Rating~~

Asinsurer default. The Company underwrites such transactions based on the underlying insured obligation without regard to the primary financial guaranty insurer and internally rates the transaction the higher of the rating of the underlying obligation and the rating of the primary financial guarantor. The second-to-pay insured par outstanding as of September 30, ~~2017~~

Public Finance
U.S.

Public Finance
Non-U.S.

Structured Finance
U.S

Structured Finance
Non-U.S
Total
Rating
Category

Net Par
Outstanding
%
Net Par
Outstanding
%
Net Par
Outstanding
%
Net Par
Outstanding
%
Net Par
Outstanding
%
(dollars in millions)
AAA $ 915
0.4 % $ 2,523
5.9 % $ 2,333
17.8 % $ 419
25.0 % $ 6,190
2.2 %
AA 33,614
15.4
301
0.7
4,853
36.9
76
4.5
38,844
14.1
A 124,332
57.0
13,657
32.0
1,778
13.5
268
15.9
140,035
50.8
BBB 52,021
23.8
23,965
56.1
724
5.5
762
45.3
77,472
28.1
BIG 7,334
3.4
2,281
5.3
3,454
26.3
157
9.3
13,226
4.8
Total net par outstanding (1) $ 218,216
100.0 % $ 42,727
100.0 % $ 13,142
100.0 % $ 1,682
100.0 % $ 275,767
100.0 %

~~_____________________~~


~~(1)~~	~~The September 30, 2017 amounts include $13.0 billion of net par from the MBIA UK Acquisition. Please refer to Part I, Item 1, Financial Statements, Note 13, Reinsurance~~2023 and ~~Other Monoline Exposures, for the effect of commutations on net par outstanding.~~

~~Financial Guaranty Portfolio by Internal Rating~~

~~As of~~ December 31, ~~2016~~ 2022 was $4.2 billion and $4.3 billion, respectively. The par on second-to-pay exposure where the ratings of the primary financial guaranty insurer and underlying insured transaction were not investment grade was $16 million and $19 million as of September 30, 2023 and December 31, 2022, respectively.

Public Finance
U.S.

Public Finance
Non-U.S.

Structured Finance
U.S

Structured Finance
Non-U.S
Total
Rating
Category

Net Par
Outstanding
%
Net Par
Outstanding
%
Net Par
Outstanding
%
Net Par
Outstanding
%
Net Par
Outstanding
%
(dollars in millions)
AAA $ 2,066
0.8 % $ 2,221
8.4 % $ 9,757
44.2 % $ 1,447
47.0 % $ 15,491
5.2 %
AA 46,420
19.0
170
0.6
5,773
26.2
127
4.1
52,490
17.7
A 133,829
54.7
6,270
23.8
1,589
7.2
456
14.8
142,144
48.0
BBB 55,103
22.5
16,378
62.1
879
4.0
759
24.6
73,119
24.7
BIG 7,380
3.0
1,342
5.1
4,059
18.4
293
9.5
13,074
4.4
Total net par outstanding $ 244,798
100.0 % $ 26,381
100.0 % $ 22,057
100.0 % $ 3,082
100.0 % $ 296,318
100.0 %

Exposure to Puerto Rico

The Company ~~has~~had insured exposure to ~~general obligation bonds~~obligations of various authorities and public corporations of the Commonwealth of Puerto Rico (Puerto Rico or the Commonwealth) ~~and various obligations of~~as well as its ~~related authorities and public corporations~~general obligation bonds aggregating ~~$5.0~~$1.1 billion net par outstanding as of September 30, ~~2017,~~2023, all of which ~~are~~was rated BIG. In recent years, Puerto Rico has experienced significant general fund budget deficits and a challenging economic environment. More recently, Hurricane Maria created additional challenges for Puerto Rico. Beginning on January 1, 2016, a number of Puerto Rico ~~credits~~exposures have defaulted on bond payments, and the Company has now paid claims on ~~most~~all of its Puerto Rico ~~credits as shown in~~exposures except the ~~table "Puerto Rico Net Par Outstanding" below. Additional information about recent developments in~~Municipal Finance Agency (MFA), the Puerto Rico Aqueduct and Sewer Authority (PRASA), and the ~~individual credits insured by~~University of Puerto Rico (U of PR).

The following tables present information in respect of the ~~Company may be found~~Puerto Rico exposures to supplement the disclosures and discussions provided in ~~Part I,~~ Item 1, Financial Statements, Note 4,3, Outstanding Exposure.

~~The Company groups its Puerto Rico exposure into three categories:~~

~~Constitutionally Guaranteed.~~ The Company includes in this category public debt benefiting from Article VI of the Constitution of the Commonwealth, which expressly provides that interest and principal payments on the public debt are to be paid before other disbursements are made.

Public Corporations – Certain Revenues Potentially Subject to Clawback. The Company includes in this category the debt of public corporations for which applicable law permits the Commonwealth to claw back, subject to certain conditions and for the payment of public debt, at least a portion of the revenues supporting the bonds the Company insures. As a constitutional condition to clawback, available Commonwealth revenues for any fiscal year must be insufficient to pay Commonwealth debt service before the payment of any appropriations for that year. The Company believes that this condition has not been satisfied to date, and accordingly that the Commonwealth has not to date been entitled to claw back revenues supporting debt insured by the Company. Prior to the enactment of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), the Company sued various Puerto Rico governmental officials in the United States District Court, District of Puerto Rico asserting that Puerto Rico's attempt to “claw back” pledged taxes is unconstitutional, and demanding declaratory and injunctive relief.

~~Other Public Corporations.~~ ~~The Company includes in this category the debt of public corporations that are supported by revenues it does not believe are subject to clawback.~~

Exposure to Puerto Rico ~~(1)~~by Company

As of September 30, ~~2017~~2023

Net Par Outstanding
AGM AGC

AG Re
Eliminations (2)
Total
Net Par Outstanding (3)

Gross
Par Outstanding
(in millions)
Commonwealth Constitutionally Guaranteed
Commonwealth of Puerto Rico - General Obligation Bonds (4) (5) $ 670
$ 343
$ 407
$ (1 ) $ 1,419
$ 1,469
Puerto Rico Public Buildings Authority (PBA) (4) 9
141
0
(9 ) 141
146
Public Corporations - Certain Revenues Potentially Subject to Clawback
Puerto Rico Highways and Transportation Authority (PRHTA) (Transportation revenue) (4) (5) 252
511
204
(85 ) 882
913
PRHTA (Highway revenue) (4) (5) 358
93
44
—
495
556
Puerto Rico Convention Center District Authority (PRCCDA) (4) —
152
—
—
152
152
Puerto Rico Infrastructure Financing Authority (PRIFA) (4) —
17
1
—
18
18
Other Public Corporations
Puerto Rico Electric Power Authority (PREPA) (4) (5) 547
73
233
—
853
870
Puerto Rico Aqueduct and Sewer Authority (PRASA) —
284
89
—
373
373
Municipal Finance Agency (MFA) 221
54
85
—
360
416
Puerto Rico Sales Tax Financing Corporation (COFINA) (4) (5) 263
—
9
—
272
272
University of Puerto Rico (U of PR) —
1
—
—
1
1
Total exposure to Puerto Rico $ 2,320
$ 1,669
$ 1,072
$ (95 ) $ 4,966
$ 5,186


	Net Par Outstanding
	AGM		AGC		AG Re		Eliminations (1)		Total Net Par Outstanding		Gross Par Outstanding
	(in millions)
Defaulted Puerto Rico Exposures
PREPA	$	377	$	67	$	180	$	—	$	624	$	634
Total Defaulted	377		67		180		—		624		634
Resolved Puerto Rico Exposures
PRHTA (Transportation revenue) (2)	14		157		87		(14)		244		244
PRHTA (Highway revenue) (2)	109		11		8		—		128		128
Total Resolved	123		168		95		(14)		372		372
Other Puerto Rico Exposures
MFA (3)	84		6		18		—		108		114
PRASA and U of PR (3)	—		1		—		—		1		1
Total Other	84		7		18		—		109		115
Total exposure to Puerto Rico	$	584	$	242	$	293	$	(14)	$	1,105	$	1,121

___________________

~~(1)~~

The September 30, 2017 amounts include $389 million (which comprises $36 million of General Obligation Bonds, $134 million of PREPA, $144 million PRHTA (Highways revenue), and $75 million of MFA) related to 2017 commutations of previously ceded business. Please refer to Note 13, Reinsurance and Other Monoline Exposures, for more information. Please refer to Part I, Item 1, Financial Statements, Note 13, Reinsurance and Other Monoline Exposures, for more information.


~~(2)~~	(1) Net par outstanding eliminations relate to second-to-pay policies under which an Assured Guaranty insurance subsidiary guarantees an obligation already insured by another Assured Guaranty insurance subsidiary.

~~(3)~~

Includes exposure to capital appreciation bonds with a current aggregate net par outstanding of $25 million and a fully accreted net par at maturity of $56 million. Of these amounts, current net par of $19 million and fully accreted net par at maturity of $50 million relate to the COFINA, current net par of $4 million and fully accreted net par at maturity of $4 million relate to the PRHTA, and current net par of $2 million and fully accreted net par at maturity of $2 million relate to the Commonwealth General Obligation Bonds.


~~(4)~~	~~As of the date of this filing, the Company has paid claims on these credits.~~


~~(5)~~	~~As of the date of this filing, the seven-member federal financial oversight board established by PROMESA has certified a filing under Title III of PROMESA for these credits.~~

(2) Resolved pursuant to the 2022 Puerto Rico Resolutions. Consideration received under the HTA Plan related to the remaining insured exposure is reported in FG VIEs’ assets (see Item 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles).

(3) All debt service on these insured exposures have been paid to date without any insurance claim being made on the Company.

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Table of Contents

The following ~~table shows~~tables show the scheduled amortization of the general obligation bonds of Puerto Rico and various obligations of its related authorities and public corporations insured by the Company. The Company guarantees payments of ~~interest and principal~~debt service when those amounts are scheduled to be paid and cannot be required to pay on an accelerated basis. In the event that obligors default on their obligations, the Company would only pay the shortfall between the ~~principal and interest~~debt service due in any given period and the amount paid by the obligors.

Amortization Schedule

of Net Par ~~Outstanding~~ of Puerto Rico

As of September 30, ~~2017~~2023


	Scheduled Net Par Amortization
	2023 (4Q)		2024 (1Q)		2024 (2Q)		2024 (3Q)		2024 (4Q)		2025		2026		2027		2028 - 2032		2033 - 2037		2038 - 2041		Total
	(in millions)
Defaulted Puerto Rico Exposures
PREPA	$	—	$	—	$	—	$	93	$	—	$	68	$	105	$	105	$	240	$	13	$	—	$	624
Total Defaulted	—		—		—		93		—		68		105		105		240		13		—		624
Resolved Puerto Rico Exposures
PRHTA (Transportation revenue)	—		—		—		—		—		—		—		—		—		121		123		244
PRHTA (Highway revenue)	—		—		—		—		—		—		—		—		27		101		—		128
Total Resolved	—		—		—		—		—		—		—		—		27		222		123		372
Other Puerto Rico Exposures
MFA	—		—		—		16		—		16		35		15		26		—		—		108
PRASA and U of PR	—		—		—		1		—		—		—		—		—		—		—		1
Total Other Puerto Rico Exposures	—		—		—		17		—		16		35		15		26		—		—		109

Total	$	—	$	—	$	—	$	110	$	—	$	84	$	140	$	120	$	293	$	235	$	123	$	1,105

Scheduled Net Par Amortization
2017 (4Q) 2018 (1Q) 2018 (2Q) 2018 (3Q) 2018 (4Q) 2019 2020 2021 2022 - 2026 2027 - 2031 2032 - 2036 2037 - 2041 2042 - 2047 Total
(in millions)
Commonwealth Constitutionally Guaranteed
Commonwealth of Puerto Rico - General Obligation Bonds $ 0
$ 0
$ 0
$ 78
$ 0
$ 87
$ 141
$ 15
$ 226
$ 278
$ 489
$ 105
$ —
$ 1,419
PBA —
—
—
—
—
3
5
13
24
42
54
—
—
141
Public Corporations - Certain Revenues Potentially Subject to Clawback

PRHTA (Transportation revenue) 0
0
0
38
—
32
25
18
119
156
295
194
5
882
PRHTA (Highway revenue) —
—
—
20
—
21
22
35
106
73
218
—
—
495
PRCCDA —
—
—
—
—
—
—
—
—
19
133
—
—
152
PRIFA —
—
—
2
—
—
—
—
2
—
—
14
—
18
Other Public Corporations

PREPA —
—
—
5
—
26
48
28
390
330
26
0
—
853
PRASA —
—
—
—
—
—
—
—
53
57
—
2
261
373
MFA —
—
—
57
—
55
45
40
130
33
—
—
—
360
COFINA 0
0
0
0
0
(1 ) (1 ) (2 ) (5 ) (7 ) 34
102
152
272
U of PR —
—
—
0
—
0
0
0
0
0
1
—
—
1
Total $ 0
$ 0
$ 0
$ 200
$ 0
$ 223
$ 285
$ 147
$ 1,045
$ 981
$ 1,250
$ 417
$ 418
$ 4,966

Amortization Schedule

of Net Debt Service ~~Outstanding~~ of Puerto Rico

As of September 30, ~~2017~~2023


	Scheduled Net Debt Service Amortization
	2023 (4Q)		2024 (1Q)		2024 (2Q)		2024 (3Q)		2024 (4Q)		2025		2026		2027		2028 - 2032		2033 - 2037		2038 - 2041		Total
	(in millions)
Defaulted Puerto Rico Exposures
PREPA	$	3	$	12	$	3	$	105	$	3	$	92	$	126	$	122	$	273	$	14	$	—	$	753
Total Defaulted	3		12		3		105		3		92		126		122		273		14		—		753
Resolved Puerto Rico Exposures
PRHTA (Transportation revenue)	—		6		—		6		—		13		13		12		65		173		140		428
PRHTA (Highway revenue)	—		3		—		3		—		7		7		7		61		115		—		203
Total Resolved	—		9		—		9		—		20		20		19		126		288		140		631
Other Puerto Rico Exposures
MFA	—		3		—		19		—		20		39		17		28		—		—		126
PRASA and U of PR	—		—		—		1		—		—		—		—		—		—		—		1
Total Other Puerto Rico Exposures	—		3		—		20		—		20		39		17		28		—		—		127

Total	$	3	$	24	$	3	$	134	$	3	$	132	$	185	$	158	$	427	$	302	$	140	$	1,511

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Table of Contents

Scheduled Net Debt Service Amortization
2017 (4Q) 2018 (1Q) 2018 (2Q) 2018 (3Q) 2018 (4Q) 2019 2020 2021 2022 - 2026 2027 - 2031 2032 - 2036 2037 - 2041 2042 - 2047 Total
(in millions)
Commonwealth Constitutionally Guaranteed
Commonwealth of Puerto Rico - General Obligation Bonds $ 0
$ 37
$ 0
$ 114
$ 0
$ 156
$ 206
$ 74
$ 494
$ 475
$ 595
$ 111
$ —
$ 2,262
PBA —
4
—
4
—
10
12
20
54
58
62
—
—
224
Public Corporations - Certain Revenues Potentially Subject to Clawback

PRHTA (Transportation revenue) 0
23
0
61
—
76
67
59
306
308
403
229
5
1,537
PRHTA (Highway revenue) —
13
—
33
—
47
46
58
198
147
253
—
—
795
PRCCDA —
3
—
3
—
7
7
7
35
50
152
—
—
264
PRIFA —
0
—
2
—
1
1
1
6
4
4
16
—
35
Other Public Corporations

PREPA 3
18
3
22
3
65
87
63
528
380
29
0
—
1,201
PRASA —
10
—
10
—
19
19
19
147
129
68
70
327
818
MFA —
9
—
67
—
70
58
50
157
36
—
—
—
447
COFINA 0
6
0
6
0
13
13
13
70
68
102
162
160
613
U of PR —
0
—
0
—
0
0
0
0
0
1
—
—
1
Total $ 3
$ 123
$ 3
$ 322
$ 3
$ 464
$ 516
$ 364
$ 1,995
$ 1,655
$ 1,669
$ 588
$ 492
$ 8,197

Financial Guaranty Exposure to ~~Residential Mortgage-Backed Securities~~U.S. RMBS

The ~~tables below provide~~following table presents information ~~on the risk ratings and certain other risk characteristics~~in respect of the ~~Company’s financial guaranty insurance, FG VIE~~U.S. RMBS exposures to supplement the disclosures and ~~credit derivative RMBS exposures. As of September 30, 2017,~~discussion provided in Item 1, Financial Statements, Note 3, Outstanding Exposure, and Note 4, Expected Loss to be Paid (Recovered). U.S. RMBS exposures represent 2%0.8% of the total net par outstanding, and BIG U.S. RMBS represent ~~22%~~18.5% of total BIG net par ~~outstanding. Please refer to Part I, Item 1, Financial Statements, Note 5, Expected Loss to be Paid, for a discussion of expected losses to be paid on U.S. RMBS exposures.~~

~~Distribution of U.S. RMBS by Rating and Type of Exposure~~outstanding as of September 30, ~~2017~~2023.

Ratings:
Prime
First Lien

Alt-A
First Lien

Option
ARMs

Subprime
First Lien

Second
Lien

Total Net Par
Outstanding
(in millions)
AAA $ 5
$ 153
$ 26
$ 1,325
$ 0
$ 1,509
AA 17
217
32
246
—
512
A 10
—
0
82
0
92
BBB 11
0
—
69
1
81
BIG 115
511
63
1,080
1,100
2,869
Total exposures $ 157
$ 881
$ 121
$ 2,803
$ 1,101
$ 5,064

Distribution of U.S. RMBS by Year Insured and Type of Exposure as of September 30, ~~2017~~2023


Year insured:	Prime First Lien		Alt-A First Lien		Option ARMs		Subprime First Lien		Second Lien		Total Net Par Outstanding
	(in millions)
2004 and prior	$	8	$	7	$	—	$	311	$	10	$	336
2005	21		112		14		180		44		371
2006	22		23		1		38		96		180
2007	—		184		16		562		138		900
2008	—		—		—		30		—		30
Total exposures	$	51	$	326	$	31	$	1,121	$	288	$	1,817

Exposures rated BIG	$	31	$	195	$	14	$	610	$	106	$	956

Year
insured:

Prime
First Lien

Alt-A
First Lien

Option
ARMs

Subprime
First Lien

Second
Lien

Total Net Par
Outstanding
(in millions)
2004 and prior $ 21
$ 39
$ 13
$ 847
$ 56
$ 975
2005 78
312
27
158
229
804
2006 59
60
21
610
318
1,069
2007 —
471
59
1,116
498
2,144
2008 —
—
—
71
—
71
Total exposures $ 157
$ 881
$ 121
$ 2,803
$ 1,101
$ 5,064

~~Exposure to the U.S. Virgin Islands~~

The Company has $498 million insured net par outstanding to the U.S. Virgin Islands and its related authorities (USVI), of which it rates $224 million BIG. The $274 million USVI net par the Company rates investment grade is comprised primarily of bonds secured by a lien on matching fund revenues related to excise taxes on products produced in the USVI and exported to the U.S., primarily rum. The $224 million BIG USVI net par comprises (a) Public Finance Authority bonds secured by a gross receipts tax and the general obligation, full faith and credit pledge of the USVI and (b) bonds of the Virgin Islands Water and Power Authority secured by a net revenue pledge of the electric system.

Hurricane Irma caused significant damage in St. John and St. Thomas, while Hurricane Maria made landfall on St. Croix as a Category 4 hurricane on the Saffir-Simpson scale, causing loss of life and substantial damage to St. Croix’s businesses and infrastructure, including the power grid. The USVI is benefiting from the federal response to this year’s hurricanes and has made its debt service payments to date.

~~Exposure to Selected European Countries~~

The European countries where the Company has exposure and believes heightened uncertainties exist are: Hungary, Italy, Portugal, Spain and Turkey (collectively, the Selected European Countries). The Company’s direct economic exposure to the Selected European Countries, based on par, is shown in the following tables, both gross and net of ceded reinsurance.

~~Gross Direct Economic Exposure~~

~~to Selected European Countries(1)~~

~~As of September 30, 2017~~

Hungary Italy Portugal Spain Turkey Total
(in millions)
Sub-sovereign exposure(2) $ 214
$ 1,217
$ 76
$ 474
$ —
$ 1,981
Non-sovereign exposure(3) 125
465
—
—
200
790
Total $ 339
$ 1,682
$ 76
$ 474
$ 200
$ 2,771
Total BIG $ 262
$ —
$ 76
$ 474
$ —
$ 812

~~Net Direct Economic Exposure~~

~~to Selected European Countries(1)~~

~~As of September 30, 2017~~

Hungary Italy Portugal Spain Turkey Total
(in millions)
Sub-sovereign exposure(2) $ 214
$ 1,034
$ 75
$ 456
$ —
$ 1,779
Non-sovereign exposure(3) 125
449
—
—
200
774
Total $ 339
$ 1,483
$ 75
$ 456
$ 200
$ 2,553
Total BIG $ 262
$ —
$ 75
$ 456
$ —
$ 793

~~____________________~~


~~(1)~~	~~While exposures are shown in U.S. dollars, the obligations are in various currencies, primarily euros.~~


~~(2)~~	Sub-sovereign exposure in Selected European Countries includes transactions backed by receivables from, or supported by, sub-sovereigns, which are governmental or government-backed entities other than the ultimate governing body of the country.


~~(3)~~	~~Non-sovereign exposure in Selected European Countries includes debt of regulated utilities, RMBS and diversified payment rights (DPR) securitizations.~~

The $200 million net insured par exposure in Turkey is to DPR securitizations sponsored by a major Turkish bank. These DPR securitizations were established outside of Turkey and involve payment orders in U.S. dollars, pounds sterling and euros from persons outside of Turkey to beneficiaries in Turkey who are customers of the sponsoring bank. The sponsoring bank's correspondent banks have agreed to remit all such payments to a trustee-controlled account outside Turkey, where debt service payments for the DPR securitization are given priority over payments to the sponsoring bank.

The Company has excluded from the exposure tables above its indirect economic exposure to the Selected European Countries through policies it provides on pooled corporate and commercial receivables transactions. The Company calculates indirect exposure to a country by multiplying the par amount of a transaction insured by the Company times the percent of the relevant collateral pool reported as having a nexus to the country. On that basis, the Company has calculated exposure of $46 million to Selected European Countries in transactions with $0.7 billion of net par outstanding.

~~Non-Financial Guaranty Insurance~~

The Company provided capital relief triple-X excess of loss life reinsurance on approximately $540 million of exposure as of September 30, 2017 and $390 million as of December 31, 2016. The triple-X excess of loss life reinsurance exposure is expected to increase to approximately $1.2 billion prior to September 30, 2036.

~~In addition, the Company started providing reinsurance on aircraft RVI policies in the first quarter of 2017 and had net exposure of $116 million to such reinsurance as of September 30, 2017.~~

The capital relief triple-X excess of loss life reinsurance and aircraft residual value reinsurance are all rated investment grade internally. This non-financial guaranty exposure has a similar risk profile to the Company's other structured finance investment grade exposure written in financial guaranty form.

~~Monoline and Reinsurer Exposures~~

The Company has exposure to other monolines and reinsurers through reinsurance arrangements (both as a ceding company and as an assuming company) and in "second-to-pay" transactions. A number of the monolines and reinsurers to which the Company has exposure have experienced financial distress and, as a result, have been downgraded by the rating agencies. In addition, state insurance regulators have intervened with respect to some of these distressed insurers, in some instances limiting the amount of claim payments they are permitted to pay currently in cash.

Ceded par outstanding represents the portion of insured risk ceded to external reinsurers. Under these relationships, the Company cedes a portion of its insured risk in exchange for a premium paid to the reinsurer. The Company remains primarily

liable for all risks it directly underwrites and is required to pay all gross claims. It then seeks reimbursement from the reinsurer for its proportionate share of claims. The Company may be exposed to risk for this exposure if it were required to pay the gross claims and not be able to collect ceded claims from an assuming company experiencing financial distress. In accordance with U.S. statutory accounting requirements and U.S. insurance laws and regulations, in order for the Company to receive credit for liabilities ceded to reinsurers domiciled outside of the U.S., such reinsurers must secure their liabilities to the Company. All of the unauthorized reinsurers in the table below are required to post collateral for the benefit of the Company in an amount at least equal to the sum of their ceded unearned premium reserve, loss reserves and contingency reserves, all calculated on a statutory basis of accounting. In addition, certain authorized reinsurers in the table below post collateral on terms negotiated with the Company. Collateral may be in the form of letters of credit or trust accounts. The total collateral posted by all non-affiliated reinsurers as of September 30, 2017 was approximately $123 million.

Assumed par outstanding represents the amount of par assumed by the Company from third party insurers and reinsurers, including other monoline financial guaranty companies. Under these relationships, the Company assumes a portion of the ceding company’s insured risk in exchange for a premium. The Company may be exposed to risk in this portfolio in that the Company may be required to pay losses without a corresponding premium in circumstances where the ceding company is experiencing financial distress and is unable to pay premiums.

In "second-to-pay" transactions, the Company provides insurance on an obligation that is already insured by another financial guarantor. In that case, if the underlying obligor and the financial guarantor both fail to pay an amount scheduled to be paid, the Company would be obligated to pay. The Company underwrites these transactions based on the underlying obligation, without regard to the financial guarantor. Please refer to Part I, Item 1, Financial Statements, Note 13, Reinsurance and Other Monoline Exposures, for additional information.

~~Reinsurance and Other Exposures to Monolines~~

Par Outstanding
As of September 30, 2017
Reinsurer
Ceded Par
Outstanding (1)

Assumed Par
Outstanding

Second-to-
Pay Insured
Par
Outstanding (2)
(in millions)
Reinsurers rated investment grade:
National Public Finance Guarantee Corporation $ —
$ 3,245
$ 2,730
Subtotal —
3,245
2,730
Reinsurers rated BIG or not rated:
American Overseas Reinsurance Company Limited (3) 2,445
—
—
Syncora Guarantee Inc. (3) 1,994
674
1,156
ACA Financial Guaranty Corp. 208
—
10
Ambac Assurance Corporation and Ambac Assurance UK Limited 112
4,902
1,927
MBIA Insurance Corporation —
137
565
Financial Guaranty Insurance Company and FGIC UK Limited —
275
821
Ambac Assurance Corp. Segregated Account —
567
51
Subtotal 4,759
6,555
4,530
Other (3) 52
111
410
Total $ 4,811
$ 9,911
$ 7,670

~~____________________~~


~~(1)~~	~~Of the total ceded par to reinsurers rated BIG or not rated, $305 million is rated BIG.~~


~~(2)~~	~~The par on second-to-pay exposure where the primary insurer and underlying transaction rating are both BIG, and/or not rated, is $774 million.~~


~~(3)~~	~~The total collateral posted by all non-affiliated reinsurers required to post, or that had agreed to post, collateral as of September 30, 2017 was approximately $123 million.~~

Liquidity and Capital Resources

~~Liquidity Requirements and Sources~~

AGL and its U.S. Holding ~~Company Subsidiaries~~Companies

AGL directly owns (i) AG Re, an insurance company domiciled in Bermuda; and (ii) AGUS, a U.S. holding company with public debt outstanding. AGUS directly owns: (i) AGC, an insurance company domiciled in Maryland; and (ii) AGMH, a U.S. holding company with public debt outstanding. AGMH directly owns AGM, an insurance subsidiary domiciled in New York. AGUS and AGMH are collectively referred to as the U.S. Holding Companies.

Sources and Uses of Funds

The liquidity of AGL ~~AGUS~~ and ~~AGMH~~its U.S. Holding Companies is largely dependent on dividends and other distributions from their operating subsidiaries (see — Insurance Subsidiaries — Distributions from Insurance Subsidiaries below for a description of dividend and other capital distribution restrictions) and their access to external financing. The operating liquidity requirements of ~~these entities include~~AGL and the ~~payment of operating expenses,~~U.S. Holding Companies include:

•principal and interest on debt issued by AGUS and ~~AGMH, and~~ AGMH;

•dividends on ~~AGL's~~AGL’s common ~~shares.~~ shares; and

•the payment of operating expenses.

AGL and its ~~holding company subsidiaries~~U.S. Holding Companies may also require liquidity to to:

•make ~~periodic~~ capital investments in their operating ~~subsidiaries,~~ subsidiaries;

•fund acquisitions of new businesses;

•purchase or redeem the Company’s outstanding ~~Company debt~~debt; or ~~in the case of AGL, to~~

•repurchase ~~its~~AGL’s common shares pursuant to ~~its~~AGL’s share repurchase authorization.

In the ordinary course of business, the Company evaluates its liquidity needs and capital resources in light of holding company expenses and dividend policy, as well as rating agency considerations. The Company also subjects its cash flow projections and its assets to a stress test, maintaining a liquid asset balance of one ~~time~~and a half times its stressed operating company net cash flows. Management believes that AGL will have sufficient liquidity to satisfy its needs over the next twelve months. See “—~~Dividends From Subsidiaries” below~~ Overview— Key Business Strategies, Capital Management” above for ~~a discussion~~information on common share repurchases.

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Long-Term Debt Obligations

The Company has outstanding long-term debt issued by the U.S. Holding Companies. See Part II, Item 8, Financial Statements and Supplementary Data, Note 12, Long-Term Debt and Credit Facilities, of the ~~dividend restrictions~~Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and — Guarantor and U.S. Holding Companies' Summarized Financial Information, below.

U.S. Holding Companies

Long-Term Debt and Intercompany Loans


			As of September 30, 2023		As of December 31, 2022
			(in millions)
	Effective Interest Rate	Final Maturity	Principal Amount
AGUS - long-term debt
5% Senior Notes	5.00%	2024	$	—	$	330
6.125% Senior Notes	6.125%	2028	350		—
3.15% Senior Notes	3.15%	2031	500		500
7% Senior Notes	6.40%	2034	200		200
3.6% Senior Notes	3.60%	2051	400		400
Series A Enhanced Junior Subordinated Debentures (1)	3 month CME Term SOFR +2.64%	2066	150		150
AGUS long-term debt			1,600		1,580
AGUS - intercompany loans from:
AGC and AGM	3.50%	2029	250		250
AGRO (2)	5.00%	2028	20		20
AGUS intercompany loans			270		270
Total AGUS long-term debt and intercompany loans			1,870		1,850
AGMH
Junior Subordinated Debentures (3)	6.40%	2066	300		300
Total AGMH long-term debt			300		300
AGMH’s long-term debt purchased by AGUS (4)			(154)		(154)
U.S. Holding Company long-term debt			$	2,016	$	1,996

____________________

(1) Until June 30, 2023, the Series A Enhanced Junior Subordinated Debentures paid interest based on LIBOR. The reference to LIBOR in such debentures has been replaced with a rate based on Three-Month Chicago Mercantile Exchange (CME) Term Secured Overnight Finance Rate (SOFR).

(2) In the second quarter of 2023, the final maturity of the AGRO loan was extended from 2023 to 2028 and the floating rate interest rate was converted to a fixed rate of 5%.

(3) If the AGMH Junior Subordinated Debentures are outstanding after December 15, 2036, then the principal amount of the outstanding debentures will bear interest at One-Month CME Term SOFR plus 2.33%.

(4) Represents principal amount of Junior Subordinated Debentures issued by AGMH that has been purchased by AGUS.

On August 21, 2023, AGUS issued $350 million of 6.125% Senior Notes due 2028. On September 25, 2023, AGUS redeemed $330 million of 5% Senior Notes due 2024. See Item 1. Financial Statements, Note 11, Long-Term Debt.

From time to time, AGL and its ~~insurance company~~subsidiaries have entered into intercompany loan facilities. For example, on October 25, 2013, AGL, as borrower, and AGUS, as lender, entered into a revolving credit facility pursuant to which AGL may, from time to time, borrow for general corporate purposes. Under the credit facility, AGUS committed to lend a principal amount not exceeding $225 million in the aggregate. The commitment under the revolving credit facility terminates on October 25, 2033 (the loan commitment termination date). The unpaid principal amount of each loan will bear semi-annual interest at a fixed rate equal to 100% of the then applicable interest rate as determined under Internal Revenue Code Section 1274(d). Accrued interest on all loans will be paid on the last day of each June and December and at maturity. AGL must repay unpaid principal amounts

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of the loans, if any, by the third anniversary of the loan commitment termination date. AGL has not drawn upon the credit facility.

For more information, see the Company’s 2022 Annual Report on Form 10-K, Part II, Item 8. Financial Statements and Supplementary Data, Note 12, Long-Term Debt and Credit Facilities.

Guarantor and U.S. Holding Companies’ Summarized Financial Information

AGL fully and unconditionally guarantees the payment of the principal of, and interest on, the $1,450 million aggregate principal amount of notes issued by the U.S. Holding Companies, and the $450 million aggregate principal amount of junior subordinated debentures issued by the U.S. Holding Companies, and the intercompany loans. The following tables include summarized financial information for AGL and the U.S. Holding Companies, excluding their investments in subsidiaries.


	As of September 30, 2023
	AGL		U.S. Holding Companies
	(in millions)
Assets
Fixed-maturity securities (1)	$	20	$	4
Investment in Sound Point	—		419
Short-term investments, other invested assets and cash	23		56
Receivables from affiliates (2)	69		95
Receivable from U.S. Holding Companies	70		—
Other assets	3		64
Liabilities
Long-term debt	—		1,693
Loans payable to affiliates	—		270
Payable to affiliates (2)	13		40
Payable to AGL	—		70
Other liabilities	6		123

____________________

(1) As of September 30, 2023, weighted average durations of AGL’s and the U.S. Holding Companies’ fixed-maturity securities (excluding AGUS’s investment in AGMH’s debt) were 9.2 years and 4.1 years, respectively.

(2) Represents receivable and payables with non-guarantor subsidiaries.


	Nine Months 2023
	AGL		U.S. Holding Companies
	(in millions)
Revenues
Gain on sale of asset management subsidiaries (1)	$	—	$	258
Other income	1		6
Expenses
Interest expense	—		73
Other expenses	35		51
Income (loss) before provision for income taxes and equity in earnings (losses) of investees	(34)		140
Net income (loss)	(34)		105

____________________

(1) Excludes a $3 million write off of goodwill reported by a subsidiary of AGUS.

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The following table presents significant cash flow items for AGL and the U.S. Holding Companies (other than investment income, operating expenses and taxes) related to distributions from subsidiaries and outflows for debt service, dividends and other capital management activities.

AGL and U.S. Holding ~~Company Subsidiaries~~Companies

~~Significant~~Selected Cash Flow Items


	Nine Months 2023
	AGL		U.S. Holding Companies
	(in millions)
Dividends received from subsidiaries (1)	$	193	$	153
Interest paid	—		(55)
Investments in subsidiaries	—		(13)
Dividends paid to AGL	—		(140)
Dividends paid	(51)		—
Repurchases of common shares (2)	(90)		—
Issuance of long-term debt, net of issuance costs	—		345
Redemption of debt	—		(330)

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Intercompany sources (uses):
Distributions to AGL from:
AG Re $ 45
$ 35
$ 125
$ 85
AGUS 70
120
390
223
Distributions to AGUS from:
AGC 15
15
66
38
AGMH 55
55
128
158
Distributions from AGUS to:
AGMH —
—
(25 ) —
Distributions to AGMH from:
AGM 63
65
142
192
External sources (uses):
Dividends paid to AGL shareholders (17 ) (17 ) (53 ) (52 )
Repurchases of common shares(1) (80 ) (55 ) (431 ) (190 )
Interest paid by AGMH and AGUS (8 ) (7 ) (53 ) (55 )
Purchase of AGMH's debt by AGUS (22 ) —
(27 ) —

____________________


~~(1)~~	~~Please refer to Part I, Item 1, Financial Statements, Note 17, Shareholders' Equity, for additional information about share repurchases and authorizations.~~

(1) AGL’s dividends include dividends from AGUS.

~~Distributions From Subsidiaries~~

The Company anticipates that for the next twelve months, amounts paid by AGL’s direct and indirect insurance company subsidiaries as dividends or other distributions will be a major source of its liquidity. The insurance company subsidiaries’ ability to pay dividends depends upon their financial condition, results of operations, cash requirements, and compliance with rating agency requirements, and is also subject to restrictions contained in the insurance laws and related regulations of their states of domicile. Dividend restrictions applicable to AGC, AGM, MAC and to AG Re, are described in Part I,(2) See Item 1, Financial Statements, Note ~~11, Insurance Company Regulatory Requirements.~~14, Shareholders’ Equity, for additional information about share repurchases and authorizations.

~~Dividend restrictions by insurance company subsidiary are as follows:~~

The maximum amount available during 2017 for AGM to distribute as dividends without regulatory approval is estimated to be approximately $196 million. Of such $196 million, $54 million is available for distribution in the fourth quarter of 2017.

The maximum amount available during 2017 for AGC to distribute as ordinary dividends is approximately $107 million. Of such $107 million, approximately $41 million is available for distribution in the fourth quarter of 2017.

Through August 25, 2017, MAC paid $36 million in dividends based on dividend capacity at that point. After the $250 million share repurchase on September 25, 2017, MAC has no additional dividend capacity for the remainder of 2017.

Based on the applicable law and regulations, in 2017 AG Re has the capacity to (i) make capital distributions in an aggregate amount up to $128 million without the prior approval of the Bermuda Monetary Authority and (ii) declare and pay dividends in an aggregate amount up to approximately $314 million as of September 30, 2017. Such dividend capacity is further limited by the actual amount of AG Re’s unencumbered assets, which amount changes from time to time due in part to collateral posting requirements. As of September 30, 2017, AG Re had unencumbered assets of approximately $572 million.

Generally, dividends paid by a U.S. company to a Bermuda holding company are subject to a 30% withholding tax. After AGL became tax resident in the U.K., it became subject to the tax rules applicable to companies resident in the U.K., including the benefits afforded by the U.K.’s tax treaties. The income tax treaty between the U.K. and the U.S. reduces or eliminates the U.S. withholding tax on certain U.S. sourced investment income (to 5% or 0%), including dividends from U.S. subsidiaries to U.K. resident persons entitled to the benefits of the treaty.

~~On June 30, 2016, MAC obtained approval from~~

For more information, see also Part II, Item 8. Financial Statements and Supplementary Data, Note 12, Long-Term Debt and Credit Facilities, of the ~~NYDFS to repay its $300 million surplus note to MAC Holdings and its $100 million surplus note (plus accrued interest) to AGM. Accordingly,~~Company’s Annual Report on June 30, 2016, MAC transferred cash and/or marketable securities to (i) MAC Holdings in an aggregate amount equal to $300 million, and (ii) AGM in an aggregate amount of $102.5 million. MAC Holdings, upon receipt of such $300 million from MAC, distributed cash and/or marketable securities in an aggregate amount of $300 million to its shareholders, AGM and AGC, in proportion to their respective 61% and 39% ownership interests such that AGM received $182 million and AGC received $118 million.Form 10-K for the year ended December 31, 2022.

On November 25, 2016, the New York Superintendent approved AGM's request to repurchase 125 of its shares of common stock from its direct parent, AGMH, for approximately $300 million. AGM implemented the stock redemption plan in December 2016. Each share repurchased by AGM was retired and ceased to be an authorized share. Pursuant to AGM's Amended and Restated Charter, the par value of AGM's remaining shares of common stock issued and outstanding increased automatically in order to maintain AGM's total paid-in capital at $15 million and its authorized capital at $20 million.

~~On August 17, 2017, the New York Superintendent approved MAC's request to repurchase 64,322 of its shares of~~

~~common stock from its direct parent, MAC Holdings, for approximately $250 million. MAC implemented the stock~~

~~redemption plan on September 25, 2017, transferring approximately $104 million in cash and $146 million in marketable~~

~~securities to MAC Holdings, which then distributed such assets to its shareholders, AGM and AGC, in proportion to their~~

~~respective 61% and 39% ownership interests, such that AGM received approximately $152 million ($6 million in cash and~~

~~$146 million in securities) and AGC received approximately $98 million (all in cash). Each share repurchased by MAC was~~

~~retired and ceased to be an authorized share. Pursuant to MAC's Amended and Restated Charter, the par value of MAC's~~

~~remaining shares of common stock issued and outstanding increased automatically in order to maintain MAC's total paid-in~~

~~capital at $15 million.~~

~~External Financing~~Long-Term Debt Obligations

~~From time to time, AGL~~The Company has outstanding long-term debt issued by the U.S. Holding Companies. See Part II, Item 8, Financial Statements and ~~its subsidiaries have sought external debt or equity financing in order to meet their obligations. External sources~~Supplementary Data, Note 12, Long-Term Debt and Credit Facilities, of ~~financing may or may not be available to~~ the ~~Company,~~Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and ~~if available, the cost of such financing may not be acceptable to the Company.~~— Guarantor and U.S. Holding Companies' Summarized Financial Information, below.

U.S. Holding Companies

Long-Term Debt and Intercompany Loans


			As of September 30, 2023		As of December 31, 2022
			(in millions)
	Effective Interest Rate	Final Maturity	Principal Amount
AGUS - long-term debt
5% Senior Notes	5.00%	2024	$	—	$	330
6.125% Senior Notes	6.125%	2028	350		—
3.15% Senior Notes	3.15%	2031	500		500
7% Senior Notes	6.40%	2034	200		200
3.6% Senior Notes	3.60%	2051	400		400
Series A Enhanced Junior Subordinated Debentures (1)	3 month CME Term SOFR +2.64%	2066	150		150
AGUS long-term debt			1,600		1,580
AGUS - intercompany loans from:
AGC and AGM	3.50%	2029	250		250
AGRO (2)	5.00%	2028	20		20
AGUS intercompany loans			270		270
Total AGUS long-term debt and intercompany loans			1,870		1,850
AGMH
Junior Subordinated Debentures (3)	6.40%	2066	300		300
Total AGMH long-term debt			300		300
AGMH’s long-term debt purchased by AGUS (4)			(154)		(154)
U.S. Holding Company long-term debt			$	2,016	$	1,996

____________________

(2) In the second quarter of 2023, the final maturity of the AGRO loan was extended from 2023 to 2028 and ~~Guarantees~~the floating rate interest rate was converted to a fixed rate of 5%.

(4) Represents principal amount of Junior Subordinated Debentures issued by AGMH that has been purchased by AGUS.

From time to time, AGL and its subsidiaries have entered into intercompany loan facilities. For example, on October 25, 2013, AGL, as borrower, and AGUS, as lender, entered into a revolving credit facility pursuant to which AGL may, from time to time, borrow for general corporate purposes. Under the credit facility, AGUS committed to lend a principal amount not exceeding $225 million in the aggregate. ~~Such~~The commitment under the revolving credit facility terminates on October 25, ~~2018~~2033 (the loan commitment termination date). The unpaid principal amount of each loan will bear semi-annual interest at a fixed rate equal to 100% of the then applicable ~~Federal short-term or mid-term~~ interest rate ~~as the case may be,~~ as determined under Internal Revenue Code Section 1274(d). Accrued interest on all loans will be paid on the last day of each June and December and at maturity. AGL must repay ~~the then~~ unpaid principal amounts

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of the loans, if any, by the third anniversary of the loan commitment termination date. AGL has not drawn upon the credit facility.

~~In addition, in 2012 AGUS borrowed $90 million from its affiliate AGRO to fund~~For more information, see the ~~acquisition of MAC. During 2016, AGUS repaid $20 million in outstanding principal as well as accrued~~Company’s 2022 Annual Report on Form 10-K, Part II, Item 8. Financial Statements and ~~unpaid interest,~~Supplementary Data, Note 12, Long-Term Debt and ~~the parties agreed to extend the maturity date of the loan from May 2017 to November 2019. As of September 30, 2017, $70 million remained outstanding.~~Credit Facilities.

~~Furthermore,~~ Guarantor and U.S. Holding Companies’ Summarized Financial Information

AGL fully and unconditionally guarantees the payment of the principal of, and interest on, the ~~$1,130~~$1,450 million aggregate principal amount of ~~senior~~ notes issued by ~~AGUS and AGMH,~~the U.S. Holding Companies, and the $450 million aggregate principal amount of junior subordinated debentures issued by ~~AGUS~~the U.S. Holding Companies, and ~~AGMH,~~the intercompany loans. The following tables include summarized financial information for AGL and the U.S. Holding Companies, excluding their investments in ~~each case, as describe under "Commitments and Contingencies -- Long-Term Debt Obligations" below.~~subsidiaries.

~~Cash and Investments~~


	As of September 30, 2023
	AGL		U.S. Holding Companies
	(in millions)
Assets
Fixed-maturity securities (1)	$	20	$	4
Investment in Sound Point	—		419
Short-term investments, other invested assets and cash	23		56
Receivables from affiliates (2)	69		95
Receivable from U.S. Holding Companies	70		—
Other assets	3		64
Liabilities
Long-term debt	—		1,693
Loans payable to affiliates	—		270
Payable to affiliates (2)	13		40
Payable to AGL	—		70
Other liabilities	6		123

____________________

(1) As of September 30, ~~2017, AGL had $47 million in cash~~2023, weighted average durations of AGL’s and ~~short-term investments. AGUS and AGMH had a total of $59 million in cash and short-term investments. In addition,~~ the ~~Company's~~ U.S. ~~holding companies have $80 million in~~Holding Companies’ fixed-maturity securities (excluding ~~AGUS'~~AGUS’s investment in ~~AGMH's~~AGMH’s debt) were 9.2 years and 4.1 years, respectively.

(2) Represents receivable and payables with ~~weighted average duration~~non-guarantor subsidiaries.


	Nine Months 2023
	AGL		U.S. Holding Companies
	(in millions)
Revenues
Gain on sale of asset management subsidiaries (1)	$	—	$	258
Other income	1		6
Expenses
Interest expense	—		73
Other expenses	35		51
Income (loss) before provision for income taxes and equity in earnings (losses) of investees	(34)		140
Net income (loss)	(34)		105

____________________

(1) Excludes a $3 million write off of ~~0.3 years.~~goodwill reported by a subsidiary of AGUS.

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Table of Contents

~~Insurance Company Subsidiaries~~

~~Liquidity of the insurance company subsidiaries is primarily used to pay for:~~

~~operating expenses,~~

~~claims on the insured portfolio,~~

~~posting of collateral in connection with credit derivatives and reinsurance transactions,~~

~~reinsurance premiums,~~

~~dividends to AGL, AGUS and/or AGMH, as applicable,~~

~~principal of and, where applicable, interest on surplus notes, and~~

~~capital investments in their own subsidiaries, where appropriate.~~

~~Management believes that its subsidiaries’ liquidity needs for the next twelve months can be met from current cash, short-term investments and operating~~The following table presents significant cash flow ~~including premium collections~~items for AGL and ~~coupon payments as well as scheduled maturities~~the U.S. Holding Companies (other than investment income, operating expenses and ~~paydowns~~taxes) related to distributions from ~~their respective investment portfolios. The Company targets a balance of its most liquid assets including cash~~subsidiaries and short-term securities, Treasuries, agency RMBS and pre-refunded municipal bonds equal to 1.5 times its projected operating company cash flow needs over the next four quarters. The Company intends to hold and has the ability to hold temporarily impairedoutflows for debt ~~securities until the date of anticipated recovery.~~

~~Beyond the next twelve months, the ability of the operating subsidiaries to declare and pay~~service, dividends ~~may be influenced by a variety of factors, including market conditions, insurance regulations and rating agency capital requirements and general economic conditions.~~

~~Insurance policies issued provide, in general, that payments of principal, interest~~ and other amounts insured may not be accelerated by the holder of the obligation. Amounts paid by the Company therefore are typically in accordance with the obligation’s original payment schedule, unless the Company accelerates such payment schedule, at its sole option.capital management activities.

~~Payments made in settlement of the Company’s obligations arising from its insured portfolio may,~~AGL and often do, vary significantly from year-to-year, depending primarily on the frequency and severity of payment defaults and whether the Company chooses to accelerate its payment obligations in order to mitigate future losses.U.S. Holding Companies

Selected Cash Flow Items

~~Claims (Paid) Recovered~~

Third Quarter Nine Months
2017 2016 2017 2016
(in millions)
Public finance $ (222 ) $ (196 ) $ (251 ) $ (213 )
Structured finance:
U.S. RMBS 13
5
40
(100 )
Other structured finance 0
(23 ) (14 ) (47 )
Structured finance 13
(18 ) 26
(147 )
Claims (paid) recovered, net of reinsurance(1) $ (209 ) $ (214 ) $ (225 ) $ (360 )


	Nine Months 2023
	AGL		U.S. Holding Companies
	(in millions)
Dividends received from subsidiaries (1)	$	193	$	153
Interest paid	—		(55)
Investments in subsidiaries	—		(13)
Dividends paid to AGL	—		(140)
Dividends paid	(51)		—
Repurchases of common shares (2)	(90)		—
Issuance of long-term debt, net of issuance costs	—		345
Redemption of debt	—		(330)

____________________


~~(1)~~	Includes $3 million paid and $3 million paid for consolidated FG VIEs for Third Quarter 2017 and 2016, respectively, and $7 million paid and $9 million paid for consolidated FG VIEs for Nine Months 2017 and 2016, respectively.

(1) AGL’s dividends include dividends from AGUS.

In addition, the Company has net par exposure to the general obligation bonds of Puerto Rico and various obligations of its related authorities and public corporations aggregating $5.0 billion, all of which are BIG. Puerto Rico has experienced significant general fund budget deficits in recent years. Beginning in 2016, the Commonwealth and certain related authorities and public corporations have defaulted on obligations to make payments on its debt. In addition to high debt levels, Puerto Rico faces a challenging economic environment. Information regarding the Company's exposure to the Commonwealth of Puerto Rico and its related authorities and public corporations is set forth in Part I,(2) See Item 1, Financial Statements, Note ~~4, Outstanding Exposure.~~14, Shareholders’ Equity, for additional information about share repurchases and authorizations.

~~As of September 30, 2017, the Company had exposure of approximately $574 million~~Generally, dividends paid by a U.S. company to a long-term infrastructure project that was financed by bonds that mature prior to the expiration of the project concession. The Company expects the cash flows from the project to be sufficient to repay all of the debt over the life of the project concession, and also expects the debt to be refinanced in the market at or prior to its maturity. If the issuer is unable to refinance the debt due to market conditions, the Company may have to pay claims when the debt matures from 2018 to 2022, and then recover from cash flows produced by the project in the future. The Company generally projects that in most scenarios it will be fully reimbursed for such claim payments. However, the recovery of such amounts is uncertain and may take from 10 to 35 years, depending on the performance of the underlying collateral.

In connection with the acquisition of AGMH, AGM agreed to retain the risks relating to the debt and strip policy portions of the leveraged lease business. In a leveraged lease transaction, a tax-exempt entity (such as a transit agency) transfers tax benefits to a tax-paying entity by transferring ownership of a depreciable asset, such as subway cars. The tax-exempt entity then leases the asset back from its new owner.

If the lease is terminated early, the tax-exempt entity must make an early termination payment to the lessor. A portion of this early termination payment is funded from amounts that were pre-funded and invested at the closing of the leveraged lease transaction (along with earnings on those invested funds). The tax-exempt entity is obligated to pay the remaining, unfunded portion of this early termination payment (known as the strip coverage) from its own sources. AGM issued financial guaranty insurance policies (known as strip policies) that guaranteed the payment of these unfunded strip coverage amounts to the lessor, in the event that a tax-exempt entity defaulted on its obligation to pay this portion of its early termination payment. Following such events, AGM can then seek reimbursement of its strip policy payments from the tax-exempt entity, and can also sell the transferred depreciable asset and reimburse itself from the sale proceeds.

~~Currently, all the leveraged lease transactions in which AGM acts as strip coverage provider are breaching a rating trigger related to AGM and~~Bermuda holding company are subject to ~~early termination. However, early termination of~~ a ~~lease does not result~~30% withholding tax. After AGL became tax resident in ~~a draw on~~ the ~~AGM policy if~~U.K., it became subject to the ~~tax-exempt entity makes~~tax rules applicable to companies resident in the ~~required termination payment. If all~~U.K., including the ~~leases were to terminate early~~benefits afforded by the U.K.’s tax treaties. The income tax treaty between the U.K. and the ~~tax-exempt entities do not make~~U.S. reduces or eliminates the ~~required early termination payments, then AGM would be exposed~~U.S. withholding tax on certain U.S. sourced investment income (to 5% or 0%), including dividends from U.S. subsidiaries to ~~possible liquidity claims on gross exposure of approximately $865 million as of September 30, 2017. To date, none~~U.K. resident persons entitled to the benefits of the ~~leveraged lease transactions that involve AGM has experienced an early termination due to a lease default~~treaty.

For more information, see also Part II, Item 8. Financial Statements and a claim on the AGM policy. At September 30, 2017, approximately $1.6 billion of cumulative strip par exposure had been terminated since 2008 on a consensual basis. The consensual terminations have not resulted in any claims on AGM.

~~The terms~~Supplementary Data, Note 12, Long-Term Debt and Credit Facilities, of the Company’s ~~CDS contracts generally are modified from standard CDS contract forms approved by International Swaps and Derivative Association, Inc. (ISDA) in order to provide~~Annual Report on Form 10-K for ~~payments on a scheduled "pay-as-you-go" basis and to replicate~~ the terms of a traditional financial guaranty insurance policy. Some contracts the Company entered into as the credit protection seller, however, utilize standard ISDA settlement mechanics of cash settlement (i.e., a process to value the loss of market value of a reference obligation) or physical settlement (i.e., delivery of the reference obligation against payment of principal by the protection seller) in the event of a “credit event,” as defined in the relevant contract. Cash settlement or physical settlement generally requires the payment of a larger amount, prior to the maturity of the reference obligation, than would settlement on a “pay-as-you-go” basis.

The transaction documentation for $502 million of the CDS insured by AGC requires AGC to post collateral, in some cases subject to a cap, to secure its obligation to make payments under such contracts. As of September 30, 2017, AGC was posting $18 million of collateral to satisfy these requirements.

~~Consolidated Cash Flows~~

~~Consolidated Cash Flow Summary~~

Third Quarter Nine Months
2017 2016 2017
2016
(in millions)
Net cash flows provided by (used in) operating activities before effects of FG VIE consolidation $ 150
$ (153 ) $ 338
$ (205 )
Effect of FG VIE consolidation 6
11
16
16
Net cash flows provided by (used in) operating activities - reported 156
(142 ) 354
(189 )
Net cash flows provided by (used in) investing activities before effects of FG VIE consolidation (161 ) (320 ) 124
382
Effect of FG VIE consolidation 32
25
108
551
Net cash flows provided by (used in) investing activities - reported (129 ) (295 ) 232
933
Net cash flows provided by (used in) financing activities before effects of FG VIE consolidation (119 ) (68 ) (521 ) (240 )
Effect of FG VIE consolidation (38 ) (36 ) (124 ) (567 )
Net cash flows provided by (used in) financing activities - reported (1) (157 ) (104 ) (645 ) (807 )
Effect of exchange rate changes 1
(1 ) 4
(4 )
Cash and restricted cash at beginning of period 201
641
127
166
Total cash and restricted cash at the end of the period $ 72
$ 99
$ 72
$ 99

~~____________________~~


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

Excluding net cash flows from consolidated FG VIEs, cash inflows from operating activities increased in Nine Months 2017 compared with Nine Months 2016 due primarily to lower net claim payments, commutation premiums received and higher premium collections on new business in 2017.

Investing activities were primarily net sales (purchases) of fixed-maturity and short-term investment securities. Investing cash flows in Nine Months 2017 and Nine Months 2016 include inflows of $117 million and $590 million from paydowns on FG VIE assets, respectively. The decrease in inflows from FG VIEs was due to the proceeds from a paydown of a large transaction in Nine Months 2016. In Nine Months 2017, cash acquired in the MBIA UK Acquisition was $95 million. Consideration paid for MBIA UK was in the form of Zohar II Notes. In Third Quarter 2016 the Company paid $435 million, net of cash acquired, to acquire CIFGH.

Financing activities consisted primarily of paydowns of FG VIE liabilities and share repurchases. Financing cash flows in Nine Months 2017 and Nine Months 2016 include outflows of $124 million and $567 million for FG VIEs, respectively. The decrease in outflows from FG VIEs was due to the paydown of a large transaction in Nine Months 2016. The remaining cash flows from financing activities relate mainly to share repurchases, which were $431 million and $190 million in Nine Months 2017 and Nine Months 2016, respectively.

From October 1, 2017 through November 2, 2017, the Company repurchased an additional $20 million of common shares. The Board of Directors authorized, on November 1, 2017, an additional $300 million of share repurchases As of November 2, 2017, the Company had remaining authorization to purchase common shares of $398 million. For more information about the Company's share repurchases and authorizations, please refer to Part I, Item 1, Financial Statements, Note 17, Shareholders' Equity.

~~Commitments and Contingencies~~

~~Leases~~

AGL and its subsidiaries lease office space and certain other items. Future cash payments associated with contractual obligations pursuant to operating leases for office space have not materially changed sinceyear ended December 31, ~~2016.~~2022.

Long-Term Debt Obligations

The Company has outstanding ~~principal and interest paid on~~ long-term debt ~~were as follows:~~

~~Principal Outstanding~~

issued by the U.S. Holding Companies. See Part II, Item 8, Financial Statements and ~~Interest Paid on~~Supplementary Data, Note 12, Long-Term Debt and Credit Facilities, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and — Guarantor and U.S. Holding Companies' Summarized Financial Information, below.

U.S. Holding Companies

Principal Amount Interest Paid
As of September 30, As of December 31, Third Quarter Nine Months
2017 2016 2017
2016 2017 2016
(in millions)
AGUS $ 850
$ 850
$ 1
$ —
$ 23
$ 25
AGMH 730
730
7
7
30
30
AGM 8
9
0
0
0
0
Purchased debt (1) (28 ) —
0
—
0
—
Total $ 1,560
$ 1,589
$ 8
$ 7
$ 53
$ 55
Long-Term Debt and Intercompany Loans


			As of September 30, 2023		As of December 31, 2022
			(in millions)
	Effective Interest Rate	Final Maturity	Principal Amount
AGUS - long-term debt
5% Senior Notes	5.00%	2024	$	—	$	330
6.125% Senior Notes	6.125%	2028	350		—
3.15% Senior Notes	3.15%	2031	500		500
7% Senior Notes	6.40%	2034	200		200
3.6% Senior Notes	3.60%	2051	400		400
Series A Enhanced Junior Subordinated Debentures (1)	3 month CME Term SOFR +2.64%	2066	150		150
AGUS long-term debt			1,600		1,580
AGUS - intercompany loans from:
AGC and AGM	3.50%	2029	250		250
AGRO (2)	5.00%	2028	20		20
AGUS intercompany loans			270		270
Total AGUS long-term debt and intercompany loans			1,870		1,850
AGMH
Junior Subordinated Debentures (3)	6.40%	2066	300		300
Total AGMH long-term debt			300		300
AGMH’s long-term debt purchased by AGUS (4)			(154)		(154)
U.S. Holding Company long-term debt			$	2,016	$	1,996

____________________

(1) ~~In 2017, AGUS purchased $28 million principal amount of Junior Subordinated Debentures issued by AGMH.~~

~~Issued by AGUS:~~

~~7% Senior Notes.~~ ~~On May 18, 2004, AGUS issued $200 million of 7% Senior Notes due 2034 for net proceeds of $197 million. Although~~Until June 30, 2023, the ~~coupon on the Senior Notes is 7%, the effective rate is approximately 6.4%, taking into account the effect of a cash flow hedge.~~

~~5% Senior Notes.~~ On June 20, 2014, AGUS issued $500 million of 5% Senior Notes due 2024 for net proceeds of $495 million. The net proceeds from the sale of the notes were used for general corporate purposes, including the purchase of common shares of AGL.

Series A Enhanced Junior Subordinated ~~Debentures.~~ ~~On December 20, 2006, AGUS issued $150 million of Debentures due 2066. The~~ Debentures paid interest based on LIBOR. The reference to LIBOR in such debentures has been replaced with a rate based on Three-Month Chicago Mercantile Exchange (CME) Term Secured Overnight Finance Rate (SOFR).

(2) In the second quarter of 2023, the final maturity of the AGRO loan was extended from 2023 to 2028 and the floating rate interest rate was converted to a fixed ~~6.4%~~ rate of ~~interest until December 15, 2016, and thereafter pay a floating rate of interest, reset quarterly, at a rate equal to three month London Interbank Offered Rate (LIBOR) plus a margin equal to 2.38%~~5%. ~~AGUS may select at one or more times to defer payment of interest for one or more consecutive periods for up to~~ ~~ten~~ ~~years. Any unpaid interest bears interest at~~

(3) If the ~~then applicable rate. AGUS may not defer interest past the maturity date.~~

~~Issued by AGMH:~~

~~6 7/8% QUIBS.~~ ~~On December 19, 2001,~~ AGMH ~~issued~~ ~~$100 million~~ ~~face amount of~~ ~~6 7/8% QUIBS due December 15, 2101, which are callable without premium or penalty in whole or in part.~~

~~6.25% Notes.~~ ~~On November 26, 2002, AGMH issued~~ ~~$230 million~~ ~~face amount of~~ ~~6.25% Notes due November 1, 2102, which are callable without premium or penalty in whole or in part.~~

~~5.6% Notes.~~ ~~On July 31, 2003, AGMH issued~~ ~~$100 million~~ ~~face amount of~~ ~~5.6% Notes due July 15, 2103, which are callable without premium or penalty in whole or in part.~~

~~Junior Subordinated Debentures.~~ ~~On November 22, 2006, AGMH issued~~ ~~$300 million~~ ~~face amount of~~ Junior Subordinated Debentures ~~with a scheduled maturity date of December 15, 2036 and a final repayment date of December 15, 2066. The final repayment date of December 15, 2066 may be automatically extended up to~~ ~~four~~ ~~times in~~ ~~five-year increments provided certain conditions~~ are met. The debentures are redeemable, in whole or in part, at any time prior to December 15, 2036 at their principal amount plus accrued and unpaid interest to the date of redemption or, if greater, the make-whole redemption price. Interest on the debentures will accrue from November 22, 2006 to December 15, 2036 at the annual rate of ~~6.4%. If any amount of the debentures remains~~ outstanding after December 15, 2036, then the principal amount of the outstanding debentures will bear interest at One-Month CME Term SOFR plus 2.33%.

(4) Represents principal amount of Junior Subordinated Debentures issued by AGMH that has been purchased by AGUS.

From time to time, AGL and its subsidiaries have entered into intercompany loan facilities. For example, on October 25, 2013, AGL, as borrower, and AGUS, as lender, entered into a ~~floating~~revolving credit facility pursuant to which AGL may, from time to time, borrow for general corporate purposes. Under the credit facility, AGUS committed to lend a principal amount not exceeding $225 million in the aggregate. The commitment under the revolving credit facility terminates on October 25, 2033 (the loan commitment termination date). The unpaid principal amount of each loan will bear semi-annual interest at a fixed rate equal to ~~one-month LIBOR plus~~ ~~2.215%~~ ~~until repaid. AGMH may elect~~100% of the then applicable interest rate as determined under Internal Revenue Code Section 1274(d). Accrued interest on all loans will be paid on the last day of each June and December and at ~~one~~ ormaturity. AGL must repay unpaid principal amounts

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of the loans, if any, by the third anniversary of the loan commitment termination date. AGL has not drawn upon the credit facility.

For more ~~times to defer~~information, see the Company’s 2022 Annual Report on Form 10-K, Part II, Item 8. Financial Statements and Supplementary Data, Note 12, Long-Term Debt and Credit Facilities.

Guarantor and U.S. Holding Companies’ Summarized Financial Information

AGL fully and unconditionally guarantees the payment of the principal of, and interest on, the $1,450 million aggregate principal amount of notes issued by the U.S. Holding Companies, and the $450 million aggregate principal amount of junior subordinated debentures issued by the U.S. Holding Companies, and the intercompany loans. The following tables include summarized financial information for ~~one~~AGL and the U.S. Holding Companies, excluding their investments in subsidiaries.


	As of September 30, 2023
	AGL		U.S. Holding Companies
	(in millions)
Assets
Fixed-maturity securities (1)	$	20	$	4
Investment in Sound Point	—		419
Short-term investments, other invested assets and cash	23		56
Receivables from affiliates (2)	69		95
Receivable from U.S. Holding Companies	70		—
Other assets	3		64
Liabilities
Long-term debt	—		1,693
Loans payable to affiliates	—		270
Payable to affiliates (2)	13		40
Payable to AGL	—		70
Other liabilities	6		123

____________________

(2) Represents receivable and payables with non-guarantor subsidiaries.


	Nine Months 2023
	AGL		U.S. Holding Companies
	(in millions)
Revenues
Gain on sale of asset management subsidiaries (1)	$	—	$	258
Other income	1		6
Expenses
Interest expense	—		73
Other expenses	35		51
Income (loss) before provision for income taxes and equity in earnings (losses) of investees	(34)		140
Net income (loss)	(34)		105

____________________

(1) Excludes a $3 million write off of goodwill reported by a subsidiary of AGUS.

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Table of Contents

AGL and U.S. Holding Companies

Selected Cash Flow Items


	Nine Months 2023
	AGL		U.S. Holding Companies
	(in millions)
Dividends received from subsidiaries (1)	$	193	$	153
Interest paid	—		(55)
Investments in subsidiaries	—		(13)
Dividends paid to AGL	—		(140)
Dividends paid	(51)		—
Repurchases of common shares (2)	(90)		—
Issuance of long-term debt, net of issuance costs	—		345
Redemption of debt	—		(330)

____________________

(1) AGL’s dividends include dividends from AGUS.

(2) See Item 1, Financial Statements, Note 14, Shareholders’ Equity, for additional information about share repurchases and authorizations.

For more ~~consecutive~~information, see also Part II, Item 8. Financial Statements and Supplementary Data, Note 12, Long-Term Debt and Credit Facilities, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

External Financing

From time to time, AGL and its subsidiaries have sought external debt or equity financing in order to meet their obligations. External sources of financing may or may not be available to the Company and, if available, the cost of such financing may not be acceptable to the Company.

Insurance Subsidiaries

The Company has several insurance subsidiaries. The U.S. Insurance Subsidiaries consist of AGM and AGC. AGM owns: (i) AGUK, an insurance subsidiary domiciled in the U.K; and (ii) AGE, an insurance company domiciled in France. AGUK and AGE are collectively referred to as the European Insurance Subsidiaries. AG Re is an insurance company domiciled in Bermuda, which owns AGRO, an insurance subsidiary, also domiciled in Bermuda.

Sources and Uses of Funds

Liquidity of the insurance subsidiaries is primarily used to pay for:

•operating expenses,

•claims on the insured portfolio,

•dividends or other distributions to parent,

•reinsurance premiums,

•principal of, and interest ~~periods~~on, surplus notes, where applicable, and

•capital investments in their own subsidiaries and in alternative investments, where appropriate.

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Management believes that the insurance subsidiaries’ liquidity needs for the next twelve months can be met from current cash, short-term investments and operating cash flow, including premium collections and coupon payments as well as scheduled maturities and paydowns from their respective investment portfolios, although the Company may enter into secured short-term loan facilities with financial institutions to provide short-term liquidity for the payment of insurance claims it may make in connection with the future resolutions of other Puerto Rico exposures. The Company generally targets a balance of its most liquid assets including cash and short-term securities, U.S. Treasuries, agency RMBS and pre-refunded municipal bonds equal to 1.5 times its projected operating company cash flow needs over the next four quarters. As of September 30, 2023, the Company intended to hold and had the ability to hold securities in an unrealized loss position until the date of anticipated recovery of amortized cost.

Beyond the next twelve months, the ability of the operating subsidiaries to declare and pay dividends may be influenced by a variety of factors, including market conditions, general economic conditions, and, in the case of the Company’s insurance subsidiaries, insurance regulations and rating agency capital requirements.

Financial Guaranty Policies

Insurance policies issued provide, in general, that payments of principal, interest and other amounts insured may not be accelerated by the holder of the obligation. Amounts paid by the Company therefore are typically in accordance with the obligation’s original payment schedule, unless the Company accelerates such payment schedule, at its sole option. Premiums received on financial guaranty contracts are paid either upfront or in installments over the life of the insured obligations.

Payments made in settlement of the Company’s obligations arising from its insured portfolio may, and often do, ~~not exceed~~ ~~ten~~ ~~years.~~ vary significantly from year to year, depending primarily on the frequency and severity of payment defaults and whether the Company chooses to accelerate its payment obligations in order to mitigate future losses. For example, the Company made substantial claim payments in 2022 in connection with the resolution of certain Puerto Rico credits. The Company is continuing its efforts to resolve the one remaining unresolved Puerto Rico insured exposure that is in payment default, PREPA. The Company had $624 million net par outstanding to PREPA on September 30, 2023. As described in Item 1, Financial Statements, Note 3, Outstanding Exposure, in connection with the implementation of the GO/PBA Plan and the HTA Plan, certain insured bondholders elected to receive custody receipts that represent an interest in the legacy insurance policy plus cash, New Recovery Bonds and CVIs, as relevant, that constitute distributions under the GO/PBA Plan or HTA Plan. For those who made the election, distributions under the GO/PBA Plan and HTA Plan are immediately passed through to insured bondholders under the custody receipts to the extent of any cash or proceeds of new securities held in the custodial trust, and are applied to make payments and/or prepayments of amounts due under the legacy insured bonds. The Company’s insurance policy continues to guarantee principal and interest coming due on the legacy insured bonds in accordance with the terms of such insurance policy on the originally scheduled legacy bond interest and principal payment dates to the extent that distributions under the GO/PBA Plan or HTA Plan, as applicable, are insufficient to pay or prepay such amounts after giving effect to the distributions described in the immediately preceding sentence. In the case of insured bondholders who elected to receive custody receipts, the Company retains the right to satisfy its obligations under the insurance policy with respect to the related legacy insured bonds at any time thereafter, with 30 days’ notice, by paying 100% of the then outstanding principal amount of insured bonds plus accrued interest.

On August 31, 2023, after notice to certain holders of custody receipts representing interests in legacy insured GO, PBA and HTA bonds, the Company satisfied its obligations under such legacy insured bonds with respect to $108 million net par outstanding as of August 31, 2023, and the custodial trusts released to AGC and AGM New Recovery Bonds and/or CVIs with a fair value totaling $73 million as of August 31, 2023. Consequently, as of September 30, 2023, the Company had extinguished its exposure to Puerto Rico GO/PBA and had remaining net par outstanding for Puerto Rico HTA of $372 million, which consisted of bonds where the holders elected to receive custody receipts and exposures assumed from a third-party financial guarantor.

In connection with the ~~completion~~acquisition of AGMH, AGM agreed to retain the risks relating to the debt and strip policy portions of the leveraged lease business (described below). In a leveraged lease transaction, a tax-exempt entity (such as a transit agency) transfers tax benefits to a tax-paying entity by transferring ownership of a depreciable asset, such as subway cars. The tax-exempt entity then leases the asset back from its new owner.

If the lease is terminated early, the tax-exempt entity must make an early termination payment to the lessor. A portion of this ~~offering, AGMH entered into a replacement capital covenant for~~early termination payment is funded from monies that were pre-funded and invested at the ~~benefit~~closing of ~~persons~~the leveraged lease transaction (along with earnings on those invested funds). The tax-exempt entity is obligated to pay the remaining, unfunded portion of this early termination payment (known as the strip coverage) from its own sources. AGM issued financial guaranty insurance policies (known as strip policies) that ~~buy, hold or sell a specified series~~guaranteed the payment of ~~AGMH long-term indebtedness ranking senior~~these unfunded strip coverage amounts to the ~~debentures. Under~~lessor,

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in the ~~covenant, the debentures will not be repaid, redeemed, repurchased or defeased by AGMH or any~~event that a tax-exempt entity defaulted on its obligation to pay this portion of its ~~subsidiaries~~early termination payment. Following such events, AGM can then seek reimbursement of its strip policy payments from the tax-exempt entity, and can also sell the transferred depreciable asset and reimburse itself from the sale proceeds.

Currently, all the leveraged lease transactions in which AGM acts as strip coverage provider are breaching a rating trigger related to AGM and are subject to early termination. However, early termination of a lease does not result in a draw on the AGM policy if the tax-exempt entity makes the required termination payment. If all the leases were to terminate early and the tax-exempt entities did not make the required early termination payments, then AGM would be exposed to possible liquidity claims on gross exposure of approximately $393 million as of September 30, 2023. To date, none of the leveraged lease transactions that involve AGM has experienced an early termination due to a lease default and a claim on the AGM policy. As of September 30, 2023, approximately $1.9 billion of cumulative strip par exposure had been terminated since 2008 on a consensual basis. The consensual terminations have resulted in no claims on AGM.

The terms of the Company’s CDS contracts generally are modified from standard CDS contract forms approved by International Swaps and Derivatives Association, Inc. in order to provide for payments on a scheduled “pay-as-you-go” basis and to replicate the terms of a traditional financial guaranty insurance policy. The documentation for certain CDS were negotiated to require the Company to also pay if the obligor becomes bankrupt or ~~before~~if the ~~date~~reference obligation were restructured. Furthermore, some CDS documentation requires the Company to make a payment due to an event that is ~~twenty~~ ~~years~~unrelated to the performance of the obligation referenced in the credit derivative. If events of default or termination events specified in the credit derivative documentation were to occur, the Company may be required to make a cash termination payment to its swap counterparty upon such termination. Any such payment would probably occur prior to the ~~final repayment date, except~~maturity of the reference obligation and be in an amount larger than the amount due for that period on a “pay-as-you-go” basis.

Distributions From Insurance Subsidiaries

The Company anticipates that, for the next twelve months, amounts paid by AGL’s direct and indirect insurance subsidiaries as dividends or other distributions will be a major source of the holding companies’ liquidity. The insurance subsidiaries’ ability to pay dividends depends upon their financial condition, results of operations, cash requirements, other potential uses for such funds, and compliance with rating agency requirements, and is also subject to restrictions contained in the insurance laws and related regulations of their states of domicile. For more information, see Part II, Item 8, Financial Statements and Supplementary Data, Note 15, Insurance Company Regulatory Requirements, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for a complete discussion of the Company’s dividend restrictions applicable to AGC, AGM, AG Re and AGRO.

Dividend restrictions by insurance subsidiary are as follows:

•The maximum amount available during 2023 for AGM (a subsidiary of AGMH) to distribute as dividends without regulatory approval is approximately $257 million. Approximately $157 million is available for distribution in the fourth quarter of 2023, of which $77 million was paid in October 2023

•The maximum amount available during 2023 for AGC (a subsidiary of AGUS) to distribute as ordinary dividends is approximately $102 million. Approximately $58 million is available for distribution in the fourth quarter of 2023, of which $16 million was paid in October 2023.

•Based on the applicable law and regulations, in 2023 AG Re (a subsidiary of AGL) paid dividends of $53 million in the first nine months of the year and has the capacity to (i) make capital distributions in an aggregate amount up to $129 million without the prior approval of the Bermuda Monetary Authority (the Authority) and (ii) declare and pay dividends in an aggregate amount up to approximately $209 million as of September 30, 2023. Such dividend capacity is further limited by (i) the actual amount of AG Re’s unencumbered assets, which amount changes from time to time due in part to collateral posting requirements and which was approximately $117 million as of September 30, 2023, and (ii) the amount of statutory surplus, which as of September 30, 2023 was a deficit of $41 million.

•Based on the applicable law and regulations, in 2023 AGRO (an indirect subsidiary of AG Re) has the capacity to (i) make capital distributions in an aggregate amount up to $21 million without the prior approval of the Authority and (ii) declare and pay dividends in an aggregate amount up to approximately $98 million as of September 30, 2023. Such dividend capacity is further limited by (i) the actual amount of AGRO’s unencumbered assets, which amount changes from time to time due in part to collateral posting requirements and which was approximately

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$364 million as of September 30, 2023, and (ii) the amount of statutory surplus, which as of September 30, 2023 was $259 million.

Distributions From Insurance Company Subsidiaries


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions)
Dividends paid by AGC to AGUS	$	—	$	16	$	44	$	165
Dividends paid by AGM to AGMH	60		77		100		173
Dividends paid by AG Re to AGL	24		—		53		—
Dividends from AGUK to AGM	—		—		127		—

Ratings Impact on Financial Guaranty Business

A downgrade of one of AGL’s insurance subsidiaries may result in increased claims under financial guaranties issued by the Company if counterparties exercise contractual rights triggered by the downgrade against insured obligors, and the insured obligors are unable to pay. See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Insurance Subsidiaries, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Assumed Reinsurance

Some of the Company’s insurance subsidiaries (Assuming Subsidiaries) assumed financial guaranty insurance from legacy third-party bond insurers. The agreements under which such Assuming Subsidiaries assumed such business are generally subject to termination at the option of the ceding company (i) if the Assuming Subsidiary fails to meet certain financial and regulatory criteria; (ii) if the Assuming Subsidiary fails to maintain a specified minimum financial strength rating; or (iii) upon certain changes of control of the Assuming Subsidiary. Upon termination due to one of the above events, the Assuming Subsidiary typically would be required to return to the ~~extent that AGMH has received proceeds~~ceding company unearned premiums (net of ceding commissions) and loss reserves, calculated on a U.S. statutory basis, attributable to the assumed business (plus in certain cases, an additional required amount), after which the Assuming Subsidiary would be released from liability with respect to such business.

As of September 30, 2023, if each third-party company ceding business to an Assuming Subsidiary had a right to recapture such business, and chose to exercise such right, the ~~sale of replacement capital securities. The proceeds from this offering were used~~aggregate amounts those subsidiaries could be required to pay ~~a dividend~~ to ~~the shareholders of AGMH.~~all such ceding companies would be approximately $264 million, including $237 million by AGC and $27 million by AG Re.

Committed Capital Securities

Each of AGC and AGM have entered into put agreements with four separate custodial trusts allowing each of AGC and AGM ~~respectively,~~ to issue an aggregate of $200 million of non-cumulative redeemable perpetual preferred securities to the trusts in exchange for cash. ~~The~~Each custodial ~~trusts were~~trust was created for the primary purpose of issuing $50 million face amount of CCS, investing the proceeds in high-quality assets and entering into put options with AGC or AGM, as applicable. The Company ~~does~~is not ~~consider itself to be~~ the primary beneficiary of the trusts and therefore the trusts are not consolidated in Assured ~~Guaranty's~~Guaranty’s financial statements.

The trusts provide AGC and AGM access to new equity capital at their respective sole discretion through the exercise of the put options. Upon ~~AGC's~~AGC’s or ~~AGM's~~AGM’s exercise of its put option, the relevant trust will liquidate its portfolio of eligible assets and use the proceeds to purchase ~~the~~ AGC or AGM preferred stock, as applicable. AGC or AGM may use the proceeds from its sale of preferred stock to the trusts for any purpose, including the payment of claims. The put agreements have no scheduled termination date or maturity. However, each put agreement will terminate if (subject to certain grace periods) specified events occur. Both AGC and AGM continue to have the ability to exercise their respective put options and cause the related trusts to purchase their preferred stock.

Prior to 2008 or 2007, the amounts paid on the CCS were established through an auction process. All of those auctions failed in 2008 or 2007, and the rates paid on the CCS increased to their respective maximums. ~~The~~As of July 2023, the annualized rate on the AGC CCS is one-month ~~LIBOR~~CME Term SOFR plus ~~250 basis points,~~261 bps, and the annualized rate on the AGM Committed Preferred Trust Securities ~~(CPS)~~ is one-month ~~LIBOR~~CME Term SOFR plus ~~200 basis points.~~211 bps.

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Investment Portfolio

The Company’s principal objectives in managing its investment portfolio are to support the highest possible ratings for each operating company, to manage investment risk within the context of the underlying portfolio of insurance risk, to maintain sufficient liquidity to cover unexpected stress in the insurance portfolio, and to maximize after-tax net investment income.

~~The Company’s fixed-maturity securities and short-term investments had a duration~~ Approximately 61% of ~~5.4 years as of September 30, 2017 and 5.3 years as of December 31, 2016. Generally,~~the total investment portfolio is managed by external parties. In accordance with the Company’s ~~fixed-maturity securities are designated as available-for-sale. For more information about the Investment Portfolio and a detailed description~~investment guidelines, each of the three external investment managers is required to maintain the Company’s ~~valuation of investments please refer to Part I, Item 1, Financial Statements, Note 10, Investments and Cash.~~

~~Fixed-Maturity Securities and Short-Term Investments~~

~~by Security Type~~

As of September 30, 2017 As of December 31, 2016

Amortized
Cost

Estimated
Fair Value

Amortized
Cost

Estimated
Fair Value
(in millions)
Fixed-maturity securities:

Obligations of state and political subdivisions $ 5,445
$ 5,705
$ 5,269
$ 5,432
U.S. government and agencies 256
270
424
440
Corporate securities 1,932
1,976
1,612
1,613
Mortgage-backed securities(1):
RMBS 866
881
998
987
Commercial mortgage-backed securities (CMBS) 551
562
575
583
Asset-backed securities 682
852
835
945
Foreign government securities 313
300
261
233
Total fixed-maturity securities 10,045
10,546
9,974
10,233
Short-term investments 948
949
590
590
Total fixed-maturity and short-term investments $ 10,993
$ 11,495
$ 10,564
$ 10,823

~~____________________~~


~~(1)~~	~~Government-agency obligations were approximately 39% of mortgage backed securities as of September 30, 2017 and 42% as of December 31, 2016, based on fair value.~~

The following tables summarize, for all fixed-maturity securities in an unrealized loss position as of September 30, 2017 and December 31, 2016, the aggregate fair value and gross unrealized loss by length of time the amounts have continuously been in an unrealized loss position.

~~Fixed-Maturity Securities~~

~~Gross Unrealized Loss by Length of Time~~

~~As of September 30, 2017~~

Less than 12 months 12 months or more Total

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss
(dollars in millions)
Obligations of state and political subdivisions $ 445
$ (10 ) $ 253
$ (7 ) $ 698
$ (17 )
U.S. government and agencies 114
0
4
0
118
0
Corporate securities 136
(1 ) 252
(17 ) 388
(18 )
Mortgage-backed securities:

RMBS 107
(1 ) 170
(11 ) 277
(12 )
CMBS 50
0
76
(4 ) 126
(4 )
Asset-backed securities 66
0
3
0
69
0
Foreign government securities 35
(1 ) 147
(18 ) 182
(19 )
Total $ 953
$ (13 ) $ 905
$ (57 ) $ 1,858
$ (70 )
Number of securities (1)
292

230

513
Number of securities with other-than-temporary impairment
9

14

23

~~Fixed-Maturity Securities~~

~~Gross Unrealized Loss by Length of Time~~

~~As of December 31, 2016~~

Less than 12 months 12 months or more Total

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss
(dollars in millions)
Obligations of state and political subdivisions $ 1,110
$ (38 ) $ 6
$ (1 ) $ 1,116
$ (39 )
U.S. government and agencies 87
(1 ) —
—
87
(1 )
Corporate securities 492
(11 ) 118
(20 ) 610
(31 )
Mortgage-backed securities:

RMBS 391
(23 ) 94
(15 ) 485
(38 )
CMBS 165
(5 ) —
—
165
(5 )
Asset-backed securities 36
0
0
0
36
0
Foreign government securities 44
(5 ) 114
(27 ) 158
(32 )
Total $ 2,325
$ (83 ) $ 332
$ (63 ) $ 2,657
$ (146 )
Number of securities(1)
622

60

676
Number of securities with other-than-temporary impairment
8

9

17

~~___________________~~


~~(1)~~	The number of securities does not add across because lots consisting of the same securities have been purchased at different times and appear in both categories above (i.e., less than 12 months and 12 months or more). If a security appears in both categories, it is counted only once in the total column.

Of the securities in an unrealized loss position for 12 months or more as of September 30, 2017, 28 securities had unrealized losses greater than 10% of book value. The total unrealized loss for these securities as of September 30, 2017 was $26 million. As of December 31, 2016, of the securities in an unrealized loss position for 12 months or more, 41 securities had unrealized losses greater than 10% of book valueinvestment portfolio with an ~~unrealized loss~~overall credit quality rated at a minimum of ~~$59 million. The Company has determined that the unrealized losses recorded as of September 30, 2017 and December 31, 2016 were yield related and not the result of other-than-temporary-impairment.~~A+/A1/A+ by S&P/Moody’s/Fitch Inc., respectively.

Changes in interest rates affect the value of the Company’s fixed-maturity ~~portfolio.~~securities. As interest rates fall, the fair value of fixed-maturity securities generally increases and, as interest rates rise, the fair value of fixed-maturity securities generally decreases. The Company’s portfolio of fixed-maturity securities primarily consists ~~primarily~~ of ~~high-quality,~~investment-grade, liquid instruments. Other invested assets include other alternative investments, which are generally less liquid. For more information about the Investment Portfolio and a detailed description of the Company’s valuation of investments, see Item 1, Financial Statements, Note 7, Investments, and Note 9, Fair Value Measurement.

Investment Portfolio

Carrying Value


	As of
	September 30, 2023		December 31, 2022
	(in millions)
Fixed-maturity securities, available-for-sale (1)	$	6,267	$	7,119
Fixed-maturity securities, trading (2)	350		303
Short-term investments	1,426		810
Other invested assets	765		133
Total	$	8,808	$	8,365

____________________

(1) As of September 30, 2023 and December 31, 2022, includes $78 million and $358 million, respectively, of New Recovery Bonds received in connection with the consummation of the 2022 Puerto Rico Resolutions.

(2) Represents CVIs received under the 2022 Puerto Rico Resolutions.

The Company’s available-for-sale fixed-maturity securities had a duration of 4.1 years and 4.4 years as of September 30, 2023 and December 31, 2022, respectively.

Available-for-Sale Fixed-Maturity Securities By Contractual Maturity

The amortized cost and estimated fair value of the Company’s available-for-sale fixed-maturity securities, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Distribution of Available-for-Sale Fixed-Maturity Securities

by Contractual Maturity

As of September 30, ~~2017~~2023


	Amortized Cost		Estimated Fair Value
	(in millions)
Due within one year	$	248	$	239
Due after one year through five years	1,526		1,406
Due after five years through 10 years	1,760		1,629
Due after 10 years	2,809		2,475
Mortgage-backed securities:
RMBS	430		330
Commercial mortgage-backed securities	198		188
Total	$	6,971	$	6,267

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Amortized
Cost

Estimated
Fair Value
(in millions)
Due within one year $ 249
$ 250
Due after one year through five years 1,518
1,552
Due after five years through 10 years 2,280
2,365
Due after 10 years 4,581
4,936
Mortgage-backed securities:

RMBS 866
881
CMBS 551
562
Total $ 10,045
$ 10,546
Available-for-Sale and Trading Fixed-Maturity Securities By Rating

The following table summarizes the ratings distributions of the Company’s ~~investment portfolio~~available-for-sale fixed-maturity securities as of September 30, ~~2017~~2023 and December 31, ~~2016.~~2022. Ratings generally reflect the lower of ~~the~~ Moody’s ~~Investors Service, Inc. (Moody’s)~~ and S&P classifications, except for ~~bonds purchased for loss mitigation or other risk management strategies,~~(i) Loss Mitigation Securities, which use Assured Guaranty’s internal ratings ~~classifications.~~classifications, or (ii) Puerto Rico securities received under the 2022 Puerto Rico Resolutions, which are not rated.

Distribution of

Available-for-Sale Fixed-Maturity Securities by Rating


							As of
Rating	As of September 30, 2017		As of December 31, 2016		Rating		September 30, 2023			December 31, 2022
AAA	14.4	%	11.6	%	AAA		13.8	%		14.2	%
AA	52.0		54.8		AA		38.4			37.1
A	19.6		17.9		A		26.2			24.4
BBB	3.0		1.9		BBB		11.6			11.0
BIG(1)	10.5		13.5
BIG (1)					BIG (1)		7.6			7.4
Not rated(2)	0.5		0.3			2.4			5.9
Total	100.0	%	100.0	%	Total		100.0	%		100.0	%

____________________


~~(1)~~	~~Comprised primarily of loss mitigation and other risk management assets. Please refer to Part I, Item I, Financial Statements, Note 10, Investments and Cash, for additional information.~~

(1)Includes primarily Loss Mitigation Securities. See Item 1, Financial Statements, Note 7, Investments, for additional information.

(2)Primarily includes New Recovery Bonds received in connection with the consummation of the 2022 Puerto Rico Resolutions.

The Company also had $350 million and $303 million in trading fixed-maturity securities as of September 30, 2023 and December 31, 2022, respectively, representing CVIs received under the 2022 Puerto Rico Resolutions, which are not rated.

Other Investments

Other invested assets, which are generally less liquid than fixed-maturity securities primarily consist of the investment in Sound Point and fund investments across a variety of strategies.

The Insurance segment reports AGAS’ percentage ownership of Sound Point and AHP funds’ as equity method investments with changes in NAV included in the Insurance segment adjusted operating income. As of September 30, 2023, three of the funds in which AGAS invests are consolidated and the remaining are accounted as equity method investments in the Company’s condensed consolidated financial statements. As of December 31, 2022, all of the funds in which AGAS directly invested were consolidated in the Company’s condensed consolidated financial statements. See — Commitments below.

Investment in Assets Managers and Alternative Investments by Strategy

As of September 30, 2023


	Investments		Eliminations		Consolidated
	(in millions)
Sound Point (1)	$	419	$	—	$	419
Alternative investments:
CLOs (2)	246		(184)		62
Asset-based	132		(88)		44
Healthcare	103		—		103
Other	149		—		149
Total	$	1,049	$	(272)	$	777

____________________

(1) The investment in Sound Point is carried at the acquisition date fair value. On a one quarter lag, the acquisition date fair value will be adjusted for the Company’s interest in the earnings of Sound Point and amortization of intangible assets.

(2) Represents primarily investments in the equity of U.S. and European CLOs as well as the first loss equity of CLOs.

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Alternative Investments by Strategy

As of December 31, 2022


	Investments		Eliminations		Consolidated
	(in millions)
CLOs	$	272	$	(272)	$	—
Asset-based	101		(101)		—
Healthcare	91		(91)		—
Municipal bonds (1)	105		(105)		—
Other	133		—		133
Total	$	702	$	(569)	$	133

____________________

(1) In the first quarter of 2023, the fund distributed substantially all of its available cash to AGAS and other investors in the fund.

Change in Fair Value of Alternative Investments by Strategy

Nine Months Ended September 30, 2023


	Investments		Eliminations		Consolidated
	(in millions)
CLOs	$	21	$	(23)	$	(2)
Asset-based	3		(3)		—
Healthcare	21		(9)		12
Other	13		—		13
Total	$	58	$	(35)	$	23

Change in Fair Value of Alternative Investments by Strategy

Nine Months Ended September 30, 2022


	Investments		Eliminations		Consolidated
	(in millions)
CLOs	$	(10)	$	10	$	—
Asset-based	7		(7)		—
Healthcare	(6)		8		2
Municipal bonds	(4)		4		—
Other	(34)		—		(34)
Total	$	(47)	$	15	$	(32)

Beginning in third quarter 2023, the Company records an equity method investment in Sound Point pursuant to the Sound Point Transaction described in Item 1, Financial Statements, Note 1, Business and Basis of Presentation

Restricted Assets

Based on fair value, investments and ~~restricted cash~~other assets that are either held in trust for the benefit of ~~third party~~third-party ceding insurers in accordance with statutory requirements, placed on deposit to fulfill state licensing requirements, or otherwise pledged or restricted, ~~total $286~~totaled $224 million and ~~$285~~$222 million as of September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, respectively. The investment portfolio also contains securities that are held in trust by certain AGL subsidiaries or otherwise restricted for the benefit of other AGL subsidiaries in accordance with statutory and regulatory requirements in the amount of ~~$1,676~~$1,107 million and ~~$1,420~~$1,169 million, based on fair value, as of September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, respectively.

~~The fair value~~Commitments

Upon closing of the ~~Company’s pledged securities~~Sound Point Transaction and the AHP Transaction in July, the Company has increased the aggregate amount it has agreed to ~~secure its obligations under its CDS exposure totaled $18~~invest in alternative investments to $1.5 billion, including the $1 billion with Sound Point, subject to regulatory approval, which includes $630 million of invested capital (at fair value), and ~~$116~~$890 million in unfunded commitments. See Item 1, Financial Statements, Note 1, Business and Basis of Presentation, for a description of the Sound Point Transaction.

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Of the $1.5 billion mentioned above, the U.S. Insurance Subsidiaries through their jointly owned investment subsidiary, AGAS, are authorized to invest up to $750 million plus previously distributed gains of $132 million for a total of $882 million as of September 30, 2017 and December 31, 2016, respectively. In February 2017, the Company terminated all of its remaining CDS contracts with one of its counterparties as to which it had collateral posting obligations and all of the collateral that the Company had been posting to that counterparty was returned to the Company. Please refer to Part I, Item I, Financial Statements, Note 8, Contracts Accounted for as Credit Derivatives, for additional information.

~~Liquidity Arrangements with respect to AGMH’s former Financial Products Business~~

AGMH’s former financial products segment had been in the business of borrowing funds through the issuance of guaranteed investment contracts (GICs) and medium term notes and reinvesting the proceeds in investments that met AGMH’s investment criteria. The financial products business also included the equity payment undertaking agreement portion of the leveraged lease business, described under "~~--Insurance Company Subsidiaries" above.~~

~~The GIC Business~~

Until November 2008, AGMH, through its financial products business, offered GICs to municipalities and other market participants. The GICs were issued through certain non-insurance subsidiaries of AGMH. In return for an initial payment, each GIC entitles its holder to receive the return of the holder’s invested principal plus interest at a specified rate, and to withdraw principal from the GIC as permitted by its terms. AGM insures the payment obligations on all these GICs.

~~The proceeds of GICs were loaned to AGMH’s former subsidiary FSA Asset Management LLC (FSAM). FSAM in turn invested these funds in fixed-income obligations (the FSAM assets).~~

2023. As of September 30, ~~2017, approximately 32.5%~~2023, AGAS commitments to Sound Point and AHP funds were $703 million (of which $446 million was funded with a NAV of the FSAM assets (measured by aggregate principal balance) were in cash or were obligations backed by the full faith and credit of the U.S. Although AGMH no longer holds any ownership interest in FSAM or the GIC issuers, AGM’s insurance policies on the GICs remain in place, and must remain in place until$469 million). This capital was committed to several funds, each ~~GIC is terminated.~~

In June 2009, in connection with the Company's acquisition of AGMH from Dexia Holdings Inc., Dexia SA, the ultimate parent of Dexia Holdings Inc., and certain of its affiliates, entered into a number of agreements intended to mitigate the credit, interest rate and liquidity risks associated with the GIC business and the related AGM insurance policies. Some of those agreements have since terminated or expired, or been modified.

~~To support the primary payment obligations under the GICs, each of Dexia SA and Dexia Crédit Local S.A. are party~~dedicated to a ~~put contract. Pursuant to the put contract, FSAM may put an amount of its FSAM assets to Dexia SA~~single strategy, including CLOs, asset-based finance and Dexia Crédit Local S.A. in exchange for funds that FSAM would in turn make available to meet demands for payment under the GICs. To secure their obligations under this put contract, Dexia SA and Dexia Crédit Local S.A. are required to post eligible highly liquid collateral having an aggregate value (subject to agreed reductions and advance rates) equal to at least the excess of (i) the aggregate principal amount of all outstanding GICs over (ii) the aggregate mark-to-market value of FSAM’s assets.

healthcare structured capital. As of September 30, ~~2017, the aggregate accreted GIC balance was approximately $1.4 billion, compared with approximately $10.2 billion as of December 31, 2009. As of September 30, 2017, the aggregate fair market value~~2023, three of the assets supporting the GIC business (disregarding the agreed upon reductions) plus cash and positive derivative value exceeded by nearly $0.7 billion the aggregate principal amount of all outstanding GICs and certain other business and hedging costs of the GIC business. Even after applying the agreed upon reductions to the fair market value of the assets, the aggregate value of the assets supporting the GIC business plus cash and positive derivative value exceeded the aggregate principal amount of all outstanding GICs and certain other business and hedging costs of the GIC business. Accordingly, no posting of collateral was required under the primary put contract.

To provide additional support, Dexia Crédit Local S.A. provides a liquidity commitment to FSAM to lend against FSAM assets under a revolving credit agreement. As of September 30, 2017 the commitment totaled $1.5 billion, ofsix funds in which ~~approximately $0.8 billion was drawn. The agreement requires the commitment remain in place, generally until the GICs have been paid in full.~~

Despite the put contract and revolving credit agreement, and the significant portion of FSAM assets comprised of highly liquid securities backed by the full faith and credit of the U.S., AGM remains subject to the risk that Dexia SA and its affiliates may not fulfill their contractual obligations. In that case, the GIC issuers may not have the financial ability to pay upon the withdrawal of GIC funds or post collateral or make other payments in respect of the GICs, thereby resulting in claims upon the AGM financial guaranty insurance policies.

A downgrade of the financial strength rating of AGM could trigger a payment obligation of AGM in respect to AGMH's former GIC business. Most GICs insured by AGM allow for the termination of the GIC contract and a withdrawal of GIC funds at the option of the GIC holder in the event of a downgrade of AGM below a specified threshold, generally below A- by S&P or A3 by Moody's. FSAM is expected to have sufficient eligible and liquid assets to satisfy any expected withdrawal and collateral posting obligations resulting from future rating actions affecting AGM.

~~The Medium Term Notes Business~~

In connection with the acquisition of AGMH, Dexia Crédit Local S.A. agreed to fund, on behalf of AGM, 100% of all policy claims made under financial guaranty insurance policies issued by AGM in relation to the medium term notes issuance program of FSA Global Funding Limited. As of September 30, 2017, FSA Global Funding Limited had approximately $294.9 million of medium term notes outstanding.


~~ITEM 3.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

~~See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for an updated sensitivity analysis for credit derivatives and expected losses on contracts~~AGAS invests are accounted for as ~~insurance. For~~CIVs.

Lease Obligations

The Company has entered into several lease agreements for office space in Bermuda, New York, San Francisco,

London, Paris, and other ~~quantitative~~locations with various lease terms. See Part II, Item 8, Financial Statements and ~~qualitative disclosures about market risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk",~~Supplementary Data, Note 17, Leases, of ~~our Company's~~the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016. There~~2022, for a table of minimum lease obligations and other lease commitments.

FG VIEs and CIVs

The Company manages its liquidity needs by evaluating cash flows without the effect of consolidating FG VIEs and CIVs; however, the Company’s condensed consolidated financial statements include the effect of consolidating FG VIEs and CIVs. The primary sources and uses of cash at Assured Guaranty’s FG VIEs and CIVs are as follows:

•FG VIEs. The primary sources of cash in FG VIEs are the collection of principal and interest on the collateral supporting the debt obligations, and the primary uses of cash are the payment of principal and interest due on the debt obligations. The insurance subsidiaries are not primarily liable for the debt obligations issued by the VIEs they insure and would only be required to make payments on those insured debt obligations in the event that the issuer of such debt obligations defaults on any principal or interest due and only for the amount of the shortfall. AGL’s and its insurance subsidiaries’ creditors do not have any rights with regard to the collateral supporting the debt issued by the FG VIEs. For the Puerto Rico Trusts, the primary source of cash is the collection of debt service on the assets in the trusts and the primary use of cash is the payment of the trusts debt obligations.

•CIVs. The primary sources and uses of cash in the CIVs are raising capital from investors, using capital to make investments, generating cash income from investments, paying expenses, distributing cash flow to investors and borrowing funds to finance investments. The assets and liabilities of the Company’s CIVs are held within separate legal entities. The assets of the CIVs are not available to creditors of the Company, other than creditors of the applicable CIVs. In addition, creditors of the CIVs have no recourse against the assets of the Company, other than the assets of such applicable CIVs. Liquidity available at the Company’s CIVs is not available for corporate liquidity needs, except to the extent of the Company’s investment in the funds, subject to redemption provisions.

See Item. 1, Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles, for additional information.

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Condensed Consolidated Cash Flows

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

Summarized Condensed Consolidated Cash Flows


	Third Quarter				Nine Months
	2023		2022		2023		2022
	(in millions)
Net cash flows provided by (used in) operating activities, excluding FG VIEs and CIVs operating cash flows	$	(210)	$	87	$	(217)	$	(534)
FG VIEs and CIVs operating cash flows	32		(141)		475		(1,314)
Net cash flows provided by (used in) operating activities	(178)		(54)		258		(1,848)

Net cash flows provided by (used in) investing activities, excluding FG VIEs and CIVs investing cash flows	250		25		358		1,006
FG VIEs and CIVs investing cash flows	61		45		(175)		122
Net cash flows provided by (used in) investing activities	311		70		183		1,128

Net cash flows provided by (used in) financing activities, excluding FG VIEs and CIVs financing cash flows
Dividends paid	(16)		(16)		(51)		(49)
Repurchases of common shares	(64)		(97)		(90)		(400)
Issuance of long-term debt, net of issuance costs	345		—		345		—
Redemption of debt	(330)		—		(330)		—
Other	—		—		(15)		(6)
FG VIEs and CIVs financing cash flows	(135)		109		(392)		1,110
Net cash flows provided by (used in) financing activities (1)	(200)		(4)		(533)		655

Effect of exchange rate changes,excluding FG VIEs and CIVs	(2)		(4)		—		(6)
Effect of exchange rate changes for FG VIEs and CIVs	—		—		—		—
Effect of exchange rate changes	(2)		(4)		—		(6)
Increase (decrease) in cash and cash equivalents and restricted cash	(69)		8		(92)		(71)
Cash and cash equivalents and restricted cash at beginning of period	184		263		207		342
Cash and cash equivalents and restricted cash at the end of the period	$	115	$	271	$	115	$	271

____________________

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

Cash flows from operations, excluding FG VIEs and CIVs, were an outflow of $217 million in nine months 2023 and an outflow of $534 million in nine months 2022. The decrease in outflows during nine months 2023 was primarily due to a $362 million decrease in net claim payments, primarily due to the 2022 Puerto Rico Resolutions, as well as a decrease of $94 million in tax payments. Cash flows from operations attributable to FG VIE and CIV were inflows in nine months 2023 and outflows in nine months 2022, primarily because all the CLOs and CLO warehouses, which generally reported significant operating cash flows, had limited operating activities and new issuances in the first half of 2023 pending the closing of the Sound Point Transaction and AHP Transaction, at which point the CLOs and CLO warehouses were deconsolidated. The

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condensed consolidated statements of cash flows present the investing activities of the consolidated Sound Point funds, which were formerly known as AssuredIM funds, AssuredIM funds and CLOs as cash flows from operations. The increase in inflows in nine months 2023 compared with nine months 2022 was mainly due to a decrease of $2,714 million in investment purchases, partially offset by a decrease of investment sales, maturities and paydowns of $850 million.

Investing activities primarily consisted of net sales (purchases) of fixed-maturity and short-term investments and paydowns on and sales of FG VIEs’ assets. The decrease in investing cash inflows in nine months 2023 compared with nine months 2022 was mainly attributable to an increase in short-term investments in nine months 2023 compared to net sales of short-term and fixed-maturity investments in nine months 2022. In nine months 2022, investing inflows were used to fund claim payments under the 2022 Puerto Rico Resolutions and share repurchases. See Item 1. Financial Statements, Condensed Consolidated Statements of Cash Flows, and Note 3, Outstanding Exposure, for additional information.

Financing activities primarily consist of (i) AGL share repurchases and dividends, (ii) paydowns of FG VIEs’ liabilities, and (iii) CLO issuances and CLO warehouse financing activities. The CIVs’ financing cash flows mainly included issuances and repayments of CLOs and CLO warehouse financing debt. The decrease in financing cash flow activity from VIEs was primarily due to a decrease of $2,254 million in issuances, partially offset by a decrease in repayments of $964 million by the previously consolidated CLOs and CLO warehouses. The proceeds from CLO issuances and CLO warehouse borrowings were used to fund the purchases of loans. FG VIEs’ cash flows relate to the paydowns of FG VIEs’ liabilities. See Item 1. Financial Statements, Note 8, Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles.

From October 1, 2023 through November 7, 2023, the Company repurchased an additional 682,676 of common shares. As of November 7, 2023, the Company was authorized to purchase $372 million of its common shares. For more information about the Company’s share repurchases and authorizations, see Item 1, Financial Statements, Note 14, Shareholders’ Equity.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of September 30, 2023, there were no material changes into the market risks ~~that~~to which the Company is exposed to since December 31, ~~2016.~~2022.


~~ITEM 4.~~	~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

Assured Guaranty’s management, with the participation of AGL’s President and Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining disclosure controls and procedures (as ~~such term is~~ defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are effective in recording, processing, summarizing and reporting, within the time periods specified in the Securities and Exchange Commission’s rules and forms, information required to be disclosed by AGL in the reports that it files or submits under the Exchange Act and ensuring that such information is accumulated and communicated to management, including the President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Management of the Company, with the participation of its President and Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, ~~2017.~~2023. Based on their evaluation as of September 30, ~~2017~~2023 covered by this Form 10-Q, the Company’s President and Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective.

There were no changes in the Company’s internal control over financial reporting during third quarter 2023 which were identified in connection with the evaluation required pursuant to Rules 13a-15 or 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


~~PART II.~~	~~OTHER INFORMATION~~

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~~ITEM 1.~~	~~LEGAL PROCEEDINGS~~

PART II.OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

The Company is subject to legal proceedings and claims, as described in Part I, Item 1, Financial Statements, Note 13, Commitments and Contingencies – Legal Proceedings and the ~~Company's~~“PREPA” and “Puerto Rico Litigation” sections of Note 3, Outstanding Exposureand the “Recovery Litigation and Dispute Resolution” section of Note 4, Expected Loss to be Paid (Recovered) contained in this Form 10-Q and is incorporated by reference herein. For additional information see the “Legal Proceedings” and “Litigation” sections of Part II, Item 8, Financial Statements and Supplementary Data, Note 18, Commitments and Contingencies, the “Recovery Litigation” section of Note 4, Expected Loss to be Paid (Recovered), and the “Puerto Rico Litigation” section of Note 3, Outstanding Exposure, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, in the Company's Quarterly Report on Form 10-Q for the quarters ended March 31, 2017, and June 30, 2017, and in Part I, Item 1, Financial Statements, Note 14, Commitments and Contingencies – Legal Proceedings contained in this Form 10-Q. There were no material developments to such proceedings during the three months ended September 30, 2017.2022.

ITEM 1A.RISK FACTORS


~~ITEM 1A.~~	~~RISK FACTORS~~

~~Please refer to~~See the risk factors set forth in Part I, ~~"Item~~“Item 1A. Risk ~~Factors"~~Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016. There~~2022 (2022 Annual Report) and Part II, “Item 1A. Risk Factors” for the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (Q2 Quarterly Report). Except for the risk factors entitled, “Expansion of the categories and types of the Company’s investments (including those accounted for as CIVs) may expose it to increased credit, interest rate, liquidity and other risks” and “AGL, AG Re and AGRO may become subject to taxes in Bermuda after March 2035, which may adversely affect the Company’s future results of operations and on an investment in the Company,” set forth in the 2022 Annual Report, which are removed and replaced in their entirety as set forth below, there have been no material changes to the risk factors disclosed in ~~such~~the 2022 Annual Report ~~on Form 10-K~~or the Q2 Quarterly Report during the nine months ended September 30, ~~2017.~~2023.

Expansion of the categories and types of the Company’s investments (including those accounted for as CIVs), including allocations of investments to Sound Point and exclusivity arrangement with Sound Point may expose it to increased credit, interest rate, liquidity and other risks.

The Company is using Sound Point’s investment knowledge and experience to expand the categories and types of its alternative investments (including those accounted for as CIVs) by: (a) allocating $1 billion of capital in Sound Point managed funds; (b) redeploying initial amounts allocated to Sound Point in future Sound Point funds; and (c) having Sound Point serve as the U.S. Insurance Subsidiaries’ sole alternative credit manager. This expansion of categories and types of investments, allocations to Sound Point and exclusivity arrangement with Sound Point may increase the credit, interest rate and liquidity risk in the Company’s investments (including those accounted for as CIVs). In addition, the fair value of most of these assets are reported in results of operations and may be more volatile than other investments made by the Company. As a result of the Company’s expansion of the categories and types of its investments, as of September 30, 2023, the U.S. Insurance Subsidiaries had investments in Sound Point managed funds with a fair value of $378 million. In addition, the Company had $252 million of other non-Sound Point alternative investments reported in the consolidated financial statements. This expansion also has resulted in the Company investing a portion of its portfolio in assets that are less liquid than some of its other investments, and so may increase the risks described under “— Operational Risks — The ability of AGL and its subsidiaries to meet their liquidity needs may be limited”. Expanding the categories and types of Company investments (including those accounted for as CIVs), allocations to Sound Point and exclusivity arrangement with Sound Point may also expose the Company to other types of risks, including reputational risks.

AGL, AG Re and AGRO may become subject to taxes in Bermuda, which may adversely affect the Company’s future results of operations and an investment in the Company.

The Bermuda Minister of Finance, under Bermuda’s Exempted Undertakings Tax Protection Act 1966, as amended, has given AGL, AG Re and AGRO an assurance that if any legislation is enacted in Bermuda that would impose tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then subject to certain limitations the imposition of any such tax will not be applicable to AGL, AG Re or AGRO, or any of AGL’s or its subsidiaries’ operations, stocks, debentures or other obligations until March 31, 2035. Given the limited duration of the Minister of Finance’s assurance, the Company cannot be certain that it will not be subject to Bermuda tax after March 31, 2035.

Further, on August 8, 2023, the Bermuda Government issued the first of a series of public consultation papers as part of its considerations on the introduction of a corporate income tax that would be taken into account in calculating the effective

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~~ITEM 2.~~	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

tax rate of Bermuda businesses under the OECD’s global anti-base erosion (GloBE) rules. The second public consultation paper issued October 8, 2023, indicates that the Bermuda Government believes it is reasonable and proportionate for any new Bermuda corporate income tax regime to supersede any existing tax assurance certificates held by entities within the scope of the new Bermuda corporate income tax. Under the current proposal, Bermuda corporate income tax would apply only to large multinational enterprises (MNEs), as defined in the GloBE rules, with EUR 750 million or more in total global revenue in at least two of the previous four accounting periods. The proposed Bermuda corporate income tax legislation is currently anticipated to be effective for tax years beginning on or after January 1, 2025. The Bermuda Government is considering if amendments are necessary to the existing tax assurance certificate regime to ensure that tax may be collected in Bermuda from entities which are subject to the proposed Bermuda corporate income tax regime. Although we cannot predict when or if any new Bermuda corporate income tax law will be adopted or will become effective, the imposition of a Bermuda corporate income tax could, if applicable to the Company (or any Bermuda incorporated subsidiary of the Company), have an adverse effect on the Company's financial condition and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer’s Purchases of Equity Securities

The following table reflects purchases of AGL common shares made by the Company during ~~Third Quarter 2017.~~third quarter 2023.


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program (1)	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (2)		Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program (1)	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (2)
July 1 - July 31	688,432	$	43.78	685,243	$	167,872,823	July 1 - July 31	257,066	$	57.64	257,066	$	162,128,831
August 1 - August 31	679,770	$	44.17	679,165	$	137,872,863	August 1 - August 31	264,107	$	59.73	261,580	$	146,509,723
September 1 - September 30	483,493	$	41.37	483,493	$	117,872,889	September 1 - September 30	547,256	$	60.61	547,256	$	113,343,260
Total	1,851,695	$	43.29	1,847,901			Total	1,068,429	$	59.67	1,065,902

____________________

(1) After giving effect to repurchases since the Board first authorized the repurchase program on January 18, 2013, through November 7, 2023, the Company has repurchased a total of 143 million common shares for approximately $4.8 billion, excluding commissions, at an average price of $33.49 per share. On November 1, 2023, the Company announced that the Board of Directors had authorized an additional $300 million of share repurchases. As of November 7, 2023, the remaining authorization the Company was authorized to purchase was $372 million of its common shares, on a settlement basis. The repurchase program has no expiration date and the Board has previously increased the authorization periodically.

(2) Excludes commissions.

ITEM 5. OTHER MATTERS

10b5-1 Trading Plans

During third quarter 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act).

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ITEM 6.EXHIBITS

The following exhibits are filed with this report:


~~(1)~~Exhibit Number						Description of Document
4.1						~~After giving effect~~Form of Officer’s Certificate related to ~~repurchases since the beginning~~6.125% Senior Notes due 2028, containing Form of ~~2013 through November 2, 2017,~~6.125% Senior Notes due 2028 as Exhibit A (Incorporated by reference to Exhibit 4.1 to Form 8-K filed on August 21, 2023 )
10.1						Separation Agreement, dated as of July 7, 2023, between the Company has repurchased a total of 79.9 million common shares for approximately $2,166 million, excluding commissions, at an average price of $27.11 per share. The Board of Directors authorized, on November 1, 2017, an additional $300 million of share repurchases. As of November 2, 2017, $398 million of total capacity remained from the existing Board ~~of Directors share repurchase authorizations, on a settlement basis.~~and David A. Buzen*

22.0						Subsidiary Companies and Issuers of Guaranteed Securities
~~(2)~~31.1		~~Excludes commissions.~~

				Certification of CEO Pursuant to Exchange Act Rules 13A-14 and 15D-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~ITEM 5.~~31.2		~~OTHER INFORMATION~~

On November 1, 2017, Assured Guaranty Ltd. (the “Company”) mutually agreed with James M. Michener, the Company’s General Counsel and Secretary, that Mr. Michener would resign as General Counsel and Secretary and as an executive officer of the Company, effective December 31, 2017, in accordance with the terms of a separation agreement (the “Separation Agreement”) which he and the Company entered into on such date. Pursuant to the Separation Agreement, Mr. Michener will remain employed by the Company in a non-executive officer position, serving as Senior Advisor to the Chief Executive Officer, for a transition period (the “Transition Period”) beginning on January 1, 2018 and ending upon his retirement on December 31, 2018 (the “Retirement Date”). Ling Chow, the Company’s U.S. General Counsel, will succeed Mr. Michener as the Company’s new General Counsel, beginning on January 1, 2018. The Company entered into the Separation Agreement in recognition of Mr. Michener’s successful years of service with the Company and to encourage him to work through the Retirement Date in order to facilitate the transition of his duties to his successor, to advise the Company regarding ongoing litigation, and so he would remain available to consult on matters related to his experience with the Company.

The Separation Agreement provides that if Mr. Michener remains employed though the Retirement Date, his base salary and cash and equity incentive opportunities during the Transition Period will be equal to his current base salary and cash and equity incentive opportunities. The Compensation Committee will determine the exact amount of Mr. Michener’s

incentive awards for the 2017 fiscal year after the 2017 financial results are available. If the Compensation Committee awards Mr. Michener equity awards for the 2017 fiscal year, such awards will be granted as restricted stock units pursuant to a grant agreement substantially in the form attached as an exhibit to the Separation Agreement with 50% of such units settling on the one-year anniversary of the date of grant and 50% settling on the two-year anniversary of the date of grant. In addition, the Compensation Committee will determine the exact amount of Mr. Michener’s incentive awards for the 2018 fiscal year after the 2018 financial results are available. Mr. Michener’s 2018 incentive award amounts, if any, will be paid in cash rather than any equity grant because he will no longer be eligible for a grant pursuant to the Company’s 2004 Long-Term Incentive Plan once he is no longer employed by the Company. The portion of the 2018 incentive award amount, if any, attributable to an equity grant will be paid 50% in December 2019 and the remaining 50% in December 2020. The Separation Agreement specifies that during the Transition Period, Mr. Michener will be required to own AGL shares having a value equal to two times his base salary, which is the level applicable to managing directors, group heads and equivalent positions under the under the Company’s stock ownership guidelines.

Pursuant to the Separation Agreement, if Mr. Michener remains employed though the Retirement Date, any unvested equity awards that he holds on the Retirement Date will vest in accordance with the terms that the applicable award agreement provides upon retirement. However, any previously granted cash and equity awards, including the performance share units granted to Mr. Michener in 2017, that include Company or individual performance-based vesting conditions (~~e.g.~~, the achievement of certain pre-established share price targets) remain subject to satisfaction of such applicable performance conditions following the Retirement Date. The Separation Agreement addresses the timing of payments and distributions to Mr. Michener so that they remain exempt from or comply with the provisions of Sections 409A and 457A of the Internal Revenue Code.

In the event that Mr. Michener’s employment is terminated before the Retirement Date as a result of death or permanent disability, upon the Compensation Committee’s evaluation of his performance for the relevant year, the Compensation Committee would have the discretion to award him a cash payment in lieu of an equity incentive and/or a cash incentive for the year during which such termination occurs. In the event of a termination prior to the Retirement Date for any other reason, any unvested equity awards that he holds on the date of such termination will vest in accordance with the terms that the applicable award agreement provides as a result of such other termination, as applicable.

Mr. Michener will remain eligible for the Company’s severance policy, which is described in its 2017 proxy statement, for any termination prior to the Retirement Date subject to the terms of such plan. Mr. Michener’s Bermuda housing subsidy will continue through December 31, 2017 and he will reimbursed for moving expenses from Bermuda to the United States. He will also be reimbursed for tax preparation and financial planning through calendar year 2018.

The Separation Agreement contains covenants by Mr. Michener relating to protection of the Company's confidential information, cooperation, non-competition, non-solicitation and non-disparagement and other standard provisions. Payments pursuant to the Separation Agreement are subject to forfeiture and/or clawback in the event of violation of such covenants. Mr. Michener executed a release of claims as part of the Separation Agreement. The Separation Agreement provides that Mr. Michener will execute another release of claims within 45 days after his retirement.

		Certification of CFO Pursuant to Exchange Act Rules 13A-14 and 15D-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~ITEM 6.~~32.1	~~EXHIBITS.~~		Certification of CEO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
32.2			Certification of CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
101.1			The following financial information from Assured Guaranty Ltd.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and 2022; (iv) Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2023 and 2022; (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022; and (vi) Notes to Condensed Consolidated Financial Statements.
104.1			The Cover Page Interactive Data File from Assured Guaranty Ltd.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 formatted, in Inline XBRL (the cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101).

~~See Exhibit Index for a list~~

* Management contract or compensatory plan

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Table of ~~exhibits filed with this report.~~Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.



	ASSURED GUARANTY LTD. (Registrant)

Dated November ~~3, 2017~~8, 2023	By:	/s/ ROBERT A. BAILENSON

		Robert A. Bailenson Chief Financial Officer (Principal Financial ~~and~~ ~~Accounting~~ Officer and Duly Authorized Officer)

~~EXHIBIT INDEX~~

130



~~Exhibit~~ ~~Number~~			~~Description of Document~~
~~31.1~~			~~Certification of CEO Pursuant to Exchange Act Rules 13A-14 and 15D-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~31.2~~			~~Certification of CFO Pursuant to Exchange Act Rules 13A-14 and 15D-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~
~~32.1~~			~~Certification of CEO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002~~
~~32.2~~			~~Certification of CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002~~
~~101.1~~			The following financial information from Assured Guaranty Ltd.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 formatted in XBRL: (i) Consolidated Balance Sheets at September 30, 2017 and December 31, 2016; (ii) Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2017 and 2016; (iii) Consolidated Statements of Comprehensive Income for the Three and Nine Months ended September 30, 2017 and 2016 (iv) Consolidated Statement of Shareholders’ Equity for the Nine Months ended September 30, 2017 (v) Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2017 and 2016; and (vi) Notes to Consolidated Financial Statements.

~~151~~



Bermuda		98-0429991
(State or other jurisdiction of incorporation)		(I.R.S. employer
~~of incorporation)~~	identification no.)


Title of each class:		Trading Symbol(s)	Name of exchange on which registered
Common Shares	$0.01 par value per share	AGO	New York Stock Exchange
Assured Guaranty US Holdings Inc. 6.125% Senior Notes due 2028 (and the related guarantee of Registrant)		AGO/28	New York Stock Exchange
Assured Guaranty US Holdings Inc. 3.150% Senior Notes due 2031 (and the related guarantee of Registrant)		AGO/31	New York Stock Exchange
Assured Guaranty US Holdings Inc. 3.600% Senior Notes due 2051 (and the related guarantee of Registrant)		AGO/51	New York Stock Exchange


	(in millions)
Fair value of investment in Sound Point	$	419
Fair value of other consideration	25
Total consideration	444
Less net asset carrying value of transferred AssuredIM subsidiaries (1)	189
Gain on sale of asset management subsidiaries (2)	$	255



	Nine Months 2016
	(in millions, except per share amounts)
Pro forma revenues	$	1,358
Pro forma net income	796
Pro forma earnings per share (EPS):
Basic	5.93
Diluted	5.89



	~~S&P Global Ratings, a division of Standard & Poor’s Financial Services LLC~~	~~Kroll Bond Rating~~ ~~Agency~~	~~Moody’s Investors Service, Inc.~~	~~A.M. Best Company,~~ ~~Inc.~~
~~AGM~~	~~AA (stable) (6/26/17)~~	~~AA+ (stable) (12/14/16)~~	~~A2 (stable) (8/8/16)~~	—
~~AGC~~	~~AA (stable) (6/26/17)~~	~~AA (stable) (9/20/16)~~	~~(1)~~	—
~~MAC~~	~~AA (stable) (6/26/17)~~	~~AA+ (stable) (7/14/17)~~	—	—
~~AG Re~~	~~AA (stable) (6/26/17)~~	—	—	—
~~AGRO~~	~~AA (stable) (6/26/17)~~	—	—	~~A+ (stable) (6/15/17)~~
~~AGE~~	~~AA (stable) (6/26/17)~~	—	~~A2 (stable) (8/8/16)~~	—
~~AGUK~~	~~AA (stable) (6/26/17)~~	—	~~(1)~~	—
~~AGLN~~	~~BB (positive) (1/12/17)~~	—	~~(2)~~	—
~~CIFGE~~	—	—	—	—



ý☒						QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



				Page
PART I			Financial Information	1
Item 1.			Financial Statements:	1
			Condensed Consolidated Balance Sheets ~~(unaudited)~~(Unaudited) as of September 30, ~~2017~~2023 and December 31, ~~2016~~2022	1
			Condensed Consolidated Statements of Operations ~~(unaudited)~~(Unaudited) for the Three and Nine Months Ended September 30, ~~2017~~2023 and ~~2016~~2022	2
			Condensed Consolidated Statements of Comprehensive Income ~~(unaudited)~~(Loss) (Unaudited) for the Three and Nine Months Ended September 30, ~~2017~~2023 and ~~2016~~2022	3
			Condensed Consolidated ~~Statement~~Statements of Shareholders’ Equity ~~(unaudited)~~(Unaudited) for the Three and Nine Months Ended September 30, 2023 and 2022	4
			Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, ~~2017~~2023 and 2022	46
			~~Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2017 and 2016~~	5
	Notes to Condensed Consolidated Financial Statements ~~(unaudited)~~(Unaudited)	68
			1. Business and Basis of Presentation	68
			2. ~~Acquisitions~~Segment Information	910
			3. ~~Ratings~~Outstanding Exposure	1114
			4. ~~Outstanding Exposure~~	12
	5. Expected Loss to be Paid (Recovered)	2425
			6.5. Contracts Accounted for as Insurance	3534
			~~7. Fair Value Measurement~~	43
	8.6. Contracts Accounted for as Credit Derivatives	5940
			~~9. Consolidated~~7. Investments	42
			8. Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles	6448
			~~10. Investments and Cash~~9. Fair Value Measurement	6754
			~~11. Insurance Company Regulatory Requirements~~10. Asset Management Fees	7470
			11. Long-Term Debt	71
			12. Income Taxes	7571
			13. ~~Reinsurance and Other Monoline Exposures~~	78
	~~14.~~ Commitments and Contingencies	8274
			~~15. Long-Term Debt and Credit Facilities~~14. Shareholders’ Equity	8375
			~~16.~~15. Earnings Per Share	8578
	~~17. Shareholders' Equity~~	86
	~~18. Subsidiary Information~~	90
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	9879
			Forward Looking Statements	9879
			Available Information	9980
			Overview	81
			Business	81
			Economic Environment	81
			Key Business Strategies	82
			Executive Summary	9985
			Financial Performance of Assured Guaranty	86
			Other Matters	89
			Results of Operations	~~108~~89
			Critical Accounting Estimates	90
			Results of Operations by Segment	90
			Insurance Segment	91
			Asset Management Segment	101
			Corporate	102
			Other	102
			Reconciliation to GAAP	104
			Non-GAAP Financial Measures	~~121~~106
			Insured Portfolio	~~126~~110
			Liquidity and Capital Resources	~~136~~114
			AGL and its U.S. Holding Companies	114
			Insurance Subsidiaries	117
			Investment Portfolio	121
			Lease Obligations	124
			Financial Guaranty Variable Interest Entities and Consolidated Investment Vehicles	124
			Condensed Consolidated Cash Flows	125
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	~~147~~126
Item 4.			Controls and Procedures	~~147~~126
PART II			Other Information	~~148~~127
Item 1.			Legal Proceedings	~~148~~127
Item 1A.			Risk Factors	~~148~~127
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	~~148~~128
Item 5.			Other ~~Information~~Matters	~~148~~128
Item 6.			Exhibits	~~149~~129



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues
Net earned premiums	$	186		$	231		$	512		$	628
Net investment income	99			94			322			291
Net realized investment gains (losses):
Other-than-temporary impairment losses	(20		)	(4		)	(23		)	(32		)
Less: portion of other-than-temporary impairment loss recognized in other comprehensive income	(7		)	1			6			(6		)
Net impairment loss	(13		)	(5		)	(29		)	(26		)
Other net realized investment gains (losses)	20			3			83			21
Net realized investment gains (losses)	7			(2		)	54			(5		)
Net change in fair value of credit derivatives:
Realized gains (losses) and other settlements	(1		)	15			19			47
Net unrealized gains (losses)	59			6			87			(23		)
Net change in fair value of credit derivatives	58			21			106			24
Fair value gains (losses) on committed capital securities	(4		)	(23		)	(4		)	(50		)
Fair value gains (losses) on financial guaranty variable interest entities	3			(11		)	25			11
Bargain purchase gain and settlement of pre-existing relationships	—			259			58			259
Other income (loss)	274			(3		)	385			49
Total revenues	623			566			1,458			1,207
Expenses
Loss and loss adjustment expenses	223			(9		)	354			183
Amortization of deferred acquisition costs	5			4			13			13
Interest expense	24			26			73			77
Other operating expenses	58			65			183			188
Total expenses	310			86			623			461
Income (loss) before income taxes	313			480			835			746
Provision (benefit) for income taxes
Current	(148		)	18			(102		)	80
Deferred	253			(17		)	259			(18		)
Total provision (benefit) for income taxes	105			1			157			62
Net income (loss)	$	208		$	479		$	678		$	684

Earnings per share:
Basic	$	1.75		$	3.63		$	5.56		$	5.10
Diluted	$	1.72		$	3.60		$	5.48		$	5.06
Dividends per share	$	0.1425		$	0.13		$	0.4275		$	0.39


		Shareholders’ Equity Attributable to Assured Guaranty Ltd.
	Common Shares Outstanding	Common Shares Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Deferred Equity Compensation		Total		Nonredeemable Noncontrolling Interests		Shareholders’ Equity
As of June 30, 2023	58,850,144	$	1	$	5,732	$	(458)	$	1	$	5,276	$	179	$	5,455
Net income	—	—		157		—		—		157		2		159
Dividends ($0.28 per share)	—	—		(16)		—		—		(16)		—		(16)
Common shares repurchases	(1,065,902)	—		(64)		—		—		(64)		—		(64)
Share-based compensation	35,490	—		6		—		—		6		—		6
Other comprehensive loss	—	—		—		(107)		—		(107)		—		(107)
Deconsolidation of investment vehicles	—	—		—		—		—		—		(132)		(132)
As of September 30, 2023	57,819,732	$	1	$	5,815	$	(565)	$	1	$	5,252	$	49	$	5,301



	Common Shares Outstanding		Common Stock Par Value		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income		Deferred Equity Compensation			Total Shareholders’ Equity
Balance at December 31, 2016	127,988,230		$	1	$	1,060		$	5,289		$	149	$	5		$	6,504
Net income	—		—		—			678			—		—			678
Dividends ($0.4275 per share)	—		—		—			(53		)	—		—			(53		)
Common stock repurchases	(10,734,653	)	0		(431		)	—			—		—			(431		)
Share-based compensation and other	683,665		0		8			—			—		(4		)	4
Other comprehensive income	—		—		—			—			177		—			177
Other	—		—		—			(1		)	—		—			(1		)
Balance at September 30, 2017	117,937,242		$	1	$	637		$	5,913		$	326	$	1		$	6,878



	Fair Value of Net Assets Acquired, before Settlement of Pre-existing Relationships			Net effect of Settlement of Pre-existing Relationships			Net Effect of MBIA UK Acquisition
	(in millions)
Purchase price (1)	$	334		$	—		$	334

Identifiable assets acquired:
Investments	459			—			459
Cash	72			—			72
Premiums receivable, net of commissions payable	274			(4		)	270
Other assets	16			(6		)	10
Total assets	821			(10		)	811

Liabilities assumed:
Unearned premium reserves	389			(6		)	383
Current tax payable	25			—			25
Other liabilities	4			(5		)	(1		)
Total liabilities	418			(11		)	407
Net assets of MBIA UK	403			1			404
Cash acquired from MBIA Holdings	23			—			23
Deferred tax liability	(36		)	—			(36		)
Net asset effect of MBIA UK Acquisition	390			1			391
Bargain purchase gain and settlement of pre-existing relationships resulting from MBIA UK Acquisition, after-tax	56			1			57
Deferred tax	—			1			1
Bargain purchase gain and settlement of pre-existing relationships resulting from MBIA UK Acquisition, pre-tax	$	56		$	2		$	58


~~(1)~~	The purchase price of $334 million was allocated as follows: (1) $329 million for the purchase of net assets of $385 million, and (2) the settlement of pre-existing relationships between MBIA UK and Assured Guaranty at a fair value of $5 million.


					Equity in Earnings (Losses) of Investees		Less:				Net Income (Loss) Attributable to AGL
	Revenues		Expenses				Provision (Benefit) for Income Taxes		Noncontrolling Interests
	(in millions)
Segments:
Insurance	$	208	$	165	$	25	$	9	$	—	$	59
Asset Management	—		—		—		—		—		—
Total segments	208		165		25		9		—		59
Corporate division	259		57		—		47		—		155
Other	(4)		(3)		(7)		(2)		2		(8)
Subtotal	463		219		18		54		2		206
Reconciling items:
Realized gains (losses) on investments	(9)		—		—		—		—		(9)
Non-credit impairment-related unrealized fair value gains (losses) on credit derivatives	6		—		—		—		—		6
Fair value gains (losses) on CCS	(20)		—		—		—		—		(20)
Foreign exchange gains (losses) on remeasurement of premiums receivable and loss and LAE reserves	(37)		—		—		—		—		(37)
Tax effect	—		—		—		(11)		—		11
Total consolidated	$	403	$	219	$	18	$	43	$	2	$	157


~~(1)~~	AGC requested that Moody’s Investors Service, Inc. (Moody's) withdraw its financial strength ratings of AGC and AGUK in January 2017, but Moody's denied that request. Moody’s continues to rate AGC A3 (stable) and AGUK A3; Moody's put AGUK on review for upgrade on June 27, 2017, following its transfer to AGM.


~~ITEM 1.~~	~~FINANCIAL STATEMENTS~~


1.	~~Business and Basis of Presentation~~


2.	~~Acquisitions~~


~~(2)~~	Assured Guaranty did not request that Moody's rate AGLN. Moody's continues to rate AGLN, and upgraded its rating to Baa2 (stable) on January 13, 2017, following its acquisition by AGC, and then to Baa1 on review for further upgrade on June 27, 2017, following its transfer to AGM.


	As of September 30, 2023				As of December 31, 2022
	Gross		Net		Gross		Net
	(in millions)
Debt Service
Public finance	$	372,908	$	372,711	$	359,899	$	359,703
Structured finance	11,290		11,265		10,273		10,248
Total financial guaranty	$	384,198	$	383,976	$	370,172	$	369,951

Par Outstanding
Public finance	$	231,871	$	231,721	$	224,254	$	224,099
Structured finance	10,138		10,112		9,184		9,159
Total financial guaranty	$	242,009	$	241,833	$	233,438	$	233,258



	Gross Debt Service Outstanding				Net Debt Service Outstanding
	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
	(in millions)
Public finance	$	407,539	$	425,849	$	399,347	$	409,447
Structured finance	17,464		29,151		17,377		28,088
Total financial guaranty	$	425,003	$	455,000	$	416,724	$	437,535


	Public Finance U.S.				Public Finance Non-U.S.				Structured Finance U.S				Structured Finance Non-U.S				Total
Rating Category	Net Par Outstanding		%		Net Par Outstanding		%		Net Par Outstanding		%		Net Par Outstanding		%		Net Par Outstanding		%
	(dollars in millions)
AAA	$	212	0.1	%	$	2,004	4.4	%	$	860	9.6	%	$	457	40.2	%	$	3,533	1.5	%
AA	16,994		9.1		3,298		7.2		4,545		50.7		12		1.0		24,849		10.3
A	101,243		54.5		10,545		23.1		1,932		21.5		568		50.0		114,288		47.2
BBB	64,220		34.5		29,083		63.5		586		6.5		100		8.8		93,989		38.9
BIG	3,304		1.8		818		1.8		1,052		11.7		—		—		5,174		2.1
Total net par outstanding	$	185,973	100.0	%	$	45,748	100.0	%	$	8,975	100.0	%	$	1,137	100.0	%	$	241,833	100.0	%


	BIG Net Par Outstanding								Net Par
	BIG 1		BIG 2		BIG 3		Total BIG		Outstanding
					(in millions)
Public finance:
U.S. public finance	$	1,290	$	926	$	1,088	$	3,304	$	185,973
Non-U.S. public finance	818		—		—		818		45,748
Public finance	2,108		926		1,088		4,122		231,721
Structured finance:
U.S. RMBS	23		36		897		956		1,817
Other structured finance	—		28		68		96		8,295
Structured finance	23		64		965		1,052		10,112
Total	$	2,131	$	990	$	2,053	$	5,174	$	241,833


	Net Par Outstanding						Number of Risks (2)
Description	Financial Guaranty Insurance (1)		Credit Derivatives		Total		Financial Guaranty Insurance (1)	Credit Derivatives	Total
	(dollars in millions)
BIG 1	$	2,115	$	16	$	2,131	102	2	104
BIG 2	980		10		990		13	2	15
BIG 3	2,024		29		2,053		109	7	116
Total BIG	$	5,119	$	55	$	5,174	224	11	235



	Net Par Outstanding						Number of Risks(2)
Description	Financial Guaranty Insurance(1)		Credit Derivative		Total		Financial Guaranty Insurance(1)	Credit Derivative	Total
	(dollars in millions)
BIG:
Category 1	$	4,628	$	544	$	5,172	150	9	159
Category 2	1,382		65		1,447		48	4	52
Category 3	6,520		87		6,607		151	8	159
Total BIG	$	12,530	$	696	$	13,226	349	21	370


~~(2)~~	~~A risk represents the aggregate of the financial guaranty policies that share the same revenue source for purposes of making debt service payments.~~


	Gross Par Outstanding				Gross Debt Service Outstanding
	As of				As of
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
	(in millions)
Exposure to Puerto Rico	$	1,121	$	1,378	$	1,529	$	1,899



	Hungary		Italy		Portugal		Spain		Turkey		Total
	(in millions)
Sub-sovereign exposure(2)	$	214	$	1,034	$	75	$	456	$	—	$	1,779
Non-sovereign exposure(3)	125		449		—		—		200		774
Total	$	339	$	1,483	$	75	$	456	$	200	$	2,553
Total BIG (See Note 5)	$	262	$	—	$	75	$	456	$	—	$	793


	As of September 30, 2023				As of December 31, 2022
	Gross Exposure		Net Exposure		Gross Exposure		Net Exposure
	(in millions)
Life insurance transactions (1)	$	1,325	$	1,003	$	1,314	$	986
Aircraft residual value insurance policies	355		200		355		200
Other guaranties	2,090		2,090		228		228



	Net Expected Loss to be Paid (Recovered) as of June 30, 2017			Economic Loss Development / (Benefit)			(Paid) Recovered Losses (1)			Net Expected Loss to be Paid (Recovered) as of September 30, 2017 (2)
	(in millions)
Public finance:
U.S. public finance	$	1,044		$	229		$	(227	)	$	1,046
Non-U.S. public finance	42			0			5			47
Public finance	1,086			229			(222		)	1,093
Structured finance:
U.S. RMBS	182			(19		)	13			176
Triple-X life insurance transactions	(4		)	(1		)	(2		)	(7		)
Other structured finance	33			(5		)	2			30
Structured finance	211			(25		)	13			199
Total	$	1,297		$	204		$	(209	)	$	1,292



	Net Expected Loss to be Paid (Recovered) as of December 31, 2016 (2)		Net Expected Loss to be Paid on MBIA UK as of January 10, 2017		Economic Loss Development / (Benefit)			(Paid) Recovered Losses (1)			Net Expected Loss to be Paid (Recovered) as of September 30, 2017 (2)
	(in millions)
Public finance:
U.S. public finance	$	871	$	—	$	431		$	(256	)	$	1,046
Non-U.S. public finance	33		13		(4		)	5			47
Public finance	904		13		427			(251		)	1,093
Structured finance:
U.S. RMBS	206		—		(70		)	40			176
Triple-X life insurance transactions	54		—		(56		)	(5		)	(7		)
Other structured finance	34		8		(3		)	(9		)	30
Structured finance	294		8		(129		)	26			199
Total	$	1,198	$	21	$	298		$	(225	)	$	1,292


~~(2)~~	~~Includes expected LAE~~(1) Net (paid) recovered losses in 2023 include recoveries related to various Puerto Rico securities transferred to ~~be paid of $23 million as of September 30, 2017 and $12 million as of December 31, 2016.~~



	Net Expected Loss to be Paid (Recovered)					Net Economic Loss Development (Benefit)
	As of September 30, 2017			As of December 31, 2016		Third Quarter 2017			Third Quarter 2016			Nine Months 2017			Nine Months 2016
	(in millions)
Financial guaranty insurance	$	1,205		$	1,083	$	207		$	(35	)	$	328		$	66
FG VIEs (1) and other	93			105		(2		)	(3		)	(6		)	(6		)
Credit derivatives (2)	(6		)	10		(1		)	(6		)	(24		)	(23		)
Total	$	1,292		$	1,198	$	204		$	(44	)	$	298		$	37



	September 30, 2017	June 30, 2017	December 31, 2016
Delinquent/Modified in the Previous 12 Months
Alt A and Prime	20%	20%	25%
Option ARM	20	20	25
Subprime	20	20	25
30 – 59 Days Delinquent
Alt A and Prime	30	30	35
Option ARM	35	35	35
Subprime	40	40	40
60 – 89 Days Delinquent
Alt A and Prime	40	40	45
Option ARM	45	45	50
Subprime	50	45	50
90+ Days Delinquent
Alt A and Prime	50	50	55
Option ARM	55	55	55
Subprime	55	55	55
Bankruptcy
Alt A and Prime	45	45	45
Option ARM	50	50	50
Subprime	40	40	40
Foreclosure
Alt A and Prime	65	60	65
Option ARM	65	65	65
Subprime	65	65	65
Real Estate Owned
All	100	100	100



	As of September 30, 2017					As of June 30, 2017						As of December 31, 2016
	Range				Weighted Average	Range				Weighted Average		Range				Weighted Average
Alt A and Prime
Plateau CDR	1.0	%	-	11.0%	5.1%	1.1	%	-	10.3%	5.1	%	1.0	%	–	13.5%	5.7%
Final CDR	0.0	%	-	0.5%	0.3%	0.1	%	-	0.5%	0.3	%	0.0	%	–	0.7%	0.3%
Initial loss severity:
2005 and prior	60%					60%						60%
2006	80%					80%						80%
2007+	70%					70%						70%
Option ARM
Plateau CDR	2.4	%	-	6.6%	5.3%	3.7	%	-	6.7%	5.4	%	3.2	%	–	7.0%	5.6%
Final CDR	0.1	%	-	0.3%	0.3%	0.2	%	-	0.3%	0.3	%	0.2	%	–	0.3%	0.3%
Initial loss severity:
2005 and prior	60%					60%						60%
2006	70%					70%						70%
2007+	75%					75%						75%
Subprime
Plateau CDR	3.6	%	-	13.1%	7.9%	3.8	%	-	13.1%	7.8	%	2.8	%	–	14.1%	8.1%
Final CDR	0.2	%	-	0.7%	0.4%	0.2	%	-	0.7%	0.4	%	0.1	%	–	0.7%	0.4%
Initial loss severity:
2005 and prior	80%					80%						80%
2006	90%					90%						90%
2007+	95%					95%						90%


~~(1)~~	~~Excludes $79 million and $90 million of deferred premium revenue, and $18 million and $25 million of contra-paid related to FG VIEs as of September 30, 2017 and December 31, 2016, respectively.~~


~~(2)~~	~~Includes $7 million of non- financial guaranty as of September 30, 2017. As of December 31, 2016, non-financial guaranty deferred premium revenue was de minimis.~~


~~(3)~~	~~See "Financial Guaranty Insurance Losses– Insurance Contracts' Loss Information" below for an explanation of "contra-paid".~~