ASSURED GUARANTY LTD

Financial Results

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

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

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

Condensed Consolidated Results of Operations

Condensed Consolidated Results of Operations

Second Quarter 2024 Compared with Second Quarter 2023

Net income attributable to AGL for second quarter 2024 was lower compared with the three-month period ended June 30, 2023 (second quarter 2023) primarily due to:

•lower fair value gains on credit derivatives,

•foreign exchange gains on remeasurement in second quarter 2023, and

•lower fair value gains on trading securities in second quarter 2024.

These decreases were offset in part by:

•loss and LAE benefit in second quarter 2024 compared with loss and LAE in second quarter 2023, and

•employee compensation and operating expenses associated with the Sound Point Transaction and AHP Transaction of $24 million in second quarter 2023.

Six Months 2024 Compared with Six Months 2023

Net income attributable to AGL for six months 2024 was lower compared with the six-month period ended June 30, 2023 (six months 2023) primarily due to:

•lower fair value gains on credit derivatives,

•foreign exchange losses on remeasurement in six months 2024, compared with gains in six months 2023,

•lower fair value gains on CIVs, and

•lower other income mainly due to the reversal of a previously recorded litigation accrual of $20 million in six months 2023.

These decreases were offset in part by:

•a benefit in loss and LAE in six months 2024 compared with a loss and LAE in six months 2023,

•higher net earned premiums in six months 2024 compared with six months 2023 primarily due to one large refunded transaction, and

•employee compensation and operating expenses associated with the Sound Point Transaction and AHP Transaction of $31 million in six months 2023.

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 Assured Guaranty Re Ltd. (AG Re) and Cedar Personnel Ltd. taxed at the Bermuda marginal corporate tax rate of 0%. Effective January 1, 2024, the U.K. adopted a global minimum tax rate of 15% under the Organization for Economic Co-Operation and Development’s Base Erosion and Profit Shifting Pillar Two rules. See Item 1, Financial Statements, Note 10, Income Taxes.

Adjusted Operating Income

Adjusted operating income in second quarter 2024 was $80 million compared with $36 million in second quarter 2023. The increase was primarily due to a benefit in loss expense in second quarter 2024 compared with loss expense in second quarter 2023 and employee compensation and operating expenses associated with the Sound Point Transaction and AHP Transaction in second quarter 2023, partially offset by lower fair value gains on Puerto Rico CVIs..

Adjusted operating income in six months 2024 was $193 million, compared with $104 million in six months 2023. The increase was primarily due to a benefit in loss expense in six months 2024, compared with a loss expense in six months 2023. employee compensation and operating expenses associated with the Sound Point Transaction and AHP Transaction in six months 2023, and higher net earned premiums from refundings in six months 2024, partially offset by the release of a litigation accrual in six months 2023.. See “— Results of Operations — Reconciliation to GAAP” for the reconciliation of net income (loss) attributable to AGL to adjusted operating income (loss).

Book Value and Adjusted Book Value

Shareholders’ equity attributable to AGL as of June 30, 2024 decreased compared with December 31, 2023, primarily due to share repurchases of $281 million and dividends of $36 million, offset in part by net income of $187 million. Adjusted operating shareholders’ equity and adjusted book value also decreased primarily due to share repurchases and dividends, partially offset by operating income of $193 million and, in the case of adjusted book value, GWP of $193 million. See “— Non-GAAP Financial Measures” below for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity and adjusted book value.

On a per share basis, shareholders’ equity attributable to AGL, adjusted operating shareholders’ equity and adjusted book value increased as of June 30, 2024 compared with December 31, 2023, due, in part, to the accretive effect of the share repurchase program. See “— Non-GAAP Financial Measures” for the reconciliation of shareholders’ equity attributable to AGL to adjusted operating shareholders' equity and adjusted book value.