ASSURED GUARANTY LTD

The Company has several financial guaranty insurance subsidiaries. AG is an insurance subsidiary domiciled in Maryland. As of August 1, 2024, AG 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 that owns AGRO, an insurance company that is also domiciled in Bermuda.

The Company conducts its annuity reinsurance business through Assured Life Re, an insurance company domiciled in Bermuda which was acquired on January 21, 2026.

Sources and Uses of Funds

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

•operating expenses,

•claims on the insured portfolio,

•annuity reinsurance benefits,

•dividends or other distributions to parent,

•reinsurance premiums,

•expansion of the insurance business, and

•capital investments in their own subsidiaries and in alternative investments.

Financial Guaranty

Management believes that the financial guaranty 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. 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 June 30, 2026, 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 financial guaranty insurance subsidiaries, insurance regulations and rating agency capital requirements.

Financial guaranty insurance policies issued provide, in general, that payments of principal, interest and other amounts insured generally 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, 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 and 2024 in connection with the resolution of certain defaulting 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 $464 million in insured net par outstanding of PREPA obligations as of June 30, 2026. For more information, see Item 1. Financial Statements, Note 5. Expected Loss to be Paid (Recovered).

The terms of the Company’s credit default swap (CDS) contracts generally are modified from standard CDS contract forms approved by International Swaps and Derivatives Association, Inc. such that the circumstances giving rise to the Company’s obligation to make loss payments are similar to those for its financial guaranty insurance contracts. The documentation for certain CDS was negotiated to require the Company to also pay if the obligor were to become bankrupt or if the reference obligation were restructured. Furthermore, some CDS documentation requires the Company to make a payment due to an event that is 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 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.

The Company expects liquidity needs related to the annuity reinsurance business to be funded by cash flows generated by interest income, maturities and sales of invested assets and the underlying investments in funds withheld arrangements. Cash flow needs include operating expenses and benefit payments for PRT, which do not have stated maturity dates and generally terminate upon the death of the annuitant or annuitant’s spouse, as well as MYGA assumed liabilities, which have stated maturities of typically three to five years. The Company has made assumptions to determine the estimated undiscounted cash flows of the PRT policy benefits including longevity, inflation, expenses, investment returns and other assumptions. Actual cash flows may differ materially from these estimates if there is significant variation in these assumptions. Management believes that Assured Life Re has sufficient liquidity to meet the payments required under these obligations and engages in active asset liability monitoring and hedging activities to mitigate the risk associated with mismatches in asset and liability cash flows. The portfolio of investments supporting the Assured Life Re obligations primarily consists of investment grade fixed-maturity securities including liquid government, corporate and structured credit securities.

The Company may, from time to time, contribute additional capital to Assured Life Re depending on the amount of annuity liabilities it assumes in future reinsurance transactions.

Ordinary Dividends From Insurance Subsidiaries to Holding Companies

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 Item 8. Financial Statements and Supplementary Data, Note 14, Insurance Company Regulatory Requirements, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion of the Company’s dividend restrictions applicable to AG, AG Re and AGRO.

Dividend restrictions by insurance subsidiary are as follows:

•Under Maryland’s insurance law, AG may, with prior notice to the Commissioner of its domiciliary regulator, the Maryland Insurance Administration, pay an ordinary dividend in an amount that, together with all dividends and distributions paid in the prior 12 months, does not exceed the lesser of 10% of its policyholders’ surplus (as of the prior December 31) or 100% of its adjusted net investment income during that period. “Adjusted net investment income” means the sum of (x) AG’s net investment income during the 12-month period ending December 31 of the preceding year (excluding realized capital gains and pro rata distributions of its own securities), and (y) AG’s net investment income (excluding realized capital gains) from the three calendar years prior to the preceding calendar year that has not already been paid out as dividends. The maximum amount available during 2026 for AG to distribute as ordinary dividends is approximately $245 million of which approximately $72 million is available for distribution in the third quarter of 2026.

•The Company expects the amount of dividends available for distribution by AG Re in 2026 to be approximately $153 million. Based on applicable law and regulations, in 2026 AG Re has the capacity to declare and pay dividends in an aggregate amount up to 25% of the prior year total statutory capital and surplus (i.e., up to $292 million); provided that such payment cannot exceed AG Re’s unencumbered assets ($153 million as of June 30, 2026) or its statutory surplus ($249 million as of June 30, 2026). Additionally, in 2026 AG Re can make capital distributions in an aggregate amount up to $129 million without the prior approval of the Bermuda Monetary Authority (the Authority).

•Under applicable law and regulations, Assured Life Re may declare and pay dividends during 2026, without prior approval of the Authority, in an aggregate amount equal to up to 25% of its total statutory capital and surplus as of the prior year end (or $41 million). Any such dividends would also be subject to the limitations that they may not exceed Assured Life Re’s statutory surplus or its unencumbered assets. Assured Life Re prepares its statutory financial statements in conformity with the accounting principles set forth in Bermuda’s Insurance Act 1978, amendments thereto and related regulations, which also prohibits Assured Life Re from declaring or paying any dividends to any person other than a policyholder unless its approved actuary certifies that the proposed amount of the dividend would not exceed the excess of funds available to satisfy its long-term business obligations. As of June 30, 2026, Assured Life Re did not have a statutory surplus to pay dividends; its unencumbered assets were $27 million. In addition, Assured Life Re may make capital distributions during 2026 of up to $31 million in the aggregate without prior approval of the Authority. Given Assured Life Re’s focus on capital intensive growth initiatives, it does not expect to declare or pay any dividends or to make any capital distributions during 2026.

Ordinary Dividends

From Insurance Company Subsidiaries

to Holding Companies

(1) In second quarter 2026, AG Re declared a dividend of $40 million, which was paid in the third quarter of 2026.

Committed Capital Securities

AG is party to an arrangement that enables it to access, at its discretion, up to $400 million of capital, at any time, and has the right to use such capital for any purpose, including to pay claims. See Item 1. Financial Statements, Note 11. Fair Value Measurement.

Federal Home Loan Bank Membership

In the fourth quarter of 2025, AG became a member of the Federal Home Loan Bank of New York (FHLBNY), thereby gaining access to collateralized FHLBNY borrowings as an additional source of liquidity. The Board has authorized a maximum borrowing capacity of $600 million. As of June 30, 2026, the Company had not borrowed any funds or pledged any collateral under the FHLBNY program.